IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA. CWP No. 1947 of 2008. Reserved on: 8.4.2009. Decided on: 21.4.2009. __________________________________________________ Shri D.K. Gupta … Petitioner. Versus The State of H.P. and others. .… Respondents. ___________________________________________________________ Coram: Hon’ble Mr. Justice Rajiv Sharma, Judge. Whether approved for reporting?1 Yes. For the petitioner : Mr. Bhavana Dutta, Advocate. For Respondents No. 1 & 3 : Mr. R.K. Sharma, Sr. Addl. A.G. with Mr. Rajinder Dogra, Addl. A.G. and Mr. Vikas Rathore, Dy.A.G. For Respondent No.2 : Mr. J.R. Thakur, Advocate. ___________________________________________________________ Rajiv Sharma, Judge. Brief facts necessary for adjudication of this writ petition are that the petitioner was designated as General Manager of respondent No.2-Corporation on 29.7.1993. The Government of India in the year 1988-89 vide Annexure P-3 has introduced Voluntary Retirement Scheme for the employees of public enterprises. The same was made applicable by the State of Himachal Pradesh to the employees/officers working in Himachal Pradesh Public Sector Undertakings vide letter dated 11.1.1993 1 Whether reporters of the local papers may be allowed to see the judgment? Yes. 2 (Annexure P-2). The petitioner opted for retirement under the Voluntary Retirement Scheme vide letter dated 30.6.2008. The text of the letter dated 30.6.2008 reads thus: “Subject: Voluntary Retirement option of Shri D.K. Gupta, General Manager under Voluntary Retirement Scheme of the Government. Sir, I hereby opt for retirement under Voluntary Retirement Scheme of the Government with immediate effect. The notice period of three months may kindly be counted w.e.f. 1st July, 2008. The above option of retirement under voluntary retirement scheme is subject to the condition that the full financial package as on the date of retirement is paid on the date of retirement itself as has been done in earlier cases.” The option was accepted by the Managing Director of the Corporation on 3.7.2008. The entire financial package worked out was Rs. 25,22,983/-. There was a protracted correspondence between the Secretary (Industries) and the Principal Secretary (Finance) for raising the funds. The communication was made by the Principal Secretary (Industries) to the Principal Secretary (Finance) on 28.7.2008 whereby he has requested him to provide Rs. 25.23 lacs towards the Voluntary Retirement Scheme benefits. The last communication was made by the Principal Secretary (Industries) to the Principal Secretary (Finance) on 20.8.2008. He has clarified that the Managing Director had recommended the proposal of Voluntary Retirement Scheme to the petitioner and the same was also recommended by him along with abolition of post of the General Manager and personal staff attached with the post. 3 An amendment was carried out in the Voluntary Retirement Scheme vide letter dated 2.9.2008. By way of amendment, paragraph (d) of office memorandum dated 5.10.1988 was substituted by a new paragraph. The consent of the petitioner was sought on telephone by respondent No.3 for retirement under the revised Voluntary Retirement Scheme dated 2.9.2008. Thereafter, the petitioner was paid a sum of Rs. 19,96,892/- in stead of earlier financial package i.e. Rs. 25,22,983/-. Ms. Bhavana Dutta, Advocate has strenuously argued that her client was entitled to financial package of Rs. 25,22,983/- and not Rs. 19,96,892/- released by the respondent. She then argued that her client has not been treated in just and fair manner by the respondents by reducing the financial package. She further contended that the financial package was to be paid on the basis of clause (d) of Annexure P-3 dated 5.10.1988 and not on the basis of newly substituted clause (d) dated 2.9.2008. In other words, her submission was that the rights which had accrued to the petitioner as on 3.7.2008, could not be destroyed on the basis of amendment carried out in the Voluntary Retirement Scheme dated 2.9.2008. She lastly contended that the consent given by the petitioner in view of the peculiar facts and circumstances of the case dated 2.9.2008, is not binding on her client. Mr. R.K. Sharma, learned Senior Additional Advocate General appearing on behalf of respondents No. 1 & 3 and Mr. J.R. Thakur, Advocate for respondent No.2 have vehemently argued that once the petitioner had given his consent dated 2.9.2008, he cannot wriggle out of the same. They further 4 contended that the petitioner was only entitled to Rs. 19,96,892/- and not Rs. 25,22,983/-. I have heard the parties and have gone through the pleadings carefully. The Voluntary Retirement Scheme was introduced by the Government of India vide office memorandum dated 5.10.1988. The underlined principle for introducing the scheme was to reduce