{"id":255168,"date":"2008-04-24T00:00:00","date_gmt":"2008-04-23T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/national-textile-corporation-vs-m-r-jhadav-on-24-april-2008"},"modified":"2016-08-20T17:34:12","modified_gmt":"2016-08-20T12:04:12","slug":"national-textile-corporation-vs-m-r-jhadav-on-24-april-2008","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/national-textile-corporation-vs-m-r-jhadav-on-24-april-2008","title":{"rendered":"National Textile Corporation … vs M.R. Jhadav on 24 April, 2008"},"content":{"rendered":"
Supreme Court of India<\/div>\n
National Textile Corporation … vs M.R. Jhadav on 24 April, 2008<\/div>\n
Author: S.B. Sinha<\/div>\n
Bench: S.B. Sinha, V.S. Sirpurkar<\/div>\n
           CASE NO.:\nAppeal (civil)  2957 of 2008\n\nPETITIONER:\nNational Textile Corporation (M.P.) Ltd.\n\nRESPONDENT:\nM.R. Jhadav\n\nDATE OF JUDGMENT: 24\/04\/2008\n\nBENCH:\nS.B. Sinha & V.S. Sirpurkar\n\nJUDGMENT:\n<\/pre>\n
J U D G M E N T
\nREPORTABLE<\/p>\n
CIVIL APPEAL NO.      2957            OF 2008
\n[Arising out of  SLP (Civil) No. 6934 of 2006]<\/p>\n
S.B. SINHA, J :\n<\/p>\n
1. \tLeave granted.\n<\/p>\n
2. \tInterpretation of a Voluntary Retirement Scheme (VRS) floated by the
\nappellant  Corporation is in question in this appeal which arises out of a
\njudgment and order dated 10.01.2006 passed by the High Court of Madhya
\nPradesh at Indore in Writ Petition No. 2623 of 2001.\n<\/p>\n
3. \tRespondent at all material times was working as an Assistant
\nSpinning Master.   A Voluntary Retirement Scheme was floated by the
\nappellant.\n<\/p>\n
4. \tRespondent, on or about 16.05.2000 opted for the said Scheme with
\neffect from 31.07.2000.  The said application was in a prescribed proforma,
\nthe relevant portion of which reads as under:\n<\/p>\n
“With reference to your circular\/ Notice
\nNo..dated.\/Memorandum of Settlement
\ndated.containing details of N.T.C. Scheme of
\nVoluntary Retirement, I hereby tender my
\nunconditional resignation from my post and
\nservice of your mills\/ office with effect from.  I
\nhereby opt for Voluntary Retirement in terms of
\nabove said Scheme of Voluntary Retirement which
\nI have carefully read and understood.\n<\/p>\n
2.\tI hereby undertake that I shall not claim any
\npayments from your management\/ mills\/ company
\non account of my Voluntary resignation
\nconsequent on my Voluntary Retirement other than
\nthose admissible under the aforesaid scheme of
\nVoluntary Retirement.\n<\/p>\n
3.\tI also undertake that I shall not at all
\nwithdraw resignation herein tendered by me from
\nyour service.  I have furnished the required
\nparticulars in the Appendix enclosed.”\n<\/p>\n
5. \tIndisputably, administrative clearance in relation thereto was made
\nbut no decision taken by a competent committee in that behalf was
\ncommunicated to the respondent.  Indisputably, he at the material time was
\naged over 57 years.\n<\/p>\n
6. \tRespondent on expiry of the said date, i.e., 31.07.2000, requested the
\nappellant for being relieved from his post by a letter dated 19.09.2000.\n<\/p>\n
7. \tAccording to the appellant, sufficient fund was not available with it
\nfor implementation of the scheme and to proceed with the request of the
\nrespondent for his offer to retire voluntarily in terms of the said Scheme.
\nThe General Manager in his letter dated 26.09.2000 addressed to the
\nrespondent, stated:\n<\/p>\n
“In reference to your VRS proposal dated
\n16.5.2000, we have received the administrative
\napproval from HO vide letter of IR\/
\nVRS\/NBT\/99\/980 dated 24.5.2000.  Accordingly,
\nyour VRS was prepared and sent to HO for funds.
