India & Ors Vs. O.P. Swarnakar  Insc 557 (17 December 2002)
Appeal (civil) 855 of 2002 Appeal (civil) 870 of 2002 Appeal
(civil) 874 of 2002 Appeal (civil) 877 of 2002 Appeal (civil) 878 of 2002
Appeal (civil) 879 of 2002 Appeal (civil) 883 of 2002 Appeal (civil) 7353 of
2002 Appeal (civil) 7354 of 2002 Appeal (civil) 7355 of 2002 Appeal (civil)
7356 of 2002 Appeal (civil) 873 of 2002 Appeal (civil) 876 of 2002 Appeal
(civil) 880 of 2002 Appeal (civil) 3552-60 of 2002 Appeal (civil) 4067 of 2002
Appeal (civil) 5380-81 of 2002 Appeal (civil) 875 of 2002 Appeal (civil) 881 of
2002 Appeal (civil) 8467-8499 of 2002 Special Leave Petition (civil) 19373-405
of 2002 Appeal (civil) 8511 of 2002 Special Leave Petition (civil) 12322 of 2002
Appeal (civil) 7314-35 of 2002 Appeal (civil) 3561-65 of 2002 Appeal (civil)
896 of 2002 Appeal (civil) 955 of 2002 Appeal (civil) 8500 of 2002 Special
Leave Petition (civil) 7966 of 2002
H.K. Sema & S.B. Sinha. Punjab National Bank & Ors. Allahabad Bank etc.
etc. Dena Bank Punjab & Sind Bank & Ors. Union Bank of India & Ors.
State Bank of Patiala State Bank of India & Anr. etc. Virender Kumar Goel Shri
Harprit Singh Chhabra Bhupinder Singh Sachdeva & Ors. Jai Singh Chauhan
etc. etc. Raminder Singh Arora etc. etc. Mr. Netaji D. Karande & Ors. etc. Mohinder
Pal Singh & Ors. A.Q. Beg Virender Kumar Sharma & Ors. Sanjeev Kalra
etc. Punjab National Bank & Ors. etc. Bank of India & Ors. Chairman,
Punjab & Sind Bank & Ors.
granted in the special leave petitions.
common question, as to whether an employee who opts for the voluntary
retirement pursuant to or in furtherance of a scheme floated by the Nationalised
Banks and the State Bank of India would be
precluded from withdrawing the said offer, is involved in this batch of appeals
which arise out of the judgments of various High Courts.
State Bank of India has been constituted under the State Bank of India Act,
1955 whereas the other banks (hereinafter referred to as 'the Nationalized
Banks, for the sake of brevity) were taken over in terms of the provisions of
the Banking Companies (Acquisition and Transfer of Undertakings), Act, 1970
(hereinafter referred to as '1970 Act').
banks were said to be over-staffed. For the purpose of effective management ,
man power planning was contemplated by the Ministry of Finance, Government of
India, pursuant whereto and in furtherance whereof, the Government considered
the desirability of introducing voluntary retirement scheme to help the banks
to right-size their force. In a letter dated 22.5.200, the Director (IR &
BOII), Ministry of Finance, intimated to the concerned banks that different
committees and experts opined that most of the banks have 25% surplus manpower.
It was observed :
there is a need for inducting new workforce, which had adequate knowledge of
new skills such as modern technology, foreign exchange, venture capital,
e-commerce, money management, etc. it is also essential to rationalize the
existing manpower. In doing so, it has to be ensured that there should be
adequate opportunities for promotions for all and proper balance between
promoted and direct recruit officers at entry level.
promotional opportunities should be created for the entrants in non-executive
grades by creating graded scales within the cadre and giving age relaxation and
special coaching to enable them to compete for direct recruitment also. Thus
for entry in officers cadre, 50% quota for promotion should suffice. That will
enable banks to recruit 50% officers from open market in accordance with the
needs of the banks to ensure continuous intake of persons with desired
qualifications in accordance with the changing skill needs." It was,
therefore, requested that the concerned banks should undertake the exercise of
man-power planning on priority basis and send the same to the Banking Division
for approval of the Board. A Committee was constituted by the Central
Government for consideration of various issues as specified in the report of
the Committee on Human Resource Management in Public Sector Banks. The said
Committee in its report, inter alia, observed :- "3.15.1 The Committee
feels that the high establishment cost and low business per employee are
important contributory factors for the low profitability of several public
sector banks. The Committee feels that without right-sizing the staff, it would
be difficult for public sector banks to compete with other banks operating in
the country and their profitability will remain under severe strain. Optimising
the existing work force is also necessary to facilitate recruitment of
personnel with specialised skills required for appropriate use of information
technology in banking transaction, compliance with prudential norms and
consequent emphasis on improved risk management and assert liability
management, as also Banks' foray into new business areas such as insurance,
capital markets, etc.
Different committees and experts have in the recent past perceived excess staff
in banks especially in the public sector banks. The extent of surplus may
however differ from bank to bank.
are at various stages of making a proper assessment of human resource including
man-power planning exercise.
The Committee further reiterates that the Government may consider rolling back
the age of retirement for officers from 60 years to 58 years.
will not only reduce the man-power in the age group of 58 to 60 but will also
result in considerable savings." Pursuant to or in furtherance of the said
purported policy decision, the State Bank of India as well as the Nationalised Banks adopted separately but
almost identical scheme known as "Employees Voluntary Retirement
Scheme". We may, however, observe that the scheme adopted by the State
Bank of India (hereinafter referred to 'SBIVRS')
in certain respects differ from the scheme of the Nationalised Banks
(hereinafter referred to the 'said scheme'). For our purpose, we would consider
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 employees
specified therein including specialised officers were not eligible to seek
voluntary retirement. However, in certain scheme they were ordinarily
ineligible for being considered. The period during which the said scheme was to
remain operative varies from bank to bank. However, as far as Punjab National
Bank was concerned, the said scheme was to remain in operation from 1.11.2000
to 30.11.2000. In terms of the said scheme those who sought for voluntary
retirement were entitled to ex-gratia payments as specified therein as also
other benefits which are as follows :-
employee seeking voluntary retirement under the scheme will be entitled to the
ex-gratia amount mentioned below in para (a) or (b), whichever is less :-
days salary (pay plus stagnation increments plus special pay plus dearness
relief) for each completed year of service; OR
for the number of months service left;
employee seeking voluntary retirement under the scheme will be eligible for the
following benefits in addition to the ex-gratia amount mentioned in para 6
above of this scheme :- i) Gratuity as per Payment of Gratuity Act, 1972 or
Gratuity payable under the Service Rules as the case may be, as per existing
Pension (including commuted value of pension) as per PNB (Employees') Pension
Regulations, 1995. OR
Bank's contribution towards PF as per existing rules.
Leave encashment as per existing rules." The Scheme contained an
eligibility criteria, namely, that employees against whom disciplinary
proceedings were contemplated or pending would not be eligible for seeking
voluntary retirement. It states that the employees seeking voluntary retirement
were eligible for all other retirement benefits. Under the existing said scheme
the bank has reserved with itself the right to withdraw the scheme at any time
it thinks fit and its decision in this behalf was to be final.
Para 9 of the said scheme specifies
different competent authorities for accepting voluntary retirement of different
categories of officers and workmen.
following general conditions now need be noticed :- "10.4 A mere request
of an employee seeking voluntary retirement under the Scheme will not take
effect until and unless it is accepted in writing by the Competent Authority.
It will not be open for an employee to withdraw the request made for voluntary
retirement under the scheme after having exercised such option.
The Competent Authority shall have absolute discretion either to accept or
reject the request of an employee seeking Voluntary Retirement under the scheme
depending upon the requirement of the bank. The reasons for rejection of
request of an employee seeking voluntary retirement shall be recorded in
writing by the competent authority.
or otherwise of the request of an employee seeking voluntary retirement will be
communicated to him in writing.
An employee who would seek voluntary retirement under this scheme will not be
eligible for re-employment in the bank or any of its subsidiaries.
The benefits payable under this scheme shall be in full and final settlement of
all claims of whatsoever nature, whether arising under the scheme or otherwise
to the employee (or to his nominee in case of death). An employee who
voluntarily retired under this scheme will not have any claim against the bank
of whatsoever nature and no demand or dispute or difference will be raised by
him or on his behalf, whether for re-employment or compensation or back wages
including employment of any of his relative on compassionate grounds in the
service of the bank or for any other benefit whatsoever.
The vacancy caused by voluntary retirement shall not be filled up by new
The ex-gratia payable to an employee on opting for Voluntary Retirement under
this scheme would be paid to him within 45 days from the date of his relieving.
employee eligible to seek voluntary retirement under this scheme should make a
request on the prescribed application enclosed with this scheme as Annexure-A
or Annexure A-1 as the case may be through proper channel addressed to the
Competent Authority before the last date prescribed under this Scheme. Further
one copy of the application be directly sent to the Dy. General Manager (P) at
Head Office New Delhi." Annexure-A appended to the said Scheme is the
format of an application for offer to seek voluntary retirement which reads thus
:- "Application for Offer to seek voluntary retirement from the service of
workmen employees & officers upto scale-III) The Dy. General Manager
Personnel Division Head Office New Delhi.
proper channel) Sir, SUB: VOLUNTARY RETIREMENT.
hereby offer to seek voluntary retirement from the services of the Bank in
accordance with the terms and conditions stipulated in the PNB Employees
Voluntary Retirement Scheme 2000 circulated vide Personnel Division Circular
No.1755 dated 29.9.2000, which I have carefully read and understood the
contents of the same.
accept the terms and conditions stipulated in PNB Employees Voluntary
Retirement Scheme 2000 unconditionally and irrevocably.
furnished the required particulars in the APPENDIX enclosed for consideration
of my offer to seek voluntary retirement from the service of the Bank under the
faithfully, Signature of the Employee Place:
Name _______________ Date : Designation___________ BO/Division __________"
A large number of employees (1,01,000 employees approx.) submitted their
applications out of whom a small number of employees (200 employees approx.)
withdrew their offer. Despite withdrawal of their offer the same was accepted.
