Case Note & Summary
The present Letters Patent Appeal was filed by the State of Gujarat and its officers (appellants) challenging an oral order dated 10.11.2023 passed by a learned Single Judge in Special Civil Application No.19151 of 2023 and allied matters. The Single Judge had allowed the petitions filed by the respondents (original petitioners), who were retired government employees, directing the State to grant them the benefit of one annual increment. The respondents were government servants who had earned annual increments during their service tenure and retired upon attaining the age of superannuation. The dispute centered on the interpretation of Rule 38 of the Gujarat Civil Services (Pay) Rules, 2002 (GCSR), which governs the entitlement to annual increments. The State argued that since the employees retired on the last day of the month, they were not entitled to the increment that fell due on the first day of the next month, as they were not in service on that date. The respondents contended that the increment was earned by service rendered during the preceding year and should be granted regardless of the retirement date. The court analyzed the language of Rule 38 and previous judicial precedents, including decisions of the Supreme Court, which held that an increment is earned by service rendered during the year and not by being in service on the date of increment. The court reasoned that denying the increment would deprive the employees of the benefit of their full year of service and would also reduce their pensionary benefits, as the increment forms part of the pay for pension calculation. The court dismissed the appeal, affirming the Single Judge's order, and directed the State to grant the benefit of one increment to the concerned employees and recalculate their pension and other retiral benefits accordingly. The court also disposed of the connected civil application for stay.
Headnote
A) Service Law - Annual Increment - Entitlement on Retirement - Rule 38 of Gujarat Civil Services (Pay) Rules, 2002 - The issue was whether employees retiring on the last day of the month are entitled to the annual increment falling due on the first day of the next month. The court held that the increment is earned by service rendered during the year, and retirement on the last day does not disentitle the employee to the increment for the full year of service. The court relied on the principle that the increment is not a reward for future service but a recognition of past service. (Paras 3-10) B) Service Law - Pensionary Benefits - Increment as Part of Pension - Rule 38 of Gujarat Civil Services (Pay) Rules, 2002 - The court held that the annual increment, once earned, becomes part of the employee's pay and consequently affects pensionary benefits. Denying the increment would result in a lower pension, which is unjust. The court directed the State to grant the benefit of one increment to the concerned employees and recalculate pension accordingly. (Paras 11-15)
Issue of Consideration
Whether a government employee who retires on the last day of the month is entitled to the annual increment that falls due on the next day, i.e., the first day of the next month, for the service rendered in the preceding year.
Final Decision
The appeal is dismissed. The order of the learned Single Judge dated 10.11.2023 is confirmed. The appellants are directed to grant the benefit of one increment to the concerned employees and recalculate their pension and other retiral benefits accordingly. Connected civil application for stay is disposed of.
Law Points
- Annual increment is earned by service rendered during the year
- not by date of retirement
- Rule 38 of Gujarat Civil Services (Pay) Rules
- 2002
- entitlement to increment for full year of service
- retirement on last day of month does not disentitle increment
