CASE NO.: Appeal (civil) 2957 of 2008 PETITIONER: National Textile Corporation (M.P.) Ltd. RESPONDENT: M.R. Jhadav DATE OF JUDGMENT: 24/04/2008 BENCH: S.B. Sinha & V.S. Sirpurkar JUDGMENT:
J U D G M E N T
REPORTABLE
CIVIL APPEAL NO. 2957 OF 2008
[Arising out of SLP (Civil) No. 6934 of 2006]
S.B. SINHA, J :
1. Leave granted.
2. Interpretation of a Voluntary Retirement Scheme (VRS) floated by the
appellant Corporation is in question in this appeal which arises out of a
judgment and order dated 10.01.2006 passed by the High Court of Madhya
Pradesh at Indore in Writ Petition No. 2623 of 2001.
3. Respondent at all material times was working as an Assistant
Spinning Master. A Voluntary Retirement Scheme was floated by the
appellant.
4. Respondent, on or about 16.05.2000 opted for the said Scheme with
effect from 31.07.2000. The said application was in a prescribed proforma,
the relevant portion of which reads as under:
“With reference to your circular/ Notice
No..dated./Memorandum of Settlement
dated.containing details of N.T.C. Scheme of
Voluntary Retirement, I hereby tender my
unconditional resignation from my post and
service of your mills/ office with effect from. I
hereby opt for Voluntary Retirement in terms of
above said Scheme of Voluntary Retirement which
I have carefully read and understood.
2. I hereby undertake that I shall not claim any
payments from your management/ mills/ company
on account of my Voluntary resignation
consequent on my Voluntary Retirement other than
those admissible under the aforesaid scheme of
Voluntary Retirement.
3. I also undertake that I shall not at all
withdraw resignation herein tendered by me from
your service. I have furnished the required
particulars in the Appendix enclosed.”
5. Indisputably, administrative clearance in relation thereto was made
but no decision taken by a competent committee in that behalf was
communicated to the respondent. Indisputably, he at the material time was
aged over 57 years.
6. Respondent on expiry of the said date, i.e., 31.07.2000, requested the
appellant for being relieved from his post by a letter dated 19.09.2000.
7. According to the appellant, sufficient fund was not available with it
for implementation of the scheme and to proceed with the request of the
respondent for his offer to retire voluntarily in terms of the said Scheme.
The General Manager in his letter dated 26.09.2000 addressed to the
respondent, stated:
“In reference to your VRS proposal dated
16.5.2000, we have received the administrative
approval from HO vide letter of IR/
VRS/NBT/99/980 dated 24.5.2000. Accordingly,
your VRS was prepared and sent to HO for funds.
HO has informed us that the funds for payment of
VRS are not forthcoming hence do not relieve the
employees on relieving date till further orders.
Therefore, we are not in a position to relieve you
as requested by you, which you please note.”
8. Respondent issued a legal notice upon the appellant contending that it
had not been acting to effectuate his application under VRS on the ground of
non-availability of funds.
9. Indisputably, however, the retirement age of the employees of the
appellant corporation was rolled back from 60 years to 58 years. The
decision was taken by the CMD of the Holding Company which was
approved by the Board of Directors of the Corporation; the procedures
wherefor were specified as under:
“(a) The employees who have already attained
the age of 58 years or shall attain the same by 31st
December 2000 will retire on the close of office
hours on 31st January, 2001.
(b) The employees who would attain the age of
58 years in January, 2001 or thereafter will retire
in the month in which they attain the age of 58
years in the normal course.”
10. Respondent filed a writ petition in the High Court of Madhya Pradesh
at Indore inter alia praying for issuance of a writ of or in the nature of
mandamus directing the appellant to effectuate his VRS application on and
from 1.08.2000 upon making payment of admissible dues.
The said writ petition was disposed of by a learned Single Judge of
the said Court, by an order dated 8.03.2001, stating:
“2. In the situation of this nature, the only
direction at this stage that this Court can give is to
decide the application of the petitioner by the
respondent within a period of six months from
today.
3. This Court does not give any opinion at this
stage except to direct the respondent to pass
appropriate orders on the application which the
petitioner has claimed to have made under the
VRS scheme. On such decision being taken, the
petitioner is always free to raise any other
grievances depending upon the orders passed by
the respondents.”
