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Legal Case Shots

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Legal Case Shots is a searchable database of Supreme Court of India judgments, each broken down into the case type, the court's key holding, and a practical lesson learnt, with the full judgment available as a PDF for citation or deeper reading.

Service & Administrative LawSupreme Court of India

State of Sikkim v. Dr. Mool Raj Kotwal

Civil Appeal · 2025 INSC 559Decided 23 Apr 2025
C.A. No.-005464-005465-2025
Justice J.K. Maheshwari · Justice Rajesh Bindal

Background

Dr. Mool Raj Kotwal retired from Sikkim government service in 2005 after reaching the age of superannuation and was paid leave encashment for 300 days of unutilized leave, the maximum allowed. He was then re-employed on the same post for over 14 years and, on finally being relieved in 2019, was again sanctioned cash payment for 300 days of unutilized leave earned during the re-employment period. The State later realised this "double" encashment was against its Leave Rules and cancelled the second payment, prompting Dr. Kotwal to challenge the cancellation in the Sikkim High Court, where he won at both the Single Judge and Division Bench stages.

Decision Breakdown

The Supreme Court held that Rule 36 of the Sikkim Government Services (Leave) Rules, 1982 permits leave encashment (maximum 300 days) only on retirement from regular service, while Rule 32 (which treats a re-employed person as a fresh entrant for leave purposes) does not revive a fresh 300-day encashment entitlement for someone who already received it once on retirement. The two rules operate in separate spheres and cannot be read together to allow a second payout. The Court also rejected the argument that cancelling the benefit without a hearing violated natural justice, since the employee could show no valid entitlement to the amount in any case. The High Court's orders were set aside and the State's cancellation order was upheld.

Lesson Learnt

A government employee who has already received the maximum permissible leave encashment on retirement cannot claim it a second time merely because further leave accumulates during a later period of re-employment: retirement benefit rules generally cap such payouts once per employee's regular service.

State of Sikkim v. Dr. Mool Raj Kotwal – Legal Case Shots | LegalAware