Government Employee Can't Be Denied Notional Increment Merely Because They Retired On Last Day of June And Not On 1st July: Allahabad Central Administrative Tribunal

A notional increment refers to an imaginary or hypothetical increase in salary or benefits that an employee would have received if certain conditions were met. In the context of government service or employment, it typically refers to the grant of an increment or raise in salary that an employee would have been entitled to if they had continued in service for a specific period. An annual increment in salary or benefits often becomes due on a specific date each year, typically the anniversary of an employee's joining date or the start of a fiscal or calendar year.

Brief Facts:

The matter pertained to an application filed in Central Administrative Tribunal, Allahabad (“Tribunal”). The applicants contended that despite retiring from Railways on the last day of June in their respective years, they were deprived of the notional increment due on the very next day, July 1st. They argued that this issue is settled by numerous judgments affirming their entitlement to the notional increment.

In opposition, the Management contended that since the applicants retired on the final day of June, they were no longer in government service on the subsequent date, July 1st. As a consequence, it argued that the applicants were ineligible for the notional increment.

Observations of the Tribunal:

The Tribunal referred to the decision of the Supreme Court in The Director (Admn. And HR) KPTCL & ORs. vs C.P. Mundinamani & Ors. 2023 LiveLaw (SC) 296 where the SC upheld the view taken by various high courts regarding the entitlement of employees to one annual increment earned on the last day of their service, provided they had rendered their services for the preceding year with good behavior and efficiency.

The Supreme Court in this case held that:

“A government servant is granted the annual increment on the basis of his good conduct while rendering one year service. Increments are given annually to officers with good conduct unless such increments are withheld as a measure of punishment or linked with efficiency. Therefore, the increment is earned for rendering service with good conduct in a year/specified period. Therefore, the moment a government servant has rendered service for a specified period with good conduct, in a time scale, he is entitled to the annual increment"

Merely because, the government servant has retired on the very next day, how can he be denied the annual increment which he has earned and/or is entitled to for rendering the service with good conduct and efficiently in the preceding one year”.

However, upon examining the records, the Tribunal noted the applicants retired in June of their respective years, and the original application was filed in the year 2024, signifying a significant delay since the cause of action arose. Given the specific prayer for the grant of arrears accruing from the issuance of the notional increment, the Tribunal held that there was need of assessing the delay and latches prevailing in the case.

Considering the issue of delay and latches, the Tribunal held that arrear payment would only be granted for three years preceding the date of filing the original application. Therefore, the Tribunal directed the Management to issue one notional increment to the applicants and to revise the Pension Payment Orders (PPOs) accordingly. However, arrear payment for only three years preceding the filing of the original application was ordered, with an interest rate of 6% per annum.

Case Title: Jai Singh and others vs Union of India and others.

Case Number: Original Application No. 49 of 2024

Advocate for the Petitioner: Shri S. M. Ali

Advocate for the Respondent: Shri Chakrapani Vatsyayan

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