M.P.STATE ROAD TRANSPORT CORP. Vs MANOJ KUMAR
Bench: A.K. SIKRI,R.K. AGRAWAL
Case number: C.A. No.-004437-004437 / 2009
Diary number: 28909 / 2007
Advocates: J S WAD AND CO Vs
B. S. BANTHIA
Page 1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 4437 of 2009
MADHYA PRADESH STATE ROAD TRANSPORT CORPORATION .....APPELLANT(S)
VERSUS
MANOJ KUMAR & ANR. .....RESPONDENT(S)
W I T H
CIVIL APPEAL NO. 8363 OF 2016 (ARISING OUT OF SLP (C) NO. 4697 OF 2008)
CIVIL APPEAL NO. 4438 of 2009
CIVIL APPEAL NO. 4439 of 2009
CIVIL APPEAL NO. 4440 of 2009
CIVIL APPEAL NO. 4441 of 2009
CIVIL APPEAL NO. 4442 of 2009
CIVIL APPEAL NO. 4443 of 2009
CIVIL APPEAL NO. 4444 of 2009
CIVIL APPEAL NO. 4445 of 2009
CIVIL APPEAL NO. 4446 of 2009
CIVIL APPEAL NO. 8364 OF 2016 (ARISING OUT OF SLP (C) NO. 14522 OF 2010)
Civil Appeal No. 4437 of 2009 & Ors. Page 1 of 34
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CIVIL APPEAL NO. 8365 OF 2016 (ARISING OUT OF SLP (C) NO. 14587 OF 2010)
CIVIL APPEAL NO. 8366 OF 2016 (ARISING OUT OF SLP (C) NO. 14594 OF 2010)
CIVIL APPEAL NO. 8367 OF 2016 (ARISING OUT OF SLP (C) NO. 14595 OF 2010)
CIVIL APPEAL NO. 8368 OF 2016 (ARISING OUT OF SLP (C) NO. 14679 OF 2010)
CIVIL APPEAL NO. 8370 OF 2016 (ARISING OUT OF SLP (C) NO. 14775 OF 2010)
CIVIL APPEAL NO. 8371 OF 2016 (ARISING OUT OF SLP (C) NO. 14785 OF 2010)
CIVIL APPEAL NO. 8372 OF 2016 (ARISING OUT OF SLP (C) NO. 14874 OF 2010)
CIVIL APPEAL NO. 8373 OF 2016 (ARISING OUT OF SLP (C) NO. 14877 OF 2010)
CIVIL APPEAL NO. 8374 OF 2016 (ARISING OUT OF SLP (C) NO. 14890 OF 2010)
CIVIL APPEAL NO. 8375 OF 2016 (ARISING OUT OF SLP (C) NO. 14933 OF 2010)
CIVIL APPEAL NO. 8376 OF 2016 (ARISING OUT OF SLP (C) NO. 14964 OF 2010)
CIVIL APPEAL NO. 8377 OF 2016 (ARISING OUT OF SLP (C) NO. 27017 OF 2011)
A N D
CIVIL APPEAL NO. 8378 OF 2016 (ARISING OUT OF SLP (C) NO. 27670 OF 2011)
Civil Appeal No. 4437 of 2009 & Ors. Page 2 of 34
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J U D G M E N T A.K. SIKRI, J.
Leave granted in the special leave petitions.
2) The appellant Madhya Pradesh State Road Transport Corporation
(for short, the 'Corporation') is a public sector undertaking of the
State of Madhya Pradesh and undertakes the work of carrying
passengers from one place to another within and outside the
State of Madhya Pradesh. As the appellant Corporation was
running into losses, the State Government obtained permission
from the Department of Road Transport & Highways of the
Ministry of Shipping, Road Transport & Highways, Government of
India for winding up of the appellant Corporation. This permission
was given by the Government of India on March 23, 2005 with the
following directions:
“The State Government shall ensure and be fully responsible for ensuring compliance of any existing/future orders passed by various court including Tribunal in any/all matters relating to MPSRTC. The State Government is also advised to safe guard the interest of employees of MPSRTC.”
3) Considering the closure of the Corporation, the Managing
Director, vide S.No. 1452 (Karmik-2)Stha-B/2005, Order No. 28,
introduced a Scheme called as Voluntary Retirement from Service
(for short, 'VRS') for the employees of the Corporation. The said
Civil Appeal No. 4437 of 2009 & Ors. Page 3 of 34
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Scheme was to come into force from July 01, 2005. The relevant
clauses, for the purpose of the instant appeals, are as under:
“4. Scheme: (i) All the candidates – employees, shall be permitted to give their option under this Scheme upto 1.8.2005 in Form (ka), along with in Form Kha. Nomination Form shall also have to be filled up. The Management shall have this right, that they may on the basis of the reasons to be given in writing, but without intimating any reason to the applicant, may accept the Voluntary Retirement from Service or reject, against which no provision of any appeal, relief shall be vested.
(ii) In the following matters, on receipt of the option of Voluntary Retirement from Service, on the basis of merits, decision shall be taken for consideration:
(ka) Whether against the employee concerned of the Corporation, Administrative action is either pending or is 'anudhyat'.
(Kha) Where, in any criminal court, any proceeding is pending, or in any Court, is in process before hand.
(ga) Employee, who in the normal course has given the resignation letter from the service of the Corporation, or has given.
(gha) Employee, who against the Corporation has initiated judicial action, or is going on, and till such action is not rejected or finished by the Court.
