2025:HHC:15017 IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLA CWP No.8382 of 2025 Decided on: 15th July, 2025 _________________________________________________________________ Anita Kumari ....Petitioner Versus State of H.P. & Ors. …Respondents _________________________________________________________________ Coram Ms. Justice Jyotsna Rewal Dua 1 Whether approved for reporting? Yes _________________________________________________________________ For the petitioner: Ms.Shivangi Sharma, Advocate vice Mr. Vikas Rajput, Advocate. For the respondents: Mr. Anup Rattan, Advocate General, with Mr. Rajat Chaudhary, Assistant Advocate General. Jyotsna Rewal Dua, Judge Petitioner feels aggrieved against the office letter/circular dated 17.12.2024 (Annexure P-6) issued by respondent No.3 directing all concerned-Deputy Directors of Elementary Education that “credit of earned leave may be allowed without any financial benefits in favour of TGTs who have been allowed regularization retrospectively with all consequential benefits.” 1 Whether reporters of Local Papers may be allowed to see the judgment? yes 2025:HHC:15017 - 2 - 2. Background 2(i) Petitioner was appointed as Assistant Librarian in erstwhile Dugra Chand Memorial College Jaisinghpur, District Kangra. The respondent-State took over the college vide notification dated 06.02.2007. Services of the staff of the said college were also taken over retrospectively w.e.f. 06.02.2007 on contract basis. 2(ii). Aggrieved against respondents’ decision in taking over her services on contract basis, petitioner instituted Anita Kumari Vs. State of H.P. and Anr2. The said writ petition was disposed of with direction to the respondents to consider and decide petitioner’s representation in accordance with law laid down in Om Prakash Vs. State of H.P. and Ors.3 as affirmed in State of H.P. Vs. Om Prakash4. The representation was decided by the respondents and vide office order dated 25.07.2022, services of the petitioner were taken over w.e.f. 06.02.2007 as Assistant Librarian on regular basis. Respondents granted benefits to the petitioner on account of her retrospective regularization but earned leave for this period of retrospective regularization (w.e.f. 2007 to 2 CWP No.8590 of 2010 decided on 02.05.2012 3 CWP No.7602 of 2010 decided alongwith connected matter on 02.05.2012 4 LPA No.54 of 2013, decided alongwith connected matters on 04.10.2019 2025:HHC:15017 - 3 - 2015) was not granted. 2(iii) Petitioner next represented to the respondents claiming benefits of earned leaves on account of her retrospective regularization. This claim was made in light of decision rendered in Sunita Sangroli Vs. State of H.P. and Ors5. Respondents came up with office circular/letter dated 17.12.2024 (Annexure P-6) allowing credit of earned leave on account of retrospective regularization but without any financial benefits. The said office circular/letter reads as under:- Subject:-Clarification regarding accumulation of earned leave from date of regularization of services retrospectively in compliance to the judgments passed by the Hon'ble High Court of Himachal Pradesh. Sir, Please find enclosed herewith letter received from the Secretary (Education) to the Govt. of H.P. vide letter No.EDUC-E05/25/2024 dared 5092024 regarding clarification regarding accumulation of earned leave from date of regularization of services retrospectively in compliance to the judgments passed by the Hon’ble High Court of Himachal Pradesh. The matter has been examined at Government level and it is found that cases similar situated to that of Sunita Sangroli (CWP No. 5043/2022) as per directions conveyed to Director of Higher Education Shimla vide this office letter No.EDN-B-E(3)-4/2024 5 CWP No.5043 of 2022 decided on 08.08.2023 2025:HHC:15017 - 4 - dated 01.08.2024 (Copy enclosed). You are therefore directed, that credit of earned leave may be allowed without any financial benefits in favour of TGTs who have been allowed regularization retrospectively with all consequential benefits.” 2(iv) In the above background, petitioner has instituted this writ petition, seeking following substantive reliefs: - a. That respondent may kindly be directed to credit the earned leaves in the leave account of petitioner admissible to them due to retrospective regularization of her services with all financial benefits. b. That all earned/privileged leaves which has not availed by petitioner for the period when petitioners has also served the department from initial date of appointment may be counted as earned leave with fincial benefits in accordance with judgment passed by this Hon,ble court and same be credited in leave account of petitioners and thereafter same may be paid to them or earned leaves may be enchased in favor of petitioner. c. That the word "without financial benefits" in letter dated 17-12-2024 may be quashed and set aside. 