What is Notional Increment
The concept of a notional increment on the last day of retirement (30th June/31st December) has been a topic of legal and administrative debate over the past few years. Various High Courts and the Hon’ble Supreme Court of India have delivered landmark judgments impacting pensionary benefits linked to this notional increment. However, the Government of India has clarified its stand in this matter, distinguishing individual reliefs from a universal benefit.
This article presents a structured summary of the legal timeline, judgments, and current official stance regarding the issue.
How it is effected to Pensioners
Government servants who retire on 30th June or 31st December often complete a full year of service on that day. However, due to retirement taking effect from the forenoon of that day, they technically do not complete the day to earn an annual increment, which is due on 1st July or 1st January respectively. This has led to litigation from pensioners seeking notional increment for pension calculation.
Key Judicial Milestones
1. P. Ayyamperumal Case
- Court: Madras High Court, upheld by Supreme Court
- Observation: Notional increment should be granted for pension purposes if the employee has completed one year of service.
- Status: Relief granted to the individual; not a general precedent.
2. Subsequent High Court Judgments
- Courts: Madras, Delhi, Gujarat, Allahabad, Karnataka, and others
- Trend: These courts have followed the reasoning in P. Ayyamperumal and granted relief in individual cases.
3. Supreme Court Ruling in the Case of Nagarajan (SLP(C) No. 4722/2021)
- Date: 11 April 2023
- Outcome: Dismissed the Special Leave Petition (SLP) filed by the Government, thereby upholding the High Court decision.
- Significance: Strengthened the argument for notional increment for pension benefits in individual cases.
Government’s Official Position
Despite multiple court judgments, the Department of Personnel and Training (DoPT) and the Department of Expenditure (DoE) have not accepted notional increment as a general policy. The position is:
- Relief granted is specific to litigating individuals.
- These judgments are not to be treated as general orders applicable to all similarly placed retirees.
- The DoPT OM dated 18.02.2021 and subsequent clarification letters state that the benefit is not admissible universally.
Implications for Pensioners
❖ Who Benefits?
- Only those who have approached courts and received favorable judgments.
- Relief is case-specific and not automatic.
❖ What to Do?
- Pensioners in similar situations may:
- File a case individually or through associations.
- Await a larger bench or policy decision if they prefer not to litigate.
❖ Government Stand Summary
- No notional increment is granted as per general rules.
- The stand is based on legal interpretation that increment is earned after completing the full day, and since retirement takes effect from the morning, the day isn’t completed.
Let’s get an overview
The issue of notional increment on the last day of service remains a contested subject. While courts have shown sympathy and awarded relief in specific cases, the Government has consistently held a contrary view, denying blanket applicability. Pensioners must take legal recourse if they seek this benefit, as administrative relief is not available without judicial direction.
Important References
- P. Ayyamperumal vs UOI & Ors – Madras High Court and Supreme Court
- SLP (C) No. 4722/2021 – Nagarajan Case – Supreme Court
- DoPT Clarification dated 18.02.2021 and subsequent OMs
- Various High Court Judgments following the Ayyamperumal logic
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