Bank of Patiala Vs. Romesh Chander Kanoji & Ors
 Insc 115 (24
V.N. Khare, S.B. Sinha & S.H. Kapadia.
out of S.L.P.(c) No. 23499-23501 of 2002) KAPADIA, J.
question in these appeals concerns determination of the scope of the judgment
of this Court in the case of State Bank of India & Ors. v. O.P. Swarnakar
& Ors. reported in [(2003) 2 SCC 721] as also the judgment of this Court in
the case of State Bank of Patiala v. Jagga
Singh decided on 13.3.2003 in Civil Appeal No.2341 of 2003.
dispute lies within a narrow compass. State Bank of Patiala, subsidiary of State Bank of India, issued a circular No. PER/VRS/48
dated 20th January 2001 publishing their Voluntary
Retirement Scheme (hereinafter referred to as 'the SBPVRS') drawn up in the
light of the guidelines issued by the Indian Bank Association. The object of
the SBPVRS inter alia was to downsize the existing strength of the employees
and to increase profitability.
scheme was to open on February
15, 2001 and it was to
close on 1st March,
2001 (inclusive of
both days). The applications under the SBPVRS were to be accepted during the
period when the scheme was to remain open between 15th February 2001 to 1st
(5), (8) and (9)(i) of the Scheme are relevant for the purpose of deciding this
matter and accordingly, they are quoted herein below: "5. Period The
scheme will remain open during the period 15th February 2001 to 1st March 2001
(inclusive both days) with an option to the Bank to close early/extend the
scheme without assigning any reasons. The applications for Voluntary Retirement
under the SBPVRS will be accepted during this period only.
Other features The Bank intends to control the outflow of personnel according
to its requirements. Towards this end, Bank retains the discretion to limit the
number of employees to be allowed to retire in each category of staff viz.
offices/clerical-cash/subordinate, to be covered under SBPVRS. As such, the
Bank will have the sole discretion as to the acceptance or the rejection of the
request for retirement under SBPVRS depending upon the requirements of the
Bank. For the purpose of exercising discretion in this regard, category wise
lists of eligible applicants would be prepared in descending order of their age
and applications of employees coming in higher age groups above cut-off age
would be accepted; the cut-off age in each category will of course depend upon
the acceptable number of employees who can be permitted to retire.
voluntary retirement shall be deemed to have come into effect unless the
decision of the Competent Authority has been communicated in writing, which
will be convened within a maximum period of two months after the date of
closure of receipt of applications i.e. 01.03.2001.
Staff members desirous of availing benefits under the scheme will have to
submit a written application to the Competent Authority, through proper
channel, in the specified format, within the period for which the Scheme is
kept open (i.e. 15.02.2001 to 01.03.2001). The application once made cannot be
withdrawn and the same will be treated as irrevocable. While making
application, the employee will be required to declare the name of nominee, to
whom the payment may be made in the event of death of an VRS optee after the
competent authority has accepted his VRS application but before payment has
supplied)" To complete the chronology of events, respondents herein
applied under the SBPVRS between 15th February 2001 and 1st
March 2001. Respondent
No.1 withdrew his application for voluntary retirement on 3/5th March, 2001. Similarly, respondent No. 2
withdrew his application for voluntary retirement on 2nd March 2001.
No. 3 withdrew his application for voluntary retirement on 5th March, 2001. However, on 3rd April, 2001, the bank refused permission to the
said respondents to withdraw from the scheme since their withdrawal was made
after the date of the closure of the scheme on 1st March, 2001. The decision of the bank not to allow the respondents to
withdraw from the scheme came to be challenged by way of Writ Petition before
the High Court along with several other writ petitions involving the same
question. By common judgment dated 3rd April, 2002, the High Court allowed the writ
petitions by quashing the SBPVRS itself. The High Court held that even if it is
assumed for the sake of argument that the scheme was validly framed, it would
still be open to an employee to withdraw his option before the same came to be
accepted and effectively enforced. Being aggrieved, the Bank has come by way of
appeal to this Court.