(kha) Application for option presented after dated 1.8.2005.
(iii) Under the Scheme, the option once given by the employee, shall not be permissible to be changed or taken back.
(iv) The Management, by accepting once, the Voluntary Retirement from Service of which employee has intimated to the employee, in this respect, then he shall not be entitled to
Civil Appeal No. 4437 of 2009 & Ors. Page 4 of 34
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employment on contract, or otherwise in service of the State Government, or in the Service of the Corporation, or in its attached Company, active Companies, i.e. the employee in this scheme, in the Public Service, as defined, shall not be entitled to ask for employment.
xx xx xx
As per clause 4(1) of the said Scheme, the option was to be given till 1.8.2005. In other words one month time was given to decide either to opt for VRS Scheme or not to opt.
Clause 4(ii) of the order clearly provided that “under the Scheme, the option once given by the employee, shall not be permissible to be changed or taken back.””
4) It becomes manifest from the provisions of the aforesaid Scheme,
it provided certain conditions and also a specific form in which the
application/option for VRS under the Scheme was to be made.
Further, one of the conditions in the VRS Scheme was that once
the application form for opting VRS is submitted, it would not be
open to the applicant to withdraw the same. This Scheme was
declared open on July 01, 2005 and was to last till August 01,
2005. It may also be stated at this stage that though in this VRS
Scheme there was no indication that the last date for submission
of the application can be extended, on October 12, 2006, an order
was passed amending certain provisions of the original Scheme
which was promulgated vide Order No. 28 dated July 01, 2005.
Essentially, there was only one amendment, namely, extending
Civil Appeal No. 4437 of 2009 & Ors. Page 5 of 34
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the last date of submission of the application upto October 28,
2006. Other provisions/ conditions of the original Scheme had to
remain unaltered. With this amendment, those employees who
had not opted under the Scheme by the earlier stipulated date,
i.e. August 01, 2005, were provided another opportunity to give
their option for VRS. As would be noticed hereinafter, one of the
arguments is as to whether a new Scheme was promulgated or it
was an extension of the earlier Scheme. This aspect becomes
significant because of the reason that as per the original Scheme
last date for making application was August 01, 2005 and the
Scheme came to an end on that date. The 'extension' given is
much thereafter, i.e. on October 12, 2006. Thus, there was no
Scheme in operation from August 02, 2005 to October 11, 2006.
As this argument needs serious consideration and will have to be
necessarily addressed at the appropriate place, we would like to
reproduce hereunder the Order dated October 12, 2006 by which
the time was extended till October 28, 2006. The same reads as
under:
“Sl.No. 1919/Karmik/Ek/Swi.Se.Ni/06 Dated 12.10.2006
O R D E R
Subject: Order No. 28 (Voluntary Retirement from Service Scheme 2005) – in connection with.
For giving option in the order No. 28 issued
Civil Appeal No. 4437 of 2009 & Ors. Page 6 of 34
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by the Managing Director, of Part Ka, Kha, in para 4(ii), (kna) the last date has been given as 01.08.2005. After consideration and after consent by the State Government, this paragraph is amended as hereunder:
“(kna) Application for option presented after dated 28.10.06”.
2. The rest of the provisions/conditions issued vide order No. 28 of the Managing Director, with regard to Voluntary Retirement from Service 2005, shall remain as before.
3. Those employees, by whom option under this Scheme has not been presented in the past and now want to present their option, under this Scheme, then they can present the option, about V.R.S. under the conditions of Managing Director Order No. 28.
Sd/- Managing Director”
5) The respondents/employees in all these appeals had submitted
their applications for voluntary retirement within the span of
original period fixed under the Scheme, i.e. between July 01,
2005 and August 01, 2005. Other common factor in all these
appeals is that before their applications could be accepted, they
had sought withdrawal of their option. However, requests for
withdrawal of the options were made after August 01, 205, i.e.
after the expiry of the original Scheme. However, their requests
for withdrawal were not entertained and on the contrary
applications for VRS submitted by these employees were
Civil Appeal No. 4437 of 2009 & Ors. Page 7 of 34
Page 8
accepted. In order to make it abundantly clear, we clarify that this
happened after these respondents had submitted their affidavits
withdrawing their options under the VRS Scheme. These
respondents were, accordingly, relieved from the organisation on
the afternoon of July 31, 2005.
6) These respondents challenged the aforesaid action by contending
that once they had withdrawn their application for VRS, there was
no question of going ahead with the option of VRS and accepting
the same. Therefore, the action of the Corporation was
unwarranted and contrary to law. All these employees
approached the High Court of Madhya Pradesh and filed
respective writ petitions challenging the aforesaid action of the
Corporation.
7) While contesting these writ petitions, plea taken by the
Corporation was that as per the specific provision contained in the
VRS Scheme itself, there was a clear prohibitory clause putting
an embargo on the rights, if any, of these employees from
withdrawing their applications and, therefore, move on the part of
these respondents to withdraw their option to take voluntary
retirement was inconsequential and the Corporation was
empowered to go ahead by accepting the applications for VRS.