11. Pursuant thereto or in furtherance of the said direction, an office order
dated 7.08.2001 was passed by the appellant herein rejecting the said
proposal, stating:
“6. Under these circumstances, the application
of Shri M.R. Jadhav for Voluntary Retirement
made on 16.5.2000, which was not sanctioned,
could not have been sanctioned in view of the VRS
not being in vogue. Shri M.R. Jadhav was
accordingly retired on 31.1.2001 in accordance
with the orders dated 20.11.2000 whereunder the
age of retirement was rolled back to 58 years and
he stood retired as aforesaid.
7. In view of the position indicated in para 6
above an amount of Rs. 1,53,743/- being the
amount of gratuity admissible under the Payment
of Gratuity Act, 1972 was deposited with the
Controlling Authority (Payment of Gratuity Act,
1972), Bhopal as Shri M.R. Jadhav did not turn up
to collect this amount though offered to him and
other dues viz Leave Encashment etc. (if
payable).”
12. Questioning the validity of the said order, the respondent filed another
writ petition before the Indore Bench of the Madhya Pradesh High Court
praying inter alia for the following relief:
“The Respondent Employer be commanded
through a Writ of Mandamus to effectuate
acceptance of VRS by making payment of
admissible dues without further delay together
with interest as may be deemed proper.”
13. By reason of the impugned judgment, a learned Single Judge of the
said Court has allowed the said writ application upon following the decisions
of this Court in Tek Chand v. Dile Ram [(2001) 3 SCC 290] and State of
Haryana v. S.K. Singhal [(1994) 4 SCC 293], stating:
“6. From the above principle of law and in the
facts and circumstances of the case, in my opinion,
the petitioner is entitled to get the benefits of
voluntary retirement scheme. Consequently,
petition of the petitioner is allowed. The
respondents are directed to grant benefits of the
voluntary retirement scheme to the petitioner.
Necessary payments be made to the petitioner
within a period of three months from the date of
receipt of copy of this order. No order as to cost.”
14. Mr. Sanjay Ghose, learned counsel appearing on behalf of the
appellant, in support of this appeal, inter alia would submit that having
regard to the fact that the offer of the respondent was not accepted, the
impugned judgment cannot be sustained.
15. Ms. Meera Mathur, learned counsel appearing on behalf of the
respondent, on the other hand, would urge:
(i) Appellant being a ‘State’ within the meaning of Article 12 of the
Constitution of India was bound to act fairly and reasonably.
(ii) Having regard to the scope and purport of the Voluntary
Retirement Scheme floated by it as also the fact that the respondent
had applied pursuant thereto in time which was one of the relevant
factors which having been approved by the competent authority, a
legal right accrued in favour of the respondent.
16. Indisputably, Appellant is a public sector undertaking. It, however, at
the relevant time was a sick company. A financial burden was cast on it in
meeting the aforementioned Scheme.
17. When a scheme is floated for voluntary retirement, it constitutes an
offer to treat. It is not an offer stricto sensu. Only when pursuant to the said
invitation to treat, an employee opts for such a scheme, it constitutes an
offer. When such an offer is made, it is required to be accepted.
The matter relating to implementation of the said offer would
indisputably be governed by the terms and conditions of the scheme. Does it
contain any provision for automatic approval of an offer made by the
employee is the question? The High Court has proceeded to hold in view of
the decision of this Court in S.K. Singhal (supra) that there was no
requirement of an order of acceptance of the notice to be communicated to
the employee nor non-communication thereof should be treated as
amounting to withholding of permission.
18. The High Court, however, with respect, failed to read the decision in
the factual matrix obtaining therein. It was a case where construction of
Sub-Rule (1) of Rule 5.32(B) of the Punjab Civil Services Rules was in
question. What was, therefore, necessary in terms of the said Rule was a
notice to retire and not a request seeking permission to retire. What was
contemplated was seeking exemption for the three months period. In terms
thereof, failure to refuse to grant permission attracted the acceptance clause
from the date of expiry of the said period. In the light of the aforementioned
facet of the Scheme, it was held:
“18. In the case before us sub-rule (1) of Rule
5.32(B) contemplates a “notice to retire” and not a
request seeking permission to retire. The further
“request” contemplated by the sub-rule is only for
seeking exemption from the 3 months’ period. The
proviso to sub-rule (2) makes a positive provision
that “where the appointing authority does not
refuse to grant the permission for retirement before
the expiry of the period specified in sub-rule (1),
the retirement shall become effective from the date
of expiry of the said period. The case before us
stands on a stronger footing than Dinesh Chandra
Sangma case so far as the employee is concerned.
