Employees Retiring a Day Before Increment Date Entitled to Notional Increment for Pension Benefits: Central Administrative Tribunal

CAT Grants Pension Relief to Employees Retiring a Day Before Annual Increment

Jabalpur: The Central Administrative Tribunal (CAT), Jabalpur Bench, has delivered a significant ruling in favor of numerous government retirees, affirming their right to receive a notional annual increment for the purpose of pension calculation, even if they retired just one day before the increment was due. The decision, covering a large batch of applications, provides clarity and relief to employees who retired on June 30th or December 31st.

The bench, comprising Judicial Member Hon’ble Mr. Justice Akhil Kumar Srivastava and Administrative Member Hon’ble Mrs. Mallika Arya , directed the Union of India and its various departments to grant the benefit to the eligible applicants.

The Core Legal Question

The central issue before the tribunal was whether a government employee who completes a full year of service but retires on the last day of June or December is entitled to the annual increment that is officially granted on the following day (July 1st or January 1st).

The applicants, a group of retired employees from diverse government bodies including the Comptroller and Auditor General's office, Ministry of Defence, and Indian Railways, contended that they had earned the increment by rendering a full year of satisfactory service. They argued that denying them this benefit solely because they were not on the payroll on the date of the increment was unjust and arbitrary.

Reliance on Supreme Court Precedents

The applicants' counsels heavily relied on a landmark judgment by the Supreme Court in Director (Admn, and HR) KPTCK and Ors. vs C.P. Mundinamani & Ors. (Civil Appeal No. 2471 of 2023). In that case, the Apex Court held that an employee is entitled to the annual increment earned on the last day of service, having completed a full year with good conduct.

The tribunal's order noted:

"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 the service... We are in complete agreement with the view taken by the Division Bench of the High Court." - Supreme Court in KPTCL vs C.P. Mundinamani

The CAT also took cognizance of subsequent legal developments, including the dismissal of a Special Leave Petition filed by the Union of India in a similar case, Union of India vs. M. Siddaraj , and the subsequent dismissal of a Miscellaneous Application on February 20, 2025, which removed any remaining hurdles for implementing the ruling.

Government's Stance and DOPT's Instructions

The judgment references an Office Memorandum (OM) issued by the Department of Personnel and Training (DOPT) on October 14, 2024. This OM was issued in compliance with interim orders from the Supreme Court, advising government departments to allow the notional increment for employees retiring on June 30th/December 31st for the sole purpose of calculating their pension.

The Tribunal's Final Verdict and Directions

Finding that the present cases were "squarely covered" by the law laid down by the Supreme Court, the CAT disposed of the batch of applications with clear directives.

The tribunal ordered the government departments to:

• Consider the applicants' cases and grant them the benefit of one notional annual increment that would have been due on July 1st or January 1st following their retirement.
• Complete this process within 90 days of receiving the order.
• Re-fix the applicants' pensions based on the revised last pay drawn after including the notional increment.

Significantly, the tribunal specified the timeline for the payment of enhanced pension, stating, "The enhanced pension shall be payable from 01.05.2023 and no enhanced pension for period prior to 30.04.2023 shall be paid." This condition aligns with the Supreme Court's interim directions on the prospective application of the judgment for third parties to prevent a flood of litigation for past arrears.

This landmark decision provides substantial financial relief to a large number of retirees and sets a clear precedent for similar cases within the tribunal's jurisdiction.