Full Judgment Text
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CASE NO.:
Appeal (civil) 1252-1254 of 2004
PETITIONER:
State Bank of Patiala
RESPONDENT:
Romesh Chander Kanoji & Ors.
DATE OF JUDGMENT: 24/02/2004
BENCH:
CJI., V.N. KHARE, S.B. SINHA & S.H. KAPADIA.
JUDGMENT:
JUDGMENT
Arising out of S.L.P.(c) No. 23499-23501 of 2002)
KAPADIA, J.
Leave granted.
The question in these appeals concerns determination of the
scope of the judgment of this Court in the case of State Bank of India
& Ors. v. O.P. Swarnakar & Ors. reported in [(2003) 2 SCC 721] as
also the judgment of this Court in the case of State Bank of Patiala v.
Jagga Singh decided on 13.3.2003 in Civil Appeal No.2341 of 2003.
The dispute lies within a narrow compass. State Bank of
Patiala, subsidiary of State Bank of India, issued a circular No.
PER/VRS/48 dated 20th January 2001 publishing their Voluntary
Retirement Scheme (hereinafter referred to as ’the SBPVRS’) drawn
up in the light of the guidelines issued by the Indian Bank
Association. The object of the SBPVRS inter alia was to downsize
the existing strength of the employees and to increase profitability.
The scheme was to open on February 15, 2001 and it was to close on
1st March, 2001 (inclusive of both days). The applications under the
SBPVRS were to be accepted during the period when the scheme was
to remain open between 15th February 2001 to 1st March 2001.
Clauses (5), (8) and (9)(i) of the Scheme are relevant for the purpose
of deciding this matter and accordingly, they are quoted herein
below:\027
"5. Period
The scheme will remain open during the period
15th February 2001 to 1st March 2001 (inclusive both
days) with an option to the Bank to close early/extend the
scheme without assigning any reasons. The applications
for Voluntary Retirement under the SBPVRS will be
accepted during this period only.
8. Other features
The Bank intends to control the outflow of
personnel according to its requirements. Towards this
end, Bank retains the discretion to limit the number of
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employees to be allowed to retire in each category of
staff viz. offices/clerical-cash/subordinate, to be covered
under SBPVRS. As such, the Bank will have the sole
discretion as to the acceptance or the rejection of the
request for retirement under SBPVRS depending upon
the requirements of the Bank. For the purpose of
exercising discretion in this regard, category wise lists of
eligible applicants would be prepared in descending order
of their age and applications of employees coming in
higher age groups above cut-off age would be accepted;
the cut-off age in each category will of course depend
upon the acceptable number of employees who can be
permitted to retire.
No voluntary retirement shall be deemed to have
come into effect unless the decision of the Competent
Authority has been communicated in writing, which will
be convened within a maximum period of two months
after the date of closure of receipt of applications i.e.
01.03.2001.
9. General Conditions
(i) Staff members desirous of availing benefits under
the scheme will have to submit a written
application to the Competent Authority, through
proper channel, in the specified format, within the
period for which the Scheme is kept open (i.e.
15.02.2001 to 01.03.2001). The application once
made cannot be withdrawn and the same will be
treated as irrevocable. While making application,
the employee will be required to declare the name
of nominee, to whom the payment may be made in
the event of death of an VRS optee after the
competent authority has accepted his VRS
application but before payment has been effected.
(emphasis supplied)"
To complete the chronology of events, respondents herein
applied under the SBPVRS between 15th February 2001 and 1st March
2001. Respondent No.1 withdrew his application for voluntary
retirement on 3/5th March, 2001. Similarly, respondent No. 2
withdrew his application for voluntary retirement on 2nd March 2001.
Respondent No. 3 withdrew his application for voluntary retirement
on 5th March, 2001. However, on 3rd April, 2001, the bank refused
permission to the said respondents to withdraw from the scheme since
their withdrawal was made after the date of the closure of the scheme
on 1st March, 2001. The decision of the bank not to allow the
respondents to withdraw from the scheme came to be challenged by
way of Writ Petition before the High Court along with several other
writ petitions involving the same question. By common judgment
dated 3rd April, 2002, the High Court allowed the writ petitions by
quashing the SBPVRS itself. The High Court held that even if it is
assumed for the sake of argument that the scheme was validly framed,
it would still be open to an employee to withdraw his option before
the same came to be accepted and effectively enforced. Being
aggrieved, the Bank has come by way of appeal to this Court.
In the case of Bank of India v. O.P. Swarnakar (supra) a
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similar question arose for determination, namely, whether an
employee having once opted for voluntary retirement pursuant to a
voluntary retirement scheme is precluded from withdrawing his
offer/opting out from the scheme? This Court in the above judgment
found that there was difference between the voluntary retirement
scheme framed by State Bank of India (hereinafter referred to as
’SBIVRS’) on one hand and the voluntary retirement scheme framed
by nationalized banks. The difference in the two schemes was that in
the case of SBIVRS, an opportunity of 15-days was given to the
employee \026 applicant to withdraw from the scheme whereas under the
voluntary retirement scheme of nationalized banks no such
opportunity was given. In the case of voluntary retirement scheme
framed by nationalized banks, clause 10.5 stipulated that it will not be
open for an employee to withdraw his request for voluntary retirement
after having exercised such option. In the circumstances, this Court
took the view that the case of State Bank of India stood on different
footing vis-‘-vis schemes framed by other nationalized banks. The
reasons for the difference are contained in para 92 of the said
decision, which reads as under:\027
"However, the case of the State Bank of India
stands slightly on a different footing. Firstly, the State
Bank of India had not amended the scheme. It, as
noticed here before, even permitted withdrawal of the
application after 15th February. The scheme floated by
the State Bank of India contained a clause (clause 7)
laying down the mode the manner in which the
application for voluntary retirement shall be considered.