As already stated Rule 2.2 of the Punjab Civil
Services Rules Vol. II only deals with a situation
of withholding or withdrawing pension to a person
who has already retired.”
19. Our attention has also been drawn to a decision of this Court in
Manjushree Pathak v. Assam Industrial Development Corpn. Ltd. and
Others [(2000) 7 SCC 390] wherein although Clause 8.1 of the Scheme
provided for a discretion on the part of the Management to accept or reject
the request from any employee for voluntary retirement viewing the
organizational requirements and any other relevant factors, para 2 of the
prescribed application form was to the following effect:
“I, of my own accord and without any external
pressure and coercion, am opting for voluntary
retirement under the said Scheme. I shall be
obliged if you kindly accept my option for
voluntary retirement with immediate effect.”
Appellant therein, thus, made a request in the said form for its
acceptance with immediate effect. For a period of 10 days, no response
thereto was made. On that date, no vigilance enquiry or any disciplinary
proceeding was pending against him. It was in the aforementioned situation,
this Court observed:
“We are unable to understand why the
Managing Director of the respondent Corporation
did not accept the same although it was required to
be accepted with immediate effect as per para 2 of
the prescribed application form. No doubt, as per
clause 8.1 of the Scheme extracted above, the
management had discretion to accept or reject the
request from any employee for voluntary
retirement viewing the organisational requirement
and any other relevant facts but that does not mean
that the respondent Corporation being an authority
coming within the purview of Article 12 of the
Constitution can abdicate its duty to act reasonably
and fairly in exercise of discretion. It is strange as
to why the Managing Director of the respondent
Corporation, the competent authority to accept the
application made for the voluntary retirement, did
not act on it at all till 17-2-1996. He ought to have
exercised his discretion as per clause 8.1 if not
immediately at least within a reasonable time. The
last para of Memorandum No.
AIDC/Estt./1485/93/746-51 dated 20-5-1993/21-5-
1993 issued by the respondent Corporation reads
thus:
“The Corporation has thus offered a unique
opportunity. It is now for all eligible and
interested employees of the Corporation to avail
of this golden opportunity in a big way.”
13. As per sub-clause (i) of clause 5 of the
Scheme, once an employee applied for voluntary
retirement it could not be withdrawn. The
appellant wanted to avail this golden opportunity.
With this background it is not known as to why her
application was not accepted. From the letter of the
appellant dated 23-1-1996, it is clear that she
informed the Managing Director of the respondent
Corporation that there was no need to place her
application before the Board and he himself was
competent to accept it. The non-response of the
respondent Corporation to the letters of the
appellant dated 23-1-1996, 14-2-1996 and 15-2-
1996 and issuing of show-cause notice by the
respondent Corporation subsequently, clearly
indicate that all was not well with the respondent
Corporation in dealing with her application
seeking voluntary retirement. A subsequent
complaint alleging indulgence of the appellant in
political activities was not germane to the
consideration of the application of the appellant,
having regard to the relevant factors mentioned in
clause 8.1 of the Scheme particularly when there
was no infirmity or impediment in terms of the
Scheme in considering and accepting the
application of the appellant for voluntary
retirement, having regard to the fact that the
appellant on her part did what all was required to
be done.”
The said decision also cannot be said to have any application
whatsoever in the instant case.
20. Subject, of course, to the terms of “invitation to treat” as also those of
the offer as envisaged under the Indian Contract Act, an offer has to be
accepted. Unless an offer is accepted, a binding contract does not come into
being. A Voluntary Retirement Scheme contemplates cessation of the
relationship of master and servant. The rights and obligations of the parties
thereto shall become enforceable only on completion of the contract. Unless
such a stage is reached, no valid contract can be said to have come into
force. Acceptance of an offer must, therefore, be communicated.