Civil Appeal No. 4437 of 2009 & Ors. Page 8 of 34
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8) The learned Single Judge of the High Court dismissed these writ
petitions accepting the plea of the Corporation. It was held that
the applications for withdrawal of VRS could only be moved within
the validity period of the Scheme and in those cases where
applications for withdrawal was submitted after August 01, 2005,
this could not be done by the concerned employees. Writ appeals
came to be filed before the Division Bench of the High Court by
the aggrieved employees. The Division Bench, vide the
impugned judgment, decided all these appeals together and
allowed them holding that it is always permissible for an employee
to withdraw the option under VRS before it is accepted. The High
Court has proceeded on the basis that such a VRS Scheme
calling for options is an invitation to offer. Application submitted
by an employee opting under this Scheme qua voluntary
retirement amounts to an officer and only on the acceptance of
such an offer by the employee, a deal gets concluded and such
an offer can, therefore, always be withdrawn before it is accepted.
For this proposition, the High Court referred to and relied upon
judgments of this Court in Bank of India & Ors. v. O.P.
Swarnakar etc.1 and concluded as under:
“14. From the aforesaid enunciation of law, there is 1
(2003) 2 SCC 721
Civil Appeal No. 4437 of 2009 & Ors. Page 9 of 34
Page 10
no scintilla of doubt that an offer made by an employee ipso facto would not amount to resignation in praesenti and the offer can be withdrawn during the validity period. Learned Single Judge, as is perceivable, has dismissed some of the writ petitions and required some of the writ petitioners to seek redressal under the industrial law as the scheme was valid upto 1.8.2005. At this juncture, it is appropriate to mention that the conclusion arrived at by the learned Single Judge in this regard cannot be found fault with as the scheme in question, at the time of delivery of judgment, was valid upto 1.8.2005. Presently, the scheme is valid upto 31.7.2007. The said fact is not disputed by Mr. Shobhit Aditya, learned Counsel for the Corporation. As the validity period of the Scheme has been extended, the said validity would relate back to the date of inception of the Scheme and it cannot be said that jural relationship between the employees and the employer has come to an end. Therefore, the employees were entitled in law to withdraw their option for voluntary retirement within the validity period and as the validity period has been extended and they have withdrawn their option they should be deemed to be in service. Be it noted that none of the appellants has accepted any kind of benefit under the voluntary retirement scheme. Some of them are continuing in service. The employees who are continuing in service should be allowed to continue till the jural relationship between the employees and the employer comes to an end as per law. The appellants who are not in service should be reinstated in service and they shall reap all the consequential benefits.”
9) It becomes manifest from the reading of the three Judge Bench
judgment of this Court in O.P. Swarnakar that such a VRS
Scheme is held to be contractual in nature. The Court, thus, held
that provisions of the Indian Contract Act, 1872 would apply,
Civil Appeal No. 4437 of 2009 & Ors. Page 10 of 34
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which provisions categorically lay down that an offer made by a
person can be withdrawn by him before its acceptance. However,
an endeavour was made by the learned senior counsel appearing
for the Corporation to argue that the judgment in O.P. Swarnakar
should not have been followed by the High Court in view of the
specific clause in the Scheme to the effect that an application
once given cannot be withdrawn. He submitted that the High
Court, in the process, ignored the mandate of law laid down by
this Court in State Bank of Patiala v. Romesh Chander Kanoji
& Ors.2 wherein this Court held as under:
“9. We do not find any merit in the above argument. It is important to bear in mind that the Schemes in question are basically funded schemes. Under such Schemes, time is given to every employee to opt for voluntary retirement and similarly time is given to the management to work out the Scheme. Clause (5) of SBPVRS gave fifteen days' time to the employees to opt for the Scheme and under clause (8) a period of two months is given to the management to work out the Scheme. Since the said Schemes are funded schemes, the management is required to create a fund. The creation of the fund would depend upon the number of applications; the cost of the Scheme; liability which the Scheme would impose on the Bank and such other variable factors. If the employees are allowed to withdraw from the Scheme at any time after its closure, it would not be possible to work out the Scheme as all calculations of the management would fail. In the case of Bank of India v. O.P. Swarnakar [(2003) 2 SCC 721 : 2003 SCC (L&S) 200] SBIVRS is held to be an invitation to offer. Following the said judgment, we hold that SBPVRS is an invitation to
2 (2004) 2 SCC 651
Civil Appeal No. 4437 of 2009 & Ors. Page 11 of 34
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offer and not an offer. Clause (5) of the said SBPVRS inter alia states that the Scheme will remain open during the period 15-2-2001 to 1-3-2001 whereas Rule 8 thereof provides for mode of acceptance by the management. It is in the light of Rules 5 and 8 that one has to read clause (9)(i) which provides for general conditions and under which it is provided that application once made cannot be withdrawn. In Chitty on Contracts (28th Edn., p. 125), the learned author states that:
“an offer may be withdrawn at any time before it is accepted. That this rule applies even though the offeror has promised to keep the offer open for a specified time, for such a promise is unsupported by consideration.”
Therefore, clause (5) of SBPVRS gives locus poenitentiae to the employee to withdraw by 1-3-2001 after which the mode of acceptance contemplated by clause (8) of SBPVRS would apply and the Bank will proceed to vet the applications. As stated above, the Bank needs time to ascertain its liability; it is required to find out the cost of creation of a separate fund which in turn depends on the number of applications and if the employees are permitted to withdraw after the date of closure it would be impossible for the Bank to implement the Scheme. Therefore, clause (5) gives time to the employee to withdraw by 1-3-2001 and the Bank is given time of two months thereafter to complete the designated mode of acceptance (see Halsbury's Laws of England, 4th Edn., p. 133). Reading clauses (5), (8) and (9)(i), it is clear that employees are precluded from withdrawing from SBPVRS after the closure of the Scheme on 1-3-2001.”