In some cases offers despite withdrawal thereof were accepted within the period
during which the scheme was operative and in some beyond the same.
scheme was introduced by the banks with the approval of the Board of Directors.
the action on the part of the banks, in accepting the applications of the
concerned employees despite their withdrawal, writ petitions were filed in the
Punjab & Haryana High Court, Bombay High Court, Uttaranchal High Court etc.
the Punjab & Haryana High Court, the legality or validity of the said
scheme also came to be questioned. Writ applications were also filed by some
employees seeking for issuance of writ of mandamus directing the respective
banks to pay unto them their lawful dues strictly in terms of the scheme.
Punjab & Haryana High Court by reason of its judgment impugned herein dated
3.4.2002, inter alia, held :- "That the V.R. Scheme as framed is not a
valid piece of subordinate legislation inasmuch as the provision of Section 19
sub clause (1) and sub clause (4) of the Act have not been complied with and
has, therefore, to be set aside.
if it is assumed for the sake of arguments that the scheme is validly framed,
it would be open to an employee to withdraw his option before the same has been
accepted and effectively enforced.
the reasons recorded above, we allow 71 writ petitions i.e C.W.P. Nos.1458,
1472 of 2001 and C.W.P Nos. 303 and 1765 of 2002 etc. etc. in which the
petitioners have made a prayer for the withdrawal of their options and the
impugned orders accepting the options of voluntary retirement stand quashed.
All these petitioners shall be reinstated in service with all consequential
however, made clear that those petitioners who have received the benefits under
the scheme including the ex-gratia payment whether with or without protest,
shall return the entire amount received by them with interest at the rate of 9%
per annum from the date of the receipt of the said amount till the date of
return. On return of the aforesaid amount the consequential benefits regarding the
payment of arrears of salary and allowances from the date of their release to
the date of reinstatement shall be given to them by the respondents. These
petitioners shall also have the benefit of continuity of service and the
interregnum period shall be regularised in accordance with law and regulations.
we have already declared this scheme as bad, therefore, we are not in a
position to give any relief to the writ petitioners of 10 writ petitions i.e.
C.W.P. Nos.6072, 7277, 7448, 9191, 14325, 15686, 15689, 19393, 19711 and 19803
of the year 2001, and in our opinion, these writ petitions are liable to be
dismissed. When all rights flow from a valid scheme and the moment the scheme
is declared bad on account of statutory restrictions then the petitioners of
these 10 writ petitions cannot ask for any advantage or benefit.
want to make some observations with regard to those employees who had taken the
benefit under the VRS Scheme but they have not approached this court as they
appear to be satisfied/ with the amount/benefits already received by them.
regard to them we want to make it clear that the Banks are not obliged to
recall these employees for employment" The Bombay High Court and the other
High Courts, on the other hand, held that clause 10.5 of the scheme or the
scheme framed framed by the other banks is not operative as the employees have
indefeasible rights to withdraw their offer before the same is accepted. In
arriving at its aforementioned finding, the High Courts, inter alia, relied on
the following decisions of this Court in Union of India & Ors. v. Gopal
Chandra Misra & Ors. [(1978) 2 SCC 301], Balram Gupta v. Union of India & Anr. [(1987) Supp.SCC 228], Punjab
National Bank v. P.K. Mittal [(1989) Supp. 2 SCC 175], Union of India & Anr.
v. Wing Commander T. Parthasarathy [(2001) 1 SCC 158] and Shambhu Murari Sinha
v. Project & Development India Ltd. & Anr. [(2002) 3 SCC 437].
the judgment of the High Courts, Mr. Soli J. Sorabjee, learned Attorney General
for India, inter alia, submitted that having regard to the purport and object
sought to be achieved by the scheme, clause 10.5 of the General Conditions
cannot be said to be illegal as by submitting themselves thereto, the concerned
employees must be held to have resigned in prasenti and in that view of the
matter the contractual bar contained therein cannot be held to be bad in law.
The learned Attorney General would urge that the High Court proceeded on a
wrong premise insofar as it failed to take into consideration that the scheme
would amount to a regulation which would attract the provision of Section 19 of
1970 Act. It was submitted that power to fix the terms and conditions of
service of their employees by the Banks is provided for under Section 7 of the
said Act. The learned counsel would contend that it is not the case of the writ
petitioner-respondents that the aforementioned clause 10.5 is arbitrary or
otherwise opposed to public policy or suffers from lack of mutuality and, thus,
the High Court must be held to have arrived at a wrong conclusion. Such a
clause being an offer, the learned Attorney General would contend, is not violative
of any provisions of the Indian Contract Act, 1872 or the Constitution of
India. Taking us through the decisions of this Court in Gopal Chandra Misra
(supra), T. Parthasarthy (supra), Balram Gupta (supra) as also Shambhu Murari Sinha
(supra), the learned Attorney General would urge that therein this Court has
laid down that such a provision leads to laudable object and only in absence of
such a provision prospective resignation can be withdrawn before its
acceptance. It was further submitted that as each of the employees had made
irrevocable and unconditional offer of terms and conditions laid down in the
scheme, they could not have withdrawn therefrom and particularly as some of
them accepted the ex-gratia payment and, thus, they having elected for the
scheme and thus, were estopped and precluded from questioning the same. Those
employees, Mr.Sorabjee would submit, who accepted the ex-gratia payment could
not have been permitted by the High Court to approbate or reprobate. In support
of the said contention, reliance has been placed in Brijendra Nath Bhargava
& Anr. v. Harsh Wardhan & Ors.[(1988) 1 SCC 454], Shri Lachoo Mal v. Shri
Radhey Shyam [(1971) 1 SCC 619], Halsbury's Laws of England, Fourth Edition,
Volume 16, para 957 and American Jurisprudence, 2d, Volume 28, pages 677 to
regards the finding of the Punjab & Haryana High Court that the scheme is
ultra vires having regard to the fact that the same was not laid before the
Parliament as required under Section 19(4) of 1970 Act, it was contended that
such a provision being directory one, failure on the part of the Central
Government to lay the said scheme before the Parliament could not vitiate the
scheme itself. Strong reliance, in this connection, has been placed in Jan
Mohammad Noor Mohammad Begban v. State of Gujarat & Anr. [(1966) 1 SCR 505]
and M/s Atlas Cycle Industries Ltd. & Ors. v. The State of Haryana [(1979) 2 SCC 196]. It was urged
that the entire scheme was offered to the employees as a package and the same
had to be treated as such and in that view of the matter, it being within the
realm of contract, statutory regulations cannot be said to have any application
V.R. Reddy who appeared for the Punjab National Bank in the matters arising out
the judgment and orders passed by the Bombay High Court, inter alia, would
submit that the High Court erred in proceeding on the basis as if the employees
are the Government servants and enjoy a status. According to the learned
counsel, having regard to the provisions of the 1970 Act, the terms and
conditions of services of the employees of the Nationalised Banks are governed
by contract. Mr. Reddy would urge that the purpose of the scheme being down
sizing of the employees, the same was required to be considered having regard
to the age profile, skill profile, the extent of the response received from the
employees and several other relevant factors. In the aforementioned situation,
the learned counsel would submit that clause 10.5 was inserted so that in the
event, those who had opted for the scheme resile therefrom, the banks may not
face practical difficulties. The requirement of the bank, the learned counsel
would submit, must prevail over the requirement of the individual employees.
regards the validity of clause 10.5, the learned counsel would submit that the
same was at the threshold stage leading to a major contract. Strong reliance,
in this connection, has been placed Anson's Law of Contract, 28th Edition, paras
235 and Chitty on Contracts, 28th Edition (1999) pages 3 -160 and 3-161 and Halsbury's
Laws of England, 4th Edition, Volume 9, para 235 at page 106.
Rohtagi appearing on behalf of the Bank of India would contend that as the writ
petitions involved enforcement of contract qua contract, they were not
maintainable. The learned counsel placed strong reliance in Har Shankar &
Ors. v. The Dy. Excise and Taxation Commr & Ors. [(1975) 1 SCC 737].
Rajeev Dhawan and Mr. Harish Salve, appearing on behalf of the State Bank of India, submitted that the High Court
completely misdirected itself insofar as it failed to take into consideration
that the provi sions of the State Bank of India Act, 1955 materially differ
from 1970 Act. According to the learned counsel, the terms and conditions of
employment are governed under Sections 17 and 43 of 1955 Act.
been pointed out that having regard to the difficulties which may be faced by
some of the employees, although the scheme dated 27.12.2000 was to remain in
force for a short time, implementation thereof was contemplated in a time-bound
manner i.e. :-
a) Opportunity to the employees to apply for
voluntary retirement during the period 15.1.2001 to 31.1.2001;
b) Opportunity to the employees to withdraw, if so
desired by 15.2.2001;
Employees whose request for voluntary retirement is accepted, were to stand
retired on 31.3.2001 and paid accordingly.
regard to the difficulties which may be faced by some of the employees, by a
circular a cut-off date of 15.2.2001 was fixed; thereby granting opportunities
to the employee to withdraw the option exercised by him. The logic and
necessity therefor, inter alia, was :-
purpose of the SBIVRS was inter alia to have overall reduction in the existing
strength of the employees. However, the bank were also required to control the
outflow according to its requirements, for which the bank retained the
discretion to limit the number of employees allowed to retire.
decision was taken by the bank that around 10% employees may be allowed to
retire under the VRS; the petitioner bank had to process the applications of
all the employees who had opted for VRS. This ratio of 10% could be achieved
only after the bank receives a definite figure about the number of persons
opting for VRS and withdrawing later.
