Punjab DA Contempt Case: Punjab Argues 6% Interest Means No Contempt; HC Rejects Basis 

In the Punjab DA Contempt Case, the State counsel told the Punjab and Haryana High Court that since the Division Bench order itself provides for 6% interest on delayed DA, missing the deadline is not wilful disobedience. Justice Harsh Bunger found “no substance” in the argument.

North Desk Correspondent

Chandigarh, November 3

Punjab DA Contempt Case: Punjab government’s defence in the Dearness Allowance (DA) contempt case on Tuesday rested on a simple idea: if the court’s own order says unpaid DA will carry 6% interest, then paying late cannot amount to contempt.

The Punjab and Haryana High Court rejected that argument on Tuesday. In an interim order, Justice Harsh Bunger held that the interest clause is compensation for employees and pensioners, not an alternative to paying on time.

Meanwhile, the costs of Rs 1 lakh as imposed by the court has been deposited. The Punjab and Haryana High Court had imposed costs of ₹1 lakh on Punjab Chief Secretary K.A.P. Sinha for the state administration’s continuous non-compliance and failure to file a formal response regarding pending Dearness Allowance (DA) and Dearness Relief (DR) arrears. In the court’s words as noted in that order, this was “for failure to file the status/compliance report despite grant of sufficient time.”

He issued a show-cause notice to Chief Secretary K.A.P. Sinha, saying the conduct of the State and the Punjab State Power Corporation Limited (PSPCL) “prima facie reflects wilful disobedience”. This is a prima facie view at the notice stage. No finding of contempt has been recorded.

THE ARGUMENT AND THE ANSWER, SIDE BY SIDE

Punjab DA Contempt Case: What the State argued (through its senior counsel)

• The Division Bench order of August 3, 2026 itself says that if DA is not paid within the stipulated period, the unpaid amount will carry simple interest at 6% a year until actual payment.
• Once the order provides the consequence of non-payment, the State argued, merely failing to release the money in time would not be wilful disobedience and would not warrant contempt proceedings.

What the High Court held

• The interest clause “cannot be construed” as giving the State or PSPCL liberty to defer the substantive directions.
• It was evidently included to protect the financial interests of employees and pensioners, so they are compensated for the period their dues remained unpaid.
• It is a compensatory measure in their favour, “not an alternative mode of compliance” for the State.
• The obligation to release the money within the stipulated period is independent of, and in addition to, the liability to pay interest.
• Accepting the argument would let the State and PSPCL withhold the money indefinitely, simply by agreeing to bear 6% interest. That would defeat the object of the order and make its time limit redundant.
• The court rejected the contention.

IN PLAIN WORDS (the court’s reasoning)

• The deadline was the order. The interest was a cushion for the employees if the order was not followed.
• A penalty clause for delay does not turn into a licence to delay.
• If it did, any deadline in a court order could be extended at will by agreeing to pay interest.

THE STATE’S OWN ADMISSIONS IN THE STATUS REPORT

Punjab DA Contempt Case: The order records what Chief Secretary Sinha said in his status report dated October 30, 2026:

• The State is bound by the orders of the High Court and the Supreme Court.
• The August 3 orders bind the State and there is no stay on their operation.
• Its liability to pay DA to employees and pensioners, along with 6% interest, “subsists”.
• The State is availing its remedy in the Supreme Court and taking steps for early listing of its Special Leave Petition (SLP).

The court noted that despite this acknowledgement, and with no interim protection from the Supreme Court, the State and PSPCL have not complied.

Punjab DA Contempt Case: HOW BIG IS THE MONEY

• The status report puts the total pending liability of the claims at about Rs 32,418 crore.
• Paying DA at Central Government rates would add a recurring liability of about Rs 4,712 crore a year.

WHAT THE AUGUST 3 ORDER SAID

The Division Bench dismissed the State’s intra-court appeals and revised only the timelines set by the Single Judge, whose June 30 deadline had expired during the appeals. It directed:

• All pending DA/DR instalments to be released to employees and pensioners
• At the same rates as paid to All India Services (IAS/IPS/IFS) officers serving in Punjab, on the Central Government pattern
• Within a fortnight, which the contempt order records as up to August 18, 2026
• Simple interest at 6% a year on unpaid amounts from the date the deadline expires until actual payment
• A compliance affidavit by the Chief Secretary by August 31, 2026
• No “unproductive expenditures”, such as large-scale print or social media advertising campaigns, till dues are cleared

HOW WE GOT HERE: THE TIMELINE

• April 8, 2026: the writ court issues its directions on the DA claim, with a June 30 deadline.
• August 3: the Division Bench dismisses the appeals and sets the fortnight deadline.
• August 17: a State Memorandum says no such orders may be implemented without prior concurrence of the Finance Department or unless generalised directions are issued, whichever is earlier.
• August 18: the payment deadline. August 31: the compliance affidavit deadline, which the State conceded was not met.
• August 21: the contempt petition is first listed. The State’s counsel gets time to file a status or compliance report.
• September 1: the State and PSPCL file an SLP in the Supreme Court. Objections follow, and it is re-filed on October 1. Defects are again notified on October 5. Even now it has not been listed for hearing.
• October 27: no report is filed, and the State seeks more time, which the court calls “totally unjustified”. The court directs the Chief Secretary to file a personal affidavit and pay costs of Rs 1 lakh.
• October 30: the Chief Secretary files a status report. The costs are paid.
• November 3: the Chief Secretary appears in person and the show-cause notice is issued.

THE SECOND ARGUMENT: “WE HAVE APPROACHED THE SUPREME COURT”

• The State and PSPCL asked for more time to pursue their SLP and get it listed. They said the Registry’s objections have been removed but no hearing date has been given.
• The petitioners said that filing or pendency of an SLP, with no stay, cannot justify continued non-compliance. They relied on the Supreme Court’s 2026 judgment in Israr Ahmad Khan v. Amarnath Prasad, which criticised belated appeals filed after contempt petitions and said High Courts should deal with such litigants, more so when they are the State, with “an iron hand”.
• The High Court held those observations “clearly attracted” to this case.

Meanwhile, the Chief Secretary has accepted notice and sought ten days. His reply is due by November 13.

The next hearing is on November 17 at 12 noon, and he has to be physically present. North Desk will report on that hearing.

ALSO: Punjab DA Case: HC Slaps ₹1 Lakh Cost on Chief Secretary, Demands Immediate Compliance Plan

Punjab High Court Rejects its ‘No Money’ Plea, Orders Full DA Payment by June 30

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