Case: New India Assurance Co. Ltd Vs. Raghuvir Singh Narang

The respondents were working as Development Officers under the appellant - New India Assurance Co. Ltd. Section 17A of the General Insurance Business (Nationalisation) Act, 1972 (the Act, for short) inserted by the Amendment Act 3 of 1985 empowered the Central Government to regulate, by issue of notifications, the pay scales and other terms and conditions of service of officers and other employees of the appellant by framing one or more schemes and by adding, amending or varying any scheme. In exercise of the powers under Section 17A of the said Act, the Central Government framed a Scheme by Notification dated 2.1.2003 to amend the General Insurance (Rationalization of Pay Scales and Other Conditions of Service of Development Staff) Scheme, 1976. Paragraph 15-C inserted by the said Amendment Scheme of 2003 gave a special option to the Development Officers of the appellant, to opt within 60 days of commencement of the said Amendment Scheme: (a) for Special Voluntary Retirement Package as per Annexure 1 appended thereto; or (b) to render his services as Development Officer (Administration) under paragraph 21A, as per Annexure II thereto. Sub-para (2) of the said Para 15-C provided that a Development Officer, who does not exercise either of the options, under sub-para (1) within the stipulated period of sixty days, shall continue to render services as such under the General Insurance (Rationalization of Pay Scales and Other Conditions of Service of Development Staff) Amendment Scheme, 2003.  2. Annexure-1 appended to the Amendment Scheme of 2003 contained the Special Voluntary Retirement Package (SVRP for short). Para (1) of SVRP specified the eligibility criteria. Para (2) thereof prescribed the ex-gratia amount and Clause (3) prescribed the other benefits, which a Development Officer seeking SVRP will be entitled. Para 5 thereof laid down the General Conditions of the Scheme and Clauses (3), (4) and (5) of para 5 which are relevant for our purpose are extracted below:(3) The mere request of such Development Officer seeking Special Voluntary Retirement Package shall not take effect unless it is accepted in writing by the Company.  (4) A Development Officer shall not be eligible to withdraw the option once made for Special Voluntary Retirement Package.  (5) The Company shall have absolute discretion either to accept or reject the request of a Development Officer seeking Special Voluntary Retirement Package depending upon the requirement of the Company. The reasons for rejection of request of a Development Officer seeking Special Voluntary Retirement Package shall be recorded in writing by the Company. Acceptance or rejection of the request of a Development Officer seeking Special Voluntary Retirement Package shall be communicated to him in writing(emphasis supplied)  3. Respondents 1 and 2 on 3.3.2003 opted for the Special Voluntary Retirement Package. The Regional Office of appellant informed the Divisional Office at Indore by letter dated 28.3.2003 that in view of several writ petitions challenging the provisions of the Amendment Scheme, the Head Office had instructed that it will not be possible to relieve all the opting Development Officers with effect from 1.4.2003. The respondents were, accordingly informed on 29.3.2003. This was followed by a circular dated 31.3.2003 issued by the appellant stating that status quo should be maintained in regard to Development Officers who have opted for Special Voluntary Retirement Package. On 31.3.2003, the respondents requested the appellant to extend the scheme and give more time for exercising the option under the Scheme, and if that was not possible, then treat the option earlier exercised by them on 3.3.2003 as withdrawn as till that day (31.3.2003) there was no communication from the appellant regarding acceptance of the voluntary retirement.  4. On 1.4.2003, the appellant relieved the respondents from the services of the Company stating that the competent authority has accepted the voluntary retirement of the respondents. The respondents sent a letter dated 2.4.2003 stating that they should be permitted to continue in service until a fresh option was given. The appellant, by letter dated 3.4.2003, informed the respondents that they cannot withdraw from the option already given. This was followed by letter dated 12.5.2003 wherein the appellant reiterated that the respondents were relieved on 1.4.2003 in view of the acceptance by the competent authority, of the option exercised by the respondents to retire from service. Feeling aggrieved, the respondents filed a writ petition seeking a direction to the appellant to reinstate them in the post of Development Officer. The said writ petition was allowed by the Madhya Pradesh High Court by order dated 27.8.2003, purporting to follow the decision of this Court in Bank of India Vs. Swaranakar & Ors., (2003) 2 SCC 721 . It held that the SVRP Contained in the Amendment Scheme of 2003 was not a statutory scheme, but was contractual in nature; that the option exercised by the respondents to retire voluntarily in terms of SVRP was merely an offer by the respondents, and that before the acceptance of the request of respondents by the appellant, the respondents could withdraw their offer; and that as respondents had already withdrawn their offers on 31.3.2003, there was no occasion for the appellant to accept their offers. The said decision is challenged in this appeal.  