I.T.I. Limited vs I.T.I. EX/VR Employees/Officers Welfare Association and Others

M. Katju and Asok Kumar Ganguly, JJ.—Delay in filing the application for substitution is condoned, substitution is allowed and abatement is set aside.

Heard learned Counsel for the parties.

These appeals have been filed against the impugned judgment of the Karnataka High Court at Bangalore dated September 13, 2001.

The facts of the case in detail have been set out in the impugned order and hence we are not repeating the same here.

The short question involved in these appeals is "whether after an employee has accepted the VRS Scheme and received payment under it, can he subsequently claim a higher amount because of subsequent wage revision with retrospective effect by the employer."

This Court in the case of HEC Voluntary Retd. Emps. Welfare Soc. and Another Vs Heavy Engineering Corporation Ltd. and Others vide paragraphs 11 and 12, observed as under at p. 248 of LLJ:

An offer for voluntary retirement in terms of a scheme, when accepted, leads to a concluded contract between the employer 31 and the employee. In terms of such a scheme, an employee has an option either to accept or not to opt therefor. The scheme is purely voluntary, in terms whereof the tenure of service is curtailed which is permissible in law. Such a scheme is ordinarily floated with a purpose of downsizing the employees. It is beneficial both to the employees as well as to the employer. Such a scheme is issued for effective functioning of the industrial undertakings. Although the Company is "State" within the meaning of Article 12 of the Constitution, the terms and conditions of service would be governed by the contract of employment. Thus, unless the terms and conditions of such a contract are governed by a statute or statutory rules, the provisions of the Contract Act would be applicable both at the formulation of the contract as also the determination thereof. By reason of such a scheme only is an invitation of offer floated. When pursuant to or in furtherance of such a Voluntary Retirement Scheme an employee opts therefor, he makes an offer which upon acceptance by the employer gives rise to a contract. Thus, as the matter relating to voluntary retirement is not governed by any Statute, the provisions of the Contract Act, 1872, therefore, would be applicable too. See Bank of India and Others Vs O.P. Swaranakar etc .

It is also common knowledge that a scheme of voluntary retirement is preceded by financial planning. Finances for such purpose, either in full or in part, might have been provided for by the Central Government. Thus financial implications arising out of implementation of a scheme must have been borne in mind by the Company, particularly, when it is a sick industrial undertaking. Offers of such number of employees for voluntary retirement, in that view of the matter, were to be accepted by the Company only to the extent of finances available therefor.

Learned Counsel for the Appellant, hence, submitted that the High Court was in error in granting the amounts over and above the amounts which were paid to the employees under the VRS Scheme.

Learned Counsel for the respondents, however, relied on a Circular No. 409 dated September 6, 1995, a copy of which is annexed as Annexure P-2 to these appeals. The relevant clause 1.2 reads as under:

1.2 Officers who have ceased to be in service on or after January 1,1992 due to resignation, superannuation, voluntary retirement or death, will be eligible to arrears on a pro-rata basis wherever due.

Per contra, learned Counsel for the Appellant has invited our attention to another clause of the same circular viz. Clause No. 23.1, which states as follows:

23.1 ...Calculations related to compensation paid under Voluntary Retirement Scheme, incentive for not availing House Building Advance/Interest Subsidy for housing loan and/or Vehicle Advance shall not be re-opened/.

On a plain reading of both the clauses together, quoted above, it is evident that the expression "Voluntary Retirement" in clause 1.2 of the said circular does not refer to voluntary retirement under the VRS Scheme but it refers to voluntary retirement independent of such scheme. This is evident if we read the said clause along with the subsequent clause i.e. clause 23.1 which states that calculations related to compensation paid under Voluntary Retirement Scheme shall not be re-opened.

Learned Counsel for the respondents submitted that wages, had subsequently been revised with retrospective effect and hence in the eye of law it has to be deemed that at the time when an employee got the benefits under the VRS Scheme, the calculation was done wrongly and the amount should have been calculated on the higher pay.

We do not find substance in this submission. In our opinion, at the most it can be said that a wrong calculation was done when the benefits were paid to an employee under the VRS Scheme. This will not benefit the employees because clause 23.1 of the circular, quoted above, does not speak of only valid calculations but it refers to all calculations under the VRS Scheme, irrespective of whether they are valid or invalid calculations and they shall not be re-opened. In other words, if an employee has got the benefits under the VRS Scheme, whether right or wrong, it cannot be re-opened and an employee cannot claim any higher amount on account of subsequent revision in the wages retrospectively.

For the reasons given above, these appeals are allowed and the impugned judgment of the High Court is set aside. No costs.

Civil Appeal Nos. 5571-5643/2003, 5977-6023/2003 and Civil Appeal No. 7274/2004.

Delay in filing the application for substitution is condoned, substitution is allowed and abatement is set aside in Civil Appeal Nos. 5571-5643/2003.

In view of our order passed by us today in Civil Appeal Nos. 5646-5976/2003, these appeals are also allowed and the impugned judgments are set aside. No costs.

Civil Appeal Nos. 7269-7273/2004, 7275/2004, 7276-7292/2004 and 7293-7326/2004.

In view of our order passed by us today in Civil Appeal Nos. 5646-5976/2003, these appeals are also allowed and the impugned judgments are set aside. No costs. However, we direct that any additional amount paid to the employees who opted for VRS Scheme shall not be recovered.