THE DIRECTOR (ADMN. AND HR) KPTCL & ORS. versus C.P. MUNDINAMANI & ORS. on 11 April 2023

1. Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the High Court of Karnataka at Bengaluru in WritAppeal No. 4193/2017, by which, the Division Bench of the High Courthas allowed the said appeal preferred by the employees - respondentsherein by quashing and setting aside the judgment and order passed bythe learned Single Judge and directing the appellants to grant one annualincrement which the respondents had earned one day prior to they retiredon attaining the age of superannuation, the management – KPTCL haspreferred the present appeal.

2. The undisputed facts are that one day earlier than the retirementand on completion of one year service preceding the date of retirementall the employees earned one annual increment. However, taking intoconsideration Regulation 40(1) of the Karnataka Electricity BoardEmployees Service Regulations, 1997 (hereinafter referred to as theRegulations), which provides that an increment accrues from the dayfollowing that on which it is earned, the appellants denied the annualincrement on the ground that the day on which the increment accruedthe respective employees – original writ petitioners were not in service.The writ petition(s) filed by the original writ petitioners claiming the annualincrement came to be dismissed by the learned Single Judge. By theimpugned judgment and order and following the decision of the AndhraPradesh High Court in the case of Union of India and Ors. Vs. R.Malakondaiah and ors. reported in 2002(4) ALT 550 (D.B.) andrelying upon the decisions of other High Courts, the Division Bench ofthe Karnataka High Court has allowed the appeal and has directed thatthe appellants to grant one annual increment to the respective employees-respondents by observing that the respective employees as such earnedthe increment for rendering their one-year service prior to their retirement.

2.1 Feeling aggrieved and dissatisfied with the impugned judgmentand order passed by the Division Bench of the High Court, themanagement – KPTCL has preferred the present appeal.

3. Shri Huzefa Ahmadi, learned Senior Advocate has appearedon behalf of the appellants and Shri Mallikarjun S. Mylar, learned counselhas appeared on behalf of the respective employees – respondents.

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A3.1 Shri Ahmadi, learned Senior Advocate appearing on behalf ofthe appellants has vehemently submitted that the decision of the AndhraPradesh High Court in the case of R. Malakondaiah (supra) whichhas been relied upon by the Division Bench of the High Court whilepassing the impugned judgment and order has been subsequently overruledBby the Full Bench of the Andhra Pradesh High Court in the case ofPrincipal Accountant-General, Andhra Pradesh and Anr. Vs. C.Subba Rao reported in 2005 (2) LLN 592.

3.2 It is further submitted by Shri Ahmadi, learned Senior Advocateappearing on behalf of the appellants that there are divergent views ofCdifferent High Courts on the issue. It is submitted that the Madras HighCourt, the Delhi High Court, the Allahabad High Court, the MadhyaPradesh High Court, the Gujarat High Court have taken a contrary viewthan the view taken by the Full Bench of the Andhra Pradesh HighCourt, the Kerala High Court and the Himachal Pradesh High Court. Itis submitted that various High Courts taking the contrary view have asDsuch followed the decision of the Madras High Court in the case of P.Ayyamperumal Vs. The Registrar and Ors. (W.P. No. 15732/2017decided on 15.09.2017).

3.3 On merits, Shri Ahmadi, learned Senior Advocate appearingEon behalf of the appellants has vehemently submitted that the wordsused in Regulation 40(1) of the Regulations are very clear andunambiguous. It is submitted that it categorically provides that “anincrement accrues from the day following that on which it is earned.” Itis submitted that therefore, when the right to get the increment is accruedthe employee must be in service. It is submitted that in the present caseFwhen the right to get the increment accrues in favour of the respectiverespondents they were not in service but on their superannuation retiredfrom the services. It is submitted that therefore, they shall not be entitledto the annual increment which might have been earned one day earlieri.e., on the last day of their service.G

3.4 It is further submitted by Shri Ahmadi, learned Senior Advocateappearing on behalf of the appellants that the annual increment is in theform of a good service and it is an incentive so that the concernedemployee may serve effectively and may render good services. It issubmitted that therefore, when the concerned employees are not in serviceH

due to their retirement there is no question of grant of any annualincrement which as such is in the form of incentive to encourage theemployee for better performance.

