THE HON’BLE MR JUSTICE L. NARASIMHA REDDY W.P.Nos.22158 & 22160 of 2009 COMMON ORDER: The petitioners were the employees of Chittoor Co-operative Town Bank Limited (for short ‘the Bank’), Chittoor. The Bank introduced Voluntary Retirement scheme (VRS) with an object of pruning its establishment. For this purpose, the permission from the Reserve Bank of India and the Commissioner for Cooperation was obtained. The petitioners opted to avail the benefit under the scheme. Their request was acceded to, and they were permitted to take voluntary retirement. The grievance of the petitioners is that they were denied the benefit of leave encashment. It is urged that the Bank itself incorporated the benefit of leave encashment in the scheme, while seeking approval, but has denied it to them. They contend that the Service Rules of the Bank provide for the facility of encashment of Earned Leave (E.L.), subject to certain limits, on retirement of an employee, and there is no justification for denying it to them. The respondents filed counter-affidavits. It is stated that though at one point of time, it was thought of incorporating the facility of encashment of E.L. also, under the VRS, it was dropped, when it was found that the financial liability on account of that would cross the limits, prescribed under Section 116-C of the A.P Co-operative Societies Act (for short ‘the Act’). Other grounds are also urged. Heard Sri Siva, learned counsel for the petitioners and Sri Sharad Sanghi, learned counsel for the respondents. In the year 2006, the Bank found that the cost of its establishment is more than what is permissible in law and accordingly proposed certain measures to prune the establishment. The permission of the Reserve Bank of India and the Commissioner for Co- operation were also obtained in the year 2007, through letters dated 14-09-2007 and 10-04-2007, respectively. It is important to mention that the Bank incorporated the facility of encashment of E.L., along with the other benefits, that are extendible to the employees, who seek voluntary retirement. Those include, incentive of Rs.60,000/- or Rs.1 lakh, depending upon the status of the employee; six months’ salary, entire gratuity, salary payable for the year of retirement, etc. The amounts, that are payable to the petitioners on account of leave encashment were also indicated in the proposal submitted to the State Authorities, and such proposals were in fact approved. With this state of affairs, the petitioners were naturally encouraged or persuaded to seek VRS. Having accepted their applications, the Bank cannot turn around and plead excuses in respect of a component, which formed part of the entire scheme. It is no doubt true that Section 116-C of the Act makes certain restrictions upon the cost of establishment for the Co-operative Societies. The nature of benefit to be extended to the petitioners, however, cannot be within the purview of that Act, particularly, when the Apex Authority under that enactment had accorded approval. Further, whatever may have been the justification in denying the benefit of encashment of E.L., to the petitioners, by citing financial constraints, the state of affairs, now existing in the Bank, does not warrant austerity measure. It must not be forgotten that an E.L. is the result of the working of an employee on certain days, which he could have availed leave with the fond hope that his working on such days would yield certain financial benefit to him. It can safely be said that the Bank had the benefit of working of the petitioners by foregoing their service, with the promise of enabling them to encash it, and it cannot deny the same after the petitioners took VRS. Another angle from which the matter can be viewed is that, had the petitioners retired in the usual course, which, obviously is a matter of few years, the Bank could not have denied the benefit, even by citing the restrictions, under Section 116-C of the Act. Hence, the writ petition is allowed, and the respondents are directed to extend the benefit of encashment of earned leave to the petitioners, subject to the limits, that are in vogue, within a period of six weeks from the date of receipt of a copy of this order. There shall be no order as to costs. ________________________ L. NARASIMHA REDDY, J. Dt.07-12-2010. KO