\nHO has informed us that the funds for payment of
\nVRS are not forthcoming hence do not relieve the
\nemployees on relieving date till further orders.\n<\/p>\n
Therefore, we are not in a position to relieve you
\nas requested by you, which you please note.”\n<\/p>\n
8. \tRespondent issued a legal notice upon the appellant contending that it
\nhad not been acting to effectuate his application under VRS on the ground of
\nnon-availability of funds.\n<\/p>\n
9. \tIndisputably, however, the retirement age of the employees of the
\nappellant  corporation was rolled back from 60 years to 58 years.  The
\ndecision was taken by the CMD of the Holding Company which was
\napproved by the Board of Directors of the Corporation; the procedures
\nwherefor were specified as under:\n<\/p>\n
“(a)\tThe employees who have already attained
\nthe age of 58 years or shall attain the same by 31st
\nDecember 2000 will retire on the close of office
\nhours on 31st January, 2001.\n<\/p>\n
(b)\tThe employees who would attain the age of
\n58 years in January, 2001 or thereafter will retire
\nin the month in which they attain the age of 58
\nyears in the normal course.”\n<\/p>\n
10. \tRespondent filed a writ petition in the High Court of Madhya Pradesh
\nat Indore inter alia praying for issuance of a writ of or in the nature of
\nmandamus directing the appellant to effectuate his VRS application on and
\nfrom 1.08.2000 upon making payment of admissible dues.\n<\/p>\n
 \tThe said writ petition was disposed of by a learned Single Judge of
\nthe said Court, by an order dated 8.03.2001, stating:\n<\/p>\n
“2.\tIn the situation of this nature, the only
\ndirection at this stage that this Court can give is to
\ndecide the application of the petitioner by the
\nrespondent within a period of six months from
\ntoday.\n<\/p>\n
3.\tThis Court does not give any opinion at this
\nstage except to direct the respondent to pass
\nappropriate orders on the application which the
\npetitioner has claimed to have made under the
\nVRS scheme.  On such decision being taken, the
\npetitioner is always free to raise any other
\ngrievances depending upon the orders passed by
\nthe respondents.”\n<\/p>\n
11. \tPursuant thereto or in furtherance of the said direction, an office order
\ndated 7.08.2001 was passed by the appellant herein rejecting the said
\nproposal, stating:\n<\/p>\n
“6.\tUnder these circumstances, the application
\nof Shri M.R. Jadhav for Voluntary Retirement
\nmade on 16.5.2000, which was not sanctioned,
\ncould not have been sanctioned in view of the VRS
\nnot being in vogue.  Shri M.R. Jadhav was
\naccordingly retired on 31.1.2001 in accordance
\nwith the orders dated 20.11.2000 whereunder the
\nage of retirement was rolled back to 58 years and
\nhe stood retired as aforesaid.\n<\/p>\n
7.\tIn view of the position indicated in para 6
\nabove an amount of Rs. 1,53,743\/- being the
\namount of gratuity admissible under the Payment
\nof Gratuity Act<\/a>, 1972 was deposited with the
\nControlling Authority (Payment of Gratuity Act,
\n1972), Bhopal as Shri M.R. Jadhav did not turn up
\nto collect this amount though offered to him and
\nother dues viz Leave Encashment etc. (if
\npayable).”\n<\/p>\n
12. \tQuestioning the validity of the said order, the respondent filed another
\nwrit petition before the Indore Bench of the Madhya Pradesh High Court
\npraying inter alia for the following relief:\n<\/p>\n
“The Respondent Employer be commanded
\nthrough a Writ of Mandamus to effectuate
\nacceptance of VRS by making payment of
\nadmissible dues without further delay together
\nwith interest as may be deemed proper.”\n<\/p>\n
13. \tBy reason of the impugned judgment, a learned Single Judge of the
\nsaid Court has allowed the said writ application upon following the decisions
\nof this Court in Tek Chand v. Dile Ram<\/a> [(2001) 3 SCC 290] and State of
\nHaryana v. S.K. Singhal<\/a> [(1994) 4 SCC 293], stating:\n<\/p>\n
“6.\tFrom the above principle of law and in the
\nfacts and circumstances of the case, in my opinion,
\nthe petitioner is entitled to get the benefits of
\nvoluntary retirement scheme.  Consequently,
\npetition of the petitioner is allowed.  The
\nrespondents are directed to grant benefits of the
\nvoluntary retirement scheme to the petitioner.
