Vice Chairman & Managing Director vs R. Varaprasad And Others

Civil Appeal Nos. 2159-2160/2001, 4067-4069/2001

AND

Civil Appeal Nos. 4658-4659 of 2001

Shivaraj V. Patil, J.

Civil Appeal No. 5638 of 1999

The Andhra Pradesh State Irrigation Development

Corporation Ltd. (for short 'Corporation') is a

Government company, registered under the Companies Act,

1956. Pursuant to the national policy, the State of

Andhra Pradesh issued instructions for floating

Voluntary Retirement Scheme (VRS) in the Government

companies and corporations. The Corporation introduced

the VRS (Phase-I) on 1.6.1995. In the light of the

said Scheme the Corporation issued a circular on

4.7.1997 inviting applications from the employees, who

were eligible under the Scheme. In response to the

same 416 employees submitted their options seeking

voluntary retirement. The Corporation accepted their

options on 18.10.1997 treating 31.10.1997 as cut off

date for all purposes of VRS. The funds, for giving

benefits under the Scheme to the employees, were made

available to the Corporation by the State Government

during the first week of November, 1997. The

employees, whose options had been accepted, were

relieved from service on 15.11.1997. As per the Scheme

offered, the employees were entitled to three months

pay in lieu of notice. The cut off date was fixed as

31.10.1997. The employees had worked 15 days beyond

the cut off date and earned salary for the period.

Hence they were given two months and 15 days notice pay

in addition to the 15 days salary. On 1.10.1997 the

State Government issued a clarification stating, "in

the circumstances where the management takes time to

take a decision about the acceptance of the application

of the employee and allows the notice period to lapse

or the individual concerned has drawn all salary during

the notice period, in these cases notice period pay

would not be admissible as the individual has already

drawn salaries during the notice period."

The Corporation issued another VRS (Phase II) on

12.12.1997 seeking options from the employees. 212

employees, including respondents 1 to 32 in this

appeal, submitted their options for voluntary

retirement. The options were accepted fixing the cut

off date as 28.2.1998 for the purpose of calculating

the VRS claims of the employees. Since the State

Government insisted for pre audit clearance by the

Director of Treasuries and Accounts to pay the claims

of the employees, it took some time and the funds were

provided by the State Government only on 25.7.1998.

The optees were relieved from service on 31.7.1998.

They were permitted to continue in service beyond the

notice period of three months and they were given full

salary and allowances up to 31.7.1998, i.e., for a

period of five months (including period of notice pay)

beyond the cut off date. They were not given notice

pay while settling their claims under the Scheme

because they had also drawn salary during that period.

The respondents 1 to 32 filed writ petition No.

21901 of 1998 in the High Court seeking a writ of

mandamus directing the Corporation to pay all service

benefits as if they were in service up to 31.7.1998.

The Corporation resisted the writ petition by filing a

detailed counter affidavit contending that the writ

petitioners were not entitled for any relief. The

learned single Judge of the High Court allowed the writ

petition and directed the Corporation to pay three

months notice pay treating the cut off date as

31.7.1998 though specific prayer was not made in the

writ petition to this effect. The Corporation was also

directed to calculate the terminal benefits of the

optees as if they were continued in service till

31.7.1998 notwithstanding the cut off date fixed was

28.2.1998. Aggrieved by this order of the learned

single Judge the appellants filed writ appeal No. 633

of 1999 before the Division Bench of the High Court.

The same was dismissed by the Division Bench holding

that the action of the Corporation in not giving notice

pay to the employees covered under the second phase of

VRS was discriminatory and violative of Article 14 of

the Constitution of India as such benefit was given to

the employees covered under the first phase of the VRS.

Under these circumstances the appellants have called in

question the validity and correctness of the impugned

judgment and order of the Division Bench of the High

Court affirming the order of the learned single Judge.

Mr. L. Nageshwara Rao, learned senior counsel for

the appellants – Corporation, urged that the High Court

was not right in holding that the employees were

entitled to get notice pay even though they were

continued in service having drawn full salary and

allowances beyond the stipulated notice period; the

High Court was also not justified in directing the

Corporation to treat two sets of optees of VRS – Phase

I and Phase II, similarly when they were governed by

distinct and different sets of guidelines and

conditions; that the terminal benefits to which the

employees were entitled could be calculated as on and

up to the cut off date of 28.2.1998; once the options

seeking voluntary retirement were accepted with

reference to a cut off date the employees were not

entitled to claim terminal benefits beyond that date.

