WRIT PETITION 3069/1999 on 24 October 1990

1. The respondent D P Sharma was employed as a Meter Readerin the Delhi Electric Supply Undertaking[1], which was taken over bythe appellant BSES Rajdhani Power Ltd in 2002.

2. On 24 October 1990, the petitioner received a memo/charge-sheet, alleging that he had committed a misconduct by favouring aparticular consumer in June 1980 and October 1982. An inquiry was conducted, resulting in the submission of an Inquiry Report by theInquiry Officer[2]in December 1997, exonerating the respondent fromthe charges against him. The Disciplinary Authority[3]disagreed withthe findings of the IO and issued a disagreement note to therespondent on 28 May 1998, opining that, according to him, thecharge against the respondent was fully proved. The memo also calledupon the respondent to show cause against imposition, on him, of apenalty of reduction by three stages in the time-scale of pay for aperiod of three years with the further stipulation that he would notearn any increments of pay during the period of reduction. Therespondent replied on 26 June 1998. The DA, vide order dated 12August 1998, imposed, on the respondent, the punishment proposed inthe disagreement memo dated 28 May 1998. The respondent appealed,on 2 September 1998, to the Chairman of the erstwhile DESU. Byorder dated 11 February 1999, the Chairman reduced the punishmentimposed on the respondent to reduction by two stages in the time scalefor two years with cumulative effect.

3. Aggrieved thereby, the respondent approached this Court byway of WP (C) 3069/1999[4]. Consequent to the appellant stepping intothe shoes of DESU in 2002, the DESU was substituted by theappellant as a respondent in the said writ petition.

4. By order dated 12 August 2013, WP (C) 3069/1999 wasdisposed of, by this Court, by setting aside the order dated 12 August 1 “DESU”, hereinafter 2 “IO”, hereinafter 3 “DA”, hereinafter 4 D.P. Sharma v DVB

1998 and directing the DA to issue, to the respondent, a fresh showcause notice as to why the inquiry report be not set aside for thereasons contained therein. The respondent was directed to respond tothe said show cause notice, whereafter the DA was required to pass aspeaking order, to be communicated to the respondent.

5. Much after the time granted by this Court for completion of theabove process, a show cause notice dated 12 September 2014 wasissued to the respondent by the DA, followed by show cause noticesdated 17 November 2014, 24 April 2015 and 13 May 2015.Ultimately, by order dated 8 June 2015, the DA once again confirmed,against the respondent, the punishment earlier imposed by the orderdated 11 February 1999.

6. In the interregnum, on 31 December 2003, the respondentvoluntarily retired from the services of the appellant by availing theSpecial Voluntary Retirement Scheme[5]of the appellant at the time ofavailingtheSVRS,therespondenttenderedthefollowingundertaking:

“APPLICATION FOR RETIREMENT UNDER BSESSPECIAL VOLUNTARY RETIREMENT SCHEME (SVRS)

NZD 101

Addl. Vice President (HR)BSES Rajdhani Power Ltd.Nehru PlaceNew Delhi - 110019

Dear Sir,

(Through Proper Channel)

5 “SVRS” hereinafter

With reference to the circular No.SVRS-001 dated 18.12.03. Ihereby apply for retirement BSES SVRS. My personal serviceparticulars are as given hereunder:

1. Name, Emp. No. and Designation

D.P.SHARMA

S/o K. K. SharmaE.No. 17068-20 M R

2. Department & SectionM S R SECTION NZD

3. Date of Birth & age

23-7-1951

4. Date of regular Appointment3 OCT 19745. Total Period of Service28 YEARS6. Basic Pay & DARs. 6600 + DA 3894=00

-SD- -SD-

Declaration/ Undertaking [Higher time scale under process sinceOct 2003]APO(B)/AFO(A)S

1. I hereby declare that I have gone through the conditions ofSVRS and have fully understood the same and undertake to fullyabide by all terms and conditions of the referred scheme.

2. I understand that for calculation purpose, for benefits underSVRS, my salary as on 31.12.2003 shall be taken as last salarydrawn.

3. I also understand that I shall not be eligible for re-employment, reengagement in BRPL or any of the Joint venture orsubsidiaries.

4. I hereby undertake that I shall not withdraw my applicationfor retirement under SVRS without the approval of the CompetentAuthority. I also understand that the application cannot bewithdrawn on acceptance of the same by Competent Authority. Ialso request for the waive-off of the notice period.