\nNecessary payments be made to the petitioner
\nwithin a period of three months from the date of
\nreceipt of copy of this order.  No order as to cost.”\n<\/p>\n
14. \tMr. Sanjay Ghose, learned counsel appearing on behalf of the
\nappellant, in support of this appeal, inter alia would submit that having
\nregard to the fact that the offer of the respondent was not accepted, the
\nimpugned judgment cannot be sustained.\n<\/p>\n
15. \tMs. Meera Mathur, learned counsel appearing on behalf of the
\nrespondent, on the other hand, would urge:\n<\/p>\n
(i)\tAppellant being a ‘State’ within the meaning of Article 12<\/a> of the
\nConstitution of India was bound to act fairly and reasonably.\n<\/p>\n
(ii)\tHaving regard to the scope and purport of the Voluntary
\nRetirement Scheme floated by it as also the fact that the respondent
\nhad applied pursuant thereto in time which was one of the relevant
\nfactors which having been approved by the competent authority, a
\nlegal right accrued in favour of the respondent.\n<\/p>\n
16. \tIndisputably, Appellant is a public sector undertaking.  It, however, at
\nthe relevant time was a sick company.  A financial burden was cast on it in
\nmeeting the aforementioned Scheme.\n<\/p>\n
17. \tWhen a scheme is floated for voluntary retirement, it constitutes an
\noffer to treat.  It is not an offer stricto sensu.  Only when pursuant to the said
\ninvitation to treat, an employee opts for such a scheme, it constitutes an
\noffer.  When such an offer is made, it is required to be accepted.\n<\/p>\n
 \tThe matter relating to implementation of the said offer would
\nindisputably be governed by the terms and conditions of the scheme.  Does it
\ncontain any provision for automatic approval of an offer made by the
\nemployee is the question?  The High Court has proceeded to hold in view of
\nthe decision of this Court in S.K. Singhal (supra) that there was no
\nrequirement of an order of acceptance of the notice to be communicated to
\nthe employee nor non-communication thereof should be treated as
\namounting to withholding of permission.\n<\/p>\n
18. \tThe High Court, however, with respect, failed to read the decision in
\nthe factual matrix obtaining therein.  It was a case where construction of
\nSub-Rule (1) of Rule 5.32(B) of the Punjab Civil Services Rules was in
\nquestion.  What was, therefore, necessary in terms of the said Rule was a
\nnotice to retire and not a request seeking permission to retire.  What was
\ncontemplated was seeking exemption for the three months period.  In terms
\nthereof, failure to refuse to grant permission attracted the acceptance clause
\nfrom the date of expiry of the said period.  In the light of the aforementioned
\nfacet of the Scheme, it was held:\n<\/p>\n
“18. In the case before us sub-rule (1) of Rule
\n5.32(B) contemplates a “notice to retire” and not a
\nrequest seeking permission to retire. The further
\n“request” contemplated by the sub-rule is only for
\nseeking exemption from the 3 months’ period. The
\nproviso to sub-rule (2) makes a positive provision
\nthat “where the appointing authority does not
\nrefuse to grant the permission for retirement before
\nthe expiry of the period specified in sub-rule (1),
\nthe retirement shall become effective from the date
\nof expiry of the said period. The case before us
\nstands on a stronger footing than Dinesh Chandra
\nSangma case so far as the employee is concerned.
\nAs already stated Rule 2.2 of the Punjab Civil
\nServices Rules Vol. II only deals with a situation
\nof withholding or withdrawing pension to a person
\nwho has already retired.”\n<\/p>\n
19. \tOur attention has also been drawn to a decision of this Court in
\nManjushree Pathak v. Assam Industrial Development Corpn. Ltd. and
\nOthers<\/a> [(2000) 7 SCC 390] wherein although Clause 8.1 of the Scheme
\nprovided for a discretion on the part of the Management to accept or reject
\nthe request from any employee for voluntary retirement viewing the
\norganizational requirements and any other relevant factors, para 2 of the
\nprescribed application form was to the following effect:\n<\/p>\n
“I, of my own accord and without any external
\npressure and coercion, am opting for voluntary
\nretirement under the said Scheme. I shall be
\nobliged if you kindly accept my option for
\nvoluntary retirement with immediate effect.”\n<\/p>\n
 \tAppellant therein, thus, made a request in the said form for its
\nacceptance with immediate effect.  For a period of 10 days, no response
\nthereto was made.  On that date, no vigilance enquiry or any disciplinary
\nproceeding was pending against him.  It was in the aforementioned situation,
\nthis Court observed:\n<\/p>\n
“We are unable to understand why the
\nManaging Director of the respondent Corporation
\ndid not accept the same although it was required to
\nbe accepted with immediate effect as per para 2 of
\nthe prescribed application form. No doubt, as per
\nclause 8.1 of the Scheme extracted above, the
\nmanagement had discretion to accept or reject the
\nrequest from any employee for voluntary
\nretirement viewing the organisational requirement
\nand any other relevant facts but that does not mean
\nthat the respondent Corporation being an authority
\ncoming within the purview of Article 12<\/a> of the
\nConstitution can abdicate its duty to act reasonably
\nand fairly in exercise of discretion. It is strange as
\nto why the Managing Director of the respondent
\nCorporation, the competent authority to accept the
\napplication made for the voluntary retirement, did
\nnot act on it at all till 17-2-1996. He ought to have
\nexercised his discretion as per clause 8.1 if not
\nimmediately at least within a reasonable time. The
\nlast para of Memorandum No.