According to the learned counsel the employees were

continued in service beyond 28.2.1998 because of the

condition that they could not be relieved from services

even after the cut off date until they were paid the

amount due to them as per VRS; they were paid salary

and other allowances even after the cut off date till

the date on which they were actually relieved from

service after making the payment; that period between

1.3.1998 and 31.7.1998 could not be taken into

consideration for the purpose of calculating the

terminal benefits as per the VRS.

In opposition the learned counsel representing the

respondents in their arguments supported the impugned

judgment and order. They reiterated the submissions

that were made before the High Court.

The learned counsel for the parties took us

through the relevant portions of various documents on

which they placed reliance.

To resolve the controversies that arise for

consideration in this appeal, it becomes necessary to

look at the guidelines, the VRS and circulars issued by

the Corporation seeking the options of the employees

for voluntary retirement. The claims of the parties

are to be examined in the light of these documents as

between them. Annexure P-1 dated 1.6.1995 is a

circular issued by the Corporation in which it is

stated that the Management is pleased to issue a

Voluntary Retirement Scheme for employees of the

Corporation and the Scheme will be known as "APSIDC

Employees Voluntary Retirement Scheme 1995". The

relevant clauses, which have bearing on the

controversies to be resolved read: -

"c) For calculation of VRS Ex-gratia,

as well as reckoning eligibility,

the date of acceptance of the

application will be taken into

consideration. Any increase in the

salary after the cut-off point/date

cannot be taken into consideration.

However, for calculating the

compensation for "Remaining period

of service" wherever applicable,

no compensation shall be paid for

the period for which the salary has

already been drawn by the employee

after submission of VRS

application.

d) The VRS option exercised is final

as far as employee is concerned.

e) There shall be no separate notice

either for the employee or the

Corporation. In terms of service

conditions mentioned in the offer

of appointment/service rules/S.R.S.

xxx xxx xxx

i) The payments that are due from the

Corporation under the scheme shall

be released to the concerned on the

date of relief subject to receipt

of funds from Government."

Under the Scheme the Vice Chairman and Managing

Director shall have power to amend, modify, alter or

withdraw or extend the period of operation of the

Scheme at any time either in whole or in part, at his

discretion, if the circumstances so warrant.

Annexure P-2 is circular dated 4.7.1997, issued by

the Corporation referring to Annexure P-1 dated

1/6/1995 and other circulars inviting applications from

the employees, who were eligible and willing to accept

VRS to apply in the prescribed form. By memo dated

1.10.1997 (Annexure P-3) Government of Andhra Pradesh

issued amendment to the Voluntary Retirement Scheme

guidelines, issued in the memo No. 1038/PE.I/A2/94-4

dated 23.1.1996. The amendment reads: -

1. (a) In the said Memo, for the

existing clause 6(a)(iv) the

following shall be substituted,

namely: -

"IV One month's/three months'

notice pay (as per the conditions

of service applicable)

If an application of an employee

opting for Voluntary Retirement is

accepted instantaneously and

payment is arranged by the

management on the same day, the

concerned individual would be

entitled to payment of ex-gratia

alone with the notice period pay.

It is however clarified that

payment of ex-gratia for service

rendered or left over service

(whichever is less) as well as the

amount payable for the notice

period should not exceed the basic

pay plus D.A. that would have been

paid to the employees who have

opted for Voluntary Retirement

Scheme till the date of his

superannuation.

In the circumstances where the

Management takes time to take a

decision about the acceptance of an

application submitted by the

employee for Voluntary Retirement

Scheme; and allows the notice

period to lapse or the individual

concerned has drawn full salary

during the notice period served by

him, in these cases notice period

pay would not be admissible as the

individual has already drawn the

salary during the notice period."

This amendment came into force from the date of issue

of memo itself, i.e., from 1.10.1997.

In this appeal we are concerned with respondents 1

to 32 falling under VRS phase II.

In the light of the contentions urged two points

arise for consideration – (1) whether the terminal

benefits and financial package available under the

Scheme are to be calculated up to the cut off date

fixed for accepting the applications of the employees,

who opted for voluntary retirement or they should be

calculated up to the actual date of relieving them from

service, and (2) whether the respondents were entitled

for notice pay of three months.

