2002 JTR(SC) 346
2002 AIR(Jhar)(R) 506 ; 2002 AIR(SC) 1341 ; 2002 AIR(SCW) 1165 ; 2002 2 AllCJ 1022 ; 2002 2 AWC 1177 ; 2002 1 BLJR 787 ; 2002 1 CLR 1044 ; 2002 100 FJR 575 ; 2002 94 FLR 229 ; 2002 2 JCR(SC) 93 ; 2002 2 JLJR(SC) 54 ; 2002 3 JT 37 ; 2002 LIC 1093 ; 2002 2 LLJ 430 ; 2002 2 LLN 401 ; 2002 2 PLJR(SC) 172 ; 2002 2 Scale 587 ; 2002 3 SCC 437 ; 2002 SCC(L&S) 444 ; 2002 2 SCJ 409 ; 2002 2 SCR 396 ; 2002 2 SCT 400 ; 2002 3 SLR 359 ; 2002 1 UJ 656 ; 2002 2 UPLBEC 1174 ; 2002 KHC 1831 ; 2002 1 KLT(Online) 1005 ; 2002 2 Supreme 391
2002(2) Supreme 391
SUPREME COURT OF INDIA
(From Patna High Court)
S.N. Phukan & P. Venkatarama Reddi, JJ.
Shambhu Murari Sinha -Appellant
versus
Project & Development India Ltd. & Anr. -Respondents
Civil Appeal No. 2639 of 2000
Decided on 13-3-2002
Counsel for the Parties :
For the Appellant : S.B. Upadhyay, Pawan Upadhyay, Sujit Kr. Singh, Santosh Mishra, Advocates.
For the Respondents : Deba Prasad Mukherjee and Ms. Nandini Gore, Advocates.
IMPORTANT POINT
An employee has locus poenitentiae to withdraw his proposal for voluntary retirement before the relationship of employer and employee came to an end.
Act Referred :SERVICE LAW : .
(A) The service law framework governing voluntary retirement schemes applies to this case, where the acceptance of an option under a voluntary retirement scheme (VRS) did not operate as an unconditional termination of employment, and the principles under the relevant acts and sections contemplate that an employee retains the locus poenitentiae to withdraw such an option before the jural relationship of employer and employee is concluded. The scheme allowed for a window between the acceptance of the option and the actual release, during which the employee could withdraw the request, and no contractual or statutory bar was invoked to preclude this right in the present facts.
(B) Key legal principles include: (i) a prospective resignation or option under a VRS can be withdrawn before it becomes effective; (ii) the jural relationship terminates only upon actual release or when the specified effective date passes; (iii) acceptance of a resignation or VRS option does not automatically sever the employment relationship unless expressly provided; (iv) the employee retains locus poenitentiae absent a clear contractual or statutory condition to the contrary; and (v) the actual relief or release date, not the acceptance date, is determinative of the effective termination date.
Facts of the case:
The appellant joined the respondent as a Draftsman Trainee in 1964 and later served as General Foreman (Electrical). In October 1995, the respondent issued an improved Voluntary Retirement Scheme (VRS) effective from 12 to 18 October 1995. The appellant applied for voluntary retirement on 18 October 1995, which was accepted by the management on 30 July 1997 with a condition that a release memo and details would follow. The appellant sent two withdrawal letters on 7 August 1997 and 27 September 1997, which went unanswered. The respondent issued an office memorandum on 25 September 1997 releasing the appellant w.e.f. 26 September 1997 (afternoon). The appellant was paid salaries until 26 September 1997 and filed a petition under Article 226 challenging the release order, which was dismissed by the Single Judge and later affirmed by the Division Bench. A Review Petition was allowed, leading to the impugned judgment.
Findings of Court:
The court found that the VRS scheme did not contain any clause stating that acceptance of the option would preclude withdrawal. The Division Bench correctly applied the principles from prior precedents, recognizing that the appellant had locus poenitentiae to withdraw the option before the jural relationship ended on 26 September 1997. The respondent could not refuse the withdrawal since it was communicated before actual release, and the appellant was entitled to continue in service and receive all salaries and benefits during the intervening period.
Issues:
The central issue was whether an employee who had an option under a voluntary retirement scheme accepted by the employer could withdraw that option before the actual date of release, and what constitutes the effective date of termination in such cases.
