New Delhi, April 11 -- The Supreme Court on Friday ruled that governments cannot discriminate between serving and retired employees when granting or enhancing inflation-linked benefits, a decision with wide ramifications for pensioners across the country. A bench of justices Manoj Misra and PB Varale held that once a policy decision is taken to grant benefits such as dearness allowance (DA) and dearness relief (DR), fixing different rates for the two groups is arbitrary and unconstitutional. The ruling came while dismissing an appeal by the Kerala government against a 2022 high court judgment that struck down differential treatment for retired employees of Kerala State Road Transport Corporation. Senior counsel V Chitambaresh and Vipin Nair represented the retired employees. As variations in DA and DR rates exist across several states and departments, the judgment opens the door for pensioners nationwide to challenge disparities in inflation-linked benefits. "In our view, when those benefits serve a common purpose and are linked to inflation, and inflationary pressures do not discriminate between a serving employee and a pensioner, fixing different rates of enhancement of dearness allowance and dearness relief have no rational nexus to the object sought to be achieved and is clearly discriminatory as well as arbitrary," the bench declared. The Kerala government had argued that retired and serving employees constitute different classes. The SC rejected this, finding no error in the high court's reasoning that such differentiation lacked a rational basis. The court underscored that pensioners cannot be treated as a separate or inferior class when it comes to benefits designed to offset rising cost of living. The purpose of DA for serving employees and DR for pensioners is identical-to neutralise inflation's impact-and once that objective is common, any variation in rates fails the test of equality under the Constitution, the bench held. Once the state acknowledges inflationary pressures and decides to cushion employees through DA or DR, it cannot arbitrarily extend unequal benefits to similarly placed groups, the bench noted. The judgment acknowledged that financial constraints might justify deferring disbursement or staggering implementation dates....