21. In Bank of India v. O.P. Swarnakar [(2003) 2 SCC 721], this court
held:
“60. Acceptance or otherwise of the request of
an employee seeking voluntary retirement is
required to be communicated to him in writing…”
22. What is the meaning of the word “communication” has been noticed
by this Court in State of Punjab v. Amar Singh Harika [AIR 1966 SC 1313]
in the following terms:
“It is plain that the mere passing of an order of
dismissal would not be effective unless it is
published and communicated to the officer
concerned. If the appointing authority passed an
order of dismissal, but does not communicate it to
the officer concerned, theoretically it is possible
that unlike in the case of a judicial order
pronounced in Court, the authority may change its
mind and decide to modify its order.”
[See also BSNL v. Subash Chandra Kanchan (2006) 8 SCC 279]
A distinction, however, has always been made by this Court as to
cessation of a contract of service by way of punishment vis-`-vis an order of
suspension which does not bring about such a cessation, as for example
suspension. [See State of Punjab v. Khemi Ram AIR 1970 SC 214]
23. In MCD v. Qimat Rai Gupta [(2007) 7 SCC 309], this Court opined:
“27. An order passed by a competent authority
dismissing a government servant from services
requires communication thereof as has been held
in State of Punjab v. Amar Singh Harika but an
order placing a government servant on suspension
does not require communication of that order. (See
State of Punjab v. Khemi Ram)”
24. Therefore, there cannot be any doubt whatsoever that communication
of the acceptance of offer was necessary. An internal noting does not
constitute a communication. Even in a case of order of suspension, only
when the case goes out of the control of the appropriate authority, actual
communication may not be necessary.
25. If for good and sufficient reasons, the competent authority did not
communicate its decision, in our opinion, the respondent did not derive any
legal right. Such a legal right cannot be claimed only on the basis of the
letter of the General Manager dated 26.09.2000. What was communicated
there was the administrative approval. However, it was also categorically
stated therein that the Head Office had not sanctioned the funds for payment
of VRS. It is in that situation, the request of the respondent to relieve him
from his duties was not acceded to. Respondent continued in his service
after 1.08.2000. He had been drawing his salary and other perks. There is
nothing on record to show that he drew his salaries without prejudice to his
rights and contentions. If he had drawn his salary for the entire period
during which he was in service and reached the age of superannuation, by
reason thereof, he must be held to have waived his right, if any.
26. An offer for voluntary retirement must be made and accepted so long
the relationship of an employer and employee continues, subject of course to
the rules to the contrary. Such relationship would come to an end on the
date on which the employee reaches his age of superannuation.
27. The contents of the letter dated 26.09.2000, therefore, indicate that
although administrative approval had been granted but no final decision had
been taken.
28. We, therefore, are of the opinion that in absence of the
communication of the offer of the respondent, the respondent derived no
legal right to obtain the benefits of the voluntary retirement scheme.
29. It was submitted by Ms. Mathur that by asking the respondent to
continue in service, the appellant has taken away the right of an employee to
continue in service.
We are unable to accept the said contention. By reason of a mere
offer to retire voluntarily, in terms whereof employee was to get some more
monetary benefits by itself, did not confer any legal right on him.
30. For the said purpose, it is of some significance to notice that Clause
3.1 of the Scheme provides for acceptance of an employee’s offer for
voluntary retirement. The scheme postulates that the appointing authority
concerned would be competent not to accept the offer.
By reason of Clause 3.2 of the Scheme, the management reserved a
right to accept or reject an employee’s offer under the Scheme. The said
right is absolute and is not hedged by any condition whatsoever. The
procedure provided for acceptance also postulates that not only the offer has
to be accepted, an order is required to be issued that the post falling vacant
in all cases shall stand abolished simultaneously. Issuance of such an order,
simultaneously with acceptance of resignation, therefore, plays an important
role. Admittedly, no such order was also issued by the appellant.
31. Clause 4 of the Scheme provides for the grant of benefits under the
Scheme. Respondent has been paid his provident fund dues, accumulated
earned leave as also gratuity. What has not been paid to him is the ‘ex gratia
payment’. However, such ex gratia payment was to be made equivalent to
one and a half month’s emoluments for each completed year of service or
the monthly emoluments at the time of voluntary retirement multiplied by
the remaining months of service before normal date of retirement, whichever
is lower. Thus, even the said provision contemplates that some service
should remain. If no period of service remained, even ex gratia payment
could not be made.
32. For the reasons aforementioned, we are of the opinion that the
impugned judgment cannot be sustained and is set aside accordingly. The
appeal is allowed. No costs.