Further the final decision of the category of persons eligible under VRS could
be taken only after the petitioner bank had the final tally regarding the last
and final figure of number of persons who had opted under the VRS.
The scheme was purely voluntary and the conscious decision of the employee,
hence there could be no reason for his withdrawal of application at a later
date. However, keeping in view the interest of the employee, it was decided
that the employee might be permitted to withdraw the application on or before
was a time bound scheme whereunder the employee was to be relieved and paid
entire monetary benefits by 31.3.2001, for which arrangements were to be made.
been pointed out that around 35,380 employees had applied under the said scheme
and around 1,996 employees had withdrawn before the cut off date.
21,000 employees had been granted voluntary retirement under the scheme,
excluding the ineligible.
contended that the scheme if read in its entirety would clearly show that the
same was an offer and not an invitation to offer and in terms thereof an
enforceable rights and duties had been conferred upon both employer and
employee which would, subject to certain exception, be enforceable. It was
contended that as the concerned employee did not exercise his option of
withdrawal within the specified date, namely, 15.2.2001, his case had been
considered on the premise that he has not withdrawn his offer. The learned
counsel would contend that a contract of employment can be terminated
unilaterally; even a tenure of contract of employment can be curtailed by an
agreement and in that view of the matter voluntary retirement scheme cannot be
said to be illegal. Reliance, in this connection, has been placed on 'Chitty on
Contract' paras 37-114 and 37-115.
Rao, learned senior counsel appearing on behalf of the respondents in civil
appeal arising out of SLP (C) CC No.7966, inter alia, would submit that the
decisions of this Court in Balram Gupta (supra) and Parathasary (supra) in no
unmistakable terms laid down the law that an offer of resignation can be
withdrawn before the same is accepted. According to the learned counsel, the
matter relating to the scheme is merely an invitation to offer and option
pursuant thereto on the part of an employee would constitute an offer. Such an
offer, the learned counsel would contend, had been made by the concerned employee
on dotted lines. In any event, the learned counsel would submit, that having
regard to the provision contained in Section 5 of the Contract Act, the
concerned employee had an absolute right to withdraw the same before a
concluded contract is arrived at. Clause
of the Punjab National Bank VRS is, thus, ultra vires Section 5 of the Contract
reliance, in this connection, has been placed on Rajendra Kumar Verma v. State
of Madhya Pradesh & Ors. [AIR 1972 MP 131], Abdus Salam Choudhury v. The
State of Assam & Ors. [AIR 1991 Gauhati 9] and Devi Krishan Goyal v.
District Inspector of Schools, Ghaziabad & Ors. [ J.T. 1988 (4) SC 201].
Subramanium, learned senior counsel appearing on behalf of the respondent in
Civil Appeal arising out of SLP (C) Nos.19373-404 of 2002, would submit that
the scheme formulated by other public sector banks including Punjab & Sind
Bank is identical to that of Punjab National Bank. According to the learned
counsel, the entire scheme has be read as a whole. It was pointed out that the
scheme had a limited duration from 1.12.2000 to 31.12.2000, and a cumulative
consideration of the relevant clauses would clearly show that the relationship
between the master and servant comes to an end only upon acceptance of the
offer. It was pointed out that the offer is required to be considered at the
level of the Branch Manager and Zonal Manager and upon their recommendation the
same was ultimately to be taken up by the Personnel Department will clearly go
to show that irrevocable nature of option would be relevant only if the same
culminates into an acceptance. The learned counsel would submit that mere
declaration given by an offerer that he would not withdraw or cancel the offer
would not destroy his locus. Strongly relying upon the decisions of this Court
in J.N. Srivastava v. Union of India & Anr. [(1998) 9 SCC 559], Gopal
Chandra Misra (supra), Parthasarathy (supra), Shambhu Murari Sinha (supra), Balram
Gupta (supra), the learned counsel would submit that even after acceptance, the
offer could be withdrawn, such an action on the part of the optioner is
permissible even after the acceptance of the offer and in that view of the
matter the application of contractual bar must be held to be applicable only in
a case where offerer has been relieved from his part not prior thereto.
decisions of this Court, Mr. Suramanium would submit, lay down the following principles
Juridical relationship of employer and employee continues till the employee is
relieved from his duties
is a bilateral action,
Offer being not in prasenti its acceptance is necessary,
exception to the said rule would be where prejudice may be caused.
would urge that in the instant case, it cannot be said that the statutory
regulation has nothing to do with the Scheme as pension was to be calculated in
terms thereof. The learned counsel pointed out that after the offer had been
made, the concerned banks had issued a circular, pursuant whereto or in
furtherance whereof a proviso to Regulation 28 was sought to be added; in terms
whereof the concerned employees were deprived of the benefit of additional five
years of service towards qualifying service so as to get pension in terms of
clause (4) of Regulation 19 as thereby instead and in place of full pension the
principle of pro- rata pension was introduced. Such amendment in the scheme as
a result whereof the employees were gravely prejudiced, the concerned employees
derived a legal right to withdraw from the said scheme.
Dwivedi, learned senior counsel appearing on behalf of the respondents in Civil
Appeals arising out of SLP (C) Nos.19373-405 of 2002, would contend that the
offending clause having been unilaterally prescribed would not amount to a
contractual bar. Such a contractual bar, the learned counsel would submit, must
be based on consideration. A contractual scheme must not offend the right of
the employee under Section 5 of the Indian Contract Act, in terms whereof the offeror
is entitled to revoke his proposal/offer at any time before the communication
of the acceptance. Relying upon or on the basis of a large number of decisions
by different High Courts, namely, Zoravarmal v. Gopal Das [AIR 1922 Mad. 486,
491], Secretary of State v. Bhaskar Krishnaji [AIR 1925 Bom. 485,487, 488], Somu
Sundram Pillai v. Provincial Government [AIR 1947 Mad. 366, 368], Raghunandan
v. State of Hyderabad [AIR 1963 AP 110, 113], T. Linga Godar v. State of Madras
[AIR 1971 Mad. 28], Rajendra K. Verma v. State of M.P. [AIR 1972 M.P. 131], Sri
Durga Saw Mills v. State of Orissa [AIR 1978 Orissa 41,43], Managing Committee
v. State of Bihar [AIR 1981 Patna 271, 272], Janardhan Misra v. State of U.P.
[AIR 1981 Allahabad 213, 216-217], M/s Suraj Besan & Rice Mills v. FCI [AIR
1988 Delhi 224], A.S. Khongphai v. Special Judicial Officer [AIR 1981 Gau, 9],
it was argued that in absence of any statute or statutory rules governing the
field, Section 5 of the Indian Contract Act would be attracted and in that view
of the matter clause 10.5 is neudum pactum and thus being a nullity is not
to the learned counsel, the terms and conditions of service of employees being
governed by a statute or statutory regulations, they enjoy a status. It was
urged that as such voluntary retirement scheme affects the status of an employee,
a contractual bar cannot be imposed. Reliance, in this connection, has been
placed on Delhi Transport Corporation v. D.T.C. Mazdoor Congress & Ors.
[(1991) Supp.(1) SCC 600]. In a case, Mr. Dwivedi would urge when the employee
has voluntarily withdrawn the offer, the doctrine of election will have no
application as by reason thereof the employee has not received the benefit in
one part of the contract and then questioned the rest thereof.
Dhankar would, inter alia, submit that in some cases the letters of withdrawal
reached before the option. In any event, as the orders had been passed in many
cases on 8.1.2001 i.e. well after the expiry of the period of the scheme,
namely, 184.108.40.2060, the competent authority had no jurisdiction to accept the
Panda appearing for the Appellant in Civil Appeal No.955 of 2002 would draw the
attention of this Court to the fact of the matter and submitted that the
concerned respondent had withdrawn his offer on the very next day of filling
his application but despite the same, he had been relieved from his duties on
learned counsel would contend that the offending clause seeks to obliterate the
right of the employee to which he would have been otherwise entitled to in
terms of Regulation 19(4) and thus the same must be held to be illegal.
Reliance, in this connection, has been placed in V.T. Khanzode & Ors. v.
Reserve Bank of India & Anr.[(1982) 2 SCC 7]. Mr. Panda contended that by
reason of the impugned judgment, the Uttaranchal High Court dismissed a writ
petition filed by an employee, inter alia, on the ground that as he is bound
himself by the terms not to withdraw the application for voluntary retirement,
the writ petition was not maintainable.
to the learned counsel, for the reasons stated by the Punjab & Haryana High
Court and Bombay High Court and the other High Courts, the said decision cannot
Goburdhan, appearing on behalf of the respondent-employee of the State Bank of
India would submit that his client, who had completed 19 years, 10 months of
service, had made the offer as he wanted pensionary benefits having regard to
the circular issued by the Indian Banks' Association of which the State Bank of
India is manager, namely, that who had completed 15 years of service may opt therefor,
but withdrew the same as he was informed that he would not get his pensionary
Gupta appearing in Civil Appeal Nos.5380-81 of 2002 on behalf of the concerned
employees of Allahabad Bank, would submit that as the respondent therein was
working in a foreign exchange branch, and having been doing a specialised job,
would not have ordinarily come within the purview of the scheme. It was pointed
out that his letter of withdrawal was strongly recommended by the Branch
Manager but despite the same, by reason of the writ petition, the competent
authority accepted the same without assigning any reason. The said order,
contends the learned counsel, suffers from vice of non-application of kind
inasmuch as in a case of this nature, the concerned authority should have
passed a speaking order.
learned counsel appearing in SLP (C) CC No.7966 would submit that the Punjab
& Haryana High Court had rejected ten writ petitions filed by the
petitioners, inter alia, on the ground that as the scheme is ultra vires, no
relief can be granted in their favour. The learned counsel contended, that as
the scheme is contractual in nature, the benefits which were otherwise
available to them in terms of the scheme could not have been curtailed.
we advert to the rival contentions, we may take note of the relevant provisions
of 1970 Act.
