State of Punjab v. Tarlok Chand
Background
Work-charged employees of the Ranjit Sagar Dam project received numerous special increments before their services were regularised. When Punjab later revised their pay, it sought to exclude those increments as improperly granted. The High Court's Division Bench protected the increments on the ground that the Chief Engineer had authority to grant them, and the State appealed.
Decision Breakdown
The Supreme Court held that having authority to grant increments did not justify the excessive and selectively awarded increments in these cases. As a case-specific settlement, it directed that pay include annual increments for actual service before regularisation and no more than four of the special increments already received. Employees who had received fewer than four special increments could not claim additional ones under this direction. The settled entitlement to increments associated with retrenchment remained protected, and pay and pension were to be refixed accordingly. The Court modified the High Court's order but prohibited recovery of amounts already paid on any account.
Lesson Learnt
A public employer's power to grant special increments must be exercised fairly and for defensible reasons. The four-increment arrangement in this case was confined to these employees and did not create a general entitlement for other workers.