SUPREME COURT OF INDIA
State Bank of Patiala
Vs.
Romesh Chander Kanoji
C.A.No.1252-1254 of 2004
(V.N.Khare CJI. and S. B. Sinha JJ.)
24.02.2004
JUDGMENT
S. H. Kapadia, J.
1. Leave granted.
2. 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. vs. O.P.
Swarnakar & Ors. reported in 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.
3. 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.
4. 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:
"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 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)"
5. 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.
6. In the case of Bank of India v. O.P. Swarnakar (supra) a similar question
arose for determination, namely, whether an employee having once opted for
voluntary retirement pursuant to a voluntary retirement scheme is precluded
from withdrawing his offer/opting out from the scheme? This Court in the above
judgment found that there was difference between the voluntary retirement
scheme framed by State Bank of India (hereinafter referred to as 'SBIVRS') on
one hand and the voluntary retirement scheme framed by nationalized banks. The
difference in the two schemes was that in the case of SBIVRS, an opportunity of
15-days was given to the employee applicant to withdraw from the scheme whereas
under the voluntary retirement scheme of nationalized banks no such opportunity
was given. In the case of voluntary retirement scheme framed by nationalized
banks, clause 10.5 stipulated that it will not be open for an employee to
withdraw his request for voluntary retirement after having exercised such
option. In the circumstances, this Court took the view that the case of State
Bank of India stood on different footing vis-'-vis schemes framed by other
nationalized banks. The reasons for the difference are contained in para 92 of
the said decision, which reads as under:
"However, the case of the State Bank of India stands slightly on a different
footing. Firstly, the State Bank of India had not amended the scheme. It, as
noticed here before, even permitted withdrawal of the application after 15th
February. The scheme floated by the State Bank of India contained a clause
(clause 7) laying down the mode the manner in which the application for
voluntary retirement shall be considered. 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."
7. 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.
8. 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.
9. 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 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 dissimilar 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.
10. 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.
11. 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.
12. 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.