7(2), 19(1), 19(2)(f) and 19(4) of 1970 Act read as follows :- "7(2) The
general superintendence, direction and management of the affairs and business
of a corresponding new bank shall vest in a Board of Directors which shall be
entitled to exercise all such powers and do all such acts and things as the
corresponding new bank is authorised to exercise and do."
Power to make regulations. - (1) The Board of Directors of a corresponding new
bank may, after consultation with the Reserve Bank and with the previous
sanction of the Central Government, by notification in the Official Gazette,
make regulations, not inconsistent with the provisions of this Act or any
scheme made thereunder, to provide for all matters for which provision is
expedient for the purpose of giving effect to the provisions of this Act."
"19(2) In particular, and without prejudice to the generality of the
foregoing power, the regulations may provide for all or any of the following
matters, namely, :- (a) (b) (c) (d) (e) (f) the establishment and maintenance
of superannuation, pension, provident or other funds for the benefit of
officers or other employees of the corresponding new bank or of the dependants
of such officers or other employees and the granting of superannuation
allowances, annuities and pensions payable out of such funds;" 19(4) Every
regulation shall, as soon as may be after it is made under this Act by the
Board of Directors of a corresponding new bank, be forwarded to the Central
Government and that Government shall cause a copy of the same to be laid before
each House of Parliament, while it is in session, for a total period of thirty
days which may be comprised in one session or in two or more successive
sessions, and if, before the expiry of the session immediately following the
session or the successive sessions aforesaid, both Houses agree in making any
modification in the regulation or both Houses agree that the regulation should
not be made, the regulation shall thereafter have effect only in such modified
form or be of no effect, as the case may be, so, however, that any such
modification or annulment shall be without prejudice to the validity of
anything previously done under that regulation." Pursuant to or in
furtherance of the power conferred upon the 'Bank' under clause (f) of
sub-section (2) of Section 19 of 1970 Act, the Punjab National Bank (Employees')
Pension Regulation, 1995 was framed; the relevant provisions being Regulations
28 and 29 thereof read thus :- "28. Superannuation Pension Superannuation
pension shall be granted to an employee who has retired on his attaining the
age of superannuation specified in the Service Regulations or
Pension on voluntary Retirement 1) On or after the 1st day of November, 1993,
at any time after an employee has completed twenty years of qualifying service
he may, by giving notice of not less than three months in writing to the
appointing authority retire from service;
Provided that this sub-regulation shall not apply to an employee who is on
deputation or on study leave abroad unless after having been transferred or
having returned to India he has resumed charge of the post in India and has
served for a period of not less than one year;
Provided further that this sub-regulation shall not apply to an employee who
seeks retirement from service for being absorbed permanently in an autonomous
body or a public sector undertaking or company or institution or body, whether
incorporated or not to which he is on deputation at the time of seeking
that this sub-regulation shall not apply to an employee who is deemed to have
retired in accordance with clause (1) of regulation 2.
employee, who has elected to retire under this regulation and has given
necessary notice to that effect to the appointing authority, shall be precluded
from withdrawing his notice except with the specific approval of such
authority;" It is not in dispute that on or about 23.12.2000 a proviso to
Regulation 28 was sought to be introduced, which is as follows :-
"Provided that, pension shall also be granted to an employee who opts to
retire before attaining the age of superannuation, but after having served for
a minimum period of 15 years in terms of any scheme that may be framed for the
purpose by the Bank's Board with the concurrence of the Government".
said amendment, however, has been carried into effect recently in 2002..
relevant portion of the SBI Voluntary Retirement Scheme is as follows :
VOLUNTARY RETIREMENT SCHEME (SBIVRS)
2. Objectives :
have a balanced age profile providing for mobility, training, development of
skills and succession plans for higher-level positions.
provide an exit for employees who have an honest feeling that they should now
retire and take rest or that there are better opportunities elsewhere.
To have over all reduction in the existing strength of the employees and to
increase productivity and profitability.
scheme will be open to all permanent employees of the Bank, except those
specifically mentioned as 'ineligible', who have put in 15 years of service or
have completed 40 years of age as on 31st December, 2000.
will be reckoned on the basis of the date of birth as entered in service
following categories of employees are ineligible under the scheme;
Staff members who have executed bonds and have not completed it; staff members
serving abroad under the special arrangements/bonds. The Board of Directors
may, however, waive this, subject to fulfillment of the bond/other
Employees against whom Disciplinary Proceedings are contemplated/pending or who
are under suspension. This will also include employees against whom action has
been initiated by Government Agencies/other law enforcing agencies.
Employees appointed on contract basis.
Watch and ward staff.
Highly skilled and qualified staff.
Amount of Ex-gratia :
staff members whose request for retirement under SBIVRS has been accepted by
Competent Authority will be paid an amount of ex-gratia of 60 days' salary (pay
plus stagnation increments plus special pay plus dearness allowance for each
completed year of service (for this purpose fraction of service of six months
and above will be taken as one year and accordingly service of less than six
months will not be counted) or salary for the number of months service is left,
whichever is less. Fraction of a month, if any, will be ignored.
Other benefits :
Gratuity as payable under the extent instructions on the relevant date.
Provident Fund contribution as per State Bank of India Employees' Provident
Fund Rules as on relevant date.
in terms of State Bank of India Employees' Pension Fund Rules on the relevant
date (including commuted value of pension).
Encashment of balance of Privilege Leave, as applicable, on the relevant date.
Respective facilities extended to officers/others such as retention of
accommodation, telephone, car, continuation of housing loan etc. will be
extended to officers/others retiring under SBIVRS as per present dispensation,
at the discretion of Competent Authority.
in such cases of retention of physical facilities, 50% of the amount of ex-gratia
payable will be released only after the employee surrenders the facility. No
interest, however, will be paid for the amount so withheld. All other
outstanding loans/advances will have to be repaid before date of retirement
under SBI VRS, failing which the amount of ex-gratia and other terminal
benefits payable to the employee will be appropriated towards the outstanding
loans/advances and the balance amount only will be payable to the employee.
Other features :
Bank intends to control the outflow according to its requirements. Towards this
end, the Bank retains the discretion to limit the number of employees allowed to
retire in each category of staff viz. officer/clerical - cash/subordinate, to
be covered under SBIVRS. As such the Bank will have the sole discretion as to
the acceptance or the rejection of the request for retirement under SBIVRS
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.
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
staff member retired under the scheme will not be eligible for re-employment in
the Bank or its subsidiaries/Associates joint ventures (including offices
The employees seeking retirement under SBIVRS will not be entitled to dispute
the payments received under the scheme on any ground whatsoever. The retiring
staff member and/or their nominees or legal heirs shall have no right/claim
demands against the Bank on any matter relating to the scheme.
SBIVRS is voluntary, it shall not be negotiable and shall not be deemed or
construed as a subject matter of right or contract of service. It will not be a
subject matter of any industrial disputes under the provisions of the
Industrial Disputes Act, 1947 and shall not be cited as precedent, custom,
convention, usage or practice any time in future.
SBIVRS is voluntary in nature, the employee seeking retirement under the SBIVRS
will not be eligible for any retrenchment compensation payable under the provisions
of the Industrial Disputes Act.
SBIVRS is independent of and without prejudice to the rights of the Bank to
dispense with the services of an employee either under the contract of
employment, service rules, awards or under the applicable Standing
Orders/Law/Rules/terms and conditions of service as may be applicable to the
The SBIVRS shall not be construed as a revision of any of the previous
retirement schemes of the Bank and as such no claim from the employee who has retired/will
be retiring under the existing schemes shall be entertained.
In case of disputes as to the interpretation of any of the terms and conditions
of the scheme, the decision of the Bank shall be final and binding on all the
Bank reserves the right to modify, amend or cancel any or all of the aforesaid
clauses and to give effect thereto from any dates it may deem fit.
to in furtherance of the powers conferred under Section 50(3), the Reserve Bank
of India with the previous sanction of the
Central Government made the State Bank of India General Regulations, 1955. It is also not in dispute that in exercise
of the power conferred under Section 43(1) of the State Bank of India Act, 1955
the Central Board of the State Bank of India made the State Bank of India
Officers Service Rules determining the terms and conditions of the appointment
and services of officers in the Bank.
legal issues arise for determination in these appeals :
Whether an application by an employee to secure voluntary retirement under the
Voluntary Retirement Scheme (VRS) can be withdrawn by such an employee before
the same is accepted by the Competent Authority though the scheme contained an
express stipulation that an application made thereunder is irrevocable and the
employee will have no right to withdraw the application once submitted? B.