10) On that basis, it was argued that it was not open to the
respondents to withdraw their application after August 01, 2005,
which was the last date stipulated in the application and thereby
disturb the equilibrium and the very creation of the Fund that was
Civil Appeal No. 4437 of 2009 & Ors. Page 12 of 34
Page 13
created depending upon the number of applications; the cost of
the Scheme; liability which the Scheme would impose and other
variable factors etc. It was also argued that the judgment in O.P.
Swarnakar related to batch of matters of nationalised banks
where the facts and questions were different. The significant
distinguishing factor was that there was no closure of any of the
nationalised banks, which was the prime motive for introducing
the VRS Scheme by the Corporation.
11) Second argument, in the alternative, was that even if the
judgment in O.P. Swarnakar is to be applied, it was specifically
held in that case that option of voluntary retirement can be
withdrawn by the last date on which the application is to be
submitted. In the instant case, these options were withdrawn
after the stipulated date. It was pointed out that the High Court
did not accept this plea on the ground that since the last date was
extended from August 01, 2005 to October 28, 2006 and the
applications for withdrawal were not submitted from the said date,
the withdrawal applications would be treated as having been
submitted before the expiry date mentioned in the Scheme. The
learned senior counsel for the Corporation argued with ardor that
this was an erroneous approach on the part of the High Court
Civil Appeal No. 4437 of 2009 & Ors. Page 13 of 34
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inasmuch as the original VRS Scheme promulgated vide order
No. 28 dated July 01, 2005 never mentioned any clause for
extension of the Scheme and once these employees opted under
the said Scheme they were very well informed that the last date is
August 01, 2005. It was also submitted that the amendment was
carried out for specific purpose, namely, to give opportunity to
those who had not yet opted under the Scheme and, therefore,
such an extension in the date could not enure to the benefit of
those who had already opted and for whom the last date was
August 01, 2005.
12) Learned counsel who appeared for the respondents in these
appeals submitted that the position in law was crystal clear as
stated in O.P. Swarnakar and even in Romesh Chander Kanoji,
relied upon by the Corporation, and made a fervent plea to this
court to accept the approach adopted by the High Court in the
impugned judgment. They also pointed out that Romesh
Chander Kanoji, in fact, specifically referred to and relied upon
O.P. Swarnakar, which was a three Judge Bench judgment. It
was also argued that even thereafter the principle of O.P.
Swarnakar has been applied by this Court consistently and
following judgments are cited in support:
Civil Appeal No. 4437 of 2009 & Ors. Page 14 of 34
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(i) Food Corporation of India and others v. Ramesh Kumar3
(ii) New India Assurance Company Limited v. Raghuvir Singh
Narang and another4.
13) To begin with, we deem it appropriate to consolidate, with
required astuteness, various legal principles touching upon the
issue at hand, which are sparged in various judgments, and then
apply those principles to the facts in these cases. Though much
case law has emerged, reference to few judgments, which take
into consideration the earlier cases as well, would suffice. Since
the High Court has referred to the judgment in the case of O.P.
Swarnakar, we deem it apt to initiate the discussion with that
judgment, which is also earliest of the four judgments we are
going to refer to.
14) In O.P. Swarnakar, which was a judgment rendered by a three
Judge Bench of this Court, various nationalised banks were the
appellants and batch of matters pertaining to these banks were
decided. The State Bank of India, constituted under the State
Bank of India Act, 1955 and other banks taken over under the
Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1970 adopted in the year 2000 separately but similar 3 (2007) 8 SCC 141 4 (2010) 5 SCC 335
Civil Appeal No. 4437 of 2009 & Ors. Page 15 of 34
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schemes known as the “Employees Voluntary Retirement
Scheme”. The question involved in those appeals was whether
an employee opting for voluntary retirement under the said
Schemes was precluded from withdrawing that offer. The
Scheme adopted by the State Bank of India differed from the
Scheme of the other nationalised banks inasmuch as that scheme
permitted withdrawal of the applications for voluntary retirement
by February 15, 2001. The said Scheme was applicable in
relation to employees who on the date of application had
completed 15 years of service or 40 years of age. The period
during which the said Scheme was to remain operative varied
from bank to bank. However, in case of the Punjab National
Bank, the said Scheme was to remain in operation from
November 1, 2000 to November 30, 2000. Para 10.5 of the said
Scheme barred an employee from withdrawing the request made
for voluntary retirement after once exercising the option. Other
sub-paras of para 10 provided that a request for voluntary
retirement would not take effect unless accepted by the
competent authority who would have absolute discretion to accept
or reject that request. The said Scheme prescribed a particular
procedure for making an application for seeking voluntary
retirement. A large number of employees submitted their
Civil Appeal No. 4437 of 2009 & Ors. Page 16 of 34
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applications, out of whom a small number of employees withdrew
their offer. Despite withdrawal of their offer, the same was
accepted. In some cases, offers, despite withdrawal thereof,
were accepted after the expiry of the operation period of the
Scheme. Writ petitions were filed in various High Courts to
challenge the acceptance of the employees' applications by the
banks despite their withdrawal. Before the Punjab & Haryana
High Court, the validity of the said Scheme also was challenged.
