Can retrospective pay revision in Govt/ Public sector reflect in computing compensation after death? 3-judge Bench of Supreme Court to decide

Supreme Court was considering an appeal by family members of a deceased employee of United India Insurance. Employee met with and an accident following which the Motor Accidents Tribunal granted compensation of 53 lakhs
Can retrospective pay revision in Govt/ Public sector reflect in computing compensation after death? 3-judge Bench of Supreme Court to decide
Supreme Court

Can retrospective pay revisions of government and public sector employees be also made applicable to compute monthly emoluments of a deceased employee in such sector though such pay revision happened after the death of the employee?

A three-judge Bench of the Supreme Court will examine this issue after a Division Bench comprising Justices Sanjay Kishan Kaul and Hrishikesh Roy referred the matter to a larger Bench.

The Court considered it fit to refer the issue to a larger Bench in view of the fact that pay revision when it comes to government and public sector service takes time to materialise and happens less frequently when compared to private sector employment.

"We are of the view that the only aspect which may need examination is the plea advanced on behalf of the petitioner that where the Government is an employer of the public sector and pay revisions are applied retrospectively (it is submitted that the process of revision takes time in Government and public authorities) whether that pay revision applied retrospectively after the date of demise should be a factor taken into account while computing the monthly emoluments of the deceased," the Court said in its order.

The Bench was considering an appeal filed by family members of a deceased employee of United India Insurance. The employee had met with and an accident following which the Motor Accidents Claims Tribunal had granted compensation of Rs. 53 lakh.

However, soon thereafter, by way of Rationalisation of Pay Scales and Other Conditions of Service of Development Staff Second Amendment Scheme, 2016, scale of pay of development officers of all nationalized insurance companies was increased with retrospective effect from August 2012.

Consequently, there was a significant increase in the salary of the deceased as a result of the Pay Revision Order.

In appeal, the family contended before the Kerala High Court that revised pay made applicable retrospectively from a date anterior to death must be reckoned for fixing income.

The High Court, however, refused to accept the same ruling that subsequent pay revision cannot be considered for fixing income of a victim.

In their appeal before the Supreme Court, the following question was raised by the appellants:

"Whether pay revision granted to a public sector employee with retrospective effect from a date anterior to the date of death must be considered and benefit of increase in salary must be given while fixing the gross income of the deceased?"

The Supreme Court order noted that the 2008 judgment in Oriental Insurance Co. Ltd. v. Jashuben held that latter revision would not be a factor to determine the amount of compensation.

It was contended by the appellants that the High Court failed to appreciate the dicta in Jashuben correctly.

"In fact, in that case, this Hon'ble Court denied the benefit of pay revision singularly on account of the fact that the pay revision was not retrospective with effect from a date anterior to the date of death,” the appellants submitted.

Importantly, the appellants referred to a 2013 three-judge bench judgment in Rajesh & Ors. v. Rajbir Singh & Ors. to contend that the subsequent pay revision was taken into account.

The Supreme Court noted that the decision in Rajesh v. Rajbir Singh was limited to the aspect of computation and did not deal with the legal issue.

"We are thus, of the view that this aspect would required to be considered by a three Judges Bench," the Court said referring the matter to larger Bench.

Advocates MF Philip, Joseph Saleem and Purnima Krishna appeared for the appellants.

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