ivil Appeal No 2014 of 1986
From the Judgment and Order dated 244
1986 of the Delhi High Court in CW No 477 of 1986
Dr Anand Prakash D Mehta Atul Nanda and SK Mehta for the Appellant
SK Bisaria for the Respondent
The Judgment of the Court was delivered by RANGANATHAN J
A very short question as to the inter pretation of the service regulations of the appellant bank comes up for consideration in this appeal
The relevant service regulation is Regulation No 20 which reads as under 201 Subject to sub regulation 3 of regu lation 16 the bank may terminate the services of any officer by giving him three months  notice in writing or by paying him three months  emoluments in lieu thereof
615 2 No officer shall resign from the service of the bank otherwise than on the expiry of three months from the service on the bank of a notice in writing of such resignation
Provid ed further that the competent authority may reduce the period of three months or remit the requirement of notice
 The respondent a permanent officer in the bank sent a communication to the bank on 21st January 1986
By this letter he purported to resign from the service of the bank due to personal reasons
He added that the date of receipt of the letter should be treated as the date of the commence ment of the notice period so that inclusive of the same his resignation would become effective on 30th June 1986
According to the respondent the Deputy General Manager who was the competent authority under the Service Regulations had agreed that the resignation may be accepted with effect from 30th June 1986
However what actually transpired was that the respondent received a letter from the bank on 7th February 1986 informing him that his resignation letter dated 21st January 1986 had been accepted by the competent authority with immediate effect by waiving the condition of notice and that consequently he was being relieved from the service of the bank with effect from the afternoon of the same date namely 7th February 1986
The respondent thereupon filed a writ petition in the High Court challeng ing the validity of the purported acceptance of his resigna tion with effect from 7th February 1986 and for a direction to the bank to treat him as in service of the bank up to 30th June 1986 and as entitled to all benefits while being in such service
A further development took place after the filing of the writ petition and before it came up for hearing
On 15th April 1986 the respondent wrote a letter to the bank by which he purported to withdraw the resignation letter dated 21st January 1986
The High Court therefore dealt with the situation resulting from this subsequent development
The High Court held that the petitioner s resignation letter would have become effective only on the 30th June 1986
Under the regulations there was no jurisdiction whatever in the competent authority to determine his services earlier
Until the resignation became effective on 30th June 1986 the petitioner had a right to withdraw the same and in fact had also exercised that right
The High Court concluded We may notice that this writ petition was filed at a stage 616 when the petitioner had not sent his letter dated 15th April 1986 whereby he withdrew his resignation letter dated 2 Ist January 1986
This is a subsequent development during the pendency of the writ petition
Therefore we are not called upon to decide the earlier grievance that the resignation could not have been accepted at an earlier date
Even to that submission we would have said that there is no provision of acceptance but that question does not arise so we will not deal with it further
Result is that the impugned order dated 7th of February 1986 is hereby quashed and it is declared that the petitioner continues to be in service with the respondent bank
However in view of the facts of the present case parties are directed to bear their own costs of the present proceedings
 The bank has preferred this appeal
Dr Anand prakash learned counsel for the appellant bank submitted that regulation 202 provided for a notice to the employer only in order to protect the employer s interests and to enable the employer in case it decided to accept the resignation to make other arrangements in place of the resigning employ ee
He submitted that this being a provision for the bene fit of the employer its requirements could be waived by the employer if it so desired unilaterally The proviso to clause 2 of the regulation indeed makes it clear that it is open to the bank to waive the requirement of notice or to reduce the period of the notice to less than three months
He therefore submitted that when the respondent sent in his resignation on 21st January 1986 it was not incumbent on the bank to wait till 30th June 1986 when the notice period would expire
It was competent for the bank to waive any notice at all and to accept the resignation with immedi ate effect or with effect from such other date as the bank may consider appropriate
It was further contended by learned counsel that once the resignation letter of the respondent had been accepted by the bank and given effect to to there was no further possibility of the respondent seeking to withdraw the resignation letter as he has pur ported to do in this case
Learned counsel therefore submitted that the bank s letter dated 7th February 1986 was quite valid and effective and that the respondent s writ petition ought to have been dismissed