Some writ petitioners sought issuance of a writ of mandamus to
the respective banks to pay unto them their lawful dues strictly in
terms of the Scheme. The High Court held that: (i) the said
Scheme was not a valid piece of subordinate legislation as
Sections 19(1) and 19(4) of the Banking Companies (Acquisition
and Transfer of Undertakings) Act, 1970 had not been complied
with, (ii) even assuming the said Scheme to be valid, it was open
to an employee to withdraw his option before the same had been
accepted and effectively enforced, and (iii) since the Scheme was
invalid, no relief could be granted in the writ petitions seeking any
benefits under the Scheme. The Bombay High Court and other
High Courts held that clause 10.5 of the said Scheme was not
operative as the employees had an indefeasible right to withdraw
their offer before the same was accepted. The Uttarakhand High
Civil Appeal No. 4437 of 2009 & Ors. Page 17 of 34
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Court dismissed a writ petition as not maintainable on the ground
that the petitioner had bound himself by the terms not to withdraw
the application for voluntary retirement.
15) Eschewing the discussion on other aspects which are not relevant
for these cases, insofar as issue at hand is concerned, the Court
held that the Scheme was floated with a purpose of downsizing all
employees. Such a Scheme, although may incidentally be
beneficial also to the employees, but was primarily beneficial to
the banks. The ultimate aim and object of floating such a Scheme
was for the purpose of effective functioning of the banks so as to
enable them to compete with private banks. On the other hand,
the Court also remarked that though bank employees do not
enjoy the 'status' as in the case of Government employees,
nevertheless, they do enjoy security of their employment
inasmuch as these nationalised banks were 'States' within the
meaning of Article 12 of the Constitution. The banks, therefore,
cannot take recourse to 'hire and fire' for terminating the services
of the employees. They are required to act fairly and strictly in
terms of the norms laid down therefor. Their actions in this behalf
must satisfy the test of Articles 14 and 21. Proceeding therefrom,
the Court took the view that a contract of employment is also a
Civil Appeal No. 4437 of 2009 & Ors. Page 18 of 34
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subject matter of contract and insofar as the question whether the
VRS Scheme was an offer/proposal or merely an invitation to
offer is essentially a question of fact. The Court further discussed
the law relating to 'offer' and 'acceptance' with the observations
that it could not be stated in simplistic form. In the context of the
VRS, however, the Court applied this law of contract by deducing
the following conclusions:
(i) The banks treated the application from the employees as an
offer which could be accepted or rejected.
(ii) Acceptance of such an offer was required to be
communicated in writing.
(iii) The decision making process involved application of mind on
the part of several authorities.
(iv) The decision making process was to be formed at various
levels.
(v) The process of acceptance of an offer made by an employee
was in the discretion of the competent authority.
(vi) The request of voluntary retirement would not take effect in
praesenti but in future.
(vii) The bank reserved its right to alter/rescind the conditions of
the Scheme.
Thus, the nationalised banks in terms of the Scheme had
Civil Appeal No. 4437 of 2009 & Ors. Page 19 of 34
Page 20
secured for themselves an unfettered and unguided right to deal
with the jural relationship between themselves and their
employees. It was held that the Scheme constituted invitation to
an offer and not an offer. As a fortiorari, the application submitted
by an employee was to be treated as offer/proposal of the
employee, and when accepted by the bank it would constitute a
'promise' within the meaning of Section 2(b) of the Indian Contract
Act, 1872 and only then the promise becomes an enforceable
contract.
On this analogy, the Court held that since employees had
withdrawn their offer before it was accepted, they had a right to do
so.
However, the Court found that the case of State Bank of
India stood slightly on a different footing as it had not amended
the VRS Scheme and even permitted withdrawal of applications
by February 15, 2001. Also, the Scheme floated by the State
Bank of India contained clause (7) which laid down the mode and
manner in which application for voluntary retirement was to be
considered and this clause created an enforceable right. The
Court noted that in the event the State Bank of India failed to
adhere to its preferred policy, the same could have been
subsequently enforced by the Court of law and, therefore, it would
Civil Appeal No. 4437 of 2009 & Ors. Page 20 of 34
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amount to some consideration. On this basis, insofar as appeals
of State Bank of India are concerned, the same were allowed but
appeals of nationalised banks were dismissed. Following
passages from this judgment capture the essence of the legal
principle laid down:
“113. The submission of the learned Attorney-General that as soon as an offer is made by an employee, the same would amount to resignation in praesenti cannot be accepted. The Scheme was in force for a fixed period. A decision by the authority was required to be taken and till a decision was taken, the jural relationship of employer and employee continued and the employees concerned would have been entitled to payment of all salaries and allowances etc. Thus it cannot be said to be a case where the offer was given in praesenti but the same would be prospective in nature keeping in view of (sic) the fact that it was come into force at a later date and that too subject to acceptance thereof by the employer. We, therefore, are of the opinion that the decisions of this Court, as referred to hereinbefore, shall apply to the facts of the present case also.
114. However, it is accepted that a group of employees accepted the ex gratia payment. Those who accepted the ex gratia payment or any other benefit under the Scheme, in our considered opinion, could not have resiled therefrom.
115. The Scheme is contractual in nature. The contractual right derived by the employees concerned, therefore, could be waived. The employees concerned having accepted a part of the benefit could not be permitted to approbate and reprobate nor can they be permitted to resile from their earlier stand.”
16) Next decision, in the chronology, which we want to refer to is the
Civil Appeal No. 4437 of 2009 & Ors. Page 21 of 34
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case of Romesh Chander Kanoji. This is also a judgment
rendered by a three Judge Bench, in which case of O.P.
