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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. 25887