Govt Employees Can't Be Denied Annual Increment Merely Because They Retired The Next Day Of Earning It: Supreme Court

Whether a government employee who has earned the annual increment is entitled to the same despite the fact that he retired on the very next day after earning the increment?

The Supreme Court has recently held that government employees cannot be denied the annual increment merely because they are to retire on the very next day of earning the increment.

"Merely because the government servant has retired on the very next day, he cannot be denied the annual increment which he has earned and/or is entitled to for rendering the service with good conduct and efficiency in the preceding year", the court said.

The undisputed facts

In the present case, one day earlier than retirement and on completion of one year of service preceding the date of retirement, all the employees earned one annual increment. However, taking into consideration Regulation 40(1) of the Karnataka Electricity Board Employees Service Regulations, 1997 (hereinafter referred to as the Regulations), which provides that an increment accrues from the day following that on which it is earned, the appellants denied the annual increment on the ground that the day on which the increment accrued the respective employees – original writ petitioners were not in service. 

The writ petition(s) filed by the original writ petitioners claiming the annual increment came to be dismissed by the learned Single Judge. By the impugned judgment and order and following the decision of the Andhra Pradesh High Court in the case of Union of India and Ors. Vs. R. Malakondaiah and ors. reported in 2002(4) ALT 550 (D.B.) and relying upon the decisions of other High Courts, the Division Bench of the Karnataka High Court allowed the appeal and directed that the appellants to grant one annual increment to the respective employees-respondents by observing that the respective employees as such earned the increment for rendering their one-year service prior to their retirement. 

Feeling aggrieved and dissatisfied with the judgment and order passed by the Division Bench of the High Court, the management – of KPTCL has preferred the present appeal. 

Senior Advocate Ahmadi appearing on behalf of the appellants argued that the decision of the Andhra Pradesh High Court in the case of R. Malakondaiah (supra) which has been relied upon by the Division Bench of the High Court while passing the judgment and order has been subsequently overruled by the Full Bench of the Andhra Pradesh High Court in the case of Principal Accountant General, Andhra Pradesh and Anr. Vs. C. Subba Rao reported in 2005 (2) LLN 592. It is further argued by Ahmadi, that there are divergent views of different High Courts on the issue. 

On merits...

The words used in Regulation 40(1) of the Regulations are very clear and unambiguous. It provides that “an increment accrues from the day following that on which it is earned.” A literal interpretation of the provision implies that when the right to get the increment is accrued, the employee must be in service. 

Applying the law at face value in the case at hand, the appellants argued that the right to get the increment accrues in favour of the respective respondents when they were not in service. 

The Counsel for the appellants further argued that the annual increment is in the form of good service and it is an incentive so that the concerned employee may serve effectively and may render good services. 

Counsel appearing on behalf of the respective employees – respondents, relied upon the decision of the Madras High Court in the case of P. Ayyamperumal and the decisions of the Gujarat High Court, the Delhi High Court, the Allahabad High Court, the Madhya Pradesh High Court and the Orissa High Court taking the view that the concerned employees who earned the annual increment for rendering one year service prior to their retirement they cannot be denied the benefit of the annual increment which they actually earned, solely on the ground that they retired on attaining the age of superannuation on the very next day. 

It was submitted that therefore, the Division Bench of the High Court has not committed any error in allowing one annual increment in favour of the respective employees which they actually earned. 

Day of incentive accrual not conclusive

In the context of the facts of the present case, the view of the  Delhi High Court in the case of Gopal Singh Vs. Union of India and Ors is relevant. In that case, the court had held that the annual increment though is attached to the post & becomes payable on the day following which it is earned but the day on which the increment accrues or becomes payable is not conclusive or determinative. 

"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 and it can be said that he has earned the annual increment for rendering the specified period of service with good conduct", the court said.