Swarnakar was specifically referred to and discussed. The
principle laid down in O.P. Swarnakar was explained and in the
process the Court noticed different outcomes insofar as State
Bank of India is concerned vis-a-vis nationalised banks. This
distinction was brought out and explained by this Court in the
following manner:
“6. It is evident from above that in the case of SBIVRS, where there is a specific provision for withdrawal, the employee must exercise his option within the time specified; and in case of nationalized banks where there was no provision to withdraw (and in fact the Scheme forbade withdrawal), the withdrawal must be effected prior to acceptance by the Bank. Therefore, in terms of the ratio laid down by this Court, the employee is ensured under SBIVRS the right of withdrawal within the specified period.”
17) The Court thereafter referred to its earlier judgment of this Court
in State Bank of Patiala v. Jagga Singh5 wherein the Court held
that since State Bank of Patiala was a subsidiary of State Bank of
India and the Schemes were similar, the decision in O.P.
Swarnakar, so far as it related to the State Bank of India, would
be applicable to State Bank of Patiala as well. The counsel
appearing for the employees in this case sought to distinguish
5 (2004) 2 SCC 201
Civil Appeal No. 4437 of 2009 & Ors. Page 22 of 34
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Jagga Singh. However, this contention was repelled and in the
process observation which was made by the Court need a glance.
It is, thus, reproduced below:
“9. We do not find any merit in the above argument. It is important to bear in mind that the Schemes in question are basically funded schemes. Under such Schemes, time is given to every employee to opt for voluntary retirement and similarly time is given to the management to work out the Scheme. Clause (5) of SBPVRS gave fifteen days' time to the employees to opt for the Scheme and under clause (8) a period of two months is given to the management to work out the Scheme. Since the said Schemes are funded schemes, the management is required to create a fund. The creation of the fund would depend upon the number of applications; the cost of the Scheme; liability which the Scheme would impose on the Bank and such other variable factors. If the employees are allowed to withdraw from the Scheme at any time after its closure, it would not be possible to work out the Scheme as all calculations of the management would fail. In the case of Bank of India v. O.P. Swarnakar [(2003) 2 SCC 721 : 2003 SCC (L&S) 200] SBIVRS is held to be an invitation to offer. Following the said judgment, we hold that SBPVRS is an invitation to offer and not an offer. Clause (5) of the said SBPVRS inter alia states that the Scheme will remain open during the period 15-2-2001 to 1-3-2001 whereas Rule 8 thereof provides for mode of acceptance by the management. It is in the light of Rules 5 and 8 that one has to read clause (9)(i) which provides for general conditions and under which it is provided that application once made cannot be withdrawn. In Chitty on Contracts (28th Edn., p. 125), the learned author states that
“an offer may be withdrawn at any time before it is accepted. That this rule applies even though the offeror has promised to keep the offer open for a specified time, for such a promise is unsupported by consideration.”
Civil Appeal No. 4437 of 2009 & Ors. Page 23 of 34
Page 24
Therefore, clause (5) of SBPVRS gives locus poenitentiae to the employee to withdraw by 1-3-2001 after which the mode of acceptance contemplated by clause (8) of SBPVRS would apply and the Bank will proceed to vet the applications. As stated above, the Bank needs time to ascertain its liability; it is required to find out the cost of creation of a separate fund which in turn depends on the number of applications and if the employees are permitted to withdraw after the date of closure it would be impossible for the Bank to implement the Scheme. Therefore, clause (5) gives time to the employee to withdraw by 1-3-2001 and the Bank is given time of two months thereafter to complete the designated mode of acceptance (see Halsbury's Laws of England, 4th Edn., p. 133). Reading clauses (5), (8) and (9)(i), it is clear that employees are precluded from withdrawing from SBPVRS after the closure of the Scheme on 1-3-2001.”
18) The aforesaid two judgments pertained to nationalised banks or
State Bank of India/its subsidiaries. Issue was discussed again in
respect of a public sector undertaking in the case of Food
Corporation of India & Ors. v. Ramesh Kumar6. In the said
case, clause VIII (d) of the VRS Scheme framed by the Food
Corporation of India was to the following effect:
“Once an employee submits his application for voluntary retirement under this scheme to the competent authority, it shall be treated as final and it is not open to the employee to withdraw the same. The competent authority within notice period (3 months) shall take a decision to accept or reject the request and shall communicate the same to the official concerned.”
6 (2007) 8 SCC 141
Civil Appeal No. 4437 of 2009 & Ors. Page 24 of 34
Page 25
On facts, it was found that the offer of voluntary retirement
given by the employee was withdrawn before its acceptance. The
Court held that it could be so done following O.P. Swarnakar and
Romesh Chander Kanoji. Paragraph 8 of the said judgment
discusses the position as under:
“8. Now adverting to the present Scheme of Food Corporation, Para 8 clearly stipulates that the incumbent has no right to revoke the same and the Management will decide the same within three months. That means the Management still has three months' time to consider and decide whether to act upon the offer given by the incumbent or not. But if the incumbent revokes his offer before the Corporation accepts it then in that case, the revocation of the offer is complete and the Corporation cannot act upon that offer. In the present case there is one more additional factor which is that the Management has to take a decision within three months. Therefore, once the revocation is made by the incumbent before three months then in that case the Corporation cannot act upon the offer of voluntary retirement unless it is accepted prior to its withdrawal. In the present case, it is clear that the incumbent had given an offer for voluntary retirement on 13-9-2004 and he revoked his offer on 27-9-2004 but the same was accepted on 9-11-2004 i.e. after the revocation of his offer. In view of the law laid down by this Court in State Bank of Patiala [(2004) 2 SCC 651 : 2004 SCC (L&S) 428] the incumbent has already revoked his offer before it could be accepted. Therefore, in this view of the matter, the approach of the High Court appears to be correct and does not require any interference. The revocation made by the incumbent on 27-9-2004 of his offer of retirement cannot be acted upon as he has revoked it before the Corporation could act upon it. Hence, we are of the opinion, that the view taken by the High Court is correct. Consequently, all the three appeals are dismissed but without any order as to costs.”