surplus man power. It would be apt at this stage to reproduce sub paragraph (d) of office memorandum dated 5.10.1988, which reads thus: “In addition, an employee whose request for Voluntary Retirement is accepted would also be entitled to an ex-gratia payment equivalent to 1 ½ months’ emoluments (pay+DA) for each completed year of service or the monthly emoluments at the time of retirement multiplied by the balance months of service left before normal date of retirement, whichever is less. For example, an employee, who has put in 24 years of service and has got only one year of service for normal retirement will get ex-gratia payment of only 12 months emoluments and not 36 months’ emoluments. The memorandum dated 5.10.1988 was made applicable by the respondent-State to the employees/officers working in Himachal Pradesh Government Public Sector Undertakings with effect from 11.1.1993. The respondent No.2 is also a public undertaking of the State of Himachal Pradesh. The petitioner opted for voluntary retirement vide letter dated 30.6.2008. He had clarified by way of abundant precaution that financial package should be as on the date of retirement itself as has been 5 done in earlier cases. The financial package worked out by the respondents was Rs. 25,22,983/-. The option was accepted by the Managing Director of respondent No.2-Corporation on 3.7.2008. Once the petitioner had opted for retirement under Voluntary Retirement Scheme and the same stood accepted on 3.7.2008, he was liable to be paid financial package of Rs. 25,22,983/-. In fact, it is borne out from the correspondence entered into between respondents No.3 and 2 that the financial package worked out and payable to the petitioner was in fact Rs. 25,22,983/-. It is also evident from the Annexures P-14 and P-17. The amendment has been carried out in the Voluntary Retirement Scheme by the State of Himachal Pradesh on 2.9.2008, whereby paragraph (d) of memorandum dated 5.10.1988 has been substituted as under: “In addition, an employee whose request for Voluntary Retirement is accepted would also be entitled to an ex-gratia payment equivalent to one month emoluments (Basic Pay + DA) for each completed year of service or the monthly emolument at the time of retirement multiplied by the balance months of service left before normal date of retirement, whichever is less. For example an employee, who has put in 24 years of service andhas got only one year of service for normal retirement will get ex-gratia payment of only 12 months emoluments and not 24 months emoluments.” The effect of substitution of new paragraph (d) by way of amendment carried out on 2.9.2008 is that ex-gratia payment equal to one month emoluments basic pay plus D.A. for each completed year of service or the monthly emoluments at the time of 6 retirement multiplied by balance months of service left before the normal date of retirement, whichever is less, instead of ex-gratia payment equivalent to 1 ½ months’ emoluments (pay+DA) for each completed year of service. The petitioner has opted for voluntary retirement on 30.6.2008. It was accepted on 3.7.2008. The rights of the petitioner crystallized on 3.7.2008. He was entitled to financial package of Rs. 25,22,983/-. However, the petitioner was paid a sum of Rs. 19,96,892/- after obtaining his consent on telephone by the Special Secretary (Finance). The consent obtained from the petitioner by the respondent on telephone without disclosing the contents of amendment carried out on 2.9.2008 was unreasonable. The same is the outcome of undue influence and is outcome of lower bargaining power of the petitioner vis-à-vis the State. The mode adopted by the Special Secretary (Finance) of seeking the consent from the petitioner on telephone is not approved. The petitioner did not have the copy of the amendment carried out on 2.9.2008 whereby amendment has been carried out in the existing memorandum. The petitioner was hard pressed for money after he has sent his daughter to United State of America for higher education. Rather, he has been pushed to wall. In case the petitioner had known the consequences/complications of the amendment carried on 2.9.2008, no doubt, he may not have opted for voluntary retirement. The petitioner has not been treated in a just and fair manner by the respondents. The petitioner’s daughter was selected for higher studies in Engineer in United State of America. He was required to arrange the funds to the tune 7 of Rs. 31 lacs. It is in these circumstances that in fact, he opted for retirement under the Voluntary Retirement Scheme on 30.6.2008. His daughter left for United State of America for higher studies in Engineer on 31.7.2008. His option was accepted on 3.7.2008. The petitioner, in fact, had been left in lurch by the respondents by accepting his option and thereafter, on the basis