once they had withdrawn their application for VRS, there was no question of going ahead with the option of VRS and accepting the same. Therefore, the action of the Corporation was unwarranted and contrary to law ?=This chart indicates that some of the employees belonging to the first group had withdrawn their offer before August 01, 2005.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 Likewise, those employees belonging to the second category who had withdrawn their offers before October 28, 2006 were entitled to withdraw their offers as those were not accepted by that date.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.=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the facts of this case, we find that insofar as those employees who fall in the first category are concerned, they had withdrawn their offer after August 01, 2005, except one Mr.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 Court’s 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 Likewise, employees falling in the second category had withdrawn their offer after October 28, 2006, except Mr.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 Court’s order dated May 12, 2016. They are, therefore, entitled for reinstatement without back wages. = In the case of all other respondents, their application for withdrawal post the tenure of the Scheme would be of no consequence. – The direction of the High Court reinstating these respondents/employees is, therefore, found to be contrary to law and is hereby set aside, resulting into allowing all other appeals of the Corporation.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 4437 of 2009

|MADHYA PRADESH STATE ROAD | |
|TRANSPORT CORPORATION |…..APPELLANT(S) |
|VERSUS | |
|MANOJ KUMAR & ANR. |…..RESPONDENT(S) |

W I T H
CIVIL APPEAL NO. 8363 OF 2016
(ARISING OUT OF SLP (C) NO. 4697 OF 2008)

CIVIL APPEAL NO. 4438 of 2009

CIVIL APPEAL NO. 4439 of 2009

CIVIL APPEAL NO. 4440 of 2009

CIVIL APPEAL NO. 4441 of 2009

CIVIL APPEAL NO. 4442 of 2009

CIVIL APPEAL NO. 4443 of 2009

CIVIL APPEAL NO. 4444 of 2009

CIVIL APPEAL NO. 4445 of 2009

CIVIL APPEAL NO. 4446 of 2009

CIVIL APPEAL NO. 8364 OF 2016
(ARISING OUT OF SLP (C) NO. 14522 OF 2010)

CIVIL APPEAL NO. 8365 OF 2016
(ARISING OUT OF SLP (C) NO. 14587 OF 2010)

CIVIL APPEAL NO. 8366 OF 2016
(ARISING OUT OF SLP (C) NO. 14594 OF 2010)

CIVIL APPEAL NO. 8367 OF 2016
(ARISING OUT OF SLP (C) NO. 14595 OF 2010)

CIVIL APPEAL NO. 8368 OF 2016
(ARISING OUT OF SLP (C) NO. 14679 OF 2010)

CIVIL APPEAL NO. 8370 OF 2016
(ARISING OUT OF SLP (C) NO. 14775 OF 2010)

CIVIL APPEAL NO. 8371 OF 2016
(ARISING OUT OF SLP (C) NO. 14785 OF 2010)

CIVIL APPEAL NO. 8372 OF 2016
(ARISING OUT OF SLP (C) NO. 14874 OF 2010)

CIVIL APPEAL NO. 8373 OF 2016
(ARISING OUT OF SLP (C) NO. 14877 OF 2010)

CIVIL APPEAL NO. 8374 OF 2016
(ARISING OUT OF SLP (C) NO. 14890 OF 2010)

CIVIL APPEAL NO. 8375 OF 2016
(ARISING OUT OF SLP (C) NO. 14933 OF 2010)

CIVIL APPEAL NO. 8376 OF 2016
(ARISING OUT OF SLP (C) NO. 14964 OF 2010)

CIVIL APPEAL NO. 8377 OF 2016
(ARISING OUT OF SLP (C) NO. 27017 OF 2011)

A N D

CIVIL APPEAL NO. 8378 OF 2016
(ARISING OUT OF SLP (C) NO. 27670 OF 2011)

J U D G M E N T

A.K. SIKRI, J.
Leave granted in the special leave petitions.

The appellant Madhya Pradesh State Road Transport Corporation (for short,
the ‘Corporation’) is a public sector undertaking of the State of Madhya
Pradesh and undertakes the work of carrying passengers from one place to
another within and outside the State of Madhya Pradesh. As the appellant
Corporation was running into losses, the State Government obtained
permission from the Department of Road Transport & Highways of the Ministry
of Shipping, Road Transport & Highways, Government of India for winding up
of the appellant Corporation. This permission was given by the Government
of India on March 23, 2005 with the following directions:
“The State Government shall ensure and be fully responsible for ensuring
compliance of any existing/future orders passed by various court including
Tribunal in any/all matters relating to MPSRTC. The State Government is
also advised to safe guard the interest of employees of MPSRTC.”