3. Heard learned counsel on both sides and considered the case file. 4. Consideration 4(i). Absolutely no reason is discernible from the 2025:HHC:15017 - 5 - impugned office circular for not allowing financial benefits while crediting the earned leaves in the leave account of the petitioner in view of her retrospective regularization with all consequential benefits. State of Sikkim and others Vs. Dr. Mool Raj Kotwal6, pertained to the claim of leave encashment for the period of re-employment after attaining the age of superannuation. The claim was rejected as Leave Encashment could be claimed for maximum of 300 days during service tenure till superannuation. However, some observations of the Hon’ble Apex Court, relevant to the context of Earned Leave encashment are being extracted hereinafter:- 25. In the said sequel, the philosophy and purpose of granting encashment of unutilized earned leave also warrants attention. Leave encashment is a legal entitlement that exists within the framework of service law and in the welfare of the employee. It allows employees to receive a monetary benefit in exchange for leave they have earned but not taken during regular employment. This right is based on the principle of deferred compensation to an employee who has not taken leaves and served, for which the employer must compensate not only for his/her work, but also for benefits of leave accumulated over time 6 Civil Appeal No. 5464 of 2025 decided on 23.04.2025 2025:HHC:15017 - 6 - limited to 300 days maximum. This entitlement is often established in statutory provisions, service rules (such as Rule 36 of the Leave Rules) or employment contracts, ensuring that employees are fairly compensated for their unutilized leave. 26. A three-judges Bench of this Court in ‘State of Rajasthan and Another Vs. Senior Higher Secondary School, Lacchmangarh and Others’7 , although in context of Section 29 of Rajasthan Non- Government Education Institutions Act, 1989, interpreted Leave Encashment as ‘nothing but salary for the unavailed leave to the credit of the employee’. Nonetheless, something more is required to understand the full import behind grant of Leave Encashment, which is the benefit after retirement to a devoted employee. Jurisprudentially, leave encashment is grounded in two key principles: equity and economic security. The principle of equity ensures that employees who forgo their right to take leave for the benefit of the organization are not deprived of its monetary value. The principle of economic security treats leave encashment as a form of deferred wages, similar to gratuity or pension benefits. This reinforces the employer’s duty to maintain fair labour practices and protects employees’ financial rights. 27. Interpreting leave encashment provisions goes beyond financial compensation and connects to broader legal principles of dignity and welfare during service. However, such interpretations must carefully balance the interests of both employees and the financial stability of the organization, especially when public exchequer is involved. Courts must tread carefully to 7 (2005)10 SCC 346 (para 21) 2025:HHC:15017 - 7 - prevent employees from claiming leave encashment multiple times for the same accrual, which could lead to unjust enrichment and may go against the public interest of largesse. 28. Therefore, while leave encashment ensures that extraordinary work ethic of an employee is rewarded, it must be applied in a way that upholds both employee rights and institutional sustainability. Naturally, courts must interpret leave encashment rules and statutes in a manner that prevents undue financial burden on employers while ensuring that employees receive what they are lawfully entitled to. 29. Thus, Leave Rules recognize benefit of leave encashment to a government servant whose service has been extended and who has retired from regular service under the Service Rules, but not to the re- employed retired government servant. Therefore, the leave encashment is permissible maximum upto 300 days of leave and not beyond as on the date of retirement, including the case of extension of service. 4(ii) Not allowing financial benefits for the earned leave due and admissible to the petitioner is contrary to the ratio of decision in Sunita Sangroli4. In the said case there was delay in regularization of service of the petitioner. The said delay was attributable to the respondent-Department. Prayer was accordingly made for grant of benefit of earned leave to the petitioner from the due date of regularization. Respondents in the said case had defended not crediting 2025:HHC:15017 - 8 - earned leaves on account of retrospective regularization on the basis of instructions issued by the Financial Department. According to the said instructions, benefit of earned leaves was not part of consequential benefits; There was no provision in the CCS (Leave) Rules, 1972, to grant benefit of earned leaves from retrospective date. All these objections were turned down by the Court. It was held that