Pathak Vs. The Assam Industrial Development Corporation Ltd. & Ors  INSC
461 (31 August 2000)
Babu J. & Shivaraj V. Patil J.
V. Patil J.
appeal, the appellant has assailed the judgment and order dated 5.12.1997
passed by the Division Bench of the High Court of Assam, Nagaland, Meghalaya,
Manipur, Mizoram, Tripura and Arunachal Pradesh at Gauhati made in Writ Appeal
No. 124/96. In brief, the facts leading to the filing of this appeal are the
appellant joined the services of the respondent- Corporation in 1973 as
passing LL.B degree examination, she was promoted to the post of legal
Assistant in 1981. Subsequently she was promoted as Assistant Law Officer, Law
Officer and finally as Senior Law Officer in 1995 [re-designated as Deputy
1992 the respondent-Corporation issued a special scheme "AIDC Voluntary
Retirement Scheme, 1992" (for short the `Scheme') as a special measure in
the form of a golden handshake providing an option to its employees for
voluntary retirement who had completed 10 years of service in the Corporation
or 40 years of age.
appellant having served the respondent-Corporation for nearly 23 years and
attaining the age of 42 years with a view to avail the benefit of the Scheme,
made an application on 7.12.1995 seeking voluntary retirement in the form
prescribed, requesting to accept her option for voluntary retirement with
immediate effect. The recommending authority on the same day recommended for
accepting her voluntary retirement. Voluntary retirement ought to have come
into effect with immediate effect. Since the appellant was not allowed to hand
over the charge and there was none to take over charge from her and certain
other official formalities were also left to be carried out, she was compelled
to continue to attend to her duties. When there was no response from the
respondent-Corporation till third week of January, 1996, she wrote a letter
dated 23.1.1996 to the Managing Director of the respondent-Corporation stating
that she had come to know that her application for voluntary retirement would
be placed before the Board of Directors and that there was no need for the same
as under the Scheme Managing Director himself was the competent authority to
accept application of her voluntary retirement. No reply was given to the said
letter. The appellant addressed a letter dated 14.2.1996 to the Chairman of the
respondent- Corporation stating that the failure of the respondent- Corporation
to accept her voluntary retirement has caused great inconvenience and that she
was entitled to get her voluntary retirement accepted forthwith. In the said
letter also she made it clear that in the absence of any specific order she
would consider herself to be free person without any obligations to the
respondent-Corporation and her contract of service would stand determined with
effect from the date of submission of her application for voluntary retirement.
Further in the said letter she stated that in case there was any delay, she
would presume that her voluntary retirement was deemed to have been accepted
with effect from 15.2.1996 and that she would not attend her duties any more.
The appellant wrote a third letter to the Managing Director of the
respondent-Corporation on 15.2.1996 requesting for payment of retirement
benefits under the Scheme. Strangely the Managing Director of the
respondent-Corporation issued a show cause notice dated 15/16.2.1996, which was
received by the appellant on 17.2.1996. In the said show cause notice it was
stated that the appellant had been participating in the political activities of
the BJP and that she intended to contest the election on a BJP ticket which
amounted to misconduct and as such a reply was sought for the same. Under the
circumstances, the appellant approached the High Court by filing Writ Petition
Civil Rule No. 816/96 seeking reliefs that the appellant was no longer employee
of the respondent-Corporation having gone on voluntary retirement with effect
from 7.12.1995 and to direct the respondent-Corporation to give all retirement
benefits by setting aside the show cause notice dated 15/16.2.1996. The learned
Single Judge accepted the case of the appellant and granted relief. The
respondent-Corporation aggrieved by the order of the learned Single Judge took
up the matter in appeal and the Division Bench of the High Court allowed the
appeal and set aside the order of the learned Single Judge.
learned counsel for the appellant urged that there was no requirement of three
months' prior notice in the Scheme; the option of voluntary retirement ought to
have been accepted with immediate effect; the respondent-Corporation, having
offered that the Scheme was a golden and unique opportunity to eligible
employees, was bound to accept the application of the appellant seeking
voluntary retirement when all the conditions of the Scheme were satisfied. It
was further contended that Dinesh Chander Sangma's case referred to in the
judgment under appeal fully supports the case of the appellant.
learned counsel for the respondent-Corporation while supporting the judgment
and order impugned in this appeal submitted that the filing of the writ
petition was pre-mature as three months' period from the date of the
application seeking voluntary retirement was not yet over.
