Employees Retiring on June 30/Dec 31 Entitled to Notional Increment for Pension Calculation: Central Administrative Tribunal - 2025-07-05

CAT Upholds Right to Notional Increment for Pensioners Retiring a Day Before Due Date

Jabalpur: In a significant ruling providing relief to numerous Central Government pensioners, the Central Administrative Tribunal (CAT), Jabalpur Bench, has affirmed that employees who retire on June 30 or December 31 are entitled to the benefit of the annual increment due on the following day (July 1 or January 1) for the purpose of pension calculation.

The decision, delivered by Judicial Member Hon’ble Mr. Justice Akhil Kumar Srivastava , disposes of a large batch of applications, including the lead case of Shantaram & Ors. vs. Defence (O.A./699/2024) . The Tribunal directed the government to grant a notional increment to all eligible applicants, re-fix their pensions accordingly, and pay the enhanced amount from May 1, 2023.

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Background of the Case

The applicants, a group of retired employees from various Central Government departments such as Defence, Posts, and Railways , approached the Tribunal after being denied an annual increment. The core of their grievance was that despite completing a full year of satisfactory service, they were deemed ineligible for the increment simply because they superannuated one day before it became payable.

The central legal question before the Tribunal was whether an employee who has earned an increment by rendering a full year of service is entitled to its benefit for pensionary calculations, even if they are not in service on the date the increment is formally granted.

Arguments and Legal Precedents

The counsel for the applicants heavily relied on the landmark judgment of the Supreme Court in Director (Admn, and HR) KPTCL vs C.P. Mundinamani & Ors. (2023) . In that case, the Apex Court held that an increment is a reward for a year of unblemished service and that an employee who completes this service earns the benefit. Denying it on the technical ground of retirement a day prior was deemed arbitrary.

The judgment noted that the Union of India had attempted to challenge this principle by filing a review petition against the Mundinamani decision and a miscellaneous application for clarification in a related case, Union of India vs. M. Siddaraj .

However, the Tribunal highlighted the following key developments: - The Supreme Court dismissed the Union of India's review petition on December 18, 2024. - In the Siddaraj case, the Supreme Court issued an interim order on September 6, 2024, clarifying that the enhanced pension would be payable prospectively from May 1, 2023, without arrears for the prior period. - The Department of Personnel and Training (DOPT) issued an Office Memorandum on October 14, 2024, directing all departments to implement the Supreme Court's orders. - The miscellaneous application in the Siddaraj case was finally dismissed on February 20, 2025, removing any remaining ambiguity.

Tribunal's Observations and Decision

The CAT observed that with the dismissal of the review petition and miscellaneous application by the Supreme Court, the legal position is now settled.

In its final order, the Tribunal stated:

"We are of the considered opinion, now there is no impediment to grant relief prayed subject to verification of factual aspects from the service record and eligibility."

The judgment emphasized that the case was "squarely covered" by the Supreme Court's rulings.

Final Directions

The Central Administrative Tribunal issued the following conclusive directions:

Grant of Notional Increment: The respondent departments are directed to consider the applicants' cases and grant one annual notional increment, which was due on either July 1 or January 1, following their retirement on June 30 or December 31, respectively.

Verification and Timeline: The process of verification and granting the increment must be completed within 90 days from the receipt of the order.

Pension Re-fixation: Following the grant of the notional increment, the applicants' pensions must be re-fixed.

Prospective Payment: In line with the Supreme Court's order, the enhanced pension shall be payable from May 1, 2023 , and no arrears for the period prior to April 30, 2023, will be paid.

This ruling solidifies the rights of government employees who retire on the eve of their increment date, ensuring that their full year of service is recognized in their final pensionary benefits.