entitlement of civil servant to earned leave start from date he joins services where earned leave are permissible. Earned leave becomes an incidence of service, a benefit available to the civil servant by virtue of his being appointed to the civil post. There can be no discrimination between the persons who have received service benefits of regular employment w.e.f. retrospective date, be it under the orders of the Court or otherwise and others in whose cases the requirement of grant of benefits retrospectively did not arise. Denial of the benefit of earned leave to the petitioner from retrospective date of regularization was held bad in law being discriminatory, arbitrary and against Articles 14 and 16 of the Constitution of India. Relevant portion from the decision is as under:- “By way of instant petition, petitioner has prayed for 2025:HHC:15017 - 9 - following substantive reliefs:- ii That writ of mandamus may kindly be issued, directing the respondent department to grant benefit of earned leave to the petitioner from the due date of regularization i.e. 25.06.1997, in view of the fact that the delay in regularization of service of the petitioner is clear cut fault on the part of the respondent department and for the fault of the respondent department, the petitioner cannot be deprived from getting the benefit of earned leave.’ 2. The issue involved in the instant petition is with respect to the grant of benefit of earned leave from a retrospective date. 3&4. …………………….. 5. Respondents by way of their reply to the petition have sought to defend their action on the basis of the instructions issued by the Finance Department, vide office memorandum dated 06.07.2020 (Annexure P-7), according to which, the benefit of earned leave was not a part of consequential benefits. It is submitted on behalf of the respondents that the leave is regularized under CCS Rules, 1972 and in such rules there is no provision to grant the benefit of earned leave from retrospective date. 6 to9 …………………………………….. 10. The entitlement of civil servant to an earned leave starts from the date she joins the service, where earned leave is permissible. That being so, the earned leave becomes an incidence of service, a benefit available to the civil servant by virtue of he being appointed to a civil post. In this view of the matter, to discriminate between the persons who have received service benefits of regular 2025:HHC:15017 - 10 - employment w.e.f. retrospective date, be it under the orders of the Court or otherwise and others in whose cases the requirement of grant of benefits retrospectively did not arise, is clearly discriminatory and without any intelligible differentia. 11. It is not a case that the petitioner had not rendered actual services to the State from the date from which she was allowed to derive her benefits by virtue of a decision in compliance to the orders of the Court. Once, she had rendered the services from such date and had been ordered to be conferred with all the service benefits from such date, denial of the benefit of earned leave to the petitioner from such retrospective date is bad in law for the reason that it is discriminatory and arbitrary and hence against the Articles 14 and 16 of the Constitution of India. 12. Instructions issued, vide office memorandum dated 06.07.2020, by the Finance Department of State Government, Annexure P-7, thus, cannot be sustained for the reasons detailed above. Even otherwise, the CCS Leave Rules, 1972, do not provide for any embargo on the grant of benefit of earned leave from retrospective date. 13. In result, the petition is allowed. Office memorandum dated 06.07.2020 (Annexure P-7), is quashed and set aside. Respondents are directed to grant benefit of earned leave to the petitioner from the initial date of contract appointment i.e. 25.06.1997 within eights weeks from today.” It is admitted position of the parties that the above judgment has attained finality and has been accepted 2025:HHC:15017 - 11 - and implemented by the respondents. 4(iii) The Central Civil Services (Leave) Rules entitles, the petitioner to financial benefits in lieu of maximum 300 earned leaves. The, office circular dated 17.12.2024 (Annexure P-6) permits credit of earned leaves for the period of retrospective regularization to the leave account of the petitioner but without any monetary benefit. Denial of financial benefits to the extent of 300 earned leave spanning petitioner’s entire service career inclusive of period in question, cannot be held to be in consonance with law. 4(iv) During hearing of the case on 14.07.2025, learned Assistant Advocate General had placed on record an office order dated 11.07.2025 issued by respondent No.2 and submitted that the aforesaid office order reflects the stand of the respondents and no further reply is required to be filed. In the aforesaid office order, respondent No.2 has now assigned following reason for denying financial benefits in lieu of