Summary
Employees of the Karnataka Power Transmission Corporation who completed a year of service on the day before superannuation were denied the annual increment because under Regulation 40(1) of the Karnataka Electricity Board Employees Service Regulations an increment accrues from the day after it is earned, when they were no longer in service. The High Court directed grant of one increment. The Supreme Court dismissed the employer's appeal: an increment is earned by a year's service with good conduct, the entitlement crystallises on completing that service and the next day is merely the date of payment, denying an earned increment because the employee retired the next day would be arbitrary under Article 14, and 'accrue' must be read as 'payable'; the contrary view of the Andhra Pradesh Full Bench and the Kerala and Himachal Pradesh High Courts was disapproved.
Issues
- Whether an employee who completes the qualifying year of service on the last day before retirement is entitled to the annual increment although, under the service regulation, the increment accrues from the following day on which he is no longer in service.
Provisions considered
- Regulation 40(1), Karnataka Electricity Board Employees Service Regulations, 1997Provides that an increment accrues from the day following that on which it is earned and may be withheld only for bad conduct or unsatisfactory work; read as a whole, the provision confers a right earned by a year's service, and 'accrue' means payable on the succeeding day rather than a condition that the employee be in service on that day. (¶¶ 6.1, 6.5, 6.7)
- Article 14, Constitution of IndiaAn interpretation denying an increment already earned by a year's good service solely because the employee retired on the day it became payable would be arbitrary and unreasonable and must be avoided. (¶¶ 6.5, 6.7)
Held
- The contention that an increment is an incentive for future service and so cannot be granted to one who has retired has no substance; an increment is earned on one year's past service in a time scale with good conduct, and even an employee earning it three days before retirement would have no further year to serve. (¶ 6.4)
- The entitlement to an increment crystallises when the employee completes the requisite length of service with good conduct, and it becomes payable on the succeeding day; the day of accrual is not determinative, and an employee who retires on the day the increment becomes payable cannot be denied what he has earned, as that would punish him for no fault and offend reasonableness. The Court approved the views of the Madras, Delhi, Allahabad, Madhya Pradesh, Orissa and Gujarat High Courts and disapproved the Andhra Pradesh Full Bench in Principal Accountant-General v. C. Subba Rao and the Kerala and Himachal Pradesh decisions to the contrary. (¶¶ 6.5, 6.6, 6.7)
Result
Appeal dismissed; High Court direction to grant one annual increment earned on the last day of service for the preceding year's service upheld; no order as to costs.