Supreme Court Rules Gujarat Workers Who Retired on June 30 Are Entitled to July 1 Increment and Higher Pension; State's "Daily Wager" Plea, Raised Only Before Division Bench, Rejected
The Supreme Court of India on October 6, 2026 held that Gujarat Irrigation Department workers who retired on June 30 after more than 30 years of service are entitled to the increment that fell due on the next day, July 1, and to a pension calculated with it. A Bench of Justice Sanjay Kumar and Justice Sanjeev Sachdeva rejected the State's plea that they were mere "daily wagers", a ground raised only before the Division Bench of the Gujarat High Court, saying it ignored a Government Resolution of 17.10.1988 that had made such skilled workers permanent. The Court directed the authorities to work out and release the dues within 30 days, failing which interest at six per cent per annum will run.
Case at a Glance
Case Title: Chhaganbhai Kohyabhai Pateliya and Others v. The State of Gujarat and Others
Citation: 2026 INSC 1088
Case No.: Civil Appeal arising out of Special Leave Petition (Civil) No. 26129 of 2025
Bench: Justice Sanjay Kumar and Justice Sanjeev Sachdeva (judgment authored by Justice Sanjay Kumar)
What Was Challenged: Oral order dated 09.01.2025 of a Division Bench of the Gujarat High Court in Letters Patent Appeal No. 100 of 2025, which reversed a Single Judge order dated 26.09.2023 in Special Civil Application No. 20921 of 2022
Date of Judgment: October 6, 2026
Retired on June 30, Denied an Increment Due on July 1
The appellants had served the Irrigation Department of the State of Gujarat for more than 30 years. Each retired on the 30th of June in different years, and each was denied the increment that fell due on the 1st of July. They went to the High Court, and on 26.09.2023 a Single Judge accepted their claim, saying the issue was no longer res integra after the Supreme Court's decision of 11.04.2023 in Director (Administration and Human Resources), KPTCL v. C.P. Mundinamani (2023) 14 SCC 411.
The State argued that even if the increment were granted, no arrears should be paid. The Single Judge noted that a coordinate bench had directed arrears in Pravinbhai Khemabhai Patel v. State of Gujarat and that the Division Bench had confirmed that decision on 07.08.2023. The Single Judge held that an increment is the legitimate right of an employee on completing a year of employment, so arrears must also be paid. Since the matter was a batch, the Judge directed the workers to apply, the authorities to verify and pay, and ordered interest at six per cent if the exercise was not completed in time.
A Last-Minute Argument Before the Division Bench
The State appealed only in respect of Special Civil Application No. 20921 of 2022, filed by Chhaganbhai Kohyabhai Pateliya and 18 others. The Supreme Court noted what happened next with a pointed word: "Strangely", the State urged a new ground before the Division Bench, namely that the respondents were daily wagers and so could not claim the increment under C.P. Mundinamani. The Division Bench accepted this plea in its oral order of 09.01.2025, held that daily wagers were not entitled to the benefit extended to regular employees, and quashed the Single Judge's order. Chhaganbhai Kohyabhai Pateliya and 11 others then came to the Supreme Court.
The 1988 Resolution That Changed the Argument
The Court turned to Government Resolution dated 17.10.1988. It accepted the recommendations of a committee chaired by the Minister of the Roads and Buildings Department and granted pay and facilities to daily-wage skilled workers across departments. Workers who had completed ten years of service or more as on 01.10.1988 were to be considered permanent and kept in the running payscale of their cadre. They were to receive salary, dearness allowance, house rent allowance and local compensatory allowance, and were entitled to retiral benefits, gratuity and employees provident fund. Their age of superannuation was fixed at 60 years, and the time spent in permanent employment was to count as pensionable.
The Additional Solicitor General appearing for the State did not dispute that all the petitioners fell in this category of daily-wage skilled workers.
The Court's Verdict on the "Daily Wager" Plea
The Court held that, since the workers were treated as permanent for payscale, allowances, pension and retirement benefits, the contention that they were not entitled to the increment merely because they were daily wagers could not be countenanced. It said the argument appeared to have been made:
ignoring the Government Resolution dated 17.10.1988 and the benefits that flowed therefrom.
The Court added that the argument that C.P. Mundinamani had no application to these workers was also without merit. It noted that the ratio of that case was applied in a later decision, Union of India v. M. Siddaraj (Civil Appeal No. 3933 of 2023, decided on 19.05.2023).