Civil Appeal No. 4437 of 2009 & Ors. Page 25 of 34
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19) In New India Assurance Company Ltd. v. Raghuvir Singh
Narang & Anr.7, this Court again reiterated that such schemes
were contractual in nature and the provisions of the Indian
Contract Act, 1872 would apply and the offer could be withdrawn
any time before its acceptance. What is important is that this
Court culled out the principles laid down in O.P. Swarnakar in
para 22 of its judgment, which we reproduce below:
“22. The effect of the decision in Swarnakar can be summarised thus:
(i) If a contractual scheme provides that the voluntary retirement by exercise of option by the employee will come into effect only on its acceptance by the employer, it will not create any enforceable right in the employee to claim SV retirement. Any term in such a scheme that the employee shall not withdraw from the option once exercised, will be an agreement without consideration and therefore, invalid. Consequently, the employee can withdraw the offer (that is option exercised) before its acceptance. But if the contractual scheme gives the option to an employee to voluntarily retire in terms of the scheme and if there is no condition that it will be effective only on acceptance by the employer, the scheme gives an enforceable right to the employee to retire, by exercising his option. In such a situation, a provision in the contractual scheme that the employee will not be entitled to withdraw the option once made, will be valid and binding and consequently, an employee will not be entitled to withdraw from the option exercised.
(ii) Where the scheme is statutory in character, its terms will prevail over the general principles of contract and the provision of the Contract Act.
7 (2010) 5 SCC 335
Civil Appeal No. 4437 of 2009 & Ors. Page 26 of 34
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Further, there will be no question of any “consideration” for the condition in the scheme that the employee will not withdraw from the option exercised. Subject to any challenge to the validity of the scheme itself, the terms of the statutory scheme will be binding on the employees concerned, and once the option is exercised by an employee to voluntarily retire in terms of the retirement package contained in the scheme, the employee will not be entitled to withdraw from the exercise of the option, if there is a bar against such withdrawal.
20) Reading of the aforesaid judgments would clearly demonstrate
that in those cases where the Scheme is contractual in nature
(and not statutory in character as was seen in State Bank of
India's case), provisions of the Indian Contract Act would apply.
The VRS Scheme floated by the employer would be treated as
invitation to offer and the application submitted by the employees
pursuant thereto is an offer which does not amount to resignation
in praesenti and the offer can be withdrawn during the validity
period. This would be the position even when there is a clause in
the Scheme that offer once given cannot be withdrawn at all.
However, exception to this principle is that in such cases offer is
to be withdrawn during the validity period of the Scheme and not
thereafter even when if it is not accepted during the period of the
Scheme. That is the clear mandate of Romesh Chander Kanoji.
The rational which is given for carving out this exception is
Civil Appeal No. 4437 of 2009 & Ors. Page 27 of 34
Page 28
contained in para 9 of the said judgment, which has already been
reproduced above. To put it pithily, what is highlighted is that
such schemes are funded schemes and time is given to every
employee to opt for voluntary retirement. Because these are
funded schemes, the Management is required to create a fund.
The creation of this fund depends upon a number of applications;
the cost of the Scheme; liability which this Scheme would impose
on the employer and such other variable factors. In this situation,
if the employees are allowed to withdraw from the Scheme at any
time even after its closure, it would not be possible to work out the
Scheme as all calculations of the employer would fail.
21) In the present case, the Corporation had floated the Scheme
because of the reason that it has virtually stopped transport
business and the purpose of the Scheme was to benefit itself by
shrinking the strength of the employees as with no transport
business need for such employees is not there. Here also, the
Scheme provided that once the option is given, the same cannot
be withdrawn. Following the dicta in the aforesaid judgments, as
noted above, it is clear that notwithstanding this clause, the
employees had a right to withdraw the offer during the validity
period but not thereafter. This legal principle is even taken note of
Civil Appeal No. 4437 of 2009 & Ors. Page 28 of 34
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by the High Court as well in the impugned judgment.
The High Court has, however, held that though the Scheme
was valid up to August 01, 2005, but validity was extended up to
July 31, 2007, the employees could withdraw their offers before
July 31, 2007. Further, as in all these cases where the offer was
withdrawn before July 31, 2007, the High Court has dismissed the
appeals of the Corporation herein.
22) At this juncture, therefore, other issue that gains importance and
needs to be decided is: whether validity of the Scheme was
extended up to July 31, 2007 and the employees could withdraw
their offer before this date or the date on which the initial scheme
expired, i.e. August 01, 2005 and the withdrawal thereafter was
not permissible?
23) To decide this question, let us recapitulate some salient facts.