In clause (c) of Annexure P-1, extracted above, it

is expressly and clearly stated that the date of

acceptance of the applications of the employees seeking

voluntary retirement under the Scheme shall be the date

for calculation of VRS ex-gratia, as well as for

reckoning eligibility. Added to this it is also made

clear that any increase in the salary after the cut off

point/date cannot be taken into consideration. It is

also stated that for calculating the compensation for

"remaining period of service" wherever applicable no

compensation shall be paid for the period for which the

salary has already been drawn by the employees after

submission of VRS applications. Clause (i) of the

Annexure states that the payments that are due from the

Corporation under the Scheme shall be released to the

concerned on the date of relieving subject to receipt

of funds from the Government. This clause, in our

view, has no bearing as far as the cut off or effective

date is concerned for the purpose of calculating the

terminal benefits including VRS ex-gratia and other

benefits available under the VRS, to which an employee

is entitled, particularly so, when in clause (c), as

already stated above, it is mentioned that for

calculation of VRS ex-gratia as well as reckoning its

eligibility the date of acceptance of applications will

be taken into consideration. Clauses (c) and (i) are

meant to serve different purposes. One is for the

purpose of calculation of the benefits in terms of

money under the VRS and the other is to see that the

employee is not sent out without such payment. If that

happens it will lead to a great hardship to an employee

without any financial support to carry on life. It is

for that reason clause (i) appears to have been

incorporated so that an employee is not rendered

jobless. The payments that are due to be made by the

Corporation under the Scheme depended upon the release

of the funds by the Government. If some time is taken

in this process even after acceptance of the voluntary

retirement application, an employee is not relieved

from service, he is to be paid salary and allowances

from the date of acceptance of voluntary retirement

application/cut off date till he is actually relieved

from the service. The employee may continue in service

in the interregnum by virtue of clause (i) but that

cannot alter the date on which the benefits that were

due to an employee under the VRS to be calculated.

Clause (c) itself indicates that any increase in salary

after the cut off point/date cannot be taken into

consideration for the purpose of calculation of

payments to which an employee is entitled under the

VRS. It is further made clear that for remaining

period of service, wherever applicable, no compensation

shall be paid for the period for which the salary has

already been drawn by the employee after submission of

application for voluntary retirement.

This being the position both learned single Judge

and the Division Bench of the High Court were not right

in taking a contrary view that the benefits available

under the Scheme and terminal benefits should be

reckoned and calculated as on the date of actual

relieving the employees notwithstanding the cut off

date mentioned by the Corporation and accepted by the

employees. An employee even after accepting his

application could not be relieved unless entire amount

to which he was entitled under the Scheme was paid.

Such payment depended on making funds available by the

State Government. All employees who accepted VRS could

be relieved at a time or batch by batch depending on

availability of funds. Further funds may be made

available early or late. If the argument of the

respondents that relieving date should be taken as

effective date for calculating terminal benefits and

financial package under VRS, the dates may be

fluctuating depending on availability of funds. Hence

it is not possible to accept this argument. When the

employees have opted for VRS on their own without any

compulsion knowing fully well about the Scheme,

guidelines and circulars governing the same, it is not

open to them to make any claim contrary to the terms

accepted. It is matter of contract between the

Corporation and the employees. It is not for the

courts to re-write the terms of the contract, which

were clear to the contracting parties, as indicated in

the guidelines and circulars governing them under which

Voluntary Retirement Schemes floated.

In the circumstances we are of the view that the

terminal benefits and financial package available under

the Scheme are to be calculated up to the cut off date

fixed for accepting the applications of the employees

and not up to the date of their actual relieving from

service. Hence the relevant date for the purpose of

calculation of terminal benefits and benefits of VRS to

the respondents was 28.2.1998 and not 31.7.1998.

As per clause (e) of Annexure P-1 it is made

abundantly clear that there shall be no separate notice

either for the employee or Corporation in terms of

service conditions mentioned in the offer of

appointment/service rules/S.R.S. As per Annexure P-3

Memo dated 1.10.1997 Government of Andhra Pradesh

issued amendment to the Voluntary Retirement Scheme

Guidelines contained in the Memo dated 23.1.1996 and

this amendment came into force with immediate effect.

As per the amendment, extracted above, if an

application of an employee opting for voluntary

retirement is accepted instantaneously and the payment

is arranged by the Management on the same day the

concerned individual would be entitled to payment of

ex-gratia alone with the notice period pay. It is also

clarified that in the circumstances where the

Management takes time to take a decision about the

acceptance of an application submitted by the employee

for the VRS and allows the notice period to lapse or

the individual concerned has drawn full salary during

the notice period served by him, notice period pay

would not be admissible as the individual has drawn the

salary during the notice period.