case of Bank of India v. O.P. Swarnakar (supra) a similar question arose for
determination, namely, whether an employee having once opted for voluntary
retirement pursuant to a voluntary retirement scheme is precluded from
withdrawing his offer/opting out from the scheme? This Court in the above
judgment found that there was difference between the voluntary retirement scheme
framed by State Bank of India (hereinafter referred to as
'SBIVRS') on one hand and the voluntary retirement scheme framed by
nationalized banks. The difference in the two schemes was that in the case of
SBIVRS, an opportunity of 15-days was given to the employee applicant to
withdraw from the scheme whereas under the voluntary retirement scheme of
nationalized banks no such opportunity was given. In the case of voluntary
retirement scheme framed by nationalized banks, clause 10.5 stipulated that it
will not be open for an employee to withdraw his request for voluntary
retirement after having exercised such option. In the circumstances, this Court
took the view that the case of State Bank of India stood on different footing vis-`-vis schemes framed by
other nationalized banks. The reasons for the difference are contained in para
92 of the said decision, which reads as under: "However, the case of the
State Bank of India stands slightly on a different
footing. Firstly, the State Bank of India had not amended the scheme. It, as noticed here before, even permitted
withdrawal of the application after 15th February. The scheme floated by the
State Bank of India contained a clause (clause 7)
laying down the mode the manner in which the application for voluntary
retirement shall be considered.
relevant clause as referred to herein before creates an enforceable right. In
the event the State Bank failed to adhere to its preferred policy, the same
could have been specifically enforced by a court of law. The same would,
therefore, amount to some consideration." 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
decision of this Court in Bank of India v. O.P. Swarnakar (supra) is dated 17th December, 2002. The decision was given by a
three-Judge Bench of this Court. A similar question came before the Division
Bench of this Court once again in the case of State Bank of Patiala v. Jagga Singh by way of Civil
Appeal No.2341 of 2003. It was held by the Division Bench that State Bank of Patiala
was a subsidiary of State Bank of India; that clause 8 of SBPVRS was similar to
clause 7 of SBIVRS; that clause 8 of SBPVRS also gave opportunity to the
employee to withdraw and consequently the appeal filed by State Bank of Patiala
was allowed in terms of the decision in the case of Bank of India v. O.P. Swarnakar
(supra). The decision in the case of Bank of India v. O.P. Swarnakar has since
been followed in several cases.
present matter, the question is once against sought to be re-agitated. Mr. Ahmadi,
learned counsel appearing on behalf of the respondents herein contended that
clause 9(i) of SBPVRS, quoted above, was similar to clause 10.5 of the scheme
of other nationalized banks inasmuch as it provided that application once made
cannot be withdrawn. It was submitted that clause 9(i) of the said SBPVRS has
not been noticed by the Division Bench of this Court in its judgment in the
case of State Bank of Patiala v. Jagga Singh (supra). It was
contended that clause 9(i) of the SBPVRS was dis-similar to SBIVRS, which gave
opportunity to the employee to withdraw and consequently the judgment of the
Division Bench of this Court in State Bank of Patiala v. Jagga Singh (supra) needs reconsideration.
not find any merit in the above argument. It is important to bear in mind that
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 the SBPVRS gave
15 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 number of applications; the
cost of the scheme; liability which the scheme would impose on the bank and
such other variable factors.
employees are allowed to withdraw from the scheme at any time after their
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
(supra) the 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.
Chitty on Contracts (28th Ed. Page 125), the learned author states that
"an offer may be withdrawn at any time before it is accepted. That this
rule applies even when 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 1.3.01 after which the mode of acceptance contemplated by clause 8
of the 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 1st March 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 Edition page 133). Reading clauses 5, 8 and 9(i), it is
clear that employees are precluded from withdrawing from the SBPVRS after the
closure of the scheme on 1.3.2001.
to above, we hold that State Bank of Patiala is a subsidiary of State Bank of India; that the SBPVRS is similar to SBIVRS and consequently, the judgment of
this Court in the case of Bank of India v. O.P. Swarnakar (supra) squarely
applies to the facts of this case. We may clarify that each scheme for the
purposes of enforceability is required to be read as a whole.
the appeals are allowed in terms of the decision of this Court in Bank of India
v. O.P. Swarnakar (supra) and the impugned judgment of the High Court is set
aside with no order as to costs.