Called daily wagers for the first time on appeal, after thirty years of service: the Supreme Court restores their retirement increment

Justices Sanjay Kumar and Sanjeev Sachdeva hold that workers made permanent by a 1988 Government Resolution cannot be denied an increment on the ground that they began as daily wagers.

An employee who retires on 30 June has completed the year of service that earns the increment falling due on 1 July — but retires a day before it is paid. The Supreme Court settled in 2023 that such an employee is entitled to it. A group of workers in Gujarat's Irrigation Department won on that basis before a Single Judge. On appeal the State raised a point it had never taken below: that these were daily wagers, to whom the 2023 ruling does not apply. The Division Bench accepted it. The Supreme Court has now set that aside, on a Government Resolution from 1988 that the argument had simply ignored.

The point that was already settled

The appellants' grievance before the Single Judge was that they had retired on the 30th of June of various years and were denied the benefit of the increment that fell due on the 1st of July of those years.

In September 2023 the Single Judge accepted the claim, holding that the issue was no longer res integra in view of this Court's decision in Director (Administration and Human Resources), KPTCL v. C.P. Mundinamani, decided in April 2023. The State argued that even so, no arrears should follow. The Judge noted that a coordinate Bench had directed payment with arrears in a similar case, a decision confirmed in appeal by a Division Bench, and held that since the right to be paid an increment is the legitimate right of an employee on successful completion of a year of employment, the contrary contention could not be countenanced.

It is worth pausing on why this ever needed deciding. Annual increments in most government pay structures fall due on a fixed date — here 1 July — and are earned by completing the preceding twelve months of satisfactory service. An employee who superannuates on 30 June has done every day of that service and misses the payment date by one. The State's position in these cases has consistently been that an increment is payable only to someone on the rolls when it falls due, so the last year's service earns nothing. Since the final pay drawn fixes the pension, the point is not confined to a single month's salary: it follows the retiree for life.

C.P. Mundinamani rejected that reading, holding that the increment is earned by rendering the service rather than conferred by being present on the payment date. The question had divided High Courts for years, and the fact that it reached the Supreme Court at all says something about how many retirees it touches — anyone in a 1 July increment cycle who retired on 30 June, across every State that follows the pattern.

Because the Judge was dealing with a batch involving several employees, the order set up a verification machinery rather than fixing sums: the petitioners were to apply for the increment accrued the day after their retirement within a timeframe; the authorities were to verify details and pay; pension was to be revised and other retiral benefits, consequential benefits and arrears disbursed, all within a timeframe, failing which interest at six per cent would run from the date the amount fell due.

A new ground on appeal

The State appealed that order so far as it concerned one of the petitions. Before the Division Bench it urged a ground the judgment describes, in a single word, as strange: that the respondents were daily wagers and so could not claim the benefit of C.P. Mundinamani at all.

The Division Bench accepted the plea by an oral order in January 2025, held that daily wagers were not entitled to an increment extended to regular employees, and quashed the Single Judge's order to the contrary. That is what twelve of the affected workers challenged.

The answer lay in a document the argument had passed over. It is admitted that all the appellants served in the Irrigation Department for more than thirty years. By a Government Resolution of 17 October 1988, the State accepted the recommendations of a committee chaired by the Minister of the Roads and Buildings Department and resolved to grant pay and facilities to daily-wage skilled workers across departments. Among the reliefs granted to those who had completed ten years of service or more as on 1 October 1988 was that they were to be considered permanent. They were to be placed in the running pay scale of the cadre concerned and paid salary, dearness allowance, house rent allowance and local compensatory allowance; they were entitled to retiral benefits, gratuity and provident fund under the prevalent rules; their age of superannuation was fixed at 60; and the period spent in permanent employment was to count as pensionable.

The Additional Solicitor General did not dispute that all the petitioners fell within that category. On that concession the argument collapsed. Having been treated as permanent employees for pay scale, allowances, pension and retirement benefits, they could not be denied the increment on the sole ground that they were daily wagers. The contention, the Court held, was advanced ignoring the 1988 Resolution and the benefits that flowed from it, and the submission that C.P. Mundinamani had no application to them was without merit.

What the increment ruling now actually gives

The more consequential part of the judgment is its account of how the 2023 decision has since been limited, because that is what determines what retirees across the country can expect.

The C.P. Mundinamani ratio was applied in Union of India v. M. Siddaraj. Miscellaneous applications were then filed, and by directions finalised in February 2025 the Court set the scheme that now governs. For third parties, the 2023 judgment takes effect from the date of that judgment: pension counting one increment is payable on and after 1 May 2023, and enhanced pension for the earlier period is not paid. For those who filed writ petitions and succeeded, the directions operate as res judicata and enhanced pension must be paid — except where the judgment has not attained finality, or an appeal has been preferred or entertained.

A fourth clause, as modified, is the one that decided this case. Where a retired employee has filed an application for intervention or impleadment, a writ petition or an original application before a Tribunal, a High Court or the Supreme Court, enhanced pension including one increment is payable for the period of three years prior to the month of that filing. That clause does not apply to anyone who filed after M. Siddaraj, who gets the third-party rule instead. Excess payments already made, including arrears, are not to be recovered.

Because the appellants filed their writ petition in 2022, they fall within the modified fourth clause and are entitled to the increment and to pension calculated on it, with three years of arrears before the month of filing.

On interest the Court recorded the current position precisely. No interest was granted on arrears by the February 2025 order, and the point was settled in Madhya Pradesh Purv Kshetra Vidyut Vitran Company Ltd. v. Vidyut Mandal Pension Samaj, which held that none is payable. But that makes it incumbent on the authorities to keep to the time stipulations in the court's orders for disbursing arrears, and failure to do so entails interest from the date of default.

Order

Declining to go into each individual fact situation, the Court left it to the authorities to examine each case in the context of each person's date of retirement, work out the amounts payable in the light of the modified clause, and release them within 30 days, failing which interest at six per cent per annum runs for the period thereafter until payment.

The benefit was extended beyond the appellants. The other petitioners in the same writ petition, who did not join this appeal and were arrayed as proforma respondents, will receive it too, since the February 2025 order applies to everyone within its ambit. The appeal was allowed in those terms, with parties bearing their own costs.

Two things make this worth the attention of anyone handling a pension file. The first is the reach of a resolution that converts status. Where a State has resolved that long-serving daily-wage workers are to be considered permanent, placed in a pay scale and given pensionable service, it cannot later select which consequences of permanence it wishes to honour. The description on the muster roll thirty years ago does not survive the resolution that changed it.

The second is the arithmetic of delay. The entitlement itself is one increment, but what it is worth depends almost entirely on when the retiree moved. File before M. Siddaraj and three years of arrears come with it; file after, and the enhanced pension runs only prospectively from May 2023. For a retired irrigation worker the difference is not academic, and it rewards those who went to court early — which these appellants, filing in 2022, did.