Whether upon making an application under VRS the employer bank secures the
authority to unilaterally determine one way or the other the jural relationship
of master and servant between the parties? The moot question which is required
to be posed and answered is whether the voluntary retirement scheme is an
offer/proposal or merely an invitation to offer.
question is whether the banks intended to make an offer or merely issued an
invitation to treat is essentially a question of fact.
would appear from the discussions made hereinafter there appears to be some
difference in the schemes floated by the State Bank of India and the
consider the cases of nationalized bank first. The circular dated 20.8.2000 and
the scheme framed by the banks are required to be read together for the purpose
of ascertaining the true intendment thereof. The scheme essentially was floated
as has been mentioned herein before with a purpose of downsizing the 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 as has been stated in the circular letter issued by the Ministry
of Finance was for the purpose of effective functioning of the banks so as to
enable them to compete with the private banks.
employees of the nationalized bank may not enjoy a 'status' as is the case of
government employees or the statutory authorities whose terms and conditions of
service are governed by the constitutional provisions and/or the statutes and
the statutory rules; but there is no gainsaying that the employees of the
Nationalized banks enjoy security of their employment. So far as the employees
of the State Bank of India are concerned their terms and conditions of service,
as noticed hereinbefore, are governed by statutory rules. However, so far as
the employees of the nationalized banks are concerned except for the matter of
grant of pension which is covered by the regulations framed in terms of Section
19 of the 1970 Act, other terms and conditions of their service are not
statutory in nature. But the State Bank of India as also the nationalized banks
are 'States' within the meaning of Article 12 of the Constitution of India. The
services of the workman are also governed by several standing orders and
bipartite settlements which have the force of law. The banks, therefore, cannot
take recourse to 'hire & fire' for the purpose of terminating the services
of the employees. The banks 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 of the Constitution of India. Having regard to the
intendment of the scheme each and every employee would not be entitled to the
benefit of the said scheme. Those who are facing disciplinary proceedings or
working in a particular class of employment are not eligible therefor.
offer indisputably can be made to a group of persons collectively which is
capable of being accepted individually but the question which has to be posed
and answered is as to whether having regard to the service jurisprudence; the
principles of Indian Contract Act would be applicable in the instant case. It
is the specific case of the 'Banks' that the schemes had been floated by way of
contract. It does not have any statutory flavour. Reference to the pension
scheme framed under the regulations was made for computation of the pension.
difficult to accept the contention raised in the Bar that a contract of
employment would not be governed by the Indian Contract Act. A contract of
employment is also a subject matter of contract. Unless governed by a statute
or statutory rules the provisions of the Indian Contract Act would be only
applicable at the formulation of the contract as also the determination
thereof. Subject to certain just exceptions even specific performance of
contract by way of a direction for reinstatement of a dismissed employee is
also permissible in law.
in the aforementioned backdrop, the questions are required to be answered. It
is now well-known that the use of the term 'offer' or 'proposal' is not
decisive. It, as noticed, would depend upon the fact involved in the matter.
Anson's Law of Contract, 26th Edn. at p.25 it is stated:
and Invitations to Treat: It is sometimes difficult to distinguish statements
of intention which cannot, and are not intended to result in any binding
obligation from offers which admit of acceptance, and so become binding
promises. A person advertises goods for sale in a newspaper, or announces that
he will sell them by tender or by auction; a shopkeeper displays goods in a shop
window at a certain p rice; or a bus company advertises that it will carry
passengers from A to Z and will reach Z and other intermediate stops at certain
times. In such cases it may be asked whether the statement made is an offer
capable of acceptance or merely an invitation to make offers, and do business.
An invitation of this nature, if it is not intended to be binding, is known as
an 'invitation to treat." Chitty on Contract states the law thus:
A statement that goods are to be sold by tender is not normally an offer to
sell to the person making the highest tender; it merely indicates a readiness
to receive offers. Similarly, an invitation for tenders for the supply of goods
or for the execution of works is, generally, not an offer, even though the
preparation of the tender may involve very considerable expense. The offer
comes from the person who submits the tender and there is no contract until the
person asking for the tenders accepts one of them. These rules, may, however,
be excluded by evidence of contrary intention: e.g. where the person who
invites the tenders states in the invitation that he binds himself to accept
the highest offer to buy (or as the case may be, the lowest offer to sell or to
provide the specified services). In such cases, the invitation for tenders may
be regarded either as itself an offer or as an invitation to submit offers
coupled with an undertaking to accept the highest (or, as the case may be, the
lowest) offer; and the contract is concluded as soon as the highest offer to
buy (or lowest offer to sell, etc.) is communicated." In Treitel's 'The
Law of Contract, it has been stated thus:
parties negotiate with a view to making a contract, many preliminary
communications may pass between them before a definite offer is made. One party
may simply respond to a request for information (e.g. by stating the price at
which he might be prepared to sell a house), or he may invite the other to make
an offer; he is then said to make an "invitation to treat". The
question whether a statement is an offer or an invitation to treat depends
primarily on the intention with which it was made." It has also been
stated in the said book:
question whether a statement is an offer or an invitation to treat depends
primarily on the intention with which it was made. A statement is only an offer
if the person making it intends to be bound as soon as the person reasonably
believes that it was made with this intention. It follows that a statement is
not an offer, if it expressly provides that the person making it is not to be
bound merely by the other party's notification of assent, but only when he
himself has signed the document in which the statement is contained." The
law relating to 'offer' and 'acceptance' is not simple.
Hamilton, Rau and Winthraub on Contracts, the learned authors referred
purported offer "I want $ 2.25 cent per cent for this seed fobcowell,"
was held not be an offer on the ground that the defendant did not say "I
offer to sell you.
page 346 of the said treatise, it is stated:
rules of offer and acceptance are usually favourites of law students; they are
easily stated and tend to be rather mechnical in their operation. They also
involve situations that are relatively easy to grasp and in which various policy
consideration are close to the surface. However, one should not assume that one
has mastered the law of contracts simply because one is conversant with rules
of offer and acceptance. In deed the writings of modern contracts scholars tend
to deprecate the importance of the rules of offer and acceptance. See Geneally
G Gilmore, the Death of Contract (1974): L. Freidman, Contract Law in America
Laws of England, 4th Edition, Volume-9, meaning of 'offer' has been stated in
paragraph 227 at page 98 in the following terms:
Meaning of offer. An offer is an expression by one person or group of persons
or by agents on his behalf, made to another, of his willingness to be bound to
a contract with that other on terms either certain or capable of being rendered
offer may be made to an individual or to a group of persons or to the world at
large. It may be made expressly by words, or it may be implied from the product
of the offerer." The request of employees seeking voluntary retirement was
not to take effect until and unless it was accepted in writing by the competent
authority. The Competent Authority had the absolute discretion whether to
accept or reject the request of the employee seeking voluntary retirement under
the scheme. A procedure has been laid down for considering the provisions of
the said scheme to the effect that an employee who intends to seek voluntary
retirement would submit duly completed application in duplicate in the
prescribed form marked "offer to seek voluntary retirement" and the
application so received would be considered by the competent authority on first
come first serve basis. The procedure laid down therefor suggests that the
applications of the employee would be an offer which could be considered by the
bank in terms of the procedure laid down therefor. There is no assurance that
such an application would be accepted without any consideration.
or otherwise of the request of an employee seeking voluntary retirement is
required to be communicated to him in writing. This clause is crucial in view
of the fact that therein the acceptance or rejection of such request has been
provided. The decision of the authority rejecting the request is appealable to
the Appellate authority. The application made by an employee as an offer as
well as the decision of the bank thereupon would be communicated to the
respective General Managers. The decisions making process shall take place at
various levels of the banks.
following, therefore, can be deduced:
The banks treated the application from the employees as an offer which could be
accepted or rejected.
Acceptance of such an offer is required to be communicated in writing.
The decision making process involved application of mind on the part of several
Decision making process was to be formed at various levels.
The process of acceptance of an offer made by an employee was in the discretion
of competent authority.
The request of voluntary retirement would not take effect in praesenti but in
The Bank reserved its right to alter/rescind the conditions of the scheme.
what has been noticed herein before, it is apparent that the Nationalized 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
not a case where on mere making of option on the part of the employee the offer
is to be accepted or even there will be reasonable certainty that some norms
should be maintained. There is no consideration for the contractual bar clause.
The submission of the learned counsel appearing on behalf of the banks that the
proposal to the effect that the option made by an employee would be considered,
is a consideration cannot be accepted.
it is held that the provisions of the Indian Contract Act, 1872 would be
applicable, the scheme admittedly being contractual in nature, the provisions
of the Act shall apply. The Scheme having regard to its provisions as noticed
hereinbefore would merely constitute invitation to treat and not an offer.
proposal is made when one person signifies to another his willingness to do or
abstain from doing anything with a view to obtaining the assent of the other to
such act or abstinence (See Section 2(a)). Herein the banks by reason of the
scheme or otherwise have not expressed their willingness to do or abstain from
doing anything with a view to obtaining assent of the employees to such act. It
will bear repetition to state that not only the power of the bank to accept or
reject such application is absolutely discretionary, it, as noticed herein
before, could also amend or rescind the scheme. The Scheme, therefore, cannot
be said to be an offer which, on the acceptance by the employee, would fructify
in a concluded contract.
proposal of the employee when accepted by the Bank would constitute a promise
within the meaning of Section 2(b) of the Act. Only then the promise becomes an
enforceable contract. In the instant case the banks when floating the scheme
did not signify that on the employees assenting thereto a concluded contract
would come into being in terms whereof they would be permitted to retire
voluntarily and get the benefits thereunder.
in terms of the said scheme no consideration passed so as to constitute an
agreement. Once it is found that by giving their option under the scheme, the
employees did not derive an enforceable right, the same in absence of any
consideration would be void in terms of Section 2(g) of the Contract Act as
opposed to Section 2(h) thereof.
even by opting for the scheme as floated by the banks, no consideration is
passed far less amounting to reciprocal promise.
it is found, as would appear from the position rendered by this court that the
employees do not have an enforceable right upon making an option the same would
be void in terms of Section 2(g) of the Contract Act as opposed to Section 2(h)
distinction between an offer and invitation to treat has been dealt with some
clarity in Gibson v. Manchester City Council reported in 1979 All.E.R. 972.
that case the council adopted a policy of selling council's house to Mr. Gibson.
The council wrote a letter to Mr. Gibson that "it may be prepared to sell
the house to you at the purchase price of Pounds 2,725 less 20% = Pounds 2180
(free hold)". He was invited to make a formal application which he did.