I request that my application for voluntary retirement maybe considered favorably and on acceptance of the same, my duesbe settled at the earliest in line with the rules under the SVRS.

D.P. SHARMA”

7. The respondent challenged the order dated 8 June 2015, passed by the appellant, by way of appeal, which was rejected by theappellate authority on 29 February 2016. The said order waschallenged before this Court by way of WP (C) 8489/2016, in which

the presently impugned order has come to be passed.

8. Among the contentions advanced by the appellant before thelearned Single Judge, while opposing the respondent’s writ petition,was the plea that, having availed SVRS, without any protest or demur,all past claims of the respondent stood washed away, as there was totalseverance of employee-employer relationship between the respondentand the appellant. Having accepted the lump sum compensationavailable under the SVRS, it was contended that the respondent couldnot now seek any further monetary benefits, including the benefitswhich would accrue to him, were the punishment imposed on him tobe set aside.

9. By the impugned judgment dated 13 August 2019, the learnedSingle Judge has set aside the show cause notices issued to therespondent as well as the orders dated 8 June 2015 and 29 February2016, whereby the respondent was imposed punishment and theappeal against the punishment was rejected. There is, however, in theimpugned judgment, no finding on the appellant’s submission that,having availed VRS, the respondent could not now claim any financialbenefit, which would otherwise have accrued to the respondentconsequent on setting aside of the order against the punishment onhim.

10. Aggrieved by the judgment dated 13 August 2019 of the learnedSingle Judge, the appellant is before us in appeal.

Rival Contentions

11. We have heard Mr. Sandeep Prabhakar, learned Counsel for theappellant and Mr. Anuj Aggarwal, learned Counsel for the respondent.

12. Mr. Prabhakar restricted his submission to one sole ground,which was that, having taken voluntary retirement under the SVRS, allpast claims of the respondent stood extinguished. Mr. Prabhakar hasdrawn our attention to Clause 1.2, 2.1 and its sub-clauses 2.1.1, 2.1.2,5.3 and 9.1 of the SVRS, which read thus:

Arguments

“1.2Any eligible employee of BRPL as at Clause 1.1 above mayseek special voluntary retirement under this SVRS, by making arequest in writing to the Competent Authority in the standardformat enclosed herewith, within the lime limit prescribed.

*****

2.1An employee, whose application for special voluntaryretirement under this SVRS: 03 is accepted, will be entitled tocompensation as under:

2.1.160 days Salary (Basic Pay plus Dearness Allowanceas applicable on 31.12.2003) for each completed year ofservice.

OR

2.1.2The monthly salary (Basic Pay plus DearnessAllowance as applicable on 31.12.2003) multiplied bybalance months of service left before normal date ofretirement.

Whichever is lower of Clause 2.1.1 or 2.1.2

*****

5.3The actual Basic pay & DA 'drawn’ by the employee as on31 December 2003, shall be taken into account for calculating thecompensation.

*****

9.1The eligible employee who wishes to opt for voluntaryretirement under this scheme shall apply for the same during thecurrency of the scheme in the prescribed format Application forvoluntary retirement scheme from interested employees will bereceived in the office of their respective Asstt. Personnel Officer(Billing) - APO(B). The respective authority after checking theeligibility and other terms and conditions ofSVRS. Sufficientcopies of the standard application form to apply under SVRS havebeen provided at all District, APO(B) & Circle Offices.”

13. Mr.PrabhakaralsoreliesonClause2ofthedeclaration/undertaking given by the respondent at the time of availingvoluntary retirement and reproduced in para 6 supra, in which therespondent clearly undertook that his salary as on 31 December 2003would be taken as a last salary drawn. That salary, as per the sameundertaking, was reflected as “Rs. 6600 + DA 3894=00” which wasafter taking into account the penalty imposed on the respondent. Thus,having availed voluntary retirement under the SVRS on the basis ofthe salary computed after taking into account the penalty imposed onthe respondent by the DA, the respondent could not now seek upwardenhancement of his pay-scale, which would be the consequence if theorder of punishment dated 8 June 2015 were to be set aside.

14. Mr. Prabhakar placed reliance, in this context, on the judgmentof the Supreme Court in A.K. Bindal v UOI[6]. He also places relianceon the judgments of the Supreme Court in Bank of India v O.P.Swarnakar[7], IFCI Ltd v Sanjay Behari[8]and Maharashtra StateFinancialCorporationEx-EmployeesAssociationvStateof 6 (2003) 5 SCC 1637 (2003) 2 SCC 7218 (2020) 18 SCC 5117 (2003) 2 SCC 7218 (2020) 18 SCC 511

Maharashtra[9]as well as the judgment of the Division Bench of thisCourt in M S Gahlot v BSES Rajdhani Power Ltd[10].