earned leaves falling to petitioner’s credit from retrospective date of regularization of her services:- “And whereas, the Government has notified HP Recruitment and conditions of Service of Govt. Employees bill, 2024 wherein it has been mentioned that after 12.12.2003 contractual will be entitled for 2025:HHC:15017 - 12 - service benefit after regularization only. Now therefore, in view the provisions contained in HP Government has notified Recruitment and conditions of Service of Govt. Employees Act, 2024 (Act No. 23 of 2025), any benefit of contract service is not admissible to any employee. Accordingly, at this stage the case of petitioner is not similar to Smt. Sunita Sangroli. Keeping in view the position explained above, the case of Smt. Anita Kumari, Assistant Librarian in GC Jaisinghpur, Distt. Kangra is hereby rejected being not similar to Smt. Sunita Sangroli. However, Smt. Anita Kumari, Assistant Library is hereby granted the benefit of credit of earned leave w.e.f. 01-01-2006 on notional basis subject to total credit of 300 Earned Leave.” As per above extract, petitioner cannot be granted actual financial benefits in lieu of earned leaves from the date of her retrospective regularization on account of the H.P. Recruitment and Conditions of Service of Government Employees Act, 2024 ( hereinafter called as 2024 Act) , as under the aforesaid enactment, after 12.12.2003 contractual employees will be entitled for service benefit only after regularization of their services. Benefit of contractual service will not be admissible to any employee. Interestingly, the 2024 Act came into force w.e.f. 25.02.2025, whereas, the decision to deny financial benefits to the petitioner in lieu of earned leaves admissible to her 2025:HHC:15017 - 13 - on account of her retrospective regularization had been taken much earlier i.e. 17.12.2024. Respondents cannot take shelter behind the 2024 Act for defending the order passed prior thereto. Furthermore, instant is not a case where petitioner has claimed benefit of contractual service. The services of the petitioner have already been regularized w.e.f. 06.02.2007. The aforesaid enactment has no applicability to the facts and relief claimed in the present case. Petitioner now, is not seeking benefit of contractual service in her claim of financial benefits for 300 earned leaves by computing the same from the date of her regularization i.e. 06.02.2007. Petitioner’s claim is purely based upon the date of retrospective regularization of her services w.e.f. 06.02.2007. It has not been disputed that petitioner’s services have been regularized retrospectively w.e.f. 06.02.2007 with all consequential benefits and that petitioner had been in position thorough out and had actually worked during the period in question. That being the position, petitioner is entitled to earned leaves on account of retrospective regularization of services for the period in question. 2025:HHC:15017 - 14 - Apparently, the respondents have also acknowledged this fact as the office order issued on 11.07.2025 states that petitioner will be entitled to notional benefits of earned leaves from retrospective date of regularization of her services. This admission of respondents takes away the foundation of their defence that in view of the 2024 Act, petitioner cannot be allowed benefit of earned leaves from the retrospective date of regularization of her services. When petitioner’s entitlement to the earned leaves to the extent of 300 from the date of her retrospective regularization is not in dispute, there is no valid reason for denying financial benefits in lieu thereof. Earned leave is not something which can be credited to the leave account of an employee on notional basis. When respondents do not dispute petitioner’s entitlement to earned leave during period of retrospective regularization of her services, the financial benefits attached thereto shall follow but of course in lieu of maximum of 300 earned leaves during entire service career of the petitioner’s inclusive of period of retrospective regularization of her service. Financial benefits for maximum 300 earned leaves will be admissible to the petitioner at the time of her superannuation. 2025:HHC:15017 - 15 - 5. In view of above discussion, the impugned office circular/letter dated 17.12.2024 (Annexure P-6) and office order dated 11.07.2025 are quashed and set aside. Petitioner is held entitled to financial benefits in lieu of earned leaves falling to her credit on account of her retrospective regularization to maximum of 300 earned leaves in her total service career. In the given facts, petitioner, however, shall not be entitled to claim earned leaves from the date of her retrospective regularization till her actual joining the post on regular basis for any other purpose. The writ petition is disposed of on above terms. Pending miscellaneous application(s), if any, also stand disposed of. Jyotsna Rewal Dua Judge July 15, 2025 R.Atal