Ratio Decidendi:
The ratio is that unless restrained by law, contract, or service rules, an employees resignation or option under a voluntary retirement scheme remains retractable until it operates to terminate the employment, which occurs only upon actual release or the specified effective date; acceptance by the employer does not, in itself, end the jural relationship.
Result:
The appeal is allowed, the impugned judgment is set aside, and the appellant is entitled to rejoin service and receive all salaries and benefits for the period of absence, with retiral benefits calculated accordingly.
(A) The service law framework governing voluntary retirement schemes applies to this case, where the acceptance of an option under a voluntary retirement scheme (VRS) did not operate as an unconditional termination of employment, and the principles under the relevant acts and sections contemplate that an employee retains the locus poenitentiae to withdraw such an option before the jural relationship of employer and employee is concluded. The scheme allowed for a window between the acceptance of the option and the actual release, during which the employee could withdraw the request, and no contractual or statutory bar was invoked to preclude this right in the present facts.
(B) Key legal principles include: (i) a prospective resignation or option under a VRS can be withdrawn before it becomes effective; (ii) the jural relationship terminates only upon actual release or when the specified effective date passes; (iii) acceptance of a resignation or VRS option does not automatically sever the employment relationship unless expressly provided; (iv) the employee retains locus poenitentiae absent a clear contractual or statutory condition to the contrary; and (v) the actual relief or release date, not the acceptance date, is determinative of the effective termination date.
Facts of the case:
The appellant joined the respondent as a Draftsman Trainee in 1964 and later served as General Foreman (Electrical). In October 1995, the respondent issued an improved Voluntary Retirement Scheme (VRS) effective from 12 to 18 October 1995. The appellant applied for voluntary retirement on 18 October 1995, which was accepted by the management on 30 July 1997 with a condition that a release memo and details would follow. The appellant sent two withdrawal letters on 7 August 1997 and 27 September 1997, which went unanswered. The respondent issued an office memorandum on 25 September 1997 releasing the appellant w.e.f. 26 September 1997 (afternoon). The appellant was paid salaries until 26 September 1997 and filed a petition under Article 226 challenging the release order, which was dismissed by the Single Judge and later affirmed by the Division Bench. A Review Petition was allowed, leading to the impugned judgment.
Findings of Court:
The court found that the VRS scheme did not contain any clause stating that acceptance of the option would preclude withdrawal. The Division Bench correctly applied the principles from prior precedents, recognizing that the appellant had locus poenitentiae to withdraw the option before the jural relationship ended on 26 September 1997. The respondent could not refuse the withdrawal since it was communicated before actual release, and the appellant was entitled to continue in service and receive all salaries and benefits during the intervening period.
Issues:
The central issue was whether an employee who had an option under a voluntary retirement scheme accepted by the employer could withdraw that option before the actual date of release, and what constitutes the effective date of termination in such cases.
Ratio Decidendi:
The ratio is that unless restrained by law, contract, or service rules, an employees resignation or option under a voluntary retirement scheme remains retractable until it operates to terminate the employment, which occurs only upon actual release or the specified effective date; acceptance by the employer does not, in itself, end the jural relationship.
Result:
The appeal is allowed, the impugned judgment is set aside, and the appellant is entitled to rejoin service and receive all salaries and benefits for the period of absence, with retiral benefits calculated accordingly.
JUDGMENT
Phukan, J.-In this appeal by special leave the appellant has assailed the judgment dated 21-06-1999 passed by the Patna High Court in LPA No. 57 of 1999 (R). By the impugned judgment the Division Bench affirmed the judgment of the learned Single Judge dated 03-02-1999 passed in CWJC No. 2970 of 1997(R).
2. The appellant joined the respondent-company as a Draftsman Trainee in the year 1964 and was promoted to the post of General Foreman (Electrical). On October 12, 1995, the respondent-company issued an improved Voluntary Retirement Scheme (for short VRS ) giving more benefits to the employees, which was effective from 12th October, 1995 to 18th October, 1995. The appellant applied for voluntary retirement on 18th October, 1995 under the scheme, which was accepted by the Management on 30th July, 1997 with the condition that the release memo along with details particulars will follow . On August 07, 1997, the appellant sent a letter withdrawing his option from the VRS by registered post but no response was received by him from the respondents. Again on September 27, 1997 another letter was sent by the appellant withdrawing his option from the scheme. This letter was received on 25th September, 1997 but there was no reply from the respondent. The respondent-company issued a memorandum on 25th September, 1997 releasing the appellant from the service of the company w.e.f. 26th September, 1997 (afternoon). The appellant filed a petition under Article 226 of the Constitution before the High Court challenging the said release order, which was dismissed by the learned Single Judge and it was upheld by the impugned judgment. That is how the matter is before us.
