Yesterday, the Supreme Court of India held government employees are entitled to annual increment even if they retire a day after earning the financial benefit.

In the said matter, verdict came on an appeal of the state government-owned Karnataka Power Transmission Corporation Ltd (KPTCL) challenging orders of a division bench of the Karnataka High Court that employees were entitled to annual increment even if they are to superannuate the very next day of earning the benefit.

A bench headed by Justices M R Shah and C T Ravikumar dismissed the appeal of KPTCL and said, "Now so far as the submission on behalf of the appellants (KPTCL) that the annual increment is in the form of incentive and to encourage an employee to perform well and therefore, once he is not in service, there is no question of grant of annual increment is concerned, the aforesaid has no substance." 

The court took note of the divergent views of various high courts and laid down the law on the legal question whether an employee who has earned the annual increment is entitled to the same despite the fact that he has retired on the very next day of earning the increment.

"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," it said.

The entitlement to the benefit of annual increment is due to the service already rendered, it said.

"In view of the..., the Division Bench of the (Karnataka) High Court has rightly directed the appellants (KPTCL) to grant one annual increment which the original writ petitioners earned on the last day of their service for rendering their services preceding one year from the date of retirement with good behaviour and efficiency," it said.

Earlier, a single-judge bench of the high court had ruled in favour of the state-owned firm. The decision was set aside by the division bench of the high court.