of memorandum carried out on 2.9.2008 paying him a sum of Rs. 19,96,892/- instead of Rs. 25,22,983/-. The Court is of the opinion that the petitioner’s consent dated 2.11.2008 was not voluntary but it was due to the circumstances beyond his control as noticed above. The consent given by the petitioner whereby he has agreed to retirement on the basis of amendment dated 2.9.2008, is declared not binding upon him. His monthly emoluments were to be worked out as per paragraph (d) of memorandum dated 5.10.1988 and not on the basis of substituted paragraph (d). The rights which have accrued to the petitioner on the basis of office memorandum dated 5.10.1988 after the acceptance of his option could not be destroyed/defeated on the basis of memorandum dated 2.9.2008. The petitioner had legitimate expectation at the time when he submitted his application on 30.6.2008 for the release of financial package of Rs. 25,22,983/-. In fact, as noticed above, he has high- lighted in his application dated 30.6.2008 that the emoluments should be worked out as on the date of retirement. The fact that the petitioner had withdrawn the amount will not defeat his right to get a sum of Rs. 25,22,983/- instead of Rs. 19,96,892/-. He had no option except to withdraw a sum of Rs. 19,96,892/- to defray the expenses he has incurred while sending his daughter to United 8 State of America. Their Lordships of the Hon’ble Supreme Court have held in Nar Singh Pal Vs. Union of India and others, (2000) 3 Supreme Court Cases 588 that in case the workman had accepted the compensation money, it will not preclude him from the benefits available under the Act. Their Lordships have held as under: “13. The Tribunal as also the High Court, both appear to have been moved by the fact that the appellant had encashed the cheque through which retrenchment compensation was paid to him. They intended to say that once retrenchment compensation was accepted by the appellant, the chapter stands closed and it is no longer open to the appellant to challenge his retrenchment. Thus, we are constrained to observe, was wholly erroneous and was not the correct approach. The appellant was a casual labour who had attained the 'temporary' status after having put in ten years' of service. Like any other employee, he had to sustain himself, or may be, his family members on the wages he got. On the termination of his services, there was no hope left for payment of salary in future. The retrenchment compensation paid to him, which was only a meagre amount of Rs. 6,350/-, was utilised by him to sustain himself. This does not mean that he had surrendered all his constitutional rights in favour of the respondents. Fundamental Rights under the Constitution cannot be bartered away. They cannot be compromised nor can there be any estoppel against the exercise of Fundamental Rights available under the Constitution. As pointed out earlier, the termination of the appellant from service was punitive in nature and was in violation of the principles of natural justice and his constitutional rights. Such an order cannot be sustained.” 9 The employer should treat its employees in just and fair manner. Their working conditions should be humane. Their rights accruing on the basis of extant rules/instructions should not be taken away arbitrarily. In the present case, amendment which has been carried on 2.9.2008 was prospective in nature and the same could not be made applicable to the petitioner retrospectively. The act of the respondents by applying the memorandum carried out on 2.9.2008 to the petitioner has resulted in hardship to the petitioner and his family. Their Lordships of the Hon’ble Supreme Court have held in 2007 (12) Supreme Court Cases 462 that fairness and reasonableness in the action of the State whether in criminal proceedings or otherwise are hallmark of Article 14 of the Constitution. The Hon’ble Apex Court has re-iterated in 2008 (2) Supreme Court Cases 672 that reasonableness/fairness is the heart and soul of Article 14 of the Constitution. Their Lordships have held in (2008) 4 Supreme Court Cases 720 that arbitrariness violates Article 14 of the Constitution. The fundamental rights can neither be bartered nor waived. In a recent pronouncement in Bank of India & another Vs. K. Mohandas & others, JT 2009 (5) SC 247, their Lordships of the Hon’ble Supreme Court had the occasion to go into various aspects of the Voluntary Retirement Scheme introduced in the year 2000 brought out by the Punjab National Bank, Punjab & Sind Bank, Bank of India, Union Bank of India and United Bank of India. An amendment was carried out in the year 2002 with retrospective 10 effect from September 1, 2000. By way of an amendment, a proviso has been inserted to Regulation 28, which reads as follows: “Provided that pension shall also be granted to an employee