The Kerala High Court has observed that a government servant, who retired on the last working day of the preceding month and whose annual increment falls due in the succeeding month, is entitled to such increment.

The Court allowed the writ petition in light of a previous judgment titled Vijayan P.R v. Union Of India OP (CAT) NO. 65 OF 2023 in a batch of petitions where the court answered the issue in favour of the government servants.

The petitioners even in the cited judgment were retired from their respective establishments on attaining the age of superannuation. To surmise, on the date of their retirement, they earned an annual increment, which, however, was due and payable only on the very next day.

Accordingly, while referring to the judgement, a bench of Justice A. Muhamed Mustaque and Justice Shoba Annamma Eapen in the present matter noted, “Therefore, in the light of the above judgment, the original petition stands allowed and the impugned order is set aside. The petitioner be entitled to similar benefits as applicable in the light of the judgment as above”.

Advocate Vivek A.V. appeared for the petitioner and Advocate Achuth Krishnan R appeared for the respondent.

Pertinently, the issue herein had received different interpretation and answers by various High Courts, however, the issue was finally settled by the Apex Court in Director (Admn. and HR) KPTCL and Others v. C.P. Mundinamani and Others 2023 SCC OnLine SC 401, where it recognised the claim of the retired employees, on an interpretation of the relevant statutory rule and accepting the views of the High Courts of Allahabad, Gujarat, Madhya Pradesh, Orissa and Madras, while disapproving the judgments by a Full Bench of the Andhra Pradesh High Court, a Division Bench of the Kerala High Court and by the Himachal Pradesh High Court which took a contrary view.

The Central Administrative Tribunal, Ernakulam Bench in the referred matter had dismissed the original applications by the common impugned order. The Tribunal relying on several judgments by various High Courts had considered the relevant Rule, which contemplates grant of annual increment on first July or January, as the case may be, to arrive at a conclusion that employees concerned must continue as on the said date to claim the benefit of the annual increment, wherefore, an employee, who stood retired on the previous day, is not entitled for the same.

However, the petitioners had relied on the judgment of the Supreme Court in Director (Admn. and HR) KPTCL’s case, where it had recognised the claim of the retired employees, on an interpretation of the relevant statutory rule.

The relevant statutory rule was Regulation No.40(1) of the Karnataka Electricity Board Employees Service Regulations, 1997, on ‘Drawals and postponements of increments’, which states-1) An increment accrues from the day following that on which it is earned. An increment that has accrued shall ordinarily be drawn as a matter of course unless it is withheld. An increment may be withheld from an employee by the competent authority, if his conduct has not been good, or his work has not been satisfactory. In ordering the withholding of an increment, the withholding authority shall state the period for which it is withheld, and whether the postponement shall have the effect of postponing future increments.

The argument that was raised against the plea was that the annual increment is in the form of a good service which is an incentive for the concerned employee to serve effectively, and to render good service, which facility cannot be contemplated for an employee who is not in service.

The Apex Court, however denying to accept the same concluded, “…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 and it can be said that he has earned the annual increment for rendering the specified period of service with good conduct. Therefore, as such, he 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".

Thus, it was specifically found that denying the benefit which has been earned by an employee for reason of not being in service on the date on which it accrues would lead to arbitrariness and unreasonableness.

The High Court had then eventually directed the respondents to grant one notional increment to the petitioners, and also, to revise their retiral benefits after including such annual increment.

Cause Title: K.N. Soman v. Union Of India [Neutral Citation: 2023/KER/70426]

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