Before the documents could be executed the control of the council changed hands
as a result whereof policy of selling the council house was reversed.
it was claimed by Mr. Gibson that the transaction amounted to a binding
contract, the House of Lords negativing the same held that the letter in
question was an invitation to treat and Mr. Gibson's application was an offer
and not an acceptance.
instant case, there was even no reasonable certainty that the scheme would be
acted upon. Furthermore terms and conditions thereof could be amended and even
the scheme itself could be rescinded.
therefore, have no hesitation in coming to the conclusion that the voluntary
scheme was not a proposal or an offer but merely an invitation to treat and the
applications filed by the employees constituted 'offer'.
the application filed by the employees is held to be an 'offer'; Section 5, in
absence of any other independent binding contract or statute or statutory rules
to the contrary would come into play.
Cheshire, Fifoot & Furmston's Law of Contract (14th edition) at Page 62 the
law is stated as under:- "It has been established ever since the case of
Payne v Cave in 1789 that recovation is possible and effective at any time
before acceptance: up to this moment ex hypothesi no legal obligation exists.
Nor, as the law stands, is it relevant that the offeror has declared himself
ready to keep the offer open for a given period.
intimation is but part and parcel of the original offer, which must stand or
fall as a whole. The offeror may, of course, bind himself, by a separate and
specific contract, to keep the offer opn; but the offeree, if such is his
allegation, must provide all the elements of a valid contract, including assent
v Grant the defendant offered on 18 March to buy the plaintiff's house for a
certain sum, 'a definite answer to be given within six weeks from the date'.
Best CJ held that the defendant could withdraw at any moment before acceptance,
even though the time limit had not expired. The plaintiff could only have held
the defendant to his offer throughout the period, if he had bought the option
by a separate and binding contract." This principle, as noticed herein
before, has been accepted in a large number of decisions relied upon by Mr. Nageshwar
Rao and Mr. Dwivedi (supra). We may, however, only refer to Devi Krishan Goyal
relevant rule, interpretation whereof fell for consideration of this Court
therein is as under:
rules shall be applicable to the Teachers of those State Government Aided
Higher Secondary Schools which are working under any local body or any nonadministrative
management, within the ambit of Salary Disbursement Act, 1971 on 30th June,
1978 or thereafter and who will give their option in favour of retirement at
the age of 58 years, within six months of the Publication of these Rules. An
option, once used will be deemed to be final. The date of retirement shall be
the end of session".
the said rule this court held:
are of the view that the High Court should not have rejected the writ
application. It has not been disputed anywhere that option stood withdrawn
before it was accepted. The provision in the rule "an option once used
will be deemed to be final" would not mean that when an offer made it is
not open to be withdrawn before it is accepted. The respondent No.1 obviously
acted under the wrong notion and the High Court did not appreciate this aspect.
We would accordingly hold that the appellant was entitled to withdraw the
at once point out that the stands of the learned counsel appearing on behalf of
banks is inconsistent and self-contradictory. Whereas once it was argued that
the offer was made by the bank by floating the scheme and once an application
is filed, the same would amount to acceptance of offer; on the same breath they
took recourse to the 'doctrine of option' which is applicable only at the
instance of the offeror, who in this case would be the employees.
in our considered opinion proceed on a total misconception.
reason of making such option or firm offer the offeror must get some benefit or
the offeree must incur some detriment.
contracts in which the said principle can be applied would be a case where
there would usually be a money payment. In the instant case apart from the fact
that no consideration is passed, the banks standing in the category of offeree
either expressly or impliedly had not promised to do or refrain from doing
something in exchange for the offeror's promise not to revoke the offer. In all
fairness to Mr. Reddy, we may set out hereunder the authorities relied upon by
Anson's Law of Contract (28th edition page 53), it is stated:
Offers: It will be noted that in Offord v. Davies, discussed above, the mere
fact that the defendants promised to guarantee payment for 12 months did not
preclude that from revoking before that period had elapsed. It is a rule of
English law that a promise to keep an offer open needs consideration to make it
binding and would thus only become so if the offeror gets some benefit, or the offeree
incurs some detriment, in respect of the promise to keep the offer open. The offeree
in such a case is said to 'purchase an option'; that is, the offeror, in
consideration usually of a money payment, sometimes nominal, makes a separate
contract not to revoke the offer during a stated period. The position is
similar where the offeree expressly or impliedly promises to do or refrain from
doing something in exchange for the offeror's promise not to revoke the offer.
For example, the offeree may promise not to negotiate with anyone else for a
fixed period. Again, a building tendering for a construction contract may have
invited quotations for a fixed period (i.e. firm offers) from electricity or
carpentry sub- contractors and expressly or impliedly promised to use the
figures contained in those offers in its tender. In these cases the offeror by
its promise precludes itself from exercising its right to revoke the offer; but
where it receives no consideration for keeping the offer open, it says in
effect, 'You may accept within such and such a time, but this limitation is
entirely for my benefit, and I make no binding promise not to revoke my offer
in the meantime'. The Law Revision Committee recommended that 'an agreement to
keep an offer open for a definite period of time or until the occurrence of
some specified event shall not be unenforceable by reason of the absence of
consideration'. Despite this criticism, subject to two exceptions, it seems to
be good law".
Chitty on Contract, it is stated:
offers. By a "firm" offer is meant one containing a promise not to
revoke it for a specified time. The mere fact that such a promise has been made
does not prevent the offeror from revoking the offer within that period since
normally the promise will be unsupported by consideration. Most obviously such
consideration will be provided if the offeree pays (or promises to pay) a sum
of money for the promise and so buys an option.
may also be provided by some other promise; for example, in the case of an offer
to sell a house, the offeree may provide consideration for the offeror's
promise not to revoke the offer for a specified time by promising not to
dispose of those shares elsewhere during that time. The performance of the offeree's
promise to keep the offer open. In one case a vendor of land entered into a
so-called "lock-out" agreement by which he promised a prospective
purchaser not to consider other offers if that purchaser would exchange
contracts within two weeks; and it was said that "the promise by the
[purchaser] to get on by limiting himself to just two weeks" constituted
consideration for the vendor's promise not to consider other offers. The case
is not strictly one of a firm offer since the vendor's promise would not in
terms have prevented him from simply deciding not to sell at all;
the practical effect of a binding "lock-out" agreement may be to
prevent the vendor from withdrawing his offer;
the reasoning quoted above could apply to the case of a firm offer. The
reasoning gives rise to some difficulty in that it does not appear that the
purchaser made any promise to exchange contracts within two weeks. It seems
more plausible to say that the vendor's promise had become binding as a
unilateral contract under which the purchaser had provided consideration by
actually making efforts to meet the deadline, even though he had not promised
to do so. Similar reasoning can apply if a seller of land promises to keep an
offer open for a month, asking the buyer during that period to make efforts to
raise the necessary money. If the buyer makes such efforts (without promising
to do so), it is arguable that he has by part performance accepted the seller's
offer of a unilateral contract to keep the principal offer open. Similarly, it
is possible for a person, to whom a promise not to revoke an offer for the sale
of a house has been made, to provide consideration for that promise by
incurring the expense of a survey. On the other hand, the equitable principle
applied in Hughes v. Metropolitan Ry. and in the High Trees case will not avail
the offeree since it only operates defensively and does not create new causes
of action where none existed before. Nor does it seem probably that the offeree
will be able to claim damages in tort under the principles laid down in Hedley Byne
& Co. Ltd v. Heller & Partners Ltd.
Laws of England (4th Ed.), Para 235 at
Page 160, the law is stated as under:
Options. A contract of option is one whereby the grantor of the option offers
to enter into what may be called a "major" contract with a second
person and makes a separate contract to keep his offer open. Usually, but not
necessarily, the person to whom the grantor of the option binds himself to keep
the offer open is that second person, who may be conveniently referred to as
the "option- holder". The contract of option may make it possible for
the rights of the option-holder to be assigned.
contract of option may be unilateral or bilateral. It may exist either as a
separate option contract, or as part of a larger contract such as one of the
following: a lease with an option in the lessee to renew the lease or but the
reversion; a hire purchase agreement; a sale with an option of repurchase
granted to either the seller or the buyer; a sale with an option for the buyer
to make further purchases on similar terms; a service or agency agreement with
an option in either party to renew. Certain contracts of option have been made
void or illegal by statute.
regard to the envisaged major contract, the effect of the contract of option is
to create an irrevocable offer and a power of acceptance. The offer is
irrevocable in the sense that it is a breach of the contract of option to
revoke it, and its effect is to create a power of acceptance in the option-holder
good against the grantor of the option and sometimes also against third
parties. Thus the grantor of the option is under a conditional duty, and the
option- holder has a conditional right of performance of the option offer, that
condition being the exercise of the power of acceptance by the option-holder;
as the envisaged major contract may be bilateral or unilateral, that condition
may be an acceptance or other act by the option-holder.
the exercise of the option may itself be subject to certain conditions
precedent, such as a time limit, or the occurrence of a certain event, or the
duration of a major contract of which it forms a part, or the mode in which it
may be exercised." In Chitty on Contract (28th edition para 3-161) it is
stated that the position being uncertain as the rule can still cause hardship;
a legislation limiting the right to withdraw firm offers is desirable.
Anson's Law of Contracts it is stated at page 51:
Revocation of the Offer: The law relating to the revocation of an offer may be
summed up in two rules;
offer may be revoked at any time before acceptance, and (2) an offer is made
irrevocable by acceptance.
