Case: Madhya Pradesh State Road Transport Corporation Vs. Manoj Kumar

extended up to July 31, 2007, the employees could withdraw their offers before July 31, 2007. Further, as in all these cases where the offer was withdrawn before July 31, 2007, the High Court has dismissed the appeals of the Corporation herein. 22) At this juncture, therefore, other issue that gains importance and needs to be decided is: whether validity of the Scheme was extended up to July 31, 2007 and the employees could withdraw their offer before this date or the date on which the initial scheme expired, i.e. August 01, 2005 and the withdrawal thereafter was not permissible? 23) To decide this question, let us recapitulate some salient facts. Scheme in the first instance was floated on July 01, 2005. It clearly mentioned that those interested to opt for the Scheme would give their options by August 01, 2005 and not thereafter. It was categorically provided that application for option presented after August 01, 2005 shall not be considered. Para 4(iii) also provided that the option once given by the employee shall not be permitted to be changed or taken back. Sub para (viii) of para 4 provided for settlement of dues of the employee on acceptance of such an Scheme. This Scheme came to an end on August 01, 2005. There was no extension of the Scheme during its currency or even immediately thereafter. More than one year thereafter, i.e. on October 12, 2006, the appellant Corporation gave another opportunity to those who had not submitted the applications earlier, to submit the options by October 28, 2006. We have already reproduced, in toto, the order dated October 12, 2006. In the first blush, it may give an impression that the initial date of August 01, 2005 stands extended till October 28, 2006. However, a little closer scrutiny and analysis of the factual background narrated above amply demonstrates that it is not a case of extension of the original Scheme. Reason is simple and can be found in the fact that there was a big gap/hiatus between August 01, 2005 and October 12, 2006. Earlier Scheme had come to an end on August 01, 2005, naturally no employees submitted or could submit applications after August 01, 2005 under the Scheme. There was no VRS Scheme in operation from August 02, 2005 to October 11, 2006. It is only on October 12, 2006, another opportunity was given to the rest of the employees to submit their applications and the period during which such an application for voluntary retirement could be submitted was from October 12, 2006 to October 28, 2006. This small window was opened for a period of 17 days for those employees who had not submitted their applications and they were afforded another chance. At the same time, the main reason was to attract more such employees to opt for VRS as the Corporation had decided to close down its operations and wanted its employees to take an honorable exit with golden handshake. Therefore, there is an acquity and sharpness in the submissions of the Corporation that it cannot be treated as extension of the earlier Scheme. In fact, instead of promulgating the VRS Scheme all over again, easy way was found by making amendment in a particular clause stating that application presented after October 28, 2006 shall not be considered. Another significant feature which has to be kept in mind is that between August 01, 2005 and October 12, 2006, applications of many employees had been accepted and many out of them had even been offered their terminal dues. Thus, we find that there are two distinct groups of employees who had submitted their applications for VRS. First group was the one which exercised its option between July 01, 2005 to August 01, 2005. Second set of employees are those who submitted their options when another chance was given to them, i.e. from October 12, 2006 to October 28, 2006. In view thereof, insofar as first set of employees are concerned, they could withdraw their option, before it was accepted, by August 01, 2005 and not thereafter. Likewise, those who submitted their options in the second phase could withdraw the same before October 28, 2006. A chart was submitted before us giving the status of the applications that were submitted by various employees/respondents in these appeals. This chart indicates that some of the employees belonging to the first group had withdrawn their offer before August 01, 2005. They had right to do so. Acceptance of their offer after the withdrawal would be of no consequence. However, those employees who withdrew their offers after August 01, 2005 could not do so and, therefore, the Corporation was within its right to accept their offers. Likewise, those employees belonging to the second category who had withdrawn their offers before October 28, 2006 were entitled to withdraw their offers as those were not accepted by that date. However, the withdrawal after October 28, 2006 when Scheme was closed would be of no consequence. 24) When we apply the aforesaid test to the facts of this case, we find that insofar as those employees who fall in the first category are concerned, they had withdrawn their offer after August 01, 2005, except one Mr. Dinesh Chand Yadav, who is respondent No.1 in the Civil Appeal arising out of Special Leave Petition (Civil) No. 14874 of 2010. Therefore, from this batch, only he is entitled for reinstatement with back wages, as he has also filed an undertaking, in terms of this Courts order dated May 12, 2016, to the effect that he is not gainfully employed during the relevant period. Likewise, employees falling in the second category had withdrawn their offer after October 28, 2006, except Mr. Sukhram and Mr. Ram Sharan Rathore, both respondents in the Civil Appeal arising out Special Leave Petition (Civil) No. 14594 of 2010. However, these respondents failed to comply with this Courts order dated May 12, 2016. They are, therefore, entitled for reinstatement without back wages.