# MADHYA PRADESH STATE ROAD TRANSPORT CORPORATION v. MANOJ KUMAR & ANR

- **Citation:** [2016] 4 S.C.R. 225
- **Court:** Supreme Court of India
- **Decided:** 2016-08-29
- **Case number:** Civil Appeal No. 443 7 of2009
- **Bench:** A.K. Sikri, R.K. Agrawal
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/madhya-pradesh-state-road-transport-corporation-v-manoj-kumar-anr-31281
- **Pages:** 25

## Headnote

Service /aw - Voluntary retirement Scheme(VRS) - VRS Sche111e
for employees of the State Road 'fransport Corporation - One of
the conditions of the VRS Scheme that once the application form
for opting VRS is sub111i1ted, it would not be open to applicant to
V.1ithdraw the same - Sche111e opened on July OJ, 2005 till August
OJ, 2005 - However, in October, 2006 validity of the Sche111e was
extended till July 3J, 2007 -
Re~pondents-employees sub111itted
applications for voluntary retirement within the span of original
period fixed under the scheme - Howeve1; request for withdrawal
made after August OJ, 2005. C(fter expiry of scheme - Request for
withdrawal not entertained and applications for VRS accepted -
Challenge to - Held: VRS Sche111e is contractual in nature and
provisions of the Contract Act would apply - VRS Sche111e floated
by employer would be treated as invitation to offer and application
submitted by the e111ployees pursua/11 thereto is an offer which does
not amount to resignation in praesenti and the offer can be
withdrawn during the validity period - Even when there is a clause
in the Sche111e that offer once given cannot be withdrawn at all,
exception to this principle is that in such cases offer is to be
withdrm1'11 during the validity period of the Scheme and not thereafter
even when if it is not accepted during the period of the Sche111e -
On facts, employees could withdraw their offer before the date on
which the initial scheme expired-August OJ, 2005 and withdrawal
thereafter was not permissible - There was a big gap/hiatus between
August OJ, 2005 and October 12, 2006 - There was no VRS Scheme
in operation fro111 August 02, 2005 to October 11, 2006.
Disposing of the appeals, the Court
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HELD: 1.1 In cases where the Scheme is contractual in
nature (and not statutory in character), provisions of the Contract
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226
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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. 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. [Para 20) [245-G-H; 246-A, B-D]
1.2 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. The Scheme provided that once
the option is given, the same cannot be withdrawn. It is clear that
notwithstanding this clanse, 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 be

## Text

_Characters 0–39,969 of 58,563. This is a partial read: ask again with offset=39969 for what follows._