How Far Back Do the Arrears Go? The Court's 2025 Directions
The Court explained that the benefit of those decisions is conditioned by its order of 20.02.2025, which treated clauses (a), (b) and (c) of its interim order of 06.09.2024 as final and modified clause (d). Under the modified clause (d), where a retired employee had filed an application, intervention or writ petition, the enhanced pension including one increment is payable for the three years prior to the month in which it was filed. The clause does not apply to those who filed after the judgment in M. Siddaraj, for whom clause (a) applies, and any excess payment already made, including arrears, is not to be recovered.
Because the appellants filed their writ petition in 2022, the Court held they are covered by modified clause (d). Seven other petitioners in the same writ petition, who did not join the appeal and were arrayed as proforma respondents Nos. 5 to 11, will receive the same benefit.
The Interest Question: None on Arrears, but a Deadline With a Penalty
The Court noted that no interest was granted on arrears in its order of 20.02.2025, and that this was settled by a later decision in Madhya Pradesh Purv Kshetra Vidyut Vitran Company Ltd. v. Vidyut Mandal Pension Samaj (Civil Appeal No. 15097 of 2025, decided on 19.12.2025), which held that no interest is payable on arrears. It added that this makes it incumbent on the authorities to meet the time stipulations in court orders, and that failure to do so will attract interest from the date of default.
The Final Directions
The Court did not go into each appellant's individual facts. It left the authorities to examine each case by date of retirement, work out the amounts under modified clause (d) of the order of 20.02.2025, and release them within 30 days, failing which interest at six per cent per annum is payable thereafter until payment. The appeal was allowed, the pending applications were disposed of, and the parties were left to bear their own costs.
What This Means Going Forward
The ruling matters for thousands of long-serving workers who retire on the last day of a month and lose an increment by one day. Three groups should take note.
Three Key Takeaways
For Retired Employees
An increment falling due the day after retirement can count towards pension, and the date of filing matters, because the arrears window depends on when a claim was filed in relation to the Court's 2025 directions. Check how a case fits within modified clause (d) before filing.
For State Authorities
Government resolutions that make workers permanent carry real consequences for pay, pension and retirement benefits. Authorities should meet court-ordered deadlines, since interest runs from the date of default, and excess payments already made are not to be recovered.
For Litigants and Counsel
A new ground raised for the first time before an appellate bench must still fit the documents on record. Here, the "daily wager" plea could not survive the 1988 resolution that the State itself did not dispute.
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Frequently Asked Questions
1. What did the Supreme Court decide in Chhaganbhai Kohyabhai Pateliya v. State of Gujarat?
On October 6, 2026 the Court held that retired daily-wage skilled workers of Gujarat's Irrigation Department are entitled to the increment that fell due the day after they retired, and to a pension that takes it into account, as limited by its 2025 directions.
2. Why did the Court reject the State's "daily wager" argument?
Government Resolution dated 17.10.1988 made skilled daily-wage workers with ten or more years of service permanent for payscale, allowances, pension and retirement benefits, and the State did not dispute that the petitioners fell in that category.
3. How far back are the arrears payable?
Under modified clause (d) of the Court's order of 20.02.2025, the enhanced pension is payable for the three years before the month in which the writ petition was filed. The appellants filed in 2022.
4. Is interest payable on the arrears?
No interest is payable on the arrears themselves. However, the dues must be released within 30 days, failing which interest at six per cent per annum is payable after that.
5. Do the workers who did not join the appeal also benefit?
Yes. The Court extended the benefit to the other petitioners in the same writ petition, who were arrayed as proforma respondents Nos. 5 to 11.
Keywords: Supreme Court of India, Chhaganbhai Kohyabhai Pateliya v State of Gujarat, retirement on June 30 increment, C.P. Mundinamani, M. Siddaraj, daily wage skilled workers permanent, Government Resolution 17.10.1988, pension with increment, Irrigation Department Gujarat, Sanjay Kumar, Sanjeev Sachdeva, 2026 INSC 1088
Case Title: Chhaganbhai Kohyabhai Pateliya and Others v. The State of Gujarat and Others
Case No.: Civil Appeal arising out of Special Leave Petition (Civil) No. 26129 of 2025
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