In the present case admittedly the cut off date

fixed was 28.2.1998, which is not disputed. The

contention was that since the employees continued to be

in service till 31.7.1998, they were entitled to the

retrial benefits and the benefits available under the

VRS as on 31.7.1998, the date on which they were

actually relieved. While discussing first point we

have clarified the position in this regard. As per

clause (e) of Annexure P-1 no separate notice was

required to be issued in terms of service conditions

mentioned in the offer of appointment/service

rules/S.R.S. But once a cut off date was fixed for the

purpose of calculating the benefits under the VRS and

thereafter an employee is continued in service to

satisfy clause (i) of Annexure P-1 and if that period

happens to be three months or more, that itself shall

be treated as notice period. In that case he shall not

be entitled for notice period pay again as is clear

from the Memo dated 1.10.1997 (Annexure P-3), on the

ground that an employee having drawn full salary during

the notice period although no separate notice was

required to be given, would not be entitled for pay for

the notice period. Even while dealing with the cases

of VRS Phase I, the employees were given notice pay for

two months 15 days and salary for 15 days. In those

cases the Corporation had treated the cut off date as

31.10.1997 but the employees were actually relieved

from service on 15.11.1997, as the funds were not made

available immediately. It clearly shows that for the

period for which the employees even under VRS first

phase worked for 15 days after the cut off date were

not given notice pay for full three months. In the

present case the cut off date was 28.2.1998 but the

respondents were actually relieved from service on

31.7.1998. Thus they worked for a period of five

months after the cut off date for which they had drawn

salary. Out of these five months three months would be

adjusted towards notice pay as in the VRS Phase I only

15 days were adjusted as notice pay as those employees

had worked only for 15 days beyond the cut off date.

In the impugned judgment the Division Bench held that

the Corporation could not discriminate between the

employees of VRS Phase I and VRS Phase II. We fail to

see how there was any discrimination. Unfortunately,

the Division Bench of the High Court did not examine

the issues that arose for consideration keeping in mind

the relevant clauses, guidelines and specific terms

contained in VRS including the amendment to the

guidelines. Rights and benefits available to the

employees under a particular VRS ought to be examined

in the light of the specific terms and conditions

governing them. Since this has not been done the

Division Bench committed an error in recording its

findings. On the other hand, there appears to have

been consistency in the stand of the Corporation.

Added to this the amendment as per Annexure P-3,

reference to which has already been made above,

justifies the stand of the appellants for the reasons

that no separate notice was required to be given and if

an employee had drawn the salary during the notice

period, he would not be entitled to claim pay for

notice period again. In this view we answer the point

No. 2 in the negative and against the respondents.

In the light of what is stated above, we are of

the view that the judgment and orders of the learned

single Judge and of the Division Bench of the High

Court cannot be sustained. Hence they are set aside

and the appeal is allowed with no order as to costs.

Civil Appeal Nos. 4067-4069 of 2001 and Civil Appeal

Nos. 2159-2160 of 2001

In view of our conclusions arrived at in Civil

Appeal No. 5638 of 1999, these appeals also are

entitled to succeed. We may also mention that the

respondent in Civil Appeal No. 6047 of 2001 is governed

by VRS Phase II and the respondents In Civil Appeal

Nos. 4068-4069 of 2001 and 2159-2150 of 2001 are

governed by VRS Phase III. It may be added that the

terms and conditions, which are applicable to VRS Phase

II are similar to VRS Phase III also, as the matters

are identical. In this view these appeals are also

allowed. The impugned judgment and orders of the High

Court are set aside. No costs.

CIVIL APPEAL NOS. 4658-4659 OF 2001

These appeals are directed against the common

order made in W.P. 15703 of 1999 and W.P. No.15742 of

1999. Respondent No. 1, Vijay Kumar, in C.A. No. 4658

of 2001 and respondent No. 1, A.Simhadri, in C.A. No.

