⁠Punjab DA arrears: Why Supreme Court order gives Bhagwant Mann government a breather

The Supreme Court’s stay on criminal contempt proceedings against Punjab Chief Secretary KAP Sinha over non-payment of dearness allowance (DA) arrears has given a political and financial breather to the Bhagwant Mann-led government. The intervention came two days after the Punjab and Haryana High Court issued a contempt notice to Sinha and directed him to appear in person.

The High Court proceedings had brought the issue of unpaid DA arrears back into focus, giving the Opposition fresh ammunition to question the Mann government’s handling of employees’ dues. The prospect of the Chief Secretary facing criminal contempt proceedings had also put the government on the defensive, particularly with the 2027 Assembly elections approaching.

A Bench of Justices B V Nagarathna and R Mahadevan stayed criminal contempt proceedings and directed that no coercive steps be taken in the connected civil contempt matter. The relief, however, does not amount to a clean chit for the state government. The Supreme Court has asked it to submit a concrete disbursement plan by March 2027, specifying how much of the outstanding arrears it proposes to release by then.

What it means for AAP

The immediate political advantage for the Aam Aadmi Party (AAP) government is that it can now argue that the controversy over the Chief Secretary’s personal appearance and the possibility of criminal contempt proceedings should not be conflated with the substantive dispute over payment of arrears.

During the hearing, Justice Nagarathna questioned the petitioners’ insistence on sending the Chief Secretary to jail, asking whether their objective was to secure compliance with the court’s order or to put the top bureaucrat behind bars. The Bench also said it did not appreciate what it described as “arm-twisting”.

This gives the government some room to counter the Opposition’s allegations that its failure to clear employees’ dues had reached the point of judicial embarrassment.

However, the issue remains politically sensitive, given that government employees and pensioners constitute a sizeable constituency in Punjab. On Wednesday, Chief Minister Bhagwant Mann said the state had around eight lakh employees and pensioners.

The AAP government has so far been cautious in responding to the Supreme Court’s order. Finance Minister Harpal Singh Cheema said, “We are examining the SC order. I will comment after we get a copy.”

SAD spokesperson Arshdeep Kaler too echoed Cheema’s view. “The party will comment on the issue after going through the order in detail,” he said.

Fiscal implications of order

The outstanding DA issue also has significant financial implications. According to the Chief Secretary’s status report submitted to the High Court, the liability towards outstanding DA and dearness relief for the period from July 1, 2021, to September 30, 2026, stands at Rs 22,818 crore. The total outstanding liability towards employees and pensioners has been pegged at Rs 32,418 crore.

The state government has maintained that it inherited around Rs 13,000 crore in legacy arrears from the previous government. It has also cited Punjab’s difficult fiscal position, pointing out that salaries and pensions account for nearly 51 per cent of its revenue receipts, while total committed liabilities, including interest payments, account for around 82 per cent.

Clearing the entire outstanding amount in one go, the government has argued, would put considerable pressure on the state exchequer.

The Supreme Court’s intervention has, therefore, eased the immediate pressure arising from the criminal contempt proceedings and the possibility of coercive action. It gives the government time to work out a staggered payment proposal rather than face an immediate demand to clear the entire liability. However, the stay neither extinguishes the employees’ dues nor settles the state’s challenge to the High Court’s August 3 judgment.

The relief also comes with a political complication. The Supreme Court has asked the government to spell out how much it can pay by March 31, 2027, with the matter listed for further hearing on December 1. The deadline falls just months ahead of the 2027 Assembly elections, giving the Opposition an opportunity to scrutinise not only the government’s proposed payment schedule but also the actual disbursements.

Meanwhile, the employees’ organisation has decided to change its counsel in the Supreme Court. Sukhchain Singh Khaira, convener of the Sanjha Mulazam Morcha, said, “We accept the decision. But our lawyer was not able to defend the case properly. We will replace him and hire another lawyer. The court has also asked the government to submit a liquidation plan by December 1 and indicate how much it can pay us by March 2027.”