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Informist, Thursday, Jun. 4, 2026

 

NEW DELHI – The Delhi High Court Thursday held that implementing any policy that operates solely to the benefit of the company or organisation while depriving employees of their advantages would be arbitrary and in violation of the Constitution. A selective and inconsistent application of policy is wholly impermissible, said a bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia. 

 

The approach adopted by Food Corp. of India in partially implementing the industrial dearness allowances pattern only when it was entitled to recover excess amounts paid to employees, while refraining from extending the corresponding benefits to employees who were entitled to it, is unsustainable in law, the court said. By relying on internal circulars, Food Corp. of India cannot justify withholding payments that are otherwise lawfully due, said the court. 

 

The high court said that a state instrumentality is bound to act fairly, reasonably, and in a non-discriminatory manner, and cannot adopt a position that permits it to retain the benefits of a policy while simultaneously denying corresponding entitlements accruing to its employees. The implementation of a welfare scheme cannot be conditioned upon the unilateral advantage of the employer, particularly where such an approach results in unequal treatment and prejudice to its employees, said the high court.

 

The mere possibility of difficulty in effecting restitution of any excess amounts that may subsequently be found payable does not confer upon a State instrumentality the authority to deny or defer benefits accruing under a pay scale sanctioned by the central government, said the court. The implementation of a central government pay scale must be fair, uniform, and non-arbitrary, it said, adding that any selective or arbitrary application is violative of Article 14 of the Constitution and cannot be sustained.

 

The division bench of the high court upheld its single-judge order that no recovery should be made from the employees of Food Corp. of India on retrospective application of change from central dearness allowances to industrial dearness allowances and any amount already recovered should be refunded with 6% interest. The division bench upheld the order that Food Corp. of India should not withhold payments and benefits to employees upon migration from central dearness allowance to industrial dearness allowance. 

 

In 1980, the government had initiated a policy to phase out the central dearness allowance pattern and migrate its employees to industrial dearness allowances pattern. Thereafter, Food Corp. of India issued circulars, resolving to proceed with the recovery of amounts allegedly paid in excess to its employees, while simultaneously directing that any amounts otherwise payable to employees be kept in abeyance.  End

 

Reported by Surya Tripathi

Edited by Avishek Dutta

 

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