Dearness allowance effective after retirement cannot be included in calculating gratuity or leave encashment.

The applicant, a retired Senior Audit Officer, was born on 1 January 1948 and superannuated on 31 December 2007 (afternoon), one day before attaining 60 years, pursuant to the applicable retirement rules.

His Death-cum-Retirement Gratuity (DCRG), leave encashment and related retiral benefits were calculated by applying Dearness Allowance (DA) at 9%, rather than the enhanced rate of 12% that became effective from 1 January 2008.

The applicant claimed that the enhanced DA should be included in the calculation of his retiral benefits and relied upon decisions including C. Subbarao and an order of the CAT, Ahmedabad Bench.

His earlier representation was rejected, and after an earlier round of litigation in O.A. No. 986/2018, the respondents again rejected his claim by order dated 10 January 2019, leading to the present Original Application.

1. Whether the applicant, who retired on 31 December 2007, was entitled to have DA at 12%, effective from 1 January 2008, included in the calculation of his DCRG, leave encashment and other retiral benefits?

2. Whether the applicant could claim the enhanced DA applicable from 1 January 2008 despite having ceased to be in Government service on 31 December 2007?

The Tribunal applied Fundamental Rule 56(a), under which a Government servant whose date of birth is the first day of a month retires in the afternoon of the last day of the preceding month on attaining 60 years.

Rule 5(2) of the CCS (Pension) Rules, 1972 provides that the day of retirement is treated as the employee’s last working day.

Rule 83 further establishes that a Government servant ceases to be borne on the establishment upon retirement.

The Tribunal noted the respondents’ reliance on the principle stated in S. Subba Rao/C. Subbarao that an employee retiring on the last working day is not entitled to an increment becoming due on the following day.

Applying FR 56(a), the Tribunal held that, because the applicant’s date of birth was 1 January 1948, he validly retired in the afternoon of 31 December 2007.

Under Rule 5(2), 31 December 2007 was his last working day, and under Rule 83 he was no longer borne on the establishment on 1 January 2008.

Consequently, the enhanced DA of 12%, which became effective only from 1 January 2008, could not be treated as an emolument existing on the date of retirement for recalculating DCRG or leave encashment.

The Tribunal further held that the applicant could not claim pay and allowances for 1 January 2008; any enhanced benefit applicable thereafter would operate as dearness relief on pension, not as DA forming part of his pre-retirement emoluments.

The respondents’ rejection order contained adequate justification, and no ground for interference was made out.

The Original Application was dismissed on merits, with no order as to costs.