Revocable before acceptance: The first of these rules may be illustrated by the
case of Offord v. Davies:
a written offer to O that, if he would discount bills for another firm, they
(D) would guarantee the payment of such bills to the extent of Pound 600 during
a period of twelve calendar months. Some bills were discounted by O, and duly
paid, but before the twelve months had expired D, the guarantors, revoked their
offer and notified O that they would guarantee no more bills. O continued to
discount bills, some of which were not paid, and then sued D on the guarantee.
held that the revocation was a good defence to the action. The alleged
guarantee was an offer, for a period of 12 months, of promises for acts, of
guarantees for discounts. Each discount turned the offer into a promise, pro tanto,
but the entire offer could at any time be revoked except as regards discounts
made before notice of revocation." The learned author, as noticed from the
passage quoted herein before, clearly stated that an offer may be revoked even
before it is accepted.
a large number of employees have withdrawn their offer only when a proviso is
sought to be added to Regulation 28 aforementioned. In terms of the Scheme the
employees, who expected to get benefits of clause 4 of Regulation 29 would be
deprived therefrom. It is not in this dispute that the qualifying period for
pension qualifying for receiving pension was 20 years. Only upon completion of
20 years, in terms of the statutory regulation contained in Regulation 29, an
employee could opt for voluntary retirement and in terms thereof, he would be
entitled to the benefits specified therein. The said regulations had
specifically been mentioned for the purpose of computation which would include
invocation of Sub-regulation 4 of Regulation 29 providing for relaxation of 5
years towards the qualifying period. The employees must have proceeded on the
basis that despite the fact that they have merely rendered 15 years of service
which was not a qualifying service under the regulations, they would be
entitled to the pensionary benefits in terms of the scheme.
introducing the proviso to Regulation 28 pension was sought to be made pro rata
in place of full pension.
basic concept of the scheme, therefore, underwent a change which also goes to
show that the banks had sought to invoke its power of amending the scheme.
the scheme is amended and/or an apprehension is created in the mind of the
employees that they would not even receive the entire benefits as envisaged
under the scheme, they were entitled to revoke their offers. Their action in
our considered opinion is reasonable. It may be that some of the employees only
opted for the provident fund benefit which did not undergo any amendment but
the same would not change the attitude on the part of the banks.
therefore, do not find any error in the judgment of the High Court on this
the case of the State Bank of India stand
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 applications after 15th
February. The scheme floated by the State Bank of India contained a clause (clause 7)
laying down the mode and manner in which the application for voluntary
retirement shall be considered. The 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.
in the case of State Bank of India, the Punjab and Haryana High Court failed to
take into consideration the provisions of the State Bank of India Act, 1955 It
further failed to take into consideration that the matter relating to grant of
pension was not covered by any statutory regulation.
are, however, not prepared to accept the submission of Mr. Salve to the effect
that by reason of the said scheme, merely the tenure of service has been
curtailed to some extent which is permissible in law.
Salve in support of its contention has relied upon para 37-115 from Chitty on
said paragraph itself shows that for bringing into a change in the tenure of
contract, the existing contract of service must be substituted or amended by
another contract. The later contract also must be an enforceable contract. Once
it is held the later contract is not a contract within the meaning of the
provisions of the Indian Contract Act, the question of invoking this
aforementioned principle would not arise.
at this juncture notice the decisions of this court covering the subject.
Chandra Misra's case (supra) this court was considering a question where a
Judge of a High Court in terms of Article 217 of the Constitution of India withdraw
the resignation submitted by him. Resignation by a constitutional authority is
a unilateral act. In the case of resignation by a constitutional authority, it
is governed by the constitutional provisions as resignation of a constitutional
authority does not require an express acceptance. The same being unilateral in
character, it was observed:
substantive body of this letter (which has been extracted in full in a
foregoing part of this judgment) is comprised of three sentences only. In the
first sentence, it is stated : "I beg to resign my office as Judge, High
Court of Judicature at Allahabad". Had this sentence stood
alone, or been the only content to his letter, it would operate as a complete
resignation in praesenti, involving immediate relinquishment of the office and
termination of his tenure as Judge. But this is not so. The first sentence is
immediately followed by two more, which read : "I will be on leave till July 31, 1977. My resignation shall be effective
on August 1, 1977". The first sentence cannot be
divorced from the context of the other two sentences and construed in
isolation. It has to be read along with the succeeding two which qualify it.
Construed as a whole according to its tenor, the letter dated May 7, 1977, is
merely an intimation or notice of the writer's intention to resign his office
as Judge, on a future date, viz., August 1, 1977".
that case, thus, a resignation which was not in praesenti has been held to be
capable of being withdrawn. It did not constitute a juristic act.
notice that in Jai Ram v. Union of India (AIR 1954 SC 584) it was held:
may be conceded that it is open to a servant, who has expressed a desire to
retire from service and applied to his superior officer, to give him the
requisite permission, to change his mind subsequently and ask for cancellation
of the permission thus obtained; but, he can be allowed to do so as long as he
continues in service and not after it has terminated." Yet again in Raj
Kumar v. Union of India [(1968) 3 SCR 857] it was held:
a public servant has invited by his letter of resignation determination of his
employment, his services normally stand 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. Till the resignation is
accepted by the appropriate authority in consonance with the rules governing
the acceptance, the public servant concerned has locus poenitentiae but not
Gupta's case this court was dealing with Central Civil Services (Pension)
Rules, 1972 which is a statutory rule. Sub-rule (4) of Rule 48-A prevented
withdrawal of resignation letter except with the approval of the authority. The
validity of the said rule was not in question. In that case the approval of the
authority to withdraw was not given. It was in the aforementioned situation
has been done. The approval of the authority was, however, not given.
Therefore, the normal rule which prevails in certain cases that a person can
withdraw his resignation before it is effective would not apply in full force
to a case of this nature because here the government servant cannot withdraw
except with the approval of such authority".
regard to the fact that the issue involved therein stood on a different
footing, this Court made a mere observation to the following effect:
may be a salutary requirement that a government servant cannot withdraw a
letter of resignation or of voluntary retirement at his sweet will and put the
government into difficulties by writing letters of resignation or retirement
and withdrawing the same immediately without rhyme or reason. Therefore, for
the purpose of appeal we do not propose to consider the question whether
sub-rule (4) of Rule 48-A of the Pension Rules is valid or not".
of such a rule was, therefore, not in question. As indicated hereinbefore, the
bar of withdrawing the resignation was contained in the statutory rule and,
thus Section 5 of the Indian Contract Act would not have been applicable in
that case. However, it is advantageous to notice the following observations
made in the said decision:
do not see how this could not be a good and valid reason. It is true that he
was resigning and in the notice for resignation he had not given any reason
except to state that he sought voluntary retirement. We see nothing wrong in
this. In the modern age we should not put embargo upon people's choice or
freedom. If, however, the administration had made arrangements acting on his
resignation or letter of retirement to make other employee available for his
job, that would be another matter but the appellant's offer to retire and
withdrawal of the same happened in such quick succession that it cannot be said
that any administrative set up or arrangement was affected".
was further observed:
the modern and uncertain age it is very difficult to arrange one's future with
any amount of certainty; a certain amount of flexibility is required, and if
such flexibility does not jeopardize government or administration,
administration should be graceful enough to respond and acknowledge the
flexibility of human mind and attitude and allow the appellant to withdraw his
letter of retirement in the facts and circumstances of this case".
P.K. Mittal's case (supra), a question arose as to whether in contravention of
Rule 20 of the Punjab National Bank (Officers) Service Rules, 1979, the bank
can reduce the notice period. Ranganathan, J. speaking for the bench held that
the same could not have been done and the concerned employee was entitled to
withdraw his resignation before it became effective.
Power Finance Corporation Ltd. v. Pramod Kumar Bhatia [(1997) 4 SCC 280] a
scheme of voluntary retirement was floated and pursuant thereto the Respondents
therein had applied for voluntary retirement but subsequently the Corporation
had withdrawn the scheme although the offer had been accepted. Such acceptance
was to take effect from 31-12-1994. This court held that the
acceptance of his offer to voluntarily retire being subject to adjustment of
the amount payable to him, the same did not attain finality. It was held:
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. Since
the order accepting the voluntary retirement was a conditional one, the
conditions ought to have been complied with. Before the conditions could be
complied with, the appellant withdrew the scheme. Consequently, the order
accepting voluntary retirement did not become effective. Thereby no vested
right has been created in favour of the respondent. The High Court, therefore,
was not right in holding that the respondent has acquired a vested right and,
therefore, the appellant has no right to withdraw the scheme
decision is an authority for the proposition that even after acceptance of the
offer made by the employee, the scheme can be withdrawn and, if it is so done,
the employee does not acquire any vested right.
J.N. Srivastava's case(supra), it was held :
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.
Cdr T. Parthasarathy's case the fact of the matter was as follows:
Respondent submitted an application on 21-7-1985 praying for premature retirement
with effect from 31-8-1986. He also furnished a certificate
stating that he was aware that any request made by him for cancellation of his
application for premature retirement would not be accepted. On 6-11-1985 he moved an amendment to earlier application stating
that the actual date of his release could be decided taking into account the pensionary
recommendations/ requirements of the Fourth Pay Commission's Report which was
expected to come in November, 1985. He subsequently withdrew his offer on 19-2-1986.
Respondent received a letter dated 20th February, 1986 that he would prematurely retire
from service with effect from 31-8-1986. On a
Writ Petition moved by the Respondent before the Karnataka High Court, it was
held that having regard to the offer made on 19-2-1986, the subsequent action taken by the Department on 20th February, 1986 had no effect. In this Court an
argument was advanced that having regard to the policy decision to which the
Respondent was aware and having given a certificate at the time of submission
of application for premature retirement that he was aware of the fact that his
request for withdrawal or cancellation subsequently would not be accepted, the
impugned judgment of the High Court was erroneous but rejecting the same this
court held :
have carefully considered the submissions of the learned counsel appearing on
either side. The reliance placed for the appellants on the decision reported in
Raj Kumar Case is in appropriate to the facts of this case. In that case this
Court merely emphasized the position that when a public servant has invited by
his letter of resignation determination of his employment his service clearly
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 condition of the 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 and that till the resignation is accepted by the appropriate
authority in consonance with the rules governing the acceptance, the public
servant concerned had locus poenitentiae but not thereafter".