Clause 8.1 of the Scheme, the respondent-Corporation had discretion either to
accept or to reject the request of any employee for voluntary retirement
viewing the organizational requirement and any other relevant factors in this
regard and that the appellant had no vested right to claim for acceptance of
the voluntary retirement.
have carefully considered the submissions made on behalf of the parties in the
light of the material placed on record. As per Clause 3 of the Scheme, an
employee who completed 10 years of service in the respondent-Corporation or
completed 40 years of age could seek voluntary retirement by making an
application in the prescribed form. The General Managers/Heads of the
Departments are the recommending authorities in respect of the employees
working under their control and the Managing Director is the accepting
authority of voluntary retirement applications as per Clause 4. Clause 5 speaks
of the conditions which apply to those requesting for voluntary retirement -
(1) once an employee has applied for voluntary retirement under the Scheme, the
option cannot be withdrawn; (2) There should not be any vigilance case
pending/contemplated against the concerned employee or/and his/her evidence in
some important case would be of material value to the respondent-Corporation;
(3) (a) Employees under suspension or against whom disciplinary proceedings are
pending or/and contemplated will not be eligible for voluntary retirement;
The Scheme will not apply to those employees who have already submitted their
resignation as on date; (c) Employees who are under bond/agreement will also
not be eligible for voluntary retirement unless they fulfill the bond/agreement
Clause 7, the eligible employee may submit application in the prescribed form
for voluntary retirement under the Scheme to the Managing Director through
8.1 reads thus:
any of the aforesaid provisions, the Scheme does not confer any right on an
employee to have the request for voluntary retirement accepted by the
management shall have full discretion to accept or reject the request from any
employee for voluntary retirement viewing the organizational requirement and
any other relevant factors in this regard." Para 2 of the prescribed application form is to the following effect:
of my own accord and without any external pressure and coercion, am opting to
voluntary retirement under the said Scheme. I shall be obliged if you kindly
accept my option for voluntary retirement with immediate effect."
(Emphasis supplied) There is no dispute that the appellant was eligible to apply
for voluntary retirement having completed nearly 23 years' service and 42 years
of age; there was no impediment coming in the way of the appellant for seeking
voluntary retirement as per clause 5 of the Scheme. The application made in the
prescribed form as per the Scheme contemplates acceptance of option for
voluntary retirement with immediate effect.
appellant made the application in the prescribed form on 7.12.1995 requesting
for its acceptance with immediate effect. The respondent-Corporation did not respond
or react to the said application till 17.2.1996, on which date the appellant
received notice asking her to show cause why action should not be taken for
alleged misconduct of indulging in political activities. In spite of reminders
and letters by the appellant as stated above while narrating the facts, it is
only after the appellant handed over charge on 15.2.1996 and requested for
release of retirement benefits on 15.2.1996, the show cause notice
aforementioned was issued to the appellant. In our view, the said show cause
notice was of no consequence. It appears to us that it was issued only to
defeat the claim of the appellant. On the date when the appellant submitted her
application for voluntary retirement, neither vigilance enquiry nor any disciplinary
proceedings were pending or contemplated. In other words, as per Clause 5 she
was not prevented from making an application to opt for voluntary retirement.
The recommending authority as per Clause 4 of the Scheme recommended for
acceptance of the application on 7.12.1995 itself. We are unable to understand
why the Managing Director of the respondent-Corporation did not accept the same
although it was required to be accepted with immediate effect as per para 2 of
the prescribed application form. No doubt, as per Clause 8.1 of the Scheme
extracted above, the Management had discretion to accept or reject the request
from any employee for voluntary retirement viewing the organizational
requirement and any other relevant facts but that does not mean that the
respondent- Corporation being an authority coming within the purview of Article
12 of the Constitution can abdicate its duty to act reasonably and fairly in
exercise of discretion. It is strange as to why the Managing Director of the
respondent-Corporation, the competent authority to accept the application made
for the voluntary retirement, did not act on it at all till 17.2.1996. He ought
to have exercised his discretion as per Clause 8.1 if not immediately at least
within a reasonable time. The last paragraph of the Memorandum No.
dated 20/21.5.1993 issued by the respondent-Corporation reads thus:
Corporation has thus offered a unique opportunity.
