A fresh order of the Central Administrative Tribunal (CAT), Jabalpur Bench, has brought the issue of notional increment back into focus for Defence Civilian and other Central Government retirees who retired on 31 December.
In Anil Sharma v. Department of Personnel and Training, decided on 18 September 2026, the Tribunal considered claims for an annual increment that became due on 1 January, immediately after retirement on 31 December. Applicant No. 1 had served under 506 Army Base Workshop, Jabalpur and retired on 31 December 2016. The husband of Applicant No. 2 had also served under the same establishment and retired on the same date.
The Tribunal did not order an automatic blanket payment to every 31 December retiree. Instead, it directed the authorities to examine the applicants’ eligibility and service records and, if they are found eligible, grant the notional increment and consequential benefits within the prescribed period.
What was the dispute before CAT Jabalpur?
The dispute arose because the employees retired on 31 December 2016, while their next annual increment fell due on 1 January 2017.
Their case was that they had already rendered the required service during the preceding year and had earned the increment through satisfactory service, but it was denied because they were no longer technically in service when 1 January arrived.
The central question before the Tribunal was therefore whether retirement on 31 December, just one day before the increment date, could by itself prevent an otherwise eligible employee from receiving the benefit of that increment for pension purposes.
What is a notional increment?
A notional increment in this context does not mean that a retired employee is treated as having continued in active service after retirement or becomes entitled to salary for 1 January.
The issue concerns whether the increment earned through the preceding period of qualifying service can be notionally added for the purpose of pension calculation.
This distinction is important because the benefit operates through pension refixation rather than by treating the retiree as an employee who actually worked on the next increment date.
Why did the Supreme Court’s C.P. Mundinamani judgment matter?
CAT relied on the Supreme Court’s decision in Director (Administration and HR), KPTCL v. C.P. Mundinamani, Civil Appeal No. 2471 of 2023, decided on 11 April 2023.
The Supreme Court examined the principle that an increment is earned through satisfactory service during the preceding period. It rejected the idea that the benefit must necessarily be lost merely because the formal increment date falls immediately after retirement.
CAT Jabalpur applied that principle while examining the claim of employees who had retired on 31 December and whose increment became due on 1 January.
The Tribunal, however, kept the relief subject to verification of the employees’ actual eligibility and service records.
Why is 1 May 2023 important?
The monetary effect of the notional increment was another major issue.
The Tribunal referred to the Supreme Court’s directions in Union of India v. M. Siddaraj. In its order dated 6 September 2024, the Supreme Court directed that for third parties, the pension after taking one increment into account would be payable on and after 1 May 2023, while enhanced pension for the earlier period would not ordinarily be paid under that direction.
Applying that framework, CAT held that although the claim related to the increment due on 1 January following retirement, the consequential enhanced pension in this case would operate from 1 May 2023, rather than retrospectively from 2017.
Did CAT directly grant the increment?
Not unconditionally.
The Tribunal directed the respondents to treat the Original Application as a representation and examine the claim.
The authorities must verify the applicants’ service records and eligibility. If the applicants satisfy the applicable conditions, the notional increment and consequential benefits are to be granted.
The Tribunal directed completion of this exercise within 90 days from receipt of the certified copy of the order.
That means the ruling should not be presented as an automatic payment order applicable without verification.
What conditions remain important?
The Supreme Court principle itself is linked to the idea that the employee must have earned the increment through the required service and satisfactory conduct or performance.
The Mundinamani judgment noted that an increment is earned through service and may be withheld where conduct or work is not satisfactory under the applicable rules.
Therefore, simply having retired on 31 December does not by itself create an unconditional entitlement.
The relevant service record, qualifying service and other applicable eligibility requirements still matter.
Why is this case important for Defence Civilians?
The case has particular relevance for Sainik Welfare News readers because Applicant No. 1 was an employee of 506 Army Base Workshop, Jabalpur, a Defence establishment.
It therefore provides a fresh example of the Supreme Court’s notional-increment principles being applied in a case involving a Defence Civilian retiree.
However, the distinction between Defence Civilians and uniformed Armed Forces personnel must be maintained.
This CAT order concerns employees covered by the Central Government civil-service pension and increment framework involved in the case. It should not automatically be described as a blanket pension revision for all Army, Navy or Air Force pensioners.
What exactly did CAT order?
The Tribunal disposed of the Original Application with directions to consider the claim for the annual notional increment falling due on 1 January after retirement on 31 December.
If the applicants are found eligible after verification, the respondents are to grant the increment and consequential benefits within 90 days.
The Tribunal also restricted enhanced pension arising from the notional increment to 1 May 2023 onwards and did not allow retrospective monetary benefit for the earlier period under the framework it applied.
No order as to costs was made.
What does this order not mean?
This judgment should not be interpreted as saying that every employee who retired on 31 December will automatically receive additional pension.
It also does not mean that salary arrears from 1 January 2017 have been sanctioned.
The order does not create a new fitment factor, pension formula or general Defence pension revision.
Its significance is much more specific: an employee who retired on 31 December cannot be denied consideration for the increment due on 1 January merely because retirement occurred the previous day, provided the applicable eligibility and service conditions are satisfied.
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