\nAIDC\/Estt.\/1485\/93\/746-51 dated 20-5-1993\/21-5-
\n1993 issued by the respondent Corporation reads
\nthus:\n<\/p>\n
“The Corporation has thus offered a unique
\nopportunity. It is now for all eligible and
\ninterested employees of the Corporation to avail
\nof this golden opportunity in a big way.”\n<\/p>\n
13. As per sub-clause (i) of clause 5 of the
\nScheme, once an employee applied for voluntary
\nretirement it could not be withdrawn. The
\nappellant wanted to avail this golden opportunity.
\nWith this background it is not known as to why her
\napplication was not accepted. From the letter of the
\nappellant dated 23-1-1996, it is clear that she
\ninformed the Managing Director of the respondent
\nCorporation that there was no need to place her
\napplication before the Board and he himself was
\ncompetent to accept it. The non-response of the
\nrespondent Corporation to the letters of the
\nappellant dated 23-1-1996, 14-2-1996 and 15-2-
\n1996 and issuing of show-cause notice by the
\nrespondent Corporation subsequently, clearly
\nindicate that all was not well with the respondent
\nCorporation in dealing with her application
\nseeking voluntary retirement. A subsequent
\ncomplaint alleging indulgence of the appellant in
\npolitical activities was not germane to the
\nconsideration of the application of the appellant,
\nhaving regard to the relevant factors mentioned in
\nclause 8.1 of the Scheme particularly when there
\nwas no infirmity or impediment in terms of the
\nScheme in considering and accepting the
\napplication of the appellant for voluntary
\nretirement, having regard to the fact that the
\nappellant on her part did what all was required to
\nbe done.”\n<\/p>\n
 \tThe said decision also cannot be said to have any application
\nwhatsoever in the instant case.\n<\/p>\n
20. \tSubject, of course, to the terms of “invitation to treat” as also those of
\nthe offer as envisaged under the Indian Contract Act<\/a>, an offer has to be
\naccepted.  Unless an offer is accepted, a binding contract does not come into
\nbeing.  A Voluntary Retirement Scheme contemplates cessation of the
\nrelationship of master and servant.  The rights and obligations of the parties
\nthereto shall become enforceable only on completion of the contract.  Unless
\nsuch a stage is reached, no valid contract can be said to have come into
\nforce.  Acceptance of an offer must, therefore, be communicated.\n<\/p>\n
21. \tIn Bank of India v. O.P. Swarnakar<\/a> [(2003) 2 SCC 721], this court
\nheld:\n<\/p>\n
“60. Acceptance or otherwise of the request of
\nan employee seeking voluntary retirement is
\nrequired to be communicated to him in writing…”\n<\/p>\n
22. \tWhat is the meaning of the word “communication” has been noticed
\nby this Court in State of Punjab v. Amar Singh Harika<\/a> [AIR 1966 SC 1313]
\nin the following terms:\n<\/p>\n
“It is plain that the mere passing of an order of
\ndismissal would not be effective unless it is
\npublished and communicated to the officer
\nconcerned. If the appointing authority passed an
\norder of dismissal, but does not communicate it to
\nthe officer concerned, theoretically it is possible
\nthat unlike in the case of a judicial order
\npronounced in Court, the authority may change its
\nmind and decide to modify its order.”\n<\/p>\n
[See also BSNL v. Subash Chandra Kanchan (2006) 8 SCC 279]<\/p>\n
 \tA distinction, however, has always been made by this Court as to
\ncessation of a contract of service by way of punishment vis-`-vis an order of
\nsuspension which does not bring about such a cessation, as for example
\nsuspension.  [See State of Punjab v. Khemi Ram<\/a> AIR 1970 SC 214]<\/p>\n
23. \tIn MCD v. Qimat Rai Gupta<\/a> [(2007) 7 SCC 309], this Court opined:\n<\/p>\n
“27. An order passed by a competent authority
\ndismissing a government servant from services
\nrequires communication thereof as has been held
\nin State of Punjab v. Amar Singh Harika<\/a> but an
\norder placing a government servant on suspension
\ndoes not require communication of that order. (See
\nState of Punjab v. Khemi Ram<\/a>)”\n<\/p>\n
24. \tTherefore, there cannot be any doubt whatsoever that communication
\nof the acceptance of offer was necessary.  An internal noting does not
\nconstitute a communication.  Even in a case of order of suspension, only
\nwhen the case goes out of the control of the appropriate authority, actual