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."
It is evident from above that in the case of SBIVRS, where
there is a specific provision for withdrawal, the employee must
exercise his option within the time specified; and in case of
nationalized banks where there was no provision to withdraw (and in
fact the scheme forbade withdrawal), the withdrawal must be effected
prior to acceptance by the bank. Therefore, in terms of the ratio laid
down by this Court, the employee is ensured under SBIVRS the right
of withdrawal within the specified period.
The decision of this Court in Bank of India v. O.P. Swarnakar
(supra) is dated 17th December, 2002. The decision was given by a
three-Judge Bench of this Court. A similar question came before the
Division Bench of this Court once again in the case of State Bank of
Patiala v. Jagga Singh by way of Civil Appeal No.2341 of 2003. It
was held by the Division Bench that State Bank of Patiala was a
subsidiary of State Bank of India; that clause 8 of SBPVRS was
similar to clause 7 of SBIVRS; that clause 8 of SBPVRS also gave
opportunity to the employee to withdraw and consequently the appeal
filed by State Bank of Patiala was allowed in terms of the decision in
the case of Bank of India v. O.P. Swarnakar (supra). The decision in
the case of Bank of India v. O.P. Swarnakar has since been followed
in several cases.
In the present matter, the question is once against sought to be
re-agitated. Mr. Ahmadi, learned counsel appearing on behalf of the
respondents herein contended that clause 9(i) of SBPVRS, quoted
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above, was similar to clause 10.5 of the scheme of other nationalized
banks inasmuch as it provided that application once made cannot be
withdrawn. It was submitted that clause 9(i) of the said SBPVRS has
not been noticed by the Division Bench of this Court in its judgment
in the case of State Bank of Patiala v. Jagga Singh (supra). It was
contended that clause 9(i) of the SBPVRS was dis-similar to SBIVRS,
which gave opportunity to the employee to withdraw and
consequently the judgment of the Division Bench of this Court in
State Bank of Patiala v. Jagga Singh (supra) needs reconsideration.
We do not find any merit in the above argument. It is important
to bear in mind that schemes in question are basically funded
schemes. Under such schemes, time is given to every employee to opt
for voluntary retirement and similarly time is given to the
management to work out the scheme. Clause (5) of the SBPVRS gave
15 days time to the employees to opt for the scheme and under clause
(8) a period of two months is given to the management to work out the
scheme. Since the said schemes are funded schemes, the management
is required to create a fund. The creation of the fund would depend
upon number of applications; the cost of the scheme; liability which
the scheme would impose on the bank and such other variable factors.
If the employees are allowed to withdraw from the scheme at any time
after their closure, it would not be possible to work out the scheme as
all calculations of the management would fail. In the case of Bank of
India v. O.P. Swarnakar (supra) the SBIVRS is held to be an
invitation to offer. Following the said judgment, we hold that
SBPVRS is an invitation to offer and not an offer. Clause 5 of the
said SBPVRS inter alia states that the scheme will remain open
during the period 15.2.2001 to 1.3.2001 whereas rule 8 thereof
provides for mode of acceptance by the management. It is in the light
of rules 5 and 8 that one has to read clause 9(i) which provides for
general conditions and under which it is provided that application
once made cannot be withdrawn. In Chitty on Contracts (28th Ed.
Page 125), the learned author states that "an offer may be withdrawn
at any time before it is accepted. That this rule applies even when the
offeror has promised to keep the offer open for a specified time, for
such a promise is unsupported by consideration." Therefore, clause 5
of SBPVRS gives locus poenitentiae to the employee to withdraw by
1.3.01 after which the mode of acceptance contemplated by clause 8
of the SBPVRS would apply and the bank will proceed to vet the
applications. As stated above, the bank needs time to ascertain its
liability; it is required to find out the cost of creation of a separate
fund which in turn depends on the number of applications and if the
employees are permitted to withdraw after the date of closure it would
be impossible for the bank to implement the scheme. Therefore,
clause 5 gives time to the employee to withdraw by 1st March 2001
and the bank is given time of two months thereafter to complete the
designated mode of acceptance (See. Halsbury’s Laws of England, 4th
Edition page 133). Reading clauses 5, 8 and 9(i), it is clear that
employees are precluded from withdrawing from the SBPVRS after
the closure of the scheme on 1.3.2001.
Subject to above, we hold that State Bank of Patiala is a
subsidiary of State Bank of India; that the SBPVRS is similar to
SBIVRS and consequently, the judgment of this Court in the case of
Bank of India v. O.P. Swarnakar (supra) squarely applies to the facts
of this case. We may clarify that each scheme for the purposes of
enforceability is required to be read as a whole.
Accordingly, the appeals are allowed in terms of the decision of
this Court in Bank of India v. O.P. Swarnakar (supra) and the
impugned judgment of the High Court is set aside with no order as to
costs.
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