Considering the closure of the Corporation, the Managing Director, vide
S.No. 1452 (Karmik-2)Stha-B/2005, Order No. 28, introduced a Scheme called
as Voluntary Retirement from Service (for short, ‘VRS’) for the employees
of the Corporation. The said Scheme was to come into force from July 01,
2005. The relevant clauses, for the purpose of the instant appeals, are as
under:
“4. Scheme: (i) All the candidates – employees, shall be permitted to
give their option under this Scheme upto 1.8.2005 in Form (ka), along with
in Form Kha. Nomination Form shall also have to be filled up. The
Management shall have this right, that they may on the basis of the reasons
to be given in writing, but without intimating any reason to the applicant,
may accept the Voluntary Retirement from Service or reject, against which
no provision of any appeal, relief shall be vested.

(ii) In the following matters, on receipt of the option of Voluntary
Retirement from Service, on the basis of merits, decision shall be taken
for consideration:

(ka) Whether against the employee concerned of the Corporation,
Administrative action is either pending or is ‘anudhyat’.

(Kha) Where, in any criminal court, any proceeding is pending, or in any
Court, is in process before hand.

(ga) Employee, who in the normal course has given the resignation letter
from the service of the Corporation, or has given.

(gha) Employee, who against the Corporation has initiated judicial action,
or is going on, and till such action is not rejected or finished by the
Court.

(kha) Application for option presented after dated 1.8.2005.

(iii) Under the Scheme, the option once given by the employee, shall not
be permissible to be changed or taken back.

(iv) The Management, by accepting once, the Voluntary Retirement from
Service of which employee has intimated to the employee, in this respect,
then he shall not be entitled to employment on contract, or otherwise in
service of the State Government, or in the Service of the Corporation, or
in its attached Company, active Companies, i.e. the employee in this
scheme, in the Public Service, as defined, shall not be entitled to ask for
employment.

xx xx xx

As per clause 4(1) of the said Scheme, the option was to be given till
1.8.2005. In other words one month time was given to decide either to opt
for VRS Scheme or not to opt.

Clause 4(ii) of the order clearly provided that “under the Scheme, the
option once given by the employee, shall not be permissible to be changed
or taken back.””

It becomes manifest from the provisions of the aforesaid Scheme, it
provided certain conditions and also a specific form in which the
application/option for VRS under the Scheme was to be made. Further, one
of the conditions in the VRS Scheme was that once the application form for
opting VRS is submitted, it would not be open to the applicant to withdraw
the same. This Scheme was declared open on July 01, 2005 and was to last
till August 01, 2005. It may also be stated at this stage that though in
this VRS Scheme there was no indication that the last date for submission
of the application can be extended, on October 12, 2006, an order was
passed amending certain provisions of the original Scheme which was
promulgated vide Order No. 28 dated July 01, 2005. Essentially, there was
only one amendment, namely, extending the last date of submission of the
application upto October 28, 2006. Other provisions/ conditions of the
original Scheme had to remain unaltered. With this amendment, those
employees who had not opted under the Scheme by the earlier stipulated
date, i.e. August 01, 2005, were provided another opportunity to give their
option for VRS. 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. As this argument needs
serious consideration and will have to be necessarily addressed at the
appropriate place, we would like to reproduce hereunder the Order dated
October 12, 2006 by which the time was extended till October 28, 2006. The
same reads as under:
“Sl.No. 1919/Karmik/Ek/Swi.Se.Ni/06
Dated 12.10.2006
O R D E R

Subject: Order No. 28 (Voluntary Retirement from Service Scheme 2005) – in
connection with.

For giving option in the order No. 28 issued by the Managing
Director, of Part Ka, Kha, in para 4(ii), (kna) the last date has been
given as 01.08.2005. After consideration and after consent by the State
Government, this paragraph is amended as hereunder:

“(kna) Application for option presented after dated 28.10.06”.

2. The rest of the provisions/conditions issued vide order No. 28 of the
Managing Director, with regard to Voluntary Retirement from Service 2005,
shall remain as before.