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]find that there are two distinct groups of employees who had submitted their applications for VRS. First group was the one which exercised its option between July 01, 2005 to August 01, 2005. Second set of employees are those who submitted their options when another chance was given to them, i.e. from October 12, 2006 to October 28, 2006. In view thereof, insofar as first set of employees are concerned, they could withdraw their option, before it was accepted, by August 01, 2005 and not thereafter. Likewise, those who submitted their options in the second phase could withdraw the same before October 28, 2006. A chart was submitted before us giving the status of the applications that were submitted by various employees/respondents in these appeals. This chart indicates that some of the employees belonging to the first group had withdrawn their offer before August 01, 2005. They had right to do so. Acceptance of their offer after the withdrawal would be of no consequence. However, those employees who withdrew their offers after August 01, 2005 could not do so and, therefore, the Corporation was within its right to accept their offers. Likewise, those employees belonging to the second category who had withdrawn their offers before October 28, 2006 were entitled to withdraw their offers as those were not accepted by that date. However, the withdrawal after October 28, 2006 when Scheme was closed would be of no consequence20) Reading of the aforesaid judgments would clearly demonstrate that in those cases where the Scheme is contractual in nature (and not statutory in character as was seen in State Bank of Indias case), provisions of the Indian Contract Act would apply. The VRS Scheme floated by the employer would be treated as invitation to offer and the application submitted by the employees pursuant thereto is an offer which does not amount to resignation in praesenti and the offer can be withdrawn during the validity period. This would be the position even when there is a clause in the Scheme that offer once given cannot be withdrawn at all. However, exception to this principle is that in such cases offer is to be withdrawn during the validity period of the Scheme and not thereafter even when if it is not accepted during the period of the Scheme. That is the clear mandate of Romesh Chander Kanoji. The rational which is given for carving out this exception is contained in para 9 of the said judgment, which has already been reproduced above. To put it pithily, what is highlighted is that such schemes are funded schemes and time is given to every employee to opt for voluntary retirement. Because these are funded schemes, the Management is required to create a fund. The creation of this fund depends upon a number of applications; the cost of the Scheme; liability which this Scheme would impose on the employer and such other variable factors. In this situation, if the employees are allowed to withdraw from the Scheme at any time even after its closure, it would not be possible to work out the Scheme as all calculations of the employer would fail21) In the present case, the Corporation had floated the Scheme because of the reason that it has virtually stopped transport business and the purpose of the Scheme was to benefit itself by shrinking the strength of the employees as with no transport business need for such employees is not there. Here also, the Scheme provided that once the option is given, the same cannot be withdrawn. Following the dicta in the aforesaid judgments, as noted above, it is clear that notwithstanding this clause, the employees had a right to withdraw the offer during the validity period but not thereafter. This legal principle is even taken note of by the High Court as well in the impugned judgment. The High Court has, however, held that though the Scheme was valid up to August 01, 2005, but validity was extended up to July 31, 2007, the employees could withdraw their offers before July 31, 2007. Further, as in all these cases where the offer was withdrawn before July 31, 2007, the High Court has dismissed the appeals of the Corporation herein.Scheme in the first instance was floated on July 01, 2005. It clearly mentioned that those interested to opt for the Scheme would give their options by August 01, 2005 and not thereafter. It was categorically provided that application for option presented after August 01, 2005 shall not be considered. Para 4(iii) also provided that the option once given by the employee shall not be permitted to be changed or taken back. Sub para (viii) of para 4 provided for settlement of dues of the employee on acceptance of such an Scheme. This Scheme came to an end on August 01, 2005. There was no extension of the Scheme during its currency or even immediately thereafter. More than one year thereafter, i.e. on October 12, 2006, the appellant Corporation gave another opportunity to those who had not submitted the applications earlier, to submit the options by October 28, 2006. We have already reproduced, in toto, the order dated October 12, 2006. In the first blush, it may give an impression that the initial date of August 01, 2005 stands extended till October 28, 2006. However, a little closer scrutiny and analysis of the factual background narrated above amply demonstrates that it is not a case of extension of the original Scheme. Reason is simple and can be found in the fact that there was a big gap/hiatus between August 01, 2005 and October 12, 2006. Earlier Scheme had come to an end on August 01, 2005, naturally no employees