who opts to retire before attaining the age of superannuation, but after having served for a minimum period of 15 years in terms of any scheme that may be framed for the purpose by the Bank’s Board with the concurrence of the Government.” Their Lordships of the Hon’ble Supreme Court have formulated the following question for determination: “Whether the employees (having completed 20 years of service) of these banks (Bank of India, Punjab National Bank, Punjab & Sind Bank, Union Bank of India and United Bank of India) who had opted for voluntary retirement under VRS 2000 are entitled to addition of five years of national service in calculating the length of service for the purpose of the said Scheme as per Regulation 29 (5) of Pension Regulations, 1995? Their Lordships of the Hon’ble Supreme Court have held that VRS 2000 was a contractual scheme and it was an invitation to offer containing a term that optee shall also be eligible for pension as per regulations of pension. The concluded contract came into existence and the offeree was relieved from the employment. In 2000 scheme, the employees seeking voluntary retirement were eligible for pension as per Pension Regulations. It was only at the fag end of the operation of VRS 2000 at the instance of NBA, the banks proposed amendment in the Pension Regulations and a circular came to be issued. Their Lordships have also held that even if Pension Regulations, 1995 are applied 11 for the purpose of VRS 2000, it would not create anomalous situation. Their Lordships have also repelled the contention of the Banks that amendment to Regulation 28 has neither been challenged nor the said Regulation has been declared ultra vires, therefore, that provision cannot be rendered otiose by taking recourse to Regulation 29. Their Lordships have held that the amendment in Regulation 28 in the year 2002 with effect from September 1, 2000 could not have applied to the optees under the Scheme who had completed service of 20 years. The Hon’ble Apex Court has also repelled the contention as raised in the present case by the Management that the petitioner had accepted the offer. The petitioner in the present case is only seeking the implementation of terms and conditions as applicable at the time he has opted for voluntary retirement. Their Lordships of the Hon’ble Supreme Court have held as under: “It may be noticed that at the fag end of the operation of VRS 2000, at the instance of IBA and with the approval of the Central Government, Regulation 28 was proposed to be amended. The amendment in fact was carried out in the year 2002 with retrospective effect from September 1, 2000. By way of amendment, a proviso has been inserted to Regulation 28, which reads as follows: "Provided that pension shall also be granted to an who opts to retire before attaining the age of superannuation, but after having served for a minimum period of 15 years in terms of any scheme that may be framed for the purpose by the Bank's Board with the concurrence of the Government." 12 The principal question that falls for our determination is: whether the employees (having completed 20 years of service) of these banks (Bank of India, Punjab National Bank, Punjab & Sind Bank, Union Bank of India and United Bank of India) who had opted for voluntary retirement under VRS 2000 are entitled to addition of five years of notional service in calculating the length of service for the purpose of the said Scheme as per Regulation 29(5) of Pension Regulations, 1995 ? In view of the admitted position that VRS 2000 was a contractual scheme; that it was an invitation to offer containing a term that optee will also be eligible for pension as per Pension that an application by an employee for voluntary retirement was a proposal or offer and that upon acceptance of on for voluntary retirement made by the employee and a communication of to him, the concluded contract came into existence and the offeree was relieved from the employment, for consideration of the question posed herein, the court need to examine the contract and the circumstances in which it was made in order to see whether or not from the nature of it, the parties must have made their bargain on the footing that a particular thing or state of things would continue to exist. It is also a well-recognized principle of construction of a contract that it must be read as a whole in order to ascertain the true meaning of its several clauses and the words of each clause should be interpreted so as to bring them into harmony with the other provisions if that interpretation does no violence to the meaning of 13 which they are naturally susceptible. [(The North Eastern Railway Company vs. L. Hastings) (1900 AC260)]. What was, in respect of pension, the intention of the banks at the time of bringing out VRS 2000? Was it not made expressly