In C.A. No. 2471 of 2023-SC- Increment crystallises when Govt servant completes requisite length of service & same becomes payable on succeeding day:SC upholds order granting annual increment to KPTCL employees for rendering their one-year service prior to retirement
Justices M.R. Shah & C.T. Ravikumar [11-04-2023]

Read Judgment: The Director (Admn. and HR) (s) KPTCL & Ors v. C.P. Mundinamani & Ors 

Tulip Kanth

New Delhi, April 17, 2023: While dismissing an Appeal against an order granting one annual increment to the KPTCL employees(writ petitioners) which they had earned on the last day of their service for rendering their services preceding one year from the date of retirement with good behaviour, the Supreme Court has opined that increments are given annually to officers with good conduct unless such increments are withheld as a measure of punishment or linked with efficiency. 

“The entitlement to receive increment therefore crystallises when the government servant completes requisite length of service with good conduct and becomes payable on the succeeding day”, the Division Bench of Justice M.R. Shah and Justice C.T. Ravikumar asserted.

The facts of this case were such that one day earlier than the retirement and on completion of one year service preceding the date of retirement all the employees earned one annual increment. However, taking into consideration Regulation 40(1) of the Karnataka Electricity Board Employees Service Regulations, 1997 which provides that an increment accrues from the day following that on which it is earned, the appellants denied the annual increment on the ground that the day on which the increment accrued the respective employees – original writ petitioners were not in service. 

The writ petitions filed by the original writ petitioners claiming the annual increment came to be dismissed by the Single Judge but the Division Bench of the Karnataka High Court allowed the appeal and directed the appellants to grant one annual increment to the respective employees-respondents by observing that the respective employees as such earned the increment for rendering their one-year service prior to their retirement.

Hence, the management – KPTCL preferred the appeal before the Apex Court challenging this Order.

The Bench discarded the contention of the appellants that the annual increment is in the form of incentive and to encourage an employee to perform well and therefore, once he is not in service, there is no question of grant of annual increment is concerned.

Noting that increment is earned on one year past service rendered in a time scale, the Bench said, “In a given case, it may happen that the employee earns the increment three days before his date of superannuation and therefore, even according to the Regulation 40(1) increment is accrued on the next day in that case also such an employee would not have one year service thereafter”.

Clarifying that the increment is earned for rendering service with good conduct in a year/specified period, the Bench further added, “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.”

The Bench was of the opinion that to interpret Regulation 40(1) in the manner in which the appellants had understood it would lead to arbitrariness and denying a government servant the benefit of annual increment which he has already earned while rendering specified period of service with good conduct and efficiently in the last preceding year. It would be punishing a person for no fault of him. 

The Bench concluded this matter by completely agreeing with the view taken by the High Courts in P. Ayyamperumal Vs. The Registrar and Ors. &  Nand Vijay Singh vs. UOI. However, the Bench did not approve the contrary view taken by the High Courts in  Principal Accountant-General, Andhra Pradesh and Anr. Vs. C. Subba Rao, Union of India Vs. Pavithran (O.P.(CAT) No. 111/2020) and Hari Prakash Vs. State of Himachal Pradesh & Ors. 

Dismissing the Appeal, the Bench held, “...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.”