submitted or could submit applications after August 01, 2005 under the Scheme. There was no VRS Scheme in operation from August 02, 2005 to October 11, 2006. It is only on October 12, 2006, another opportunity was given to the rest of the employees to submit their applications and the period during which such an application for voluntary retirement could be submitted was from October 12, 2006 to October 28, 2006. This small window was opened for a period of 17 days for those employees who had not submitted their applications and they were afforded another chance. At the same time, the main reason was to attract more such employees to opt for VRS as the Corporation had decided to close down its operations and wanted its employees to take an honorable exit with golden handshake. Therefore, there is an acquity and sharpness in the submissions of the Corporation that it cannot be treated as extension of the earlier Scheme. In fact, instead of promulgating the VRS Scheme all over again, easy way was found by making amendment in a particular clause stating that application presented after October 28, 2006 shall not be considered. Another significant feature which has to be kept in mind is that between August 01, 2005 and October 12, 2006, applications of many employees had been accepted and many out of them had even been offered their terminal dues. Thus, wefind that there are two distinct groups of employees who had submitted their applications for VRS. First group was the one which exercised its option between July 01, 2005 to August 01, 2005. Second set of employees are those who submitted their options when another chance was given to them, i.e. from October 12, 2006 to October 28, 2006. In view thereof, insofar as first set of employees are concerned, they could withdraw their option, before it was accepted, by August 01, 2005 and not thereafter. Likewise, those who submitted their options in the second phase could withdraw the same before October 28, 2006. A chart was submitted before us giving the status of the applications that were submitted by various employees/respondents in these appeals. This chart indicates that some of the employees belonging to the first group had withdrawn their offer before August 01, 2005. They had right to do so. Acceptance of their offer after the withdrawal would be of no consequence. However, those employees who withdrew their offers after August 01, 2005 could not do so and, therefore, the Corporation was within its right to accept their offers. Likewise, those employees belonging to the second category who had withdrawn their offers before October 28, 2006 were entitled to withdraw their offers as those were not accepted by that date. However, the withdrawal after October 28, 2006 when Scheme was closed would be of no24) When we apply the aforesaid test to the facts of this case, we find that insofar as those employees who fall in the first category are concerned, they had withdrawn their offer after August 01, 2005, except one Mr. Dinesh Chand Yadav, who is respondent No.1 in the Civil Appeal arising out of Special Leave Petition (Civil) No. 14874 of 2010. Therefore, from this batch, only he is entitled for reinstatement with back wages, as he has also filed an undertaking, in terms of this Courts order dated May 12, 2016, to the effect that he is not gainfully employed during the relevant period. Likewise, employees falling in the second category had withdrawn their offer after October 28, 2006, except Mr. Sukhram and Mr. Ram Sharan Rathore, both respondents in the Civil Appeal arising out Special Leave Petition (Civil) No. 14594 of 2010. However, these respondents failed to comply with this Courts order dated May 12, 2016. They are, therefore, entitled for reinstatement without back wages.9) It becomes manifest from the reading of the three Judge Bench judgment of this Court in O.P. Swarnakar that such a VRS Scheme is held to be contractual in nature. The Court, thus, held that provisions of the Indian Contract Act, 1872 would apply, which provisions categorically lay down that an offer made by a person can be withdrawn by him before its acceptance.14) In O.P. Swarnakar, which was a judgment rendered by a three Judge Bench of this Court, various nationalised banks were the appellants and batch of matters pertaining to these banks were decided. The State Bank of India, constituted under the State Bank of India Act, 1955 and other banks taken over under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 adopted in the year 2000 separately but similar schemes known as the Employees Voluntary Retirement Scheme. The question involved in those appeals was whether an employee opting for voluntary retirement under the said Schemes was precluded from withdrawing that offer. The Scheme adopted by the State Bank of India differed from the Scheme of the other nationalised banks inasmuch as that scheme permitted withdrawal of the applications for voluntary retirement by February 15, 2001. The said Scheme was applicable in relation to employees who on the date of application had completed 15 years of service or 40 years of age. The period during which the said Scheme was to remain operative varied from bank to bank. However, in case of the Punjab National Bank, the said Scheme was to remain in operation from November 1, 2000 to November 30, 2000. Para 10.5 of the said Scheme barred an employee from withdrawing the request made for voluntary retirement after once exercising the option. Other sub-paras of para 10 provided that a request for voluntary retirement would not take effect unless accepted by the competent authority who would have absolute discretion to accept or reject that request. The said Scheme prescribed a particular procedure for making an application for