Retired employees completing one year service till 30th June entitled to notional increment despite retiring next day; denial arbitrary. Granted prospectively from 01.07.2023 without arrears per Supreme Court interim order.

ORDER (Oral)

Per: Justice M.G. Sewlikar, Member (J)

We have heard learned counsel for the appli- cants and learned counsel for the respondents.

2. Learned counsel for the applicants submits that the applicants have retired on 30^th June of year 2013 and 2016 respectively. They are entitled to notional increment in terms of the judgement of the Supreme Court in the case of The Director (Admn. And HR) KPTCL & Ors. Vs. C.P. Mundinamani & Ors. in Civil Appeal No.2471 of 2023 decided on 11^th April, 2023.

3. In the case of The Director (Admn. And HR) KPTCL & Ors. Vs. C.P. Mundinamani (supra), Supreme Court has directed the Central Government to grant notional increment to all those employees who have put in service of one year from 1^st July of the relevant year to 30^th June of the next year. The Supreme Court has made the following observations:

“6. The short question which is posed for the consideration of this Court is whether an employee who has earned the annual increment is entitled to the same despite the fact that he has retired on the very next day of earning the increment?

6.1. In the present case, the relevant provision is Regulation 40(1) of the Regulations which reads as under: -

“Drawals and postponements of increments

40(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.”

6.2. It is the case on behalf of the appellants that the word used in Regulation 40(1) is that an increment accrues from the day following that on which it is earned and in the present case the increment accrued on the day when they retired and therefore, on that day they were not in service and therefore, not entitled to the annual increment which they might have earned one day earlier. It is also the case on behalf of the appellants that as the increment is in the form of incentive and therefore, when the employees are not in service there is no question of granting them any annual increment which as such is in the form of incentive.

6.3. At this stage, it is required to be noted that there are divergent views of various High Courts on the issue involved. The Full Bench of the Andhra Pradesh High Court, the Himachal Pradesh High Court and the Kerala High Court have taken a contrary view and have taken the view canvassed on behalf of the appellants. On the other hand, the Madras High Court in the case of P. Ayyamperumal (supra); the Delhi high Court in the case of Gopal Singh Vs. Union of India and Ors. (Writ Petition (C) No. 10509/2019 decided on 23.01.2020); the Allahabad High Court in the case of Nand Vijay Singh and Ors. Vs. Union of India and Ors. (Writ A No. 13299/2020 decided on 29.06.2021); the Madhya Pradesh High Court in the case of Yogendra Singh Bhadauria and Ors. Vs. State of Madhya Pradesh; the Orissa High Court in the case of AFR Arun Kumar Biswal Vs. State of Odisha and Anr. (Writ Petition No. 17715/2020 decided on 30.07.2021); and the Gujarat High Court in the case of State of Gujarat Vs. Takhatsinh Udesinh Songara (Letters Patent Appeal No. 868/2021) have taken a divergent view than the view taken by the Full Bench of the Andhra Pradesh High Court and have taken the view that once an employee has earned the increment on completing one year