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Madhya Pradesh State Road Transport Corporation v. Manoj Kumar and Anr. - (Supreme Court) (29 Aug 2016)

Once option is given, same cannot be withdrawn, notwithstanding this clause, employees had a right to withdraw offer during validity period but not thereafter



Appellant Corporation obtained permission for winding up of appellant’s Corporation due to losses. Considering closure of Corporation, a Scheme called as Voluntary Retirement from Service ('VRS') introduced for employees. Respondents/employees submitted applications for voluntary retirement within span of original period fixed under Scheme, i.e. between July 01, 2005 and August 01, 2005. Before their applications could be accepted, sought withdrawal of their option. However, requests for withdrawal of options were made after August 01, 2005, i.e. after expiry of original Scheme. However, their requests for withdrawal were not entertained and on contrary applications for VRS were accepted. Respondents challenged aforesaid action and approached High Court. Single Judge while accepting plea of Corporation held that applications for withdrawal of VRS could only be moved within validity period of Scheme. Writ appeals were filed before Division Bench of High Court by aggrieved employees. Division Bench, vide impugned judgment, allowed them holding that it is always permissible for an employee to withdraw option under VRS before it is accepted. High Court proceeded on basis that such a VRS Scheme calling for options is an invitation to offer.

Scheme is contractual in nature, provisions of Indian Contract Act would apply. VRS Scheme floated by employer would be treated as invitation to offer and application submitted by employees pursuant thereto is an offer which does not amount to resignation in praesenti and offer can be withdrawn during validity period. Same would be the position even when there is a clause in the Scheme that offer once given cannot be withdrawn at all. However, exception to this principle is that in such cases offer is to be withdrawn during validity period of Scheme and not thereafter even when if it is not accepted during the period of the Scheme.

In present case, Corporation floated Scheme because of reason that it has virtually stopped transport business and purpose of the Scheme was to benefit itself by shrinking strength of employees as with no transport business need for such employees is not there. Scheme provided that once option is given, same cannot be withdrawn. Notwithstanding this clause, employees had a right to withdraw offer during validity period but not thereafter.

There was no VRS Scheme in operation from August 02, 2005 to October 11, 2006. It is only on October 12, 2006, another opportunity was given to the rest of the employees to submit their applications and the period during which such an application for voluntary retirement could be submitted was from October 12, 2006 to October 28, 2006. This small window was opened for a period of 17 days for those employees who had not submitted their applications and they were afforded another chance. At the same time, the main reason was to attract more such employees to opt for VRS as the Corporation had decided to close down its operations and wanted its employees to take an honorable exit with 'golden handshake'. Therefore, there is an acquity and sharpness in submissions of Corporation that it, cannot be treated as extension of earlier Scheme. Supreme Court held that, direction of High Court reinstating Respondents/employees was, contrary to law and set aside the same.

Relevant : Bank of India & Ors. v. O.P. Swarnakar etc., Food Corporation of India & Ors. v. Ramesh Kumar, New India Assurance Company Ltd. v. Raghuvir Singh Narang & Anr


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