seeking voluntary retirement. A large number of employees submitted their applications, out of whom a small number of employees withdrew their offer. Despite withdrawal of their offer, the same was accepted. In some cases, offers, despite withdrawal thereof, were accepted after the expiry of the operation period of the Scheme. Writ petitions were filed in various High Courts to challenge the acceptance of the employees applications by the banks despite their withdrawal. Before the Punjab & Haryana High Court, the validity of the said Scheme also was challenged. Some writ petitioners sought issuance of a writ of mandamus to the respective banks to pay unto them their lawful dues strictly in terms of the Scheme. The High Court held that: (i) the said Scheme was not a valid piece of subordinate legislation as Sections 19(1) and 19(4) of the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 had not been complied with, (ii) even assuming the said Scheme to be valid, it was open to an employee to withdraw his option before the same had been accepted and effectively enforced, and (iii) since the Scheme was invalid, no relief could be granted in the writ petitions seeking any benefits under the Scheme. The Bombay High Court and other High Courts held that clause 10.5 of the said Scheme was not operative as the employees had an indefeasible right to withdraw their offer before the same was accepted. The Uttarakhand High Court dismissed a writ petition as not maintainable on the ground that the petitioner had bound himself by the terms not to withdraw the application for voluntary retirement15) Eschewing the discussion on other aspects which are not relevant for these cases, insofar as issue at hand is concerned, the Court held that the Scheme was floated with a purpose of downsizing all employees. Such a Scheme, although may incidentally be beneficial also to the employees, but was primarily beneficial to the banks. The ultimate aim and object of floating such a Scheme was for the purpose of effective functioning of the banks so as to enable them to compete with private banks. On the other hand, the Court also remarked that though bank employees do not enjoy the status as in the case of Government employees, nevertheless, they do enjoy security of their employment inasmuch as these nationalised banks were States within the meaning of Article 12 of the Constitution. The banks, therefore, cannot take recourse to hire and fire for terminating the services of the employees. They are required to act fairly and strictly in terms of the norms laid down therefor. Their actions in this behalf must satisfy the test of Articles 14 and 21. Proceeding therefrom, the Court took the view that a contract of employment is also a subject matter of contract and insofar as the question whether the VRS Scheme was an offer/proposal or merely an invitation to offer is essentially a question of fact. The Court further discussed the law relating to offer and acceptance with the observations that it could not be stated in simplistic form. In the context of the VRS, however, the Court applied this law of contract by deducing the following conclusions:(i) The banks treated the application from the employees as an offer which could be accepted or rejected(ii) Acceptance of such an offer was required to be communicated in writing(iii) The decision making process involved application of mind on the part of several authorities(iv) The decision making process was to be formed at various levels(v) The process of acceptance of an offer made by an employee was in the discretion of the competent authority(vi) The request of voluntary retirement would not take effect in praesenti but in future(vii) The bank reserved its right to alter/rescind the conditions of the Scheme., the nationalised banks in terms of the Scheme had secured for themselves an unfettered and unguided right to deal with the jural relationship between themselves and their employees. It was held that the Scheme constituted invitation to an offer and not an offer. As a fortiorari, the application submitted by an employee was to be treated as offer/proposal of the employee, and when accepted by the bank it would constitute a promise within the meaning of Section 2(b) of the Indian Contract Act, 1872 and only then the promise becomes an enforceable contractOn this analogy, the Court held that since employees had withdrawn their offer before it was accepted, they had a right to do soHowever, the Court found that the case of State Bank of India stood slightly on a different footing as it had not amended the VRS Scheme and even permitted withdrawal of applications by February 15, 2001. Also, the Scheme floated by the State Bank of India contained clause (7) which laid down the mode and manner in which application for voluntary retirement was to be considered and this clause created an enforceable right. The Court noted that in the event the State Bank of India failed to adhere to its preferred policy, the same could have been subsequently enforced by the Court of law and, therefore, it would amount to some consideration. On this basis, insofar as appeals of State Bank of India are concerned, the same were allowed but appeals of nationalised banks were dismissed. Following passages from this judgment capture the essence of the legal principle laid down:113. The submission of the learned Attorney-General that as soon as an offer is made by an employee, the same would amount to resignation in praesenti cannot be accepted. The Scheme was in force for a fixed period. A decision by the authority was required to be taken and till a decision was taken, the jural relationship of employer and employee continued and the employees concerned would have been entitled to payment of all salaries