15. RespondingtoMr.Prabhakar’ssubmissions,Mr.AnujAggarwal, learned Counsel for the respondent, submits that thedecisioninAKBindalwassubsequentlyclarifiedinASatyanarayanaReddyvPresidingOfficer,LabourCourt[11].Satyanarayana Reddy, he, submits, clearly, holds that only suchclaims as are specifically covered in the language of the VRS wouldbe extinguished by its availment. In that case, the Supreme Court heldthat, as the claim relating to lay-off compensation payable to theappellant-workman was not covered in the VRS, the right to avail thesaid compensation was not extinguished, merely because of availingthe VRS.

16. Mr. Aggarwal also cites the decision of a learned Single Judgeof this Court in P N Saluja v SBI[12].

17. Mr. Aggarwal has also taken exception to the appellant havingraised the contention that the respondent had taken voluntaryretirement under the SVRS for the first time in the argumentsadvanced before the learned Single Judge, never having taken this pleaat the time when WP (C) 3069/1999 was disposed of by this Court on12 August 2013 or even before the learned Single Judge by way ofresponse to the said writ petition or the subsequent writ petition WP

9 (2023) 11 SCC 186

10 Judgment dated 2 November 2022 in LPA 54/201811 (2016) 9 SCC 46212 2015 SCC OnLine Del 1316511 (2016) 9 SCC 46212 2015 SCC OnLine Del 13165

(C) 8489/2016 which has come to be allowed by the impugned order.

18. Qua the plea of the respondent that the submission regardingthe respondent having taken voluntary retirement under the SVRS hasbeen urged by the appellant belatedly, Mr. Prabhakar submits that, asthe plea is purely one of law, it can be taken at any time.

19. On this aspect, I am inclined to entertain the submission of Mr.Prabhakar on merits, and not to non-suit him on the ground that theplea of the respondent having voluntary retirement under the SVRSwas not taken earlier.

A.K. Bindal

20. The petitioners before the Supreme Court in this case wereofficers of the Fertilizer Corporation of India and the HindustanFertilizer Corporation. They are collectively referred to by theappellation “Bindal”.

21. Bindal filed a writ petition before this Court assailing aMemorandum dated 19 July 1995 issued by the Department of PublicEnterprises,MinistryofIndustries,GovernmentofIndia.Additionally, it was prayed that the respondents (before the SupremeCourt) be directed to pay, to Bindal, interim relief of at least 60% ofthe revised pay and perks given to Bindals’ counterparts, pendingdecision in the writ petition. Among the reliefs that Bindal sought wasfair wages resulting from revision of the petitioners’ pay scale.

22. In para 18 of the report, the Supreme Court rejected thepetitioners’ contention that their fundamental rights had been violatedon account of the failure, on the part of the respondents, to revise theirpay scales in 1992. These aspects of the decision in A.K. Bindal arenot of particular relevance to the controversy at hand.

23. What is of relevance, however, is the discussion in the reportcommencing from para 27, which takes note of a “subsequentdevelopment which has a serious impact on the relief claimed by thepetitioners”. This subsequent development pertained to a schemeannounced by the Government in October 1998, whereby employeesof Central Public Sector Undertakings could take voluntary retirement.The scheme was subsequently liberalised on 5 May 2000 and 6November2001.TherespondentsbeforetheSupremeCourtcontended that, as Bindal had taken advantage of the VRS andaccepted the ex gratia payment available thereunder, without anydemur, no relationship of employer and employee continued to existbetween Bindal and FCI. As such, it was contended that Bindal couldnot seek any retrospective revision of pay scale, at that stage. The writpetitions filed by Bindal and his associates were, therefore, alleged tohave become infructuous.

24. Noting the fact that considerable ex gratia payment wasdisbursed to employees who availed the VRS, the Supreme Courtdealt with the above issue, in paras 34 and 35 of the report thus :

“34.This shows that a considerable amount is to be paid to anemployee ex-gratia besides the terminal benefits in case he opts forvoluntary retirement under the Scheme and his option is accepted.