3. This appeal came up for final hearing before a Division Bench of this Court and by order dated April 13, 2000, the appeal was allowed on the reasoning that the appellant was not relieved from service and was allowed to continue in service till 26-09-1997, which, for all practical purpose would be the "effective date" as it was on this date that he was relieved from service. As the appellant had already withdrawn the offer from VRS on 07-08-1997, the resignation in spite of its acceptance could be withdrawn before the said "effective date" and, therefore, such withdrawal was valid in law [See Shambhu Murari Sinha vs. Project & Development India & Another (2000) 5 SCC 621]. The Division Bench relied on the following decisions of this Court namely. Balram Gupta vs. Union of India [(1987) Supp. SCC 228], J.N. Srivastava vs. Union of India [(1998) 9 SCC 559] and Power Finance Corpn. Ltd. vs. Pramod Kumar Bhatia [(1997) 4 SCC 280].
4. A Review Petition was filed by the respondents which was allowed by another Division Bench of this Court and the order is extracted below:-
"Delay condoned.
Heard counsel for the parties.
We find that the scheme providing for voluntary retirement of employees, prima facie, discloses that once an option to voluntary retire is exercised by an employee and the same is accepted by the employer, the employee is not entitled to withdraw the voluntary retirement. The said scheme which has bearing on the case was not adverted to while deciding this appeal. Further, the decision of this Court in Balram Gupta vs. Union of India & Anr. 1987 (Supp.) SCC 228, Raj Kumar vs. Union of India, 1968(3) SCR 857 and Union of India vs. Gopal Chandra Mishra, 1978(2) SCC 301 which are applicable to this case were not considered while deciding the appeal. Moreover, the decision under review is likely to affect a large number of employees. We are, therefore, of the opinion that the judgment under review deserves to be reviewed. We, therefore, set aside the judgment dated 13.4.2000 and restore the appeal to its original number. The Review Petition is thus allowed. Let this appeal be posted for hearing.
In view of the decision on Review Petition, the Contempt Petition is rejected."
5. We have perused the whole scheme and we do not find any condition that once an option to voluntary retire is exercised by an employee and the same is accepted by the employer, the employee is not entitled to withdraw from voluntary retirement. This position is accepted at the Bar. While allowing the appeal, the Division Bench of High Court in fact considered the ratio laid down in Balram Gupta s case (supra).
6. The short question to be decided is what was the effective date in the case in hand, before which the appellant could have withdrawn his offer of the voluntary retirement under the scheme.
7. The only contention raised before us by the learned counsel for the appellant is that in view of the law laid down by this Court since 1978, the appellant was within his right to withdraw his option for voluntary retirement even after its acceptance but before the actual date of release from the employment. In support of this contention learned counsel has placed before us various decisions of this Court.
8. Per contra, the learned counsel for the respondent has contended that from the date of acceptance of the letter of voluntary retirement by the respondent, the relationship of employer and employee came to an end and, therefore, the appellant ceased to be an employee of the respondent w.e.f. 30th July, 1997. Learned counsel also sought to raise the question of financial burden on the respondent-company, which we need not consider while deciding the legal issue involved in the present appeal.
9. A Constitution Bench of this Court in Union of India & Others vs. Gopal Chandra Misra & Others [(1978) 2 SCC 301] in paragraph 50 held that the general principle is that in the absence of a legal, contractual or constitutional bar, a prospective resignation can be withdrawn at any time before it becomes effective, and it becomes effective when it operates to terminate the employment or the office-tenure of the resignor, (emphasis ours). As stated above in the present case in the VRS, there was no indication regarding effective date of voluntary resignation and there is also no condition that once it was accepted it could not be withdrawn.
10. In Balram Gupta vs. Union of India & Anr. [(1987) Supp. SCC 228] the principle laid down in Gopal Chandra Misra (supra) was summarised as follows:-
"A complete and effective act of resigning office is one which severs the link of the resignor with his office and terminates his tenure."
11. In Balram Gupta s case, the appellant-employee offered to voluntary retire from service w.e.f. 31st March, 1981 and accordingly sent a letter within the notice period. However, he changed his mind and sent a letter on 31.01.1981 seeking to withdraw his notice of voluntary retirement but the request was disallowed by the concerned authority on the ground that the withdrawal of notice could only be with the specific approval of the authority. This Court held that the dissolution of the contract of employment would be brought about only on the date indicated i.e. 31.03.1981 and upto that date the appellant continued as Government employee. He is at liberty to withdraw his notice of voluntary retirement and for this purpose, prior approval is not required.