3. Those employees, by whom option under this Scheme has not been
presented in the past and now want to present their option, under this
Scheme, then they can present the option, about V.R.S. under the conditions
of Managing Director Order No. 28.

Sd/-
Managing Director”

The respondents/employees in all these appeals had submitted their
applications for voluntary retirement within the span of original period
fixed under the Scheme, i.e. between July 01, 2005 and August 01, 2005.
Other common factor in all these appeals is that before their applications
could be accepted, they had sought withdrawal of their option. However,
requests for withdrawal of the options were made after August 01, 205, i.e.
after the expiry of the original Scheme. However, their requests for
withdrawal were not entertained and on the contrary applications for VRS
submitted by these employees were accepted. In order to make it abundantly
clear, we clarify that this happened after these respondents had submitted
their affidavits withdrawing their options under the VRS Scheme. These
respondents were, accordingly, relieved from the organisation on the
afternoon of July 31, 2005.

These respondents challenged the aforesaid action by contending that once
they had withdrawn their application for VRS, there was no question of
going ahead with the option of VRS and accepting the same. Therefore, the
action of the Corporation was unwarranted and contrary to law. All these
employees approached the High Court of Madhya Pradesh and filed respective
writ petitions challenging the aforesaid action of the Corporation.

While contesting these writ petitions, plea taken by the Corporation was
that as per the specific provision contained in the VRS Scheme itself,
there was a clear prohibitory clause putting an embargo on the rights, if
any, of these employees from withdrawing their applications and, therefore,
move on the part of these respondents to withdraw their option to take
voluntary retirement was inconsequential and the Corporation was empowered
to go ahead by accepting the applications for VRS.

The learned Single Judge of the High Court dismissed these writ petitions
accepting the plea of the Corporation. It was held that the applications
for withdrawal of VRS could only be moved within the validity period of the
Scheme and in those cases where applications for withdrawal was submitted
after August 01, 2005, this could not be done by the concerned employees.
Writ appeals came to be filed before the Division Bench of the High Court
by the aggrieved employees. The Division Bench, vide the impugned
judgment, decided all these appeals together and allowed them holding that
it is always permissible for an employee to withdraw the option under VRS
before it is accepted. The High Court has proceeded on the basis that such
a VRS Scheme calling for options is an invitation to offer. Application
submitted by an employee opting under this Scheme qua voluntary retirement
amounts to an officer and only on the acceptance of such an offer by the
employee, a deal gets concluded and such an offer can, therefore, always be
withdrawn before it is accepted. For this proposition, the High Court
referred to and relied upon judgments of this Court in Bank of India & Ors.
v. O.P. Swarnakar etc.[1] and concluded as under:
“14. From the aforesaid enunciation of law, there is no scintilla of doubt
that an offer made by an employee ipso facto would not amount to
resignation in praesenti and the offer can be withdrawn during the validity
period. Learned Single Judge, as is perceivable, has dismissed some of the
writ petitions and required some of the writ petitioners to seek redressal
under the industrial law as the scheme was valid upto 1.8.2005. At this
juncture, it is appropriate to mention that the conclusion arrived at by
the learned Single Judge in this regard cannot be found fault with as the
scheme in question, at the time of delivery of judgment, was valid upto
1.8.2005. Presently, the scheme is valid upto 31.7.2007. The said fact is
not disputed by Mr. Shobhit Aditya, learned Counsel for the Corporation.
As the validity period of the Scheme has been extended, the said validity
would relate back to the date of inception of the Scheme and it cannot be
said that jural relationship between the employees and the employer has
come to an end. Therefore, the employees were entitled in law to withdraw
their option for voluntary retirement within the validity period and as the
validity period has been extended and they have withdrawn their option they
should be deemed to be in service. Be it noted that none of the appellants
has accepted any kind of benefit under the voluntary retirement scheme.
Some of them are continuing in service. The employees who are continuing
in service should be allowed to continue till the jural relationship
between the employees and the employer comes to an end as per law. The
appellants who are not in service should be reinstated in service and they
shall reap all the consequential benefits.”

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. However, an endeavour was made by the learned senior counsel
appearing for the Corporation to argue that the judgment in O.P. Swarnakar
should not have been followed by the High Court in view of the specific
clause in the Scheme to the effect that an application once given cannot be
withdrawn. He submitted that the High Court, in the process, ignored the
mandate of law laid down by this Court in State Bank of Patiala v. Romesh
Chander Kanoji & Ors.[2] wherein this Court held as under:
“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 that:

“an 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 consideration.”