We have given careful thought to this contention of the learned counsel and we are of the opinion that the High Court was right in the conclusion it reached
Clause 2 of regulation 20 makes it incumbent on an officer of the bank before resigning to serve a notice in writing 617 of such proposed resignation and the clause also makes it clear that the resignation will not be effective otherwise than on the expiry of three months from the service of such notice
There are two ways of interpreting this clause
One is that the resignation of an employee from service being a voluntary act on the part of an employee he is entitled to choose the date with effect from which his resignation would be effective and give a notice to the employer accordingly
The only restriction is that the proposed date should not be less than three months from the date on which the notice is given of the proposed resignation
On this interpretation the letter dated 21st January 1986 sent by the employee fully complied with the terms of this clause
Though the letter was written in January 1986 the employee gave more than three clear months  notice and stated that he wished to resign with effect from 30th of June 1986 and so the resig nation would have become effective only on that date
The other interpretation is that when an employee gives a notice of resignation it becomes effective on the expiry of three months from the date thereof
On this interpretation the respondent s resignation would have taken effect on or about 2141986 even though he had mentioned a later date
In either view of the matter the respondent s resignation did not become effective till 2141986 or 3061986
It would have normally automatically taken effect on either of those dates as there is no provision for any acceptance or rejection of the resignation by the employer as is to be found in other rules such as the Government
Services Con duct Rules
Much reliance was placed on the terms of the proviso to clause 2 of regulation 20 to justify the action of the bank in terminating the respondent s services earlier but we do not think that the proviso can be interpreted in the manner suggested by learned counsel for the bank
The resig nation letter of the officer has to give at least three months  advance notice under the main part of the clause
What the proviso contemplates is that in a case where the employee desires that his resignation should be effective even before the expiry of the period of three months or without notice being given by him the bank may consider such a request and waive the period or requirement of notice if it considers it fit to do so
That question does not arise in the present case because the employee had not requested the bank to reduce the period of notice or to waive the requirement of notice
Dr Anand Prakash seeks to interpret the proviso as empowering the bank even without any request on the part of the employee to reduce the period or waive the requirement of notice
In other words he says the bank has power to accept the resignation with immediate effect even though 618 the notice is only of a proposed future resignation
We do not think this contention can be accepted
As we have al ready mentioned resignation is a voluntary act of an em ployee
He may choose to resign with immediate effect or with a notice of less than three months if the bank agrees to the same
He may also resign at a future date on the expiry or beyond the period of three months but for this no further consent of the bank is necessary
The acceptance of the argument of Dr Ananad Prakash would mean that even though an employee might express a desire to resign from a future date the resignation can be accepted even without his wishes from an earlier date
This would not be the acceptance of a resignation in the terms in which it is offered
It amounts really to forcing a date of termination on the employee other than the one he is entitled to choose under the regulations
As rightly pointed out by the High Court the termination of service under clause 2 becomes effective at the instance of the employee and the services of the employee cannot be terminated by the employer under this clause
Dr Anand Prakash emphasises that as clause 2 and its proviso are intended only to safeguard the bank s interests they should be interpreted on the lines suggested by him
We are of the opinion that clause 2 of the regulation and its proviso are intended not only for the protection of the bank but also for the benefit of the employee
It is common knowledge that a person proposing to resign often wavers in his decision and even in a case where he has taken a firm decision tO resign he may not be ready to go out immediate ly
In most cases he would need a period of adjustment and hence like to defer the actual date of relief from duties for a few months for various personal reasons
Equally an employer may like to have time to make some alternative arrangement before relieving the resigning employee
Clause 2 is carefully worded keeping both these requirements in mind
It gives the employee a period of adjustment and rethinking
It also enables the bank to have some time to arrange its affairs with the liberty in an appropriate case to accept the resignation of an employee even without the requisite notice if he so desires it
The proviso in our opinion should not be interpreted as enabling a bank to thrust a resignation on an employee with effect from a date different from the one on which he can make his resignation effective under the terms of the regulation