3.5 Shri Ahmadi, learned Senior Advocate appearing on behalf ofthe appellants has also taken us to the definition of the word “accrue” inthe Law Lexicon (the encyclopaedic law dictionary) and the definitionof the word “increment.” It is submitted that as per the Law Lexicon,“increment” means a unit of increase in quantity or value. It means apromotion from a lower grade to a higher grade. As per the definition“increment” means an upward change in something. It is submitted thatas per the Law Lexicon the word “accrue” means to come into existenceas an enforceable claim or right. It is submitted that therefore, on trueinterpretation of Regulation 40(1) of the Regulations, an incrementaccrues from the day following that on which it is earned. It is submittedthat therefore, the Division Bench of the High Court has materially erred.It is submitted that therefore, the view taken by the Division Bench ofthe High Court and other High Courts that the concerned employeesshall be entitled to the benefit of one annual increment which they earnedone day prior to their retirement is erroneous and is on mis-interpretationof the relevant statutory provisions. Making the above submissions, it isprayed to allow the present appeal.

4. Learned counsel appearing on behalf of the respectiveemployees – respondents, has heavily relied upon the decision of theMadras High Court in the case of P. Ayyamperumal (supra) and thedecisions of the Gujarat High Court, the Delhi High Court, the AllahabadHigh Court, the Madhya Pradesh High Court and the Orissa High Courttaking the view that the concerned employees who earned the annualincrement for rendering one year service prior to their retirement theycannot be denied the benefit of the annual increment which they actuallyearned, solely on the ground that they retired on attaining the age ofsuperannuation on the very next day. It is submitted that therefore, theDivision Bench of the High Court has not committed any error in allowingone annual increment in favour of the respective employees which theyactually earned.

4.1 Making the above submissions, it is prayed to dismiss thepresent appeal.

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A5. We have heard learned counsel appearing on behalf of therespective parties.

6. The short question which is posed for the consideration of thisCourt is whether an employee who has earned the annual increment isentitled to the same despite the fact that he has retired on the very nextBday of earning the increment?

6.1 In the present case, the relevant provision is Regulation 40(1)of the Regulations which reads as under: - “Drawals and postponements of incrementsC

40(1) An increment accrues from the day following that on whichit is earned. An increment that has accrued shall ordinarily bedrawn as a matter of course unless it is withheld. An incrementmay be withheld from an employee by the competent authority, ifhis conduct has not been good, or his work has not beenDsatisfactory. In ordering the withholding of an increment, thewithholding authority shall state the period for which it is withheld,and whether the postponement shall have the effect of postponingfuture increments.”

6.2 It is the case on behalf of the appellants that the word used inERegulation 40(1) is that an increment accrues from the day followingthat on which it is earned and in the present case the increment accruedon the day when they retired and therefore, on that day they were not inservice and therefore, not entitled to the annual increment which theymight have earned one day earlier. It is also the case on behalf of theFappellants that as the increment is in the form of incentive and therefore,when the employees are not in service there is no question of grantingthem any annual increment which as such is in the form of incentive.

6.3 At this stage, it is required to be noted that there are divergentviews of various High Courts on the issue involved. The Full Bench ofGthe Andhra Pradesh High Court, the Himachal Pradesh High Court andthe Kerala High Court have taken a contrary view and have taken theview canvassed on behalf of the appellants. On the other hand, theMadras High Court in the case of P. Ayyamperumal (supra); the Delhihigh Court in the case of Gopal Singh Vs. Union of India and Ors.(Writ Petition (C) No. 10509/2019 decided on 23.01.2020); theH

Allahabad High Court in the case of Nand Vijay Singh and Ors. Vs.Union of India and Ors. (Writ A No. 13299/2020 decided on29.06.2021); the Madhya Pradesh High Court in the case of YogendraSingh Bhadauria and Ors. Vs. State of Madhya Pradesh; the OrissaHigh Court in the case of AFR Arun Kumar Biswal Vs. State ofOdisha and Anr. (Writ Petition No. 17715/2020 decided on30.07.2021); and the Gujarat High Court in the case of State of GujaratVs. Takhatsinh Udesinh Songara (Letters Patent Appeal No. 868/2021) have taken a divergent view than the view taken by the FullBench of the Andhra Pradesh High Court and have taken the view thatonce an employee has earned the increment on completing one yearservice he cannot be denied the benefit of such annual increment on hisattaining the age of superannuation and/or the day of retirement on thevery next day.

6.4 Now so far as the submission on behalf of the appellants thatthe annual increment is in the form of incentive and to encourage anemployee to perform well and therefore, once he is not in service, thereis no question of grant of annual increment is concerned, the aforesaidhas no substance. In a given case, it may happen that the employeeearns the increment three days before his date of superannuation andtherefore, even according to the Regulation 40(1) increment is accruedon the next day in that case also such an employee would not have oneyear service thereafter. It is to be noted that increment is earned on oneyear past service rendered in a time scale. Therefore, the aforesaidsubmission is not to be accepted.