Therefore, 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 Halsbury’s 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.”

On that basis, it was argued that it was not open to the respondents to
withdraw their application after August 01, 2005, which was the last date
stipulated in the application and thereby disturb the equilibrium and the
very creation of the Fund that was created depending upon the number of
applications; the cost of the Scheme; liability which the Scheme would
impose and other variable factors etc. It was also argued that the
judgment in O.P. Swarnakar related to batch of matters of nationalised
banks where the facts and questions were different. The significant
distinguishing factor was that there was no closure of any of the
nationalised banks, which was the prime motive for introducing the VRS
Scheme by the Corporation.

Second argument, in the alternative, was that even if the judgment in O.P.
Swarnakar is to be applied, it was specifically held in that case that
option of voluntary retirement can be withdrawn by the last date on which
the application is to be submitted. In the instant case, these options
were withdrawn after the stipulated date. It was pointed out that the High
Court did not accept this plea on the ground that since the last date was
extended from August 01, 2005 to October 28, 2006 and the applications for
withdrawal were not submitted from the said date, the withdrawal
applications would be treated as having been submitted before the expiry
date mentioned in the Scheme. The learned senior counsel for the
Corporation argued with ardor that this was an erroneous approach on the
part of the High Court inasmuch as the original VRS Scheme promulgated vide
order No. 28 dated July 01, 2005 never mentioned any clause for extension
of the Scheme and once these employees opted under the said Scheme they
were very well informed that the last date is August 01, 2005. It was also
submitted that the amendment was carried out for specific purpose, namely,
to give opportunity to those who had not yet opted under the Scheme and,
therefore, such an extension in the date could not enure to the benefit of
those who had already opted and for whom the last date was August 01, 2005.

Learned counsel who appeared for the respondents in these appeals submitted
that the position in law was crystal clear as stated in O.P. Swarnakar and
even in Romesh Chander Kanoji, relied upon by the Corporation, and made a
fervent plea to this court to accept the approach adopted by the High Court
in the impugned judgment. They also pointed out that Romesh Chander
Kanoji, in fact, specifically referred to and relied upon O.P. Swarnakar,
which was a three Judge Bench judgment. It was also argued that even
thereafter the principle of O.P. Swarnakar has been applied by this Court
consistently and following judgments are cited in support:

(i) Food Corporation of India and others v. Ramesh Kumar[3]
(ii) New India Assurance Company Limited v. Raghuvir Singh Narang and
another[4].

To begin with, we deem it appropriate to consolidate, with required
astuteness, various legal principles touching upon the issue at hand, which
are sparged in various judgments, and then apply those principles to the
facts in these cases. Though much case law has emerged, reference to few
judgments, which take into consideration the earlier cases as well, would
suffice. Since the High Court has referred to the judgment in the case of
O.P. Swarnakar, we deem it apt to initiate the discussion with that
judgment, which is also earliest of the four judgments we are going to
refer to.

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 retirement.

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.
Thus, 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
contract.
On this analogy, the Court held that since employees had
withdrawn their offer before it was accepted, they had a right to do so.
However, 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 also.

114. 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
therefrom.

115. 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.”

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[5] 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 glance. It 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 that

“an 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 consideration.”

Therefore, 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 Halsbury’s 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.”

The aforesaid two judgments pertained to nationalised banks or State Bank
of India/its subsidiaries. Issue was discussed again in respect of a
public sector undertaking in the case of Food Corporation of India & Ors.
v. Ramesh Kumar[6]. In the said case, clause VIII (d) of the VRS Scheme
framed by the Food Corporation of India was to the following effect:
“Once an employee submits his application for voluntary retirement under
this scheme to the competent authority, it shall be treated as final and it
is not open to the employee to withdraw the same. The competent authority
within notice period (3 months) shall take a decision to accept or reject
the request and shall communicate the same to the official concerned.”

