Landmark Supreme Court Ruling: Employees entitled to Annual Increment even if earned on the eve of retirement! [Read Judgment]

NEW DELHI: The Supreme Court on Tuesday has held that a government employee cannot be denied annual increment just because he has earned it a day before his retirement.

"A government employee is entitled to the benefit of the annual increment on the eventuality of having served for a specified period (one year) with good conduct efficiently. Merely because, the government servant has retired on the very next day, how can he be denied the annual increment which he has earned and/or is entitled to for rendering the service with good conduct and efficiently in the preceding one year," a bench of Justices M R Shah and C T Ravikumar said.

The top court dismissed an appeal filed by the KPTCL (Karnataka Power Transmission Corporation Ltd) against the Karnataka High Court's division bench decision directing the appellants to grant one annual increment to a group of employees -- C P Mundinamani and others -- which they had earned one day prior to their retirement on attaining the age of superannuation.

In its arguments, the KPTCL contended when the right to get the increment is accrued, the employee must be in service.

In the present case when the right to get the increment accrued in favour of the employees, they were not in service but on their superannuation retired from the services. Therefore, they would not be entitled to the annual increment which might have been earned one day earlier i.e. on the last date of service, it said.

The bench, however, said, "A government servant is granted the annual increment on the basis of his good conduct while rendering one year service. Increments are given annually to officers with good conduct unless such increments are withheld as a measure of punishment or linked with efficiency. Therefore, the increment is earned for rendering service with good conduct in a year/specified period."

"Therefore, the moment a government servant has rendered service for a specified period with good conduct, in a time scale, he is entitled to the annual increment," the bench added.

The court also said any other interpretation of the regulations would be arbitrary and denying the annual increment would be punishing a person for no fault of him.

"The entitlement to receive increment therefore crystallises when the government servant completes requisite length of service with good conduct and becomes payable on the succeeding day," the bench said, adding the word "accrue" should be understood liberally here.

The court noted that similar view has also been expressed by different High Courts, namely, the Gujarat, the Madhya Pradesh, Orissa and the Madras. It did not accept the decision by the full bench of Andhra Pradesh in this regard.

"If the interpretation as suggested on behalf of the appellants and the view taken by the Full Bench of the Andhra Pradesh High Court is accepted, in that case it would tantamount to denying a government servant the annual increment which he has earned for the services he has rendered over a year subject to his good behaviour," the bench said.

Senior advocate Huzefa Ahmadi has appeared on behalf of the appellants and advocate Mallikarjun S Mylar, for the respective employees.

[Read Judgment]