IMPORTANT POINT
Increments earned for good conduct during service must be included in pension calculations, regardless of retirement timing.

JUDGMENT :

A. MUHAMED MUSTAQUE, J.

1. The question that was considered by the Tribunal was whether the increment that falls due immediately after the date of retirement of Government servant could be reckoned for computing pension and other benefits or not. The Tribunal answered in favour of the applicants. The State has come up with these original petitions.

2. The stand of the State is based on Government Decision No. 1 under Rule 31 of the Kerala Service Rules, which reads thus:

GOVERNMENT DECISION NO. 1

An increment shall be granted from the first day of the month in which it falls due.

This decision shall be deemed to have come into force with effect from 1st April 1974.

3. According to the learned Government Pleader, if the retirement occurs before the first day of the month, that means subsequent to the retirement, increment cannot be reckoned for the purpose of computation of pension and other benefits and that this increment is due only on the first day of the month.

4. The learned Government Pleader also relied on the Division Bench judgment of this Court in Union of India and Another v. Pavithran K. and Another, 2022 ICO 2055 which interprets the Central Civil Services (Pension) Rules, 1972. The judgment holds that the Government servants who retire in the month preceding the date on which the annual increment falls are not entitled to have that increment reckoned for the purpose of pension and gratuity. In fact, this judgment has no relevance now, as the Apex Court, after referring to various judgments of the High Court in Civil Appeal No. 2471 of 2023, declared the law as follows:

“6.5 Now, so far as the submission on behalf of the appellants that as the increment has accrued on the next day on which it is earned and therefore, even in a case where an employee has earned the increment one day prior to his retirement but he is not in service the day on which the increment is accrued is concerned, while considering the aforesaid issue, the object and purpose of grant of annual increment is required to be considered. 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.

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7. In view of the above and for the reasons stated above, the Division Bench of the High Court has rightly directed the appellants to grant one annual increment which the original writ petitioners earned on the last day of their service for rendering their services preceding one year from the date of retirement with good behaviour and efficiently. We are in complete agreement with the view taken by the Division Bench of the High Court. Under the circumstances, the present appeal deserves to be dismissed and is accordingly dismissed. However, in the facts and circumstances of the case, there shall be no order as to costs.”

5. Therefore, the issue is concluded in favour of the Government servant. In the light of the above, we also hold that the judgment of the Division Bench of this Court is not good law in view of the Apex Court judgment. Further,