and allowances etc. Thus it cannot be said to be a case where the offer was given in praesenti but the same would be prospective in nature keeping in view of (sic) the fact that it was come into force at a later date and that too subject to acceptance thereof by the employer. We, therefore, are of the opinion that the decisions of this Court, as referred to hereinbefore, shall apply to the facts of the present case also114. However, it is accepted that a group of employees accepted the ex gratia payment. Those who accepted the ex gratia payment or any other benefit under the Scheme, in our considered opinion, could not have resiled therefrom115. The Scheme is contractual in nature. The contractual right derived by the employees concerned, therefore, could be waived. The employees concerned having accepted a part of the benefit could not be permitted to approbate and reprobate nor can they be permitted to resile from their earlier stand.16) Next decision, in the chronology, which we want to refer to is the case of Romesh Chander Kanoji. This is also a judgment rendered by a three Judge Bench, in which case of O.P. Swarnakar was specifically referred to and discussed. The principle laid down in O.P. Swarnakar was explained and in the process the Court noticed different outcomes insofar as State Bank of India is concerned vis-a-vis nationalised banks. This distinction was brought out and explained by this Court in the following manner:6. It is evident from above that in the case of SBIVRS, where there is a specific provision for withdrawal, the employee must exercise his option within the time specified; and in case of nationalized banks where there was no provision to withdraw (and in fact the Scheme forbade withdrawal), the withdrawal must be effected prior to acceptance by the Bank. Therefore, in terms of the ratio laid down by this Court, the employee is ensured under SBIVRS the right of withdrawal within the specified period.) The Court thereafter referred to its earlier judgment of this Court in State Bank of Patiala v. Jagga Singh (2004) 2 SCC 201) wherein the Court held that since State Bank of Patiala was a subsidiary of State Bank of India and the Schemes were similar, the decision in O.P. Swarnakar, so far as it related to the State Bank of India, would be applicable to State Bank of Patiala as well. The counsel appearing for the employees in this case sought to distinguish Jagga Singh. However, this contention was repelled and in the process observation which was made by the Court need a glanceIt is, thus, reproduced below:9. We do not find any merit in the above argument. It is important to bear in mind that the Schemes in question are basically funded schemes. Under such Schemes, time is given to every employee to opt for voluntary retirement and similarly time is given to the management to work out the Scheme. Clause (5) of SBPVRS gave fifteen days time to the employees to opt for the Scheme and under clause (8) a period of two months is given to the management to work out the Scheme. Since the said Schemes are funded schemes, the management is required to create a fund. The creation of the fund would depend upon the number of applications; the cost of the Scheme; liability which the Scheme would impose on the Bank and such other variable factors. If the employees are allowed to withdraw from the Scheme at any time after its closure, it would not be possible to work out the Scheme as all calculations of the management would fail. In the case of Bank of India v. O.P. Swarnakar [(2003) 2 SCC 721 : 2003 SCC (L&S) 200] SBIVRS is held to be an invitation to offer. Following the said judgment, we hold that SBPVRS is an invitation to offer and not an offer. Clause (5) of the said SBPVRS inter alia states that the Scheme will remain open during the period 15-2-2001 to 1-3-2001 whereas Rule 8 thereof provides for mode of acceptance by the management. It is in the light of Rules 5 and 8 that one has to read clause (9)(i) which provides for general conditions and under which it is provided that application once made cannot be withdrawn. In Chitty on Contracts (28th Edn., p. 125), the learned author states thatan offer may be withdrawn at any time before it is accepted. That this rule applies even though the offeror has promised to keep the offer open for a specified time, for such a promise is unsupported by considerationTherefore, clause (5) of SBPVRS gives locus poenitentiae to the employee to withdraw by 1-3-2001 after which the mode of acceptance contemplated by clause (8) of SBPVRS would apply and the Bank will proceed to vet the applications. As stated above, the Bank needs time to ascertain its liability; it is required to find out the cost of creation of a separate fund which in turn depends on the number of applications and if the employees are permitted to withdraw after the date of closure it would be impossible for the Bank to implement the Scheme. Therefore, clause (5) gives time to the employee to withdraw by 1-3-2001 and the Bank is given time of two months thereafter to complete the designated mode of acceptance (see Halsburys Laws of England, 4th Edn., p. 133). Reading clauses (5), (8) and (9)(i), it is clear that employees are precluded from withdrawing from SBPVRS after the closure of the Scheme on 1-3-2001.As would be noticed hereinafter, one of the arguments is as to whether a new Scheme was promulgated or it was an extension of the earlier Scheme.This aspect becomes significant because of the reason that as per the original Scheme last date for making application was August 01, 2005 and the Scheme came to an end on that date. The extension given is much thereafter, i.e. on October 12, 2006. Thus, there was no Scheme in operation from August 02, 2005 to October 11, 2006.