6.5 Now, so far as the submission on behalf of the appellants thatas the increment has accrued on the next day on which it is earned andtherefore, even in a case where an employee has earned the incrementone day prior to his retirement but he is not in service the day on whichthe increment is accrued is concerned, while considering the aforesaidissue, the object and purpose of grant of annual increment is required tobe considered. A government servant is granted the annual incrementon the basis of his good conduct while rendering one year service.Increments are given annually to officers with good conduct unless suchincrements are withheld as a measure of punishment or linked withefficiency. Therefore, the increment is earned for rendering service withgood conduct in a year/specified period. Therefore, the moment agovernment servant has rendered service for a specified period with AB

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Agood conduct, in a time scale, he is entitled to the annual increment andit can be said that he has earned the annual increment for rendering thespecified period of service with good conduct. Therefore, as such, he isentitled to the benefit of the annual increment on the eventuality of havingserved for a specified period (one year) with good conduct efficiently.Merely because, the government servant has retired on the very nextBday, how can he be denied the annual increment which he has earnedand/or is entitled to for rendering the service with good conduct andefficiently in the preceding one year. In the case of Gopal Singh (supra)in paragraphs 20, 23 and 24, the Delhi High Court has observed and heldas under: -C

(para 20)

“Payment of salary and increment to a central government servantis regulated by the provisions of F.R., CSR and Central CivilServices (Pension) Rules. Pay defined in F.R. 9(21) means theamount drawn monthly by a central government servant andDincludes the increment. A plain composite reading of applicableprovisions leaves no ambiguity that annual increment is given to agovernment servant to enable him to discharge duties of the postand that pay and allowances are also attached to the post. Article43 of the CSR defines progressive appointment to mean anEappointment wherein the pay is progressive, subject to goodbehaviour of an officer. It connotes that pay rises, by periodicalincrements from a minimum to a maximum. The increment incase of progressive appointment is specified in Article 151 of theCSR to mean that increment accrues from the date following thatFon which it is earned. The scheme, taken cumulatively, clearlysuggests that appointment of a central government servant is aprogressive appointment and periodical increment in pay from aminimum to maximum is part of the pay structure. Article 151 ofCSR contemplates that increment accrues from the day followingwhich it is earned. This increment is not a matter of course but isGdependent upon good conduct of the central government servant.It is, therefore, apparent that central government employee earnsincrement on the basis of his good conduct for specified periodi.e. a year in case of annual increment. Increment in pay is thusan integral part of progressive appointment and accrues from theHday following which it is earned.”

(para 23)

“Annual increment though is attached to the post & becomespayable on a day following which it is earned but the day on whichincrement accrues or becomes payable is not conclusive ordeterminative. In the statutory scheme governing progressiveappointment increment becomes due for the services renderedover a year by the government servant subject to his goodbehaviour. The pay of a central government servant rises, byperiodical increments, from a minimum to the maximum in theprescribed scale. The entitlement to receive increment thereforecrystallises when the government servant completes requisitelength of service with good conduct and becomes payable on thesucceeding day.”

(para 24)

“In isolation of the purpose it serves the fixation of day succeedingthe date of entitlement has no intelligible differentia nor any objectis to be achieved by it. The central government servant retiring on30th June has already completed a year of service and the incrementhas been earned provided his conduct was good. It would thus bewholly arbitrary if the increment earned by the central governmentemployee on the basis of his good conduct for a year is denied onlyon the ground that he was not in employment on the succeedingday when increment became payable.”

“In the case of a government servant retiring on 30th of June thenext day on which increment falls due/becomes payable loosessignificance and must give way to the right of the governmentservant to receive increment due to satisfactory services of ayear so that the scheme is not construed in a manner that if offendsthe spirit of reasonableness enshrined in Article 14 of theConstitution of India. The scheme for payment of increment wouldhave to be read as whole and one part of Article 151 of CSRcannot be read in isolation so as to frustrate the other partparticularly when the other part creates right in the centralgovernment servant to receive increment. This would ensure thatscheme of progressive appointment remains intact and the rightsearned by a government servant remains protected and are notdenied due to a fortuitous circumstance.”