Scheme in the first instance was floated on July 01, 2005. It
clearly mentioned that those interested to opt for the Scheme
would give their options by August 01, 2005 and not thereafter. It
was categorically provided that application for option presented
after August 01, 2005 shall not be considered. Para 4(iii) also
provided that the option once given by the employee shall not be
permitted to be changed or taken back. Sub para (viii) of para 4
Civil Appeal No. 4437 of 2009 & Ors. Page 29 of 34
Page 30
provided for settlement of dues of the employee on acceptance of
such an Scheme. This Scheme came to an end on August 01,
2005. There was no extension of the Scheme during its currency
or even immediately thereafter. More than one year thereafter,
i.e. on October 12, 2006, the appellant Corporation gave another
opportunity to those who had not submitted the applications
earlier, to submit the options by October 28, 2006. We have
already reproduced, in toto, the order dated October 12, 2006. In
the first blush, it may give an impression that the initial date of
August 01, 2005 stands extended till October 28, 2006. However,
a little closer scrutiny and analysis of the factual background
narrated above amply demonstrates that it is not a case of
extension of the original Scheme. Reason is simple and can be
found in the fact that there was a big gap/hiatus between August
01, 2005 and October 12, 2006. Earlier Scheme had come to an
end on August 01, 2005, naturally no employees submitted or
could submit applications after August 01, 2005 under the
Scheme. There was no VRS Scheme in operation from August
02, 2005 to October 11, 2006. It is only on October 12, 2006,
another opportunity was given to the rest of the employees to
submit their applications and the period during which such an
application for voluntary retirement could be submitted was from
Civil Appeal No. 4437 of 2009 & Ors. Page 30 of 34
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October 12, 2006 to October 28, 2006. This small window was
opened for a period of 17 days for those employees who had not
submitted their applications and they were afforded another
chance. At the same time, the main reason was to attract more
such employees to opt for VRS as the Corporation had decided to
close down its operations and wanted its employees to take an
honorable exit with 'golden handshake'. Therefore, there is an
acquity and sharpness in the submissions of the Corporation that
it cannot be treated as extension of the earlier Scheme. In fact,
instead of promulgating the VRS Scheme all over again, easy
way was found by making amendment in a particular clause
stating that application presented after October 28, 2006 shall not
be considered. Another significant feature which has to be kept in
mind is that between August 01, 2005 and October 12, 2006,
applications of many employees had been accepted and many
out of them had even been offered their terminal dues. Thus, we
find that there are two distinct groups of employees who had
submitted their applications for VRS. First group was the one
which exercised its option between July 01, 2005 to August 01,
2005. Second set of employees are those who submitted their
options when another chance was given to them, i.e. from
October 12, 2006 to October 28, 2006. In view thereof, insofar as
Civil Appeal No. 4437 of 2009 & Ors. Page 31 of 34
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first set of employees are concerned, they could withdraw their
option, before it was accepted, by August 01, 2005 and not
thereafter. Likewise, those who submitted their options in the
second phase could withdraw the same before October 28, 2006.
A chart was submitted before us giving the status of the
applications that were submitted by various
employees/respondents in these appeals. This chart indicates
that some of the employees belonging to the first group had
withdrawn their offer before August 01, 2005. They had right to
do so. Acceptance of their offer after the withdrawal would be of
no consequence. However, those employees who withdrew their
offers after August 01, 2005 could not do so and, therefore, the
Corporation was within its right to accept their offers. Likewise,
those employees belonging to the second category who had
withdrawn their offers before October 28, 2006 were entitled to
withdraw their offers as those were not accepted by that date.
However, the withdrawal after October 28, 2006 when Scheme
was closed would be of no consequence.
24) When we apply the aforesaid test to the facts of this case, we find
that insofar as those employees who fall in the first category are
concerned, they had withdrawn their offer after August 01, 2005,
Civil Appeal No. 4437 of 2009 & Ors. Page 32 of 34
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except one Mr. Dinesh Chand Yadav, who is respondent No.1 in
the Civil Appeal arising out of Special Leave Petition (Civil) No.
14874 of 2010. Therefore, from this batch, only he is entitled for
reinstatement with back wages, as he has also filed an
undertaking, in terms of this Court's order dated May 12, 2016, to
the effect that he is not gainfully employed during the relevant
period. Likewise, employees falling in the second category had
withdrawn their offer after October 28, 2006, except Mr. Sukhram
and Mr. Ram Sharan Rathore, both respondents in the Civil
Appeal arising out Special Leave Petition (Civil) No. 14594 of
2010. However, these respondents failed to comply with this
Court's order dated May 12, 2016. They are, therefore, entitled
for reinstatement without back wages.
25) Accordingly, Civil Appeal arising out of Special Leave Petition
(Civil) No. 14874 of 2010 qua Mr. Dinesh Chand Yadav and Civil
Appeal arising out of Special Leave Petition (Civil) No. 14594 of
2010 are dismissed. In the case of all other respondents, their
application for withdrawal post the tenure of the Scheme would be
of no consequence. The direction of the High Court reinstating
these respondents/employees is, therefore, found to be contrary
to law and is hereby set aside, resulting into allowing all other
Civil Appeal No. 4437 of 2009 & Ors. Page 33 of 34
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appeals of the Corporation.
In the facts and circumstances of this case, there shall be
no order as to costs.
.............................................J. (A.K. SIKRI)
.............................................J. (R.K. AGRAWAL)
NEW DELHI; AUGUST 29, 2016.
Civil Appeal No. 4437 of 2009 & Ors. Page 34 of 34