4659 of 2001 (hereinafter referred to as 'respondents')

filed writ petition Nos. 15703 of 1999 and 15742 of

1999 in the High Court seeking direction to the

appellant-Corporation to continue them in service till

they attain superannuation. Both are covered by VRS

Phase-III. The Corporation fixed 31.10.1998 as cut off

date for VRS Phase-III. Respondents Vijay Kumar and

A.Simhadri filed applications seeking voluntary

retirement under the said Scheme on 31.10.1998 and

10.10.1998 respectively. Corporation accepted their

options on 24.11.1998 and 27.10.1998, which were also

acknowledged by the respondents on 26.11.1998 and

2.11.1998. Thereafter, they applied for withdrawal of

the option given for VRS on 8.1.1999 and 26.2.1999

respectively. These respondents could not be relieved

from service along with large number of other employees

who were relieved on 31.7.1999 under VRS Phase-III

because of the interim order granted by the High Court

in the writ petitions filed by them. The Division

Bench of the High Court, by the impugned order, allowed

the writ petitions and directed the Corporation to

continue their services till their attaining the age of

superannuation. In doing so, the High Court followed

the decisions of this Court in Balram Gupta vs. Union

of India & Anr. [AIR 1987 SC 2354], J.N. Srivastava vs.

Union of India & Anr. [ AIR 1999 SC 1571] and Shambhu

Muarai Sinha vs. Project & Development India & Anr.

[2000 (5) SCC 621]. The High Court was of the view

that the respondents had filed their withdrawal

applications on 8.1.1999 and 26.2.1999 and had the

benefit of interim directions to continue in service

granted by the High Court on 30.7.1999 while they were

to be relieved on 31.7.1999 and the result was that

they were still in service on that date. The High

Court further observed that these respondents had made

the applications for withdrawal before the effective

date i.e. 31.7.1999 and they having not accepted the

monetary benefits under the VRS Scheme, could withdraw

their applications opting for VRS. In this view, the

writ petitions of these respondents were allowed. Before us, the learned counsel on both sides relied on

the decision of this Court in Bank of India & Ors. vs.

O.P. Swarnakar & Ors. [(2003) 2 SCC 721] and few other

decisions. The decisions cited on behalf of the

respondents do not help them. Unlike in those decisions

these respondents filed applications offering to take

voluntary retirement under the Scheme; their

applications were accepted by the Corporation which

were acknowledged by these respondents; they made

representations for withdrawal from the VRS Scheme

several days after the Corporation accepted their

applications made seeking voluntary retirement; merely

because they could not be relieved in view of the

interim order passed by the High Court in the writ

petitions and that they could not be relieved

immediately after the cut off date for want of funds to

be received from the Government by the Corporation,

they could not take away the result or escape

consequence of the acceptance of their voluntary

retirement by the Corporation. In other words,

question of withdrawal of their applications made for

seeking voluntary retirement after their acceptance did

not arise and they could not be permitted to do so in

law. It is fairly settled now that the voluntary

retirement once accepted in terms of the Scheme or

rules, as the case may be, cannot be withdrawn. In

these appeals from the facts it is clear that the

applications of the respondents opting for voluntary

retirement under the Scheme were accepted and even the

acceptance was communicated to them. Thereafter, they

filed the writ petitions. Hence the High Court was not

right in allowing the writ petitions holding that they

applied for withdrawal before the effective date

considering the date of relieving the employees as the

effective date. In the light of the discussions made

in Civil Appeal No. 5638 of 1999 the High Court, in our

view, was wrong in treating 31.7.1999 as an effective

date. The decisions relied on by the respondents

before the High Court or in this Court on facts do not

help them. Moreover, position is to be examined on the

facts, terms of the VRS and circumstances governing a

particular case of withdrawal offer made seeking

voluntary retirement after its due acceptance.

In view of this legal position, the impugned order

cannot be sustained. We would have set aside the same

but for the peculiar facts and circumstances of the

case stated hereinafter. These respondents though

sought for voluntary retirement under the Scheme could

not be relieved even on 31.7.1999 alongwith large

number of other employees because of the interim order

passed by the High Court in the writ petitions filed by

them. Consequently, they continued in service. Even

in the SLPs filed by the Corporation, though leave was

granted, interim order was specifically refused as is

clear from the order dated 23.7.2001 passed by this

Court in these appeals, which reads:-

"Leave granted. Tag with C.A. Nos.

4067-4069/2001. No stay."

It appears to us that the respondents have

continued in service; may be they have attained

superannuation by now or they are likely to attain

superannuation in near future; at any rate, they having

been continued for all these years and taking note of

the peculiar facts and circumstances of these cases, we

do not think it is just and appropriate to disturb the

impugned order under Article 136 of the Constitution of

India in the light of what is stated above.

Consequently, these appeals are disposed of accordingly

but with no order as to costs.