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A6.6 The Allahabad High Court in the case of Nand Vijay Singh(supra) while dealing with the same issue has observed and held inparagraph 24 as under: - “24. Law is settled that where entitlement to receive a benefitcrystallises in law its denial would be arbitrary unless it is for aBvalid reason. The only reason for denying benefit of increment,culled out from the scheme is that the central government servantis not holding the post on the day when the increment becomespayable. This cannot be a valid ground for denying incrementsince the day following the date on which increment is earnedonly serves the purpose of ensuring completion of a year’s serviceCwith good conduct and no other purpose can be culled out for it.The concept of day following which the increment is earned hasotherwise no purpose to achieve. In isolation of the purpose itserves the fixation of day succeeding the date of entitlement hasno intelligible differentia nor any object is to be achieved by it.DThe central government servant retiring on 30th June has alreadycompleted a year of service and the increment has been earnedprovided his conduct was good. It would thus be wholly arbitraryif the increment earned by the central government employee onthe basis of his good conduct for a year is denied only on theground that he was not in employment on the succeeding dayEwhen increment became payable. In the case of a governmentservant retiring on 30th of June the next day on which incrementfalls due/becomes payable looses significance and must give wayto the right of the government servant to receive increment due tosatisfactory services of a year so that the scheme is not construedFin a manner that if offends the spirit of reasonableness enshrinedin Article 14 of the Constitution of India. The scheme for paymentof increment would have to be read as whole and one part ofArticle 151 of CSR cannot be read in isolation so as to frustratethe other part particularly when the other part creates right in thecentral government servant to receive increment. This wouldGensure that scheme of progressive appointment remains intactand the rights earned by a government servant remains protectedand are not denied due to a fortuitous circumstance.”

6.7 Similar view has also been expressed by different High Courts,namely, the Gujarat High Court, the Madhya Pradesh High Court, theH

Orissa High Court and the Madras High Court. As observed hereinabove,to interpret Regulation 40(1) of the Regulations in the manner in whichthe appellants have understood and/or interpretated would lead toarbitrariness and denying a government servant the benefit of annualincrement which he has already earned while rendering specified periodof service with good conduct and efficiently in the last preceding year. Itwould be punishing a person for no fault of him. As observed hereinabove,the increment can be withheld only by way of punishment or he has notperformed the duty efficiently. Any interpretation which would lead toarbitrariness and/or unreasonableness should be avoided. If theinterpretation as suggested on behalf of the appellants and the viewtaken by the Full Bench of the Andhra Pradesh High Court is accepted,in that case it would tantamount to denying a government servant theannual increment which he has earned for the services he has renderedover a year subject to his good behaviour. The entitlement to receiveincrement therefore crystallises when the government servant completesrequisite length of service with good conduct and becomes payable onthe succeeding day. In the present case the word “accrue” should beunderstood liberally and would mean payable on the succeeding day.Any contrary view would lead to arbitrariness and unreasonablenessand denying a government servant legitimate one annual increment thoughhe is entitled to for rendering the services over a year with good behaviourand efficiently and therefore, such a narrow interpretation should beavoided. We are in complete agreement with the view taken by theMadras High Court in the case of P. Ayyamperumal (supra); the DelhiHigh Court in the case of Gopal Singh (supra); the Allahabad HighCourt in the case of Nand Vijay Singh (supra); the Madhya PradeshHigh Court in the case of Yogendra Singh Bhadauria (supra); theOrissa High Court in the case of AFR Arun Kumar Biswal (supra);and the Gujarat High Court in the case of Takhatsinh Udesinh Songara(supra). We do not approve the contrary view taken by the Full Benchof the Andhra Pradesh High Court in the case of Principal Accountant-General, Andhra Pradesh (supra) and the decisions of the KeralaHigh Court in the case of Union of India Vs. Pavithran (O.P. (CAT)No. 111/2020 decided on 22.11.2022) and the Himachal PradeshHigh Court in the case of Hari Prakash Vs. State of HimachalPradesh & Ors. (CWP No. 2503/2016 decided on 06.11.2020).

7. In view of the above and for the reasons stated above, theDivision Bench of the High Court has rightly directed the appellants to AB

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Agrant one annual increment which the original writ petitioners earned onthe last day of their service for rendering their services preceding oneyear from the date of retirement with good behaviour and efficiently.We are in complete agreement with the view taken by the Division Benchof the High Court. Under the circumstances, the present appeal deservesto be dismissed and is accordingly dismissed. However, in the facts andBcircumstances of the case, there shall be no order as to costs.

I.A. No. 149091/2022 stands disposed of in terms of the above.

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Ankit Gyan

(Assisted by : Abhishek Agnihotri and Mahendra Yadav, LCRAs)

Appeal dismissed.

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