In Brief
The Tamil Nadu Electricity Board (TNEB) sought to overturn High Court orders directing it to pay enhanced Dearness Allowance (DA) to its employees at 49% from January 2002 and 52% from July 2002. The Board argued it was bound by a 1998 settlement agreement requiring it to adopt DA rates fixed by the State Government, which had only raised DA to 49% from October 2002 due to financial hardship, whereas the Central Government had raised it earlier. The Supreme Court upheld the Board's position, holding that the explicit settlement terms tied DA revision to State Government rates, financial capacity is a material factor in wage negotiations, and the High Court erred in not considering the State's severe financial constraints. The Court allowed the appeal and set aside the High Court's orders.
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