On facts, it was found that the offer of voluntary
retirement given by the employee was withdrawn before its acceptance. The
Court held that it could be so done following O.P. Swarnakar and Romesh
Chander Kanoji. Paragraph 8 of the said judgment discusses the position as
under:
“8. Now adverting to the present Scheme of Food Corporation, Para 8 clearly
stipulates that the incumbent has no right to revoke the same and the
Management will decide the same within three months. That means the
Management still has three months’ time to consider and decide whether to
act upon the offer given by the incumbent or not. But if the incumbent
revokes his offer before the Corporation accepts it then in that case, the
revocation of the offer is complete and the Corporation cannot act upon
that offer. In the present case there is one more additional factor which
is that the Management has to take a decision within three months.
Therefore, once the revocation is made by the incumbent before three months
then in that case the Corporation cannot act upon the offer of voluntary
retirement unless it is accepted prior to its withdrawal. In the present
case, it is clear that the incumbent had given an offer for voluntary
retirement on 13-9-2004 and he revoked his offer on 27-9-2004 but the same
was accepted on 9-11-2004 i.e. after the revocation of his offer. In view
of the law laid down by this Court in State Bank of Patiala [(2004) 2 SCC
651 : 2004 SCC (L&S) 428] the incumbent has already revoked his offer
before it could be accepted. Therefore, in this view of the matter, the
approach of the High Court appears to be correct and does not require any
interference. The revocation made by the incumbent on 27-9-2004 of his
offer of retirement cannot be acted upon as he has revoked it before the
Corporation could act upon it. Hence, we are of the opinion, that the view
taken by the High Court is correct. Consequently, all the three appeals are
dismissed but without any order as to costs.”

In New India Assurance Company Ltd. v. Raghuvir Singh Narang & Anr.[7],
this Court again reiterated that such schemes were contractual in nature
and the provisions of the Indian Contract Act, 1872 would apply and the
offer could be withdrawn any time before its acceptance. What is important
is that this Court culled out the principles laid down in O.P. Swarnakar in
para 22 of its judgment, which we reproduce below:
“22. The effect of the decision in Swarnakar can be summarised thus:

(i) If a contractual scheme provides that the voluntary retirement by
exercise of option by the employee will come into effect only on its
acceptance by the employer, it will not create any enforceable right in the
employee to claim SV retirement. Any term in such a scheme that the
employee shall not withdraw from the option once exercised, will be an
agreement without consideration and therefore, invalid. Consequently, the
employee can withdraw the offer (that is option exercised) before its
acceptance. But if the contractual scheme gives the option to an employee
to voluntarily retire in terms of the scheme and if there is no condition
that it will be effective only on acceptance by the employer, the scheme
gives an enforceable right to the employee to retire, by exercising his
option. In such a situation, a provision in the contractual scheme that the
employee will not be entitled to withdraw the option once made, will be
valid and binding and consequently, an employee will not be entitled to
withdraw from the option exercised.

(ii) Where the scheme is statutory in character, its terms will prevail
over the general principles of contract and the provision of the Contract
Act. Further, there will be no question of any “consideration” for the
condition in the scheme that the employee will not withdraw from the option
exercised. Subject to any challenge to the validity of the scheme itself,
the terms of the statutory scheme will be binding on the employees
concerned, and once the option is exercised by an employee to voluntarily
retire in terms of the retirement package contained in the scheme, the
employee will not be entitled to withdraw from the exercise of the option,
if there is a bar against such withdrawal.

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 India’s 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 fail.

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.

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?

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.

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 Court’s 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 Court’s order dated May 12, 2016. They are, therefore,
entitled for reinstatement without back wages.

Accordingly, Civil Appeal arising out of Special Leave Petition (Civil) No.
14874 of 2010 qua Mr. Dinesh Chand Yadav and Civil Appeal arising out of
Special Leave Petition (Civil) No. 14594 of 2010 are dismissed. In the
case of all other respondents, their application for withdrawal post the
tenure of the Scheme would be of no consequence. The direction of the High
Court reinstating these respondents/employees is, therefore, found to be
contrary to law and is hereby set aside, resulting into allowing all other
appeals of the Corporation.
In the facts and circumstances of this case, there shall
be no order as to costs.

………………………………………J.
(A.K. SIKRI)

………………………………………J.
(R.K. AGRAWAL)
NEW DELHI;
AUGUST 29, 2016.
———————–
[1]
(2003) 2 SCC 721
[2] (2004) 2 SCC 651
[3] (2007) 8 SCC 141
[4] (2010) 5 SCC 335
[5] (2004) 2 SCC 201
[6] (2007) 8 SCC 141
[7] (2010) 5 SCC 335