UNION OF INDIA & ANOTHER vs DHRANGADHRA CHEMICAL WORKS & ANR.

The Supreme Court interpreted Section 2(b) of the Additional Emoluments (Compulsory Deposit) Act, 1974, clarifying that the rise in the cost of living index does not need to occur after the appointed day for the additional dearness allowance to be applicable. The Court held that the nexus for determining additional dearness allowance is with the payment made after the appointed day, not the timing of the cost of living index rise. The High Court's ruling was overturned, affirming that automatic payments linked to the cost of living index are deemed additional dearness allowance regardless of when the index rises.