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The Director (Admn. and HR) KPTCL & Ors. vs. C.P. Mundinamani & Ors.

Civil Appeal · 2023 INSC 352Decided 11 Apr 2023
Civil Appeal No. 2471 of 2023
M.R. Shah · C.T. Ravikumar

Background

Employees of the Karnataka Power Transmission Corporation Limited (KPTCL) completed one full year of service and thereby "earned" their annual increment on the last day before they retired, but under Regulation 40(1) of the Karnataka Electricity Board Employees Service Regulations, 1997, an increment only "accrues" (becomes payable) on the day following the day it is earned, which, for these employees, fell after their retirement. KPTCL refused to pay the increment on the ground that the employees were no longer in service on the day it technically accrued. The employees won before a Single Judge's rejection was reversed by the Karnataka High Court's Division Bench, prompting KPTCL to appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that an increment is earned through a full year of satisfactory service and good conduct, and the "day following" language in Regulation 40(1) merely fixes when it becomes payable. It does not extinguish an already-earned entitlement. Denying the increment solely because the employee retired the very next day would be arbitrary and would violate Article 14, since the increment is not a discretionary reward but a right that crystallises on completing the qualifying year. The Court agreed with the view taken by the Delhi, Allahabad, Madras, Gujarat, Madhya Pradesh and Orissa High Courts (and disagreed with the contrary view of the Andhra Pradesh Full Bench, Kerala and Himachal Pradesh High Courts), and dismissed KPTCL's appeal, upholding the Karnataka High Court's direction to pay the increment, with no order as to costs.

Lesson Learnt

An employee who has completed a full year of qualifying service with good conduct has earned that year's increment even if retirement falls exactly on the day it would technically become payable; a technical reading of a pay regulation cannot be used to deny a benefit already earned through actual service.

Official source (sci.gov.in)View Judgment (PDF)

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