5. The contentions urged give rise to the question whether a Development Officer who exercises the option under the Amendment Scheme of 2003, seeking the Special Voluntary Retirement Package, could withdraw the same before its acceptance.  6. The Special Voluntary Retirement Package was a part of the General Insurance (Rationalization of Pay Scales and Other Conditions of Service of Development Staff) Amendment Scheme 2003 framed by the Central Government in exercise of the powers in Section 17A of the General Insurance Business (Nationalisation) Act 1972. The said Scheme is a delegated Legislation which is statutory in character. The validity of the said statutory scheme has been upheld by this Court (with reference to other provisions in the Scheme) in National Insurance Co. Ltd. v. General Insurance Development Officers Association – 2008(5) SCC 472 following Kishan Prakash Sharma v. Union of India 2001(5) SCC 212. Paragraph 5(4) of the Special Voluntary Retirement Package categorically states that a Development Officer shall not be eligible to withdraw the option once made for the Special Voluntary Retirement Package.  7. It is true that the principles of Contract Law relating to offer and acceptance enables the person making the offer to withdraw the offer any time before its acceptance; and that any subsequent acceptance of the offer by the offeree, after such withdrawal, will not result in a binding contract. Where the voluntary retirement is governed by a contractual scheme, as contrasted from a statutory scheme, the said principle of Contract will apply and consequently the letter of voluntary retirement will be considered as an offer by the employee and therefore any time before its acceptance, the employee could withdraw the offer. But the said general principle of Contract will be inapplicable where the voluntary retirement is under a statutory scheme which categorically bars the employee, from withdrawing the option once exercised. The terms of the statutory scheme will prevail over the general principles of contract. This distinction has been recognized by a series of decisions of this Court. We may refer to a few of them

Reasoning:
10. The High Court proceeded on an erroneous assumption that the voluntary retirement package was not part of any statutory scheme, but was contractual in nature and therefore the general principles of contract will apply. The reliance placed by the High Court upon the decision of this Court in Swarnakar, to assume that every scheme for voluntary retirement is always contractual and not statutory, is misconceived12. The question therefore is whether Clause 4 of Para 5 of the SVRS contained in the Amendment Scheme of 2003 is void and whether Section 5 of the Contract Act which enables the person making the offer, to withdraw the offer, any time before its acceptance, would apply. The special voluntary retirement package is a part of the General Insurance (Rationalization of Pay Scales and Other Conditions of Service of Development Staff) Amendment Scheme, 2003, made by the Central Government in exercise of the power under Section 17A of the General Insurance Business Insurance (Nationalisation) Act, 1972. Section 17A, as noticed above, authorizes and empowers the Central Government, to frame, by notification published in the official gazette, one or more schemes for regulating the pay scales and other terms and conditions of service of officers and other employees of the Corporation or of any acquiring company (including the appellant). Sub-section (6) of Section 17A provides that the provision of Section 17 and of any scheme framed under it shall have effect notwithstanding anything to the contrary contained in any other law or any agreement award or other instrument for the time being in force. Therefore the scheme is statutory in character. Consequently, the provisions of the Scheme will prevail over the provisions of Contract Act or any other law or any principle of contract, and having regard to the binding nature of the scheme, the employee upon exercising the option, cannot withdraw from the same.