The Supreme Court has ruled that Annual Increment After Regularisation cannot be denied merely because employees initially joined service as daily-wage workers. The Court held that workers who later gained permanent status, regular pay scales, and retirement benefits can claim the increment earned through their completed service.
A Bench comprising Justice Sanjay Kumar and Justice Sanjeev Sachdeva set aside a Gujarat High Court Division Bench judgment. The Bench rejected the Gujarat government’s argument based on the workers’ original mode of appointment.
1988 Government Resolution Protects Workers
The Supreme Court relied on the Gujarat Government Resolution dated October 17, 1988. The resolution grants permanent status to skilled daily-wage workers after they complete ten years of service.
It also provides regular pay scales and applicable allowances. In addition, eligible workers receive pension and other retirement benefits.
The Additional Solicitor General appearing for the State did not dispute the appellants’ status. All of them belonged to the category of skilled daily-wage workers covered by the 1988 resolution.
Therefore, the Court rejected the State’s argument based on their initial daily-wage status. It found that such an argument overlooked the benefits granted under the government policy.
Employees Served for Over 30 Years
The appellants worked continuously for more than 30 years in the Gujarat Irrigation Department. They retired on June 30 in different years.
Their dispute concerned an annual increment that became due on July 1. This was the day immediately after their respective retirement dates.
A Single Judge of the Gujarat High Court had earlier allowed their claims. The Judge relied on the Supreme Court’s ruling in Director (Administration and Human Resources), KPTCL v. C.P. Mundinamani (2023 LiveLaw (SC) 296).
In C.P. Mundinamani, the Supreme Court recognised an employee’s right to an increment earned after completing a full year of service. Retirement one day before the formal increment date does not defeat that right.
Gujarat High Court Division Bench Reversed Relief
The Single Judge directed payment of arrears and revision of the employees’ retirement benefits. The State then challenged that order before a Division Bench.
At that stage, the State argued that the workers had originally joined as daily wagers. Therefore, according to the State, the ruling in C.P. Mundinamani did not apply to them.
The Division Bench accepted this argument and overturned the Single Judge’s decision. The retired employees then approached the Supreme Court.
Supreme Court Rejects Daily-Wager Objection
Justice Sanjay Kumar authored the Supreme Court’s decision. The Court held that the issue concerning June 30 retirees was no longer res integra.
It relied on C.P. Mundinamani and Union of India v. M. Siddaraj (2023). These decisions recognise the increment earned for service completed before retirement.
The Court also made it clear that the appellants’ initial employment status could not defeat their entitlement. Their subsequent regularisation and benefits under the 1988 resolution were crucial.
Accordingly, the Court upheld their right to Annual Increment After Regularisation and set aside the Division Bench judgment.
Three-Year Arrears for Pension Enhancement
The Supreme Court then considered the period for which the employees could claim monetary benefits. It referred to its February 2025 order in the M. Siddaraj proceedings.
Modified Clause (d) governs cases where retired employees approached a tribunal or High Court. It allows enhanced pension after adding the single increment.
The benefit applies for three years before the month in which the employee initiated judicial proceedings.
In this case, the appellants filed their writ petition before the High Court in 2022. The Supreme Court held that modified Clause (d) protected their claims.
As a result, the employees became entitled to enhanced pension along with arrears for the applicable three-year period preceding the filing of their writ petition.