Murari Sinha's case it was held:
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".
the appellant was actually released from the service, he withdrew his option
for voluntary retirement by sending two letters dated 7-8-1997 and 24-9-1997, but
there was no response from the respondent. By office memorandum dated 25-9-1997 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. 26-9-1997, 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 the said relationship
continued till 26-9-1997. 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 locus poenitentiae to
withdraw his proposal for voluntary retirement before the relationship of
employer and employee came to an end".
be that therein there did not exist a clause to the effect that once an option
to voluntary retirement is accepted, the employee cannot withdraw the same, but
the law laid down therein would apply herein also.
submission of 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 concerned employees would have been
entitled to payment of all salaries and allowances etc. Thus it cannot be said
to be a case where the offer was given in praesenti but the same would be
prospective in nature keeping in view of 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
herein before, shall apply to the facts of the present case also.
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.
Scheme is contractual in nature. The contractual right derived by the concerned
employees, 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.
Mal's case (supra) the law is stated in following terms:
general principle is that every one has a right to waive and to agree to waive
the advantage of a law or rule made solely for the benefit and protection of
the individual in his private capacity which may be dispensed with without
infringing any public right or public policy. Thus the maxim which sanctions
the non-observance of the statutory provision is cuilibet licet renuntiare juri
pro se introducto. (See Maxwell on Interpretation of Statutes, Eleventh
Edition, pages 375 and 376). If there is any express prohibition against
contracting out of a statute in it then no question can arise of any one
entering into a contract which is so prohibited but where there is no such
prohibition it will have to be seen whether an Act is intended to have a more
extensive operation as a matter of public policy.
Laws of England, Volume 8, Third Edition, it is stated in Paragraph 248 at page
general rule, any person can enter into a binding contract to waive the benefits
conferred upon him by an Act of Parliament, or, as it is said, can contract
himself out of the Act, unless it can be shown that such an agreement is in the
circumstances of the particular case contrary to public policy. Statutory
conditions may, however, be imposed in such terms that they cannot be waived by
agreement, and, in certain circumstances, the Legislature has expressly
provided that any such agreement shall be void." In Brijendra Nath Bhargava's
case (supra), the law is stated in following terms:
clearly goes to show that if a party gives up the advantage he could take of a
position of law it is not open to him to change and say that he can avail of
that ground. In Dawsons Bank Ltd. case their Lordships were considering the
question of waiver as a little different from estoppel and they observed as
other hand, waiver is contractual, and may constitute a cause of action; it is
an agreement to release or not to assert a right. If an agent, with authority
to make such an agreement on behalf of his principal agrees to waive his
principal's rights then (subject to any other question such as consideration)
the principal will be bound, but he will be bound by contract.
the context of the conclusion that we have reached on the basis of
circumstances indicated above that it could not be held that the tenant had
constructed this dochatti or balcony a wooden piece without the consent express
or implied of the landlord, in our opinion, it is not necessary for us to
dilate on the question of waiver any further and in this view of the matter we
are not referring to the other decisions on the question of waiver." In Halsbury's
Laws of England, 4th Edition, Vol.16 (Reissue) para
957 at page 844 it is stated:
the principle that a person may not approbate and reprobate a special species
of estoppel has arisen. The principle that a person may not approbate and
reprobate express two propositions:
That the person in question, having a choice between two courses of conduct is
to be treated as having made an election from which he cannot resile.
That he will be regarded, in general at any rate, as having so elected unless
he has taken a benefit under or arising out of the course of conduct, which he
has first pursued and with which his subsequent conduct is inconsistent."
In American Jurisprudence, 2nd Edition, Volume 28, 1966, Page 677-680 it is
by the acceptance of benefits: Estoppel is frequently based upon the acceptance
and retention, by one having knowledge or notice of the facts, of benefits from
a transaction, contract, instrument, regulation which he might have rejected or
doctrine is obviously a branch of the rule against assuming inconsistent
general principle, one who knowingly accepts the benefits of a contract or
conveyance is estopped to deny the validity or binding effect on him of such
contract or conveyance.
rule has to be applied to do equity and must not be applied in such a manner as
to violate the principles of right and good conscience." We also accept
the contention raised by the learned counsel for the respondents that the
concerned appellants could not have accepted the offer of voluntary retirement
after expiry of the scheme. All actions by the Banks were required to be taken
strictly in terms of the said scheme.
furthermore not in a position to accept the arguments of Mr. Mukul Rohtagi to
the effect that writ petitions were not maintainable as thereby the writ
petitioners intended to enforce a contract. The writ petitioners filed the writ
petitions, inter alia, questioning the validity of the scheme. In any event
validity of clause 10.5 of the said scheme was in question. The appellants
herein are 'State' within the meaning of Article 12 of the Constitution of
India. The questions raised by the writ petitioners thus could be raised in a
proceeding under Article 226 of the Constitution of India. Furthermore, in the
event it be held that the action of the appellants was arbitrary and
unreasonable, the same would attract the wrath of Article 14 of the
Constitution of India. Furthermore, the right of the employee to continue in
employment, which is a fundamental right under Article 21 of the Constitution
of India could not have been taken away except in accordance with law.
decision of this Court in Har Shankar and Ors. v. The Dy. Excise and Taxation Commr.
and Ors. [(1975) 1 SCC 737] is not apposite. In that case, this Court was
concerned with the question as to whether enforcing the terms and conditions of
a contract of supply of liquor which is a privilege would be permissible in a
writ proceeding? In the aforementioned situation, the writ was held to be not
maintainable. Such is not the position herein We may now deal with that part of
the order of the Punjab & Haryana High Court whereby it has been held that
the entire scheme is ultra vires being violative of sub-regulation 4 of
Regulation 19 of the Regulations.
not agree with the decision of the High Court on that count for more than one
the scheme is not a part of the statutory regulation. It was in the realm of
contract. That being so it was not necessary for the Central Government to
place the same before the Parliament.
even if the same was a regulation, the laying down rule is merely a directory
one and not mandatory.
Mohammad's case (supra), the law is stated in following terms:
the validity of the rules framed under the Bombay Act 22 of the 1939 was
canvassed. By s.26(1) of the Bombay Act the State Government was authorised to
make rules for the purpose of carrying out the provisions of the Act. It was
provided by sub- s. (5) that the rules made under s.26 shall be laid before
each of the Houses of the Provincial Legislature at the session thereof next
following and shall be liable to be modified or rescinded by a resolution in
which both Houses concur and such rules shall, after notification in the
Official Gazette, be deemed to have been modified or rescinded accordingly. It
was argued by the petitioner that the rules framed under the Bombay Act, 22 of
1939 were not placed before the Legislative Assembly or the Legislative Council
at the first session and therefore they had no legal validity. The rules under
Act 22 of 1939 were framed by the Provincial Government of Bombay in 1941. At
that time there was no Legislature in session, the Legislature having been
suspended during the emergency arising out of World War II. The session of the
Bombay Legislative Assembly was convened for the first time after 1041 on May 20, 1946 and that session was prorogued on May 24, 1946. The second session of the Bombay
Legislative Assembly was convened on July 15, 1946 and that of the Bombay Legislative
Council on September 3,
1946 and the rules
were placed on the Assembly Table in the second session before the Legislative
Assembly on September
2, 1946 and before the
Legislative Council on September
26(5) of Bombay Act 22 of 1939 does not prescribe that the rules acquired
validity only from the date on which they were placed before the Houses of
Legislature. The rules are valid from the date on which they are made under s.
26(1). It is true that the Legislature has prescribed that the rules shall be
placed before the Houses of Legislature, but failure to place the rules before
the Houses of Legislature does not affect the validity of the rules, merely
because they have not been placed before the Houses of the Legislature.
Granting that the provisions of sub-s. (5) of s.26 by reason of the failure to
place the rules before the Houses of Legislature were violated, we are of the
view that sub-s.(5) of s. 26 having regard to the purposes for which it is
made, and in the context in which it occurs, cannot be regarded as mandatory.
rules have been in operation since the year 1941 and by virtue of s.64 of the
Gujarat Act 20 of 1964 they continue to remain in operation." In Atlas
Cycle Industries' case (supra) the same view has been reiterated.
therefore, are of the opinion that the scheme in question cannot be said to be
bad in law.
The Punjab and Haryana High Court in its
impugned judgment has refused to grant any relief in ten writ petitions,
wherein prayers were made to the effect that the bank should be directed to act
in terms of the said scheme. The relief prayed for by the concerned petitioners
were denied by the High Court on the ground that the same was not enforceable.
We have not accepted that part of the judgment of the High Court. In that view
of the matter, the High Court must now consider the claim of the said writ
petitioners on merits and pass an appropriate order in accordance with law.
said matters are, therefore, remitted to the High Court for consideration
the reasons aforementioned, we direct that :
appeals preferred by the Nationalised Banks arising from the High Courts are
dismissed except the cases where the concerned employees have accepted a part
of the benefit under the scheme;
in respect of such of the employees who despite acceptance of a part of the
retirement benefit under the scheme had continued under the orders of the High
Court and has retired on attaining the age of superannuation, this order shall
appeals filed by the State Bank of India are allowed;
appeals arising from the judgments of the Uttaranchal High Court are allowed
and the judgments of the said High Court are set aside;
appeals arising from the judgments of the Punjab and Haryana High Court in
relation to ten writ petitions which were filed by the employees for a
direction upon the Bank that the benefits under the scheme be paid to them are
set aside and the matters are remitted to the High Court for consideration
thereof afresh on merits and in accordance with law;
appeals are disposed of on the above terms. However, in the facts and
circumstances of the case, the parties shall pay and bear their own costs