now for all eligible and interested employees of the Corporation to avail of
this golden opportunity in a big way." As per sub-clause (i) of Clause 5
of the Scheme, once an employee applied for voluntarily retirement it could not
be withdrawn. The appellant wanted to avail this golden opportunity. With this
background it is not known as to why her application was not accepted. From the
letter of the appellant dated 23.1.1996, it is clear that she informed the
Managing Director of the respondent-Corporation that there was no need to place
her application before the Board and he himself was competent to accept it. The
non-response of the respondent- Corporation to the letters of the appellant
dated 23.1.1996, 14.2.96 and 15.2.1996 and issuing of show-cause notice by the
respondent-Corporation subsequently, clearly indicate that all was not well
with the respondent-Corporation in dealing with her application seeking
voluntary retirement. A subsequent complaint alleging indulgence of the
appellant in political activities was not germane to consideration of the
application of the appellant having regard to the relevant factors mentioned in
Clause 8.1 of the Scheme particularly when there was no infirmity or impediment
in terms of the Scheme in considering and accepting the application of the
appellant for voluntary retirement having regard to the fact that the appellant
on her part did what all was required to be done.
6 of the Scheme deals with the benefits available under the Scheme. Sub-clause
(v) of the said Clause contemplates one month's/three months' notice pay (as
per conditions of service applicable to him/her). Rule 18 of AIDC Limited
(Employees) Service Rules, 1992 and AIDC Limited Recruitment and Promotion
Rules, 1992 to the extent it is relevant reads: - "18. An employee shall
not leave or discontinue his service in the Corporation without first giving
notice to the Managing Director in writing of his intention to leave or
discontinue the service. The period of notice required shall be - a) .......
after completion of probationary period - (i) Three months in case of Class I
and Class II officers.
One month in case of employees in Class III & IV service.
lieu of notice, an employee shall be liable to pay to the Corporation a sum
equal to his substantive pay for the period of notice required of him.
that any shortfall of the notice period may be adjusted towards the earned
leave due to the employee concerned." There is some controversy as to
applicability of this Rule in respect of employees offering for voluntary
retirement under the Scheme.
that three months' prior notice was required to be given by the appellant in
the case on hand in terms of Rule 18 itself any shortfall in the notice period
could be adjusted towards the earned leave due to the appellant. It is on
record that the appellant in her letter dated 14.2.1996 (Annexure-2) has
clearly requested to allow her to go on voluntary retirement latest by 5.2.1996
and that the Managing Director to adjust balance notice period by deducting
earned leave calculated up to 5.2.1996. In spite of the same the Managing
Director of the Corporation kept mum.
Division Bench of the High Court has failed to see that the Scheme conferred
discretion on the Corporation under Clause 8.1 coupled with the duty to act
judiciously when application for voluntary retirement was made by an employee.
The said clause did not confer any unfettered discretion upon the Corporation
to refuse the benefit of the Scheme to any employee being an authority coming
within the meaning of Article 12 of the Constitution. It was not open to the
Managing Director of the respondent-Corporation to act on extraneous
consideration by issuing a show-cause notice dated 15/16.2.1996 so as to
deprive the appellant of the benefit flowing from acceptance of her voluntary
retirement. It is true that under Clause 8.1 of the Scheme discretion was
available to the respondent-Corporation but that discretion was not absolute.
It was circumscribed by the terms mentioned in the said Clause and it was to be
exercised judiciously. In the case on hand the Managing Director of the
Corporation has failed to act reasonably and fairly. He abdicated his duty by
not exercising discretion at all in the light of facts and circumstances of the
case stated above in sufficient details.
of the view that the Division Bench of the High Court was also not right in
saying that the appellant filed the writ petition even before any action was
taken by the Managing Director of the respondent-Corporation either to accept
or reject the application. It is clear from the undisputed facts that the
appellant submitted the application in the prescribed form to accept her
voluntary retirement from service with immediate effect; waited for
sufficiently long time and wrote letters in January and February, 1996 pursuing
the authority to accept the application seeking voluntary retirement. Further
after receiving show-cause notice on 17.2.1996 from the respondent-
Corporation, the appellant had no good reason to wait any longer. In this view
it could not be said that the writ petition filed was pre-mature.
result, for the reasons stated above, this appeal is entitled to succeed. Hence
the judgment and order of the Division Bench of the High Court are set aside
and the order passed by the learned Single Judge of the High Court is restored.
The appeal is allowed accordingly. Parties to bear their own costs.