State of Kerala v. M. Vijayakumar & Ors.

 Fixing a lower rate of dearness relief (DR) than dearness allowance (DA), when both serve the same purpose of offsetting inflation, is arbitrary and violative of equality.

Facts

Differential DA/DR rates challenged as discriminatory

(a) KSRTC enhanced DA for employees by 14% but DR for pensioners by 11% (Para 4, 20).

(b) Pensioners challenged differential rates as discriminatory under Art. 14 Const. of India.

(c) Single Judge upheld distinction; Division Bench struck it down; State appealed to Supreme Court.

Issues Framed

Whether different rates of enhancement for DA (employees) and DR (pensioners) are constitutionally valid when both are linked to inflation (Para 3).

Court’s Reasoning

(a) Common Object of DA and DR
The Court held:

  • Both DA and DR aim to “mitigate… hardship… on account of inflation” (Para 21, 25).
  • Inflation affects serving employees and pensioners equally.

(b) Application of Equality Test
Under Art. 14 Const. of India, classification must have:

  • intelligible differentia, and
  • rational nexus with object (Para 22).

(c) Failure of Nexus Test
The Court found:

  • Though employees and pensioners are distinct classes,
  • differentiation in rate of increase had no nexus with the object of combating inflation (Para 25).

(d) Arbitrariness Principle
“Equality and arbitrariness are sworn enemies” (Para 22).
Fixing unequal rates for a common purpose was held arbitrary.

(e) Distinction from Precedents
Cases on cut-off dates and financial constraints were distinguished as they related to entitlement, not differential rates for the same benefit (Para 26–27).

(f) Financial Constraint Argument Rejected
Financial difficulty may justify deferring benefits, but not discriminatory implementation once benefit is granted (Para 28).

Held

Appeals dismissed; differential rates of DA and DR held unconstitutional (Para 29).

Ratio

Where DA and DR serve the same purpose of offsetting inflation, prescribing different rates of enhancement for employees and pensioners lacks rational nexus and violates Art. 14 Const. of India as arbitrary.

Case Details

Citation: 2026 INSC 352
Decided on: 10 April 2026
Case Title: State of Kerala v. M. Vijayakumar & Ors.
Court: Supreme Court of India
Bench: Manoj Misra, J.; Prasanna B. Varale, J.

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