clear therein that the employees seeking voluntary retirement will be eligible for pension as per Pension Regulations? If the intention was not to give pension as provided in Regulation 29 and particularly sub-regulation (5) thereof, they could have said so in the scheme itself. After all much thought had gone into the formulation of the VRS 2000 and it came to be framed after great deliberations. The only provision that could have been in mind while providing for pension as per Pension Regulations was Regulation 29. Obviously, the employees, too, had benefit of Regulation 29(5) in mind when they offered for voluntary retirement as admittedly Regulation 28 as was existing at that time was not applicable at all. None of the regulations 30 to 34 was attracted. It appears that VRS 2000 evoked huge response, much more than expected and then began the second thought. At the fag end of operation of VRS 2000, at the instance of NBA, the banks proposed amendment in the Pension Regulations and a circular came to be issued. But, by that time, ball had gone out of the hands of the employees; they had already made their offers which were irrevocable; it was not open to them to withdraw the offers as per specific condition incorporated in the scheme (albeit this court in O.P. Swarnakar held that offer could be withdrawn before acceptance) and their offers were accepted and they were relieved. We are afraid, it would be 14 unreasonable if amended Regulation 28 is made applicable, which had not seen the light of the day and which was not the intention of the bank when scheme was framed. The banks in the present batch of appeals are public sector banks and are `State' within the meaning of Article 12 of the Constitution and their action even in contractual matters has to be reasonable, lest, as observed in O.P. Swarnakar, it must attract the wrath of Article 14 of the Constitution. Any interpretation of the terms of VRS 2000, although contractual in nature, must meet the test of fairness. It has to be construed in a manner that avoids arbitrariness and unreasonableness on the part of the public sector banks who brought out VRS 2000 with an objective of rightsizing its manpower. The banks decided to shed surplus manpower. By formulation of the Special Scheme (VRS 2000), the banks intended to achieve its objective of rationalizing its force as they were overstaffed. The Special Scheme was, thus, oriented to lure the employees to go in for voluntary retirement. In this background, the consideration that was to pass between the parties assumes significance and a harmonious construction to the Scheme and Pension Regulations, therefore, has to be given. Two things immediately become noticeable from the said communication. One is that as per Regulation 29 of Pension Regulations, 1995, an employee can take voluntary retirement after 20 years of qualifying service and become eligible for pension. The other thing is that the Scheme provides that the employees with 15 years of service or 40 years of age shall be eligible to take voluntary retirement under the Scheme and under 15 Regulation 29, the employees having rendered 15 years of service or completed 40 years of age but not completed 20 years of service shall not be eligible for pensionary benefits on taking voluntary retirement under the Scheme. The use of the words `such employees' in the communication is referable to employees having rendered 15 years of service but not completed 20 years of service and, therefore, it was decided to bring in amendment in the Regulations so that employees having not completed 20 years service do not loose the benefit of pension. The amendment in Regulation 28, as is reflected from the afore-referred communication, was intended to cover the employees who had rendered 15 years service but not completed 20 years service. It was not intended to cover the optees who had already completed 20 years service as the provisions contained in Regulation 29 met that contingency. Even if it be assumed that by insertion of the proviso in Regulation 28 (in the year 2002 with effect from September 1, 2000), all class of employees under VRS 2000 were intended to be covered, such amendment in Regulation 28, needs to be harmonized with Regulation 29, particularly Regulation 29(5) which provides for addition of qualifying service by five years for the optees who had put in 20 years service or more subject to the condition that total qualifying service rendered by such employee shall not in any case exceed 33 years. This would be in tune and consonance with the explanatory note appended to the amendment in Regulation 28 wherein it is stated that amendment with retrospective effect would not adversely affect 16 any employee or officer of the respondent-bank. That would also meet the test of fairness. On behalf of the banks,