[2016] 4 S.C.R. 225
MADHYA PRADESH STATE ROAD TRANSPORT
CORPORATION
v.
MANOJ KUMAR & ANR.
(Civil Appeal No. 443 7 of2009)
AUGUST 29, 2016
[A.K. SIKRI AND R.K. AGRAWAL, JJ.)
Service /aw - Voluntary retirement Scheme(VRS) - VRS Sche111e
for employees of the State Road 'fransport Corporation - One of
the conditions of the VRS Scheme that once the application form
for opting VRS is sub111i1ted, it would not be open to applicant to
V.1ithdraw the same - Sche111e opened on July OJ, 2005 till August
OJ, 2005 - However, in October, 2006 validity of the Sche111e was
extended till July 3J, 2007 -
Re~pondents-employees sub111itted
applications for voluntary retirement within the span of original
period fixed under the scheme - Howeve1; request for withdrawal
made after August OJ, 2005. C(fter expiry of scheme - Request for
withdrawal not entertained and applications for VRS accepted -
Challenge to - Held: VRS Sche111e is contractual in nature and
provisions of the Contract Act would apply - VRS Sche111e floated
by employer would be treated as invitation to offer and application
submitted by the e111ployees pursua/11 thereto is an offer which does
not amount to resignation in praesenti and the offer can be
withdrawn during the validity period - Even when there is a clause
in the Sche111e that offer once given cannot be withdrawn at all,
exception to this principle is that in such cases offer is to be
withdrm1'11 during the validity period of the Scheme and not thereafter
even when if it is not accepted during the period of the Sche111e -
On facts, employees could withdraw their offer before the date on
which the initial scheme expired-August OJ, 2005 and withdrawal
thereafter was not permissible - There was a big gap/hiatus between
August OJ, 2005 and October 12, 2006 - There was no VRS Scheme
in operation fro111 August 02, 2005 to October 11, 2006.
Disposing of the appeals, the Court
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HELD: 1.1 In cases where the Scheme is contractual in
nature (and not statutory in character), provisions of the Contract
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(2016] 4 S.C.R.
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. 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. [Para 20) [245-G-H; 246-A, B-D]
1.2 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. The Scheme provided that once
the option is given, the same cannot be withdrawn. It is clear that
notwithstanding this clanse, 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. [Para
21) [246-D-G)
1.3 The 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
MADHYA PRADESH STATE ROAD TRANSPORT
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CORPORATION v. MANOJ KUMAR
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.
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 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 Augnst 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
Oc_tober 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 lu111dsl1<1ke'. 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 Ol, 2005 and October 12, 2006,
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applications of many employees had been accepted and many out
of them had even been offered their terminal dues. Thus, 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 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. [Para 23] (247-A-H; 248-A-E)
1.4 When the said test is applied to the facts of this case, it
is found that insofar as those employees who fall in the first
category are concerned, they had withdrawn their offer af.ter
August 01, 2005, except respondent No.1 in the CA No. 8372 of
2016. 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 both the respondents
in the Civil Appeal No. 8366 of 2016. However, these respondents
failed to comply with this Court's order dated May 12, 2016. They
are, therefore, entitled for reinstatement without back wages.
[Para 24] [248-F-G]
MADHYA PRADESH STATE ROAD TRANSPORT
CORPORATION v. MANOJ KUMAR
1.5 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 set aside. (Para 25] [249-A-B)
Bank of India & Ors. v. O.P. Sll'arnakar etc. 2002 (5)
Suppl. SCR 438:(2003) 2 SCC 721; State Bank of
Patiala v. Ramesh Chander Kanoji & Ors. 2004 (2) SCR
615:(2004) 2 SCC 651; Food Corporation of India and
others v. Ramesh Kumar 2007 (8 ) SCR 940 :(2007) 8
SCC 141; Nell' India Assurance Company Limited v.
Raghuvir Singh Narang and another 2010 (4 ) SCR
299:(2010) 5 SCC 335; State Bank of Patiala v. Jagga
Singh (2004) 2 SCC 201; Food C017Joratio11 of 111dia
& Ors. v. Ramesh Kumar 2007 (8 ) SCR 940: (2007) 8
SCC 141; Nell' India Assurance Company Ltd. v.
Raghuvir Singh Narang & Anr. 2010 (4) SCR
299:(2010) 5 sec 335 - referred to.
Case Law Reference
2002 (5) Suppl. SCR 438
referred to
Paras
20Q4 (2) SCR 615
referred to
Para9
20Q7, (8) SCR 940
referred to
Para 12
20~~ (4) SCR 299
referred to
Para 12
(2004) 2 sec 201
referred to
Para 17
2007 (8) SCR 940
referred to
Para 18
2010 (4) SCR 299
referred to
Para 19
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4437
of2009.
From the Judgment and Order dated 27.07.2007 of the High Court
of Judicature at Jabalpur, Madhya Pradesh in Writ Appeal No. 1269 of
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WITH
C.A.Nos.4438,4439,4440,4441,4442,4443,4444,4445,4446
of 2009
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C.A. Nos. 8363, 8364, 8365, 8366, 8367, 8368, 8370, 8371, 8372,
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8373, 8374, 8375, 8376, 8377 and 8378of2016.
Ms. Jayashree Wad, Ashish Wad, Ms. Paromita Majumdar, Ms.
Jaya Khanna, M/s. J. S. Wad & Co., Advs. for the Appellant.
Mishra Saurabh, Su nil Singh P., Prashant Kumar, Mrs. K. Sarada
Devi, Ms. Pratibha Jain, B. S. Banthia, Ashok Mathur, K. N.
Madhusoodhanan, T. G. Narayanan Nair, S. K. Sabharwal, Rameshwar
Prasad Goyal, Ms. Manjeet Kirpal, B. S. RajeshAgrajit, Ms. Jyoti Rana,
Shyamal K., V. K. Jha, Sanjai Kumar Pathak, Rakesh Kumar, Samdarsh
Sanjay, Biswajeet Singh, R~jan K. Chourasia, Ad vs. for the Respondents.
The Judgment of the Court was delivered by
A.K. SIKRI, J. I. Leave granted in the special leave petitions.
2. 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."
3. 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, 'YRS') for the employees of the Corporation. The said Scheme
was to come into force from JulyOI, 2005. The relevant clauses, forthe
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),
MADHYA PRADESH STATE ROAD TRANSPORT
CORPORATION v. MANOJ KUMAR [A. K. SIKRI, J.]
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 nonnal course has given the resignation
letter from the service of the Corporation, or has given.
(gha) Employee, who againstthe 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.
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As per clause 4(1) of the said Scheme, the option was to be given
