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CASE NO.: Appeal (civil)  5638 of 1999

PETITIONER: Vice Chairman & Managing Director A.P.S.I.D.C. Ltd. and another                    

RESPONDENT: Vs. R. Varaprasad and others                                 

DATE OF JUDGMENT: 22/05/2003

BENCH: SHIVARAJ V. PATIL & ARIJIT PASAYAT

JUDGMENT: J U D G M E N T WITH 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

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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 â\200\223 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 â\200\223 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

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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

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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 â\200\223 (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

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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

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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

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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

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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

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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.