An annual increment earned through preceding service cannot be denied because retirement precedes its due date.

The petitioner, Rajesh Kumar Sharma, a retired Block Extension and Training Officer, was born on 1 July 1954 and attained the age of superannuation on 1 July 2016.

The respondents treated him as having retired from service on 30 June 2016. His annual increment became due on 1 July 2016, after he had completed the preceding year of service with good conduct and efficiency, but the increment was not granted because he was no longer considered to be in service on the date it fell due.

The petitioner filed the writ petition seeking grant of the increment, consequential revision of pension and retiral dues, and interest at 18% per annum from 1 July 2016.

Whether a government servant who completes the requisite period of service with good conduct and efficiency, but retires on the day immediately preceding the date on which the annual increment becomes payable, is entitled to that increment?

Whether the petitioner was entitled to consequential re-fixation of pension and retiral dues, along with interest on the consequential monetary benefits?

The Court applied the principle laid down by the Supreme Court in Director (Administration and Human Resources), KPTCL v. C.P. Mundinamani, (2023) 14 SCC 411, that an annual increment is earned upon completion of the specified period of service with good conduct and efficiency, and cannot be denied merely because the employee retires on the day preceding the date on which the increment becomes payable.

The entitlement crystallises upon completion of the requisite service and the increment becomes payable on the succeeding day; a contrary interpretation would be arbitrary and unreasonable.

The Court also followed the Supreme Court’s direction in C.P. Mundinamani concerning grant of the increment, while noting that no interest had been awarded on the consequential monetary benefits in that case.

The petitioner had completed the preceding year of service before his retirement and the annual increment was due on 1 July 2016.

Applying C.P. Mundinamani, the Court held that the increment was earned through the petitioner’s service during the preceding year and could not be denied solely because his retirement was recorded as occurring on 30 June 2016, one day before the increment became payable.

Denial of the increment in these circumstances would unjustly deprive the petitioner of a benefit earned through satisfactory service and would be inconsistent with the Supreme Court’s interpretation of the concept of accrual.

Since the increment affected the computation of pension and retiral benefits, consequential re-fixation was also warranted. However, the Court declined to award interest because the Supreme Court had not granted interest on the consequential monetary benefits in C.P. Mundinamani.

The respondents were directed to grant the petitioner the annual increment due on 1 July 2016 and to consequentially re-fix his pension and other retiral dues.

The claim for interest on the consequential monetary benefits was rejected.

The petition accordingly stood allowed to that extent.