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till 1.8.2005. In other words one month time was given to decide
either to opt for YRS 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."
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4. 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 YRS under the Scheme was to be made.
Further, one of the conditions in the YRS Scheme was that once the
application fonn for opting YRS 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 YRS 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 0 I, 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 opporiunity to give their option for YRS. 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 wi II 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:
"SI.No. 1919/Kannik/Ek/Swi.Se.Ni/06
Dated 12.10.2006
ORDER
Subject: Order No. 28 (Voluntary Retirement from Service Scheme
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2005)- in connection with.
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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:
MADHYA PRADESH STATE ROAD TRANSPORT
233
CORPORATION v. MANOJ KUMAR [A. K. SIKRI. J.]
"(kna) Application for option presented after dated 28.10.06".
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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"
5. 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 YRS 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 YRS Scheme. These respondents were, accordingly, relieved
from the organisation on the afternoon of July 31, 2005.
6. These respondents challenged the aforesaid action by contending
that once they had withdrawn their application for YRS, there was no
question of going ahead with the option ofVRS 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.
7. While contesting these writ petitions, plea taken by the
Corporation was that as per the specific provision contained in the YRS
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
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withdraw their option to take voluntary retirement was inconsequential
and the Corporation was empowered to go ahead by accepting the
applications for YRS.
8. 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 ofYRS could only be moved within the validity
period of the Scheme and in those cases where applications for withdrawal
was submitted after August 0 I, 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 YRS before it is accepted. The High
Court has proceeded on the basis that such a YRS 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 Imlia & Ors. v. O.P.
Swarnakar etc. 1 and cone I uded 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 th is 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 val id upto 31. 7 .2007. The
said fact is not disputed by Mr. ShobhitAditya, 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 thatjural relationship
between the employees and the employer has come to an end.
1 (2003) 2secn1
MADHYA PRADESH STATE ROAD TRANSPORT
CORPORATION v. MANOJ KUMAR [A. K. SIKRI, J.]
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 thejural 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."
9. It becomes manifest from the reading of the three Judge Bench
judgment of this Court in O.P. Swamakar that such a YRS 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 oflaw laid down by this Court in State
Bank of Patiala v. Romesll Chander Kanoji & Ors.~ 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 SBPYRS
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
2 (2004) 2 sec 651
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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
15-2-200 I to 1-3-200 I whereas Rule 8 thereof provides for mode
ofacceptance 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 Chifly 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) ofSBPVRS gives locus poenitentiae to the
employee to withdraw by 1-3-200 I 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 ifthe 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 Ha!sbw:v 5· Laws of En[;land, 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 1-3-200 I."
IO. 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
ofnationalised banks where the facts and questions were different. The
MADHYA PRADESH STATE ROAD TRANSPORT
CORPORATION v. MANOJ KUMAR [A. K. SIKRI, J.]
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.
11. Second argument, in the alternative, was that even if the
judgment in O.P. Sw(lr11ftk(lr 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 0 I, 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 0 I,
2005.
12. 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 Romes/1 Ch"nder Kmwji, 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 Ch"nder Kmwji, in fact, specifically
referred to and relied upon 0.P. Sw"rn"k"r, which was a three Judge
Bench judgment. It was also argued that even thereafter the principle
of O.P. Swarn"kar has been applied by this Court consistently and
followingjudgments are cited in support:
(i) Food Corporation of India mu/ others v. R"mesh Kumar'
(ii) New India Assurance Company Limited v. Raglmvir Singh
Narang mu/ mwther'.
' (2007) s sec 141
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13. 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.
14. Jn 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 I 0.5 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 I 0 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
MADHYA PRADESH STATE ROAD TRANSPORT
CORPORATION v. MANOJ KUMAR [A. K. SIKRI, J.]
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 l 0.5 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.
15. 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 YRS 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
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context of the VRS, however, the Court applied this law of contract by
deducing the following conclusions:
B
(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.
C
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the discretion of the competent authority.
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(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,
200 I. 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 Cou11 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
MADHYA PRADESH STATE ROAD TRANSPORT
CORPORATION v. MANOJ KUMAR [A. K. SIKRI, J.]
to some consideration. On this basis, insofar as appeals of State Bank
oflndia 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 ofall 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."
16. Next decision, in the chronology, which we want to refer to is
the case of Romesll Chander Kmwji. This is also a judgment rendered
by a three Judge Bench. in which case of O.P. Swanwkar was
specifically referred to and discussed. The principle laid down in O.P.
Swamakar 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.