The Supreme Court has ruled that daily-wage skilled workers who have been conferred permanent status under the Gujarat Government Resolution of October 17, 1988, cannot be denied the benefit of an annual increment falling due on July 1 following their retirement on June 30. A Bench comprising Justice Sanjay Kumar and Justice Sanjeev Sachdeva set aside an oral order of the Division Bench of the Gujarat High Court, which had rejected the workers’ claims solely on the ground of their initial daily-wage status, and directed the authorities to release their revised pensionary dues within 30 days.
Background of the Dispute
The appellants had rendered over 30 years of continuous service in the Irrigation Department of the State of Gujarat and retired on June 30 across various years. Following their superannuation, they were denied the benefit of the annual increment that fell due on July 1 immediately after their retirement.
Aggrieved by this denial, the workers approached the Gujarat High Court. On September 26, 2023, a Single Judge allowed their writ petition, observing that the core issue was no longer res integra in view of the Supreme Court’s ruling in Director (Administration and Human Resources), KPTCL, and others vs. C.P. Mundinamani and others (2023).
The Single Judge also referenced the Co-ordinate Bench decision in Pravinbhai Khemabhai Patel vs. State of Gujarat, which had been affirmed by a Division Bench on August 7, 2023, reiterating that the right to an increment is a legitimate entitlement earned upon the successful completion of a full year of service. Consequently, the Single Judge directed the authorities to verify applications, grant the accrued increment, revise pensions, and disburse arrears, stipulating a 6% per annum default interest rate if the process was not completed within the prescribed timeframe.
The State of Gujarat and its authorities challenged this order before a Division Bench in Letters Patent Appeal (LPA) No. 100 of 2025. Before the appellate bench, the State raised a fresh argument, asserting that the employees were merely daily wagers and therefore ineligible for the increment benefits extended to regular employees under the C.P. Mundinamani precedent. Accepting this contention, the Division Bench quashed the Single Judge’s directive on January 9, 2025, prompting the appellants to approach the Supreme Court.
The 1988 Government Resolution and State’s Stance
Before the Supreme Court, the Bench examined Government Resolution dated October 17, 1988, which adopted the recommendations of a committee chaired by the Minister of the Roads and Buildings Department. Under this resolution, daily-wage skilled workers who completed 10 or more years of service as of October 1, 1988, were treated as permanent employees. They were granted running pay scales along with dearness allowance, house rent allowance, local compensatory allowance, and retiral benefits such as gratuity and provident fund. The resolution also fixed their age of superannuation at 60 years and recognized their period in permanent employment as pensionable.
During the proceedings, the learned Additional Solicitor General appearing for the State did not dispute that all the appellants satisfied the criteria of daily-wage skilled workers under the 1988 Resolution.
Rejecting the State’s stance, Justice Sanjay Kumar observed:
“If that be so, as they were treated as permanent employees for the purpose of payscale and allowances, pension, retirement benefits, etc., the contention advanced before the Division Bench of the High Court that they were not entitled to grant of the increment only on the ground that they were daily wagers cannot be countenanced.”
The Court further remarked:
“This argument seems to have been made, ignoring the Government Resolution dated 17.10.1988 and the benefits that flowed therefrom. In effect, the argument before the Bench that the decision of this Court in C.P. Mundinamani (supra) had no application to them was also without merit.”
Legal Framework on Post-Retirement Increments
The Supreme Court noted that the principle laid down in C.P. Mundinamani had been followed in Union of India and another vs. M. Siddaraj (2023). In subsequent miscellaneous applications arising from M. Siddaraj, the Supreme Court had issued interim directions on September 6, 2024, which were finalized with modifications on February 20, 2025.
Under the final framework outlined in the February 20, 2025 order:
- For third parties who had not approached a court, the C.P. Mundinamani judgment took effect from May 1, 2023, without arrears for earlier periods.
- For employees who had successfully filed writ petitions, the directions operated as res judicata, subject to finality.
- For retired employees who had filed petitions before administrative tribunals, High Courts, or the Supreme Court prior to the M. Siddaraj judgment, modified clause (d) governed their entitlements:
“In case any retired employee has filed an application for intervention/impleadment/writ petition/original application before the Central Administrative Tribunal/High Courts/this Court, the enhanced pension by including one increment will be payable for the period of three years prior to the month in which the application for intervention/impleadment/writ petition/original application was filed.”
The Court also referenced its decision in Madhya Pradesh Purv Kshetra Vidyut Vitran Company Ltd. vs. Vidyut Mandal Pension Samaj and others (2025), which established that while interest is not payable on the calculated arrears, authorities are strictly bound to disburse the dues within the time limits prescribed by courts, failing which default interest becomes payable.
The Decision
Applying the modified clause (d) of the February 20, 2025 order, the Bench observed that the appellants had initiated their writ proceedings in 2022. Consequently, they were held entitled to enhanced pension, incorporating one increment, payable for three years prior to the month their writ petition was filed.
The Court extended this relief to proforma respondents who had been co-petitioners in the original writ petition but had not joined the appeal before the Supreme Court.
Leaving individual calculations to the authorities, the Supreme Court directed the State to verify the retirement date of each worker, calculate the amounts payable in accordance with modified clause (d), and release the dues within 30 days. The Court ordered that failure to disburse the payments within 30 days will attract interest at the rate of 6% per annum from the date of default until the date of actual payment.
Case Title: Chhaganbhai Kohyabhai Pateliya and others versus The State of Gujarat and others
Case No.: Civil Appeal No. of 2026 (@SLP (C) No. 26129 of 2025)
Bench: Justice Sanjay Kumar and Justice Sanjeev Sachdeva
Date: October 06, 2026