\ncommunication may not be necessary.\n<\/p>\n
25. \tIf for good and sufficient reasons, the competent authority did not
\ncommunicate its decision, in our opinion, the respondent did not derive any
\nlegal right.  Such a legal right cannot be claimed only on the basis of the
\nletter of the General Manager dated 26.09.2000.  What was communicated
\nthere was the administrative approval.  However, it was also categorically
\nstated therein that the Head Office had not sanctioned the funds for payment
\nof VRS.  It is in that situation, the request of the respondent to relieve him
\nfrom his duties was not acceded to.  Respondent continued in his service
\nafter 1.08.2000.  He had been drawing his salary and other perks.  There is
\nnothing on record to show that he drew his salaries without prejudice to his
\nrights and contentions.  If he had drawn his salary for the entire period
\nduring which he was in service and reached the age of superannuation, by
\nreason thereof, he must be held to have waived his right, if any.\n<\/p>\n
26. \tAn offer for voluntary retirement must be made and accepted so long
\nthe relationship of an employer and employee continues, subject of course to
\nthe rules to the contrary.  Such relationship would come to an end on the
\ndate on which the employee reaches his age of superannuation.\n<\/p>\n
27. \tThe contents of the letter dated 26.09.2000, therefore, indicate that
\nalthough administrative approval had been granted but no final decision had
\nbeen taken.\n<\/p>\n
28. \tWe, therefore, are of the opinion that in absence of the
\ncommunication of the offer of the respondent, the respondent derived no
\nlegal right to obtain the benefits of the voluntary retirement scheme.\n<\/p>\n
29.\tIt was submitted by Ms. Mathur that by asking the respondent to
\ncontinue in service, the appellant has taken away the right of an employee to
\ncontinue in service.\n<\/p>\n
\tWe are unable to accept the said contention.  By reason of a mere
\noffer to retire voluntarily, in terms whereof employee was to get some more
\nmonetary benefits by itself, did not confer any legal right on him.\n<\/p>\n
30. \tFor the said purpose, it is of some significance to notice that Clause
\n3.1 of the Scheme provides for acceptance of an employee’s offer for
\nvoluntary retirement.  The scheme postulates that the appointing authority
\nconcerned would be competent not to accept the offer.\n<\/p>\n
 \tBy reason of Clause 3.2 of the Scheme, the management reserved a
\nright to accept or reject an employee’s offer under the Scheme.  The said
\nright is absolute and is not hedged by any condition whatsoever.  The
\nprocedure provided for acceptance also postulates that not only the offer has
\nto be accepted, an order is required to be issued that the post falling vacant
\nin all cases shall stand abolished simultaneously.  Issuance of such an order,
\nsimultaneously with acceptance of resignation, therefore, plays an important
\nrole.  Admittedly, no such order was also issued by the appellant.\n<\/p>\n
31. \tClause 4 of the Scheme provides for the grant of benefits under the
\nScheme.  Respondent has been paid his provident fund dues, accumulated
\nearned leave as also gratuity.  What has not been paid to him is the ‘ex gratia
\npayment’.  However, such ex gratia payment was to be made equivalent to
\none and a half month’s emoluments for each completed year of service or
\nthe monthly emoluments at the time of voluntary retirement multiplied by
\nthe remaining months of service before normal date of retirement, whichever
\nis lower.  Thus, even the said provision contemplates that some service
\nshould remain.  If no period of service remained, even ex gratia payment
\ncould not be made.\n<\/p>\n
32. \tFor the reasons aforementioned, we are of the opinion that the
\nimpugned judgment cannot be sustained and is set aside accordingly.  The
\nappeal is allowed.  No costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India National Textile Corporation … vs M.R. Jhadav on 24 April, 2008 Author: S.B. Sinha Bench: S.B. Sinha, V.S. Sirpurkar 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 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-255168","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nNational Textile Corporation ... vs M.R. 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