12. The decision in J.N. Srivastava vs. Union of India [(1998) 9 SCC 559] is also to the same effect. This Court held as follows:-
"It is now well settled that even if the voluntary retirement notice is moved by an employee and gets accepted by the authority within the time fixed, before the date of retirement is reached, the employee has locus poenitentiae to withdraw the proposal for voluntary retirement. The said view has been taken by a Bench of this Court in the case of Balram Gupta versus Union of India."
13. In Nand Keshwar Prasad vs. Indian Farmers Fertilizers Cooperative Ltd. & Ors. [(1998) 5 SCC 461], in paragraph 11, this Court reiterated that it is open to the employee concerned to withdraw letter of resignation before the date indicated in the notice of voluntary retirement, it was also observed therein:
"........ .it appears to us that the law is well settled by this Court in a number of decisions that unless controlled by condition of service or the statutory provisions, the retirement mentioned in the letter of resignation must take effect from the date mentioned therein and such date cannot be advanced by accepting the resignation from an earlier date when the employee concerned did not intend to retire from such earlier date."
14. In Raj Kumar vs. Union of India [(1968) 3 SCR 857] the normal rule has been stated as follows:-
"When a public servant invited by a letter of his resignation determination of his employment, his service normally stands terminated from the date on which the letter of resignation is accepted by the appropriate authority and in the absence of any law or rule governing the conditions of his service to the contrary it will not be open to the public servant to withdraw his resignation after it is accepted by the appropriate authority in consonance with the rules governing the acceptance, the public servant concerned has locus poenitentiae but not thereafter."
15. The above cases may not have direct application to the facts of the present case, however, the principles laid down therein deserve notice.
16. In Power Finance Corporation Ltd. vs. Pramod Kumar Bhatia [(1997) 4 SCC 280] this Court went a step further and observed thus:-
"It is now settled legal position that unless the employee is relieved of the duty, after acceptance of the offer of voluntary retirement or resignation, jural relationship of the employee and the employer does not come to an end."
17. It was pointed out in that case that the acceptance of voluntary retirement was not unconditional and before the conditions could be complied with, the employee could withdraw from the scheme. On those facts, the above observations were made. It is not necessary to consider whether in all cases, actual relief becomes the crucial date. However, the ratio of decision in Balram Gupta s case coupled with the observations of the Constitution Bench in Gopal Chandra Misra s case (underlined above) could usefully applied to the present case.
18. Coming to the case in hand the letter of acceptance was a conditional one inasmuch as though option of the appellant for the voluntary retirement under the scheme was accepted but it was stated that the release memo along with detailed particulars would follow . Before the appellant was actually released from the service, he withdrew his option for voluntary retirement by sending two letters dated August 07, 1997 and September 24, 1997, but there was no response from the respondent. By office memorandum dated 25th September, 1997, the appellant was released from the service and that too from the next day. It is not disputed that the appellant was paid his salaries etc. till his date of actual release i.e. 26th September, 1997, and, therefore, the jural relationship of employee and employer between the appellant and the respondents did not come to an end on the date of acceptance of the voluntary retirement and said relationship continued till 26th of September, 1997. The appellant admittedly sent two letters withdrawing his voluntary retirement before his actual date of release from service. Therefore, in view of the settled position of the law and the terms of the letter of acceptance, the appellant had focus poenitentiae to withdraw his proposal for voluntary retirement before the relationship of employer and employee came to an end.
19. We, therefore, hold that the respondent could not have refused to accept the resignation of the appellant as it was sent before the jural relationship of employee and employer came to an end. Consequently, the impugned judgment is liable to be set aside, which we hereby do. The appellant shall be entitled to rejoin his duty and he shall be paid all his salaries and other benefits during the period he was out from the service. The learned counsel for the respondent has stated that by this time the appellant might have retired from service on attaining the age of superannuation, if that be so, he shall be paid full salary and allowances for the entire period he was out of service till the date of his retirement and thereafter, he shall be entitled to get all retiral benefits counting the above period as if he was in service.
20. We, therefore, allow the appeal by setting aside the impugned judgment. We leave the parties to bear their own cost.
Appeal allowed.
***************