Employees Entitled to Annual Increment Despite Retirement On Very Next Day - SC

07 May 2024 8:19 AM

By: Admin

In a significant ruling, the Supreme Court of India has held that employees who have earned their annual increment are entitled to receive it, even if they retire on the very next day after earning the increment. The judgment came in a case where the Karnataka Power Transmission Corporation Limited (KPTCL) had denied the annual increment to employees who retired on the day following the increment.

The dispute centered around Regulation 40(1) of the Karnataka Electricity Board Employees Service Regulations, 1997, which states that an increment accrues from the day following its earning. The KPTCL had argued that since the employees were not in service on the day when the increment accrued, they were not entitled to it.

However, the Supreme Court rejected this argument, emphasizing that the purpose of the annual increment is to reward employees for their good conduct and efficient service rendered in the preceding year. The Court noted that the increment is earned based on the completion of one year of service with good conduct and efficiency, regardless of the employee's retirement the next day.

The Court further stated that denying employees their legitimate annual increment solely on the ground of retirement would be arbitrary and unreasonable. It held that a narrow interpretation of the regulation leading to such denial should be avoided.

Date of Judgment: April 11, 2023

The Director (Admn. and HR) VS C.P. Mundinamani & Ors.