We therefore agree with the High Court that in the present case the resignation of the employee could have become effective only on or about 21st April 1986 or on 30th June 1986 and that the bank could not have accepted that resignation on any earlier date
The letter dated 7th February 1986 was therefore without jurisdiction 619 The result of the above interpretation is that the employee continued to be in service till the 21st April 1986 or 30th June 1986 on which date his services would have come normally to an end in terms of his letter dated 21st January 1986
But by that time he had exercised his right to withdraw the resignation
Since the withdrawal letter was written before the resignation became effective the resignation stands withdrawn with the result that the respondent continues to be in the service of the bank
It is true that there is no specific provision in the regulations permitting the employee to withdraw the resignation
It is however not necessary that there should be any such specif ic rule
Until the resignation become effective on the terms of the letter read with regulation 20
it is open to the employee on general principles to withdraw his letter of resignation
That is why in some cases of public services this right of withdrawal is also made subject to the permis sion of the employer
There is no such clause here
It is not necessary to labour this point further as it is well settled by the earlier decisions of this Court in Raj Kumar vs Union of India 1963 3 SCR 857 Union of India vs Gopal Chandra Misra  and Balram Gupta vs Union of India  Learned counsel for the appellant relied on certain observations in Delhi Electric Supply Undertaking vs Tara Chand Certain other decisions were also cited by Dr Anand Prakash but we do not think that they have any bearing on the issue before us
Tara Chand was a case under regulation 8 of the regulations made by the Delhi Electric Supply Undertaking under the 
The regulation permitted the termination of the services of a servant of the undertaking on notice of three months from either side without any cause to be assigned in case of permanent servants
The employee in that case sent a letter to the employer stating that he was compelled to resign for various reasons and this resignation was accept ed by the undertaking
The Delhi High Court in its judgment to which one of us was a party observed that notice under the regulation was intended for the benefit of the employer which could if it considered necessary or proper waive the period of notice and accept the resignation with immediate effect
But that was a case where the employee though bound to give three months  notice expressed his desire to resign with immediate effect and it was also accepted by the em ployer
It was not the case that he had given notice indi cating a desire to be relieved at a future date
The analogy of that case would have applied to the present case as well if the respondent here had expressed his desire to be re lieved immediately even before the expiry of the three months  notice period and the bank had accepted it
The 620 employer would then certainly have been entitled to accept the resignation as requested by the employee waiving the notice period
The distinction between that case and the present one is that here the employee has chosen a future date on which his resignation would be effective but he is being forced to resign before such date
For the reasons discussed above we affirm the decision of the High Court and dismiss this appeal
As the employee has got a relief much larger than the one for which he initially came to Court and which has been made possible by his subsequent conduct we make no order as to costs
P SS
Appeal dis missed


Summary:
The appellant engaged an agent for the purposes of carrying on his business and conferred on him large powers of manage ment including authority to operate on bank accounts
While acting under such authority the agent withdrew moneys from the bank and used them for the discharge of his personal debts
The appellant was able to recover from the agent only a part of the amount misappropriated by him and the balance had to be written off at the end of the accounting year as irrecoverable
The question was whether the amount which was misappropriated and found irrecoverable was allowable as a deduction under the Indian Income tax Act in determining the profits of the appellant
Held that the amount in question is not allowable either as a bad debt under section 102Xi or as a business expenditure under section 102XV Of the Indian Income tax Act 1922
It can however be deducted in computing the profits of the appellant under 691 section 101 of the Act as a loss incidental to the carrying on of his business
Where an agent or an employee of a businessman in charge of the business is given authority to operate on the bank accounts and withdraws moneys in the purported exercise of that authority his action is referable to his character as such authorised agent or employee and any loss resulting from misappropriation of the money by him would be one incidental to the carrying on of the business and it is not necessary to show that the money was withdrawn for the conduct of the business
Curtis vs J  G Oldfield and Rama swami Chettiar vs Commissioner of Income tax Madras Mad 904 explained and distinguished
Venkatachalapathy Iyer vs Commissioner of Income tax  Lord s Dairy Farm Ltd vs Commissioner of Incometax and Motipur Sugar Factory Ltd vs Commissioner of Income tax  approved