The amount is paid not for doing any work or rendering anyservice. It is paid in lieu of the employee himself leaving theservices of the company or the industrial establishment andforegoing all his claims or rights in the same. It is a package deal ofgive and take. That is why in the business world it is known as"golden handshake". The main purpose of paying this amount is tobring about a complete cessation of the jural relationship betweenthe employer and the employee. After the amount is paid and theemployee ceases to be under the employment of the company orthe undertaking, he leaves with all his rights and there is noquestion of his again agitating for any kind of his past rights withhis erstwhile employer including making any claim with regard toenhancement of pay scale for an earlier period. If the employee isstill permitted to raise a grievance regarding enhancement of payscale from a retrospective date, even after he has opted forVoluntary Retirement Scheme and has accepted the amount paid tohim, the whole purpose of introducing the Scheme would be totallyfrustrated.

35. The contention that the employees opted for VRS under anykind of compulsion is not worthy of acceptance. The petitioners areofficers of the two Companies and are mature enough to weigh thepros and cons of the options which were available to them. Theycould have waited and pursued their claim for revision of pay scalewithout opting for VRS. However, they in their wisdom thoughtthat in the fact situation VRS was a better option available andchose the same. After having applied for VRS and taken the moneyit is not open to them to contend that they exercised the optionunder any kind of compulsion. In view of the fact that nearlyninety-nine per cent of employees have availed of the VRS Schemeand have left the Companies (FCI and HFC), the writ petition nolonger survives and has become infructuous.”

25. Thus, in A.K. Bindal, the Supreme Court held that ex gratiapayment disbursed to the employee, who availed the VRS was in lieuof leaving the services of the industrial establishment and foregoingall claims and rights therein. It was a package deal which, in thebusiness world, is also known as a “golden handshake”. Theconcerned employee, therefore, left with all his existing rights. TheSupreme Court held that having availed VRS and accepted paymentthereunder, there was no question of the employee again agitating for any of his past rights with his erstwhile employer, including any claimfor enhancement of pay scales. The Supreme Court observed that ifthe employee was to be permitted to agitate for enhancement of payscale from a date prior to his availing VRS, the whole purpose ofintroducing the VRS would be frustrated.

A Satyanarayana Reddy

26. Mr. Aggarwal, appearing for the respondent, pressed intoservice the subsequent judgment of the Supreme Court in ASatyanarayana Reddy to counter balance Mr. Prabhakar’s reliance onA.K. Bindal.

27. In A. Satyanarayana Reddy, the Supreme Court was concernedwith the interplay of the VRS framed by the State of Andhra Pradeshvis-à-vis Section 33C(2)[13]of the Industrial Disputes Act, 1947[14]. TheDivision Bench of the High Court, in the judgment under challengebefore the Supreme Court, affirmed the decision of a learned SingleJudge, to the effect that once the workmen had availed the VRS andreceived the special compensation package available thereunder, theycould not claim lay off compensation under Section 33C(2) of the IDAct. When the matter travelled to the Supreme Court, a Bench of twoHon’ble Judges was of the opinion that, as a discordant note appear to

13 (2)Where any workman is entitled to receive from the employer any money or any benefit which iscapable of being computed in terms of money and if any question arises as to the amount of money due or asto the amount at which such benefit should be computed, then the question may, subject to any rules that maybe made under this Act, be decided by such Labour Court as may be specified in this behalf by theappropriate Government within a period not exceeding three months:Provided that where the presiding officer of a Labour Court considers it necessary or expedient soto do, he may, for reasons to be recorded in writing, extend such period by such further period as he maythink fit.capable of being computed in terms of money and if any question arises as to the amount of money due or asto the amount at which such benefit should be computed, then the question may, subject to any rules that maybe made under this Act, be decided by such Labour Court as may be specified in this behalf by theappropriate Government within a period not exceeding three months:Provided that where the presiding officer of a Labour Court considers it necessary or expedient soto do, he may, for reasons to be recorded in writing, extend such period by such further period as he maythink fit.

14 “the ID Act”, hereinafter

havebeenstruckbetweenNationalBuildingConstructionCorporation v. Pritam Singh Gill[15]and A K Bindal, the matter wasrequired to be referred to a larger Bench. It was thus that the matterwas referred to a Bench of three Hon’ble Judges, which rendered thedecision under reference.

28. While referring the issue to the Larger Bench, the two JudgeBench, in its decision in A. Satyanarayana Reddy v. Labour Court[16]observed thus:

“25.The right of the workman to claim payment of lay-offcompensation is not denied or disputed. If the said claim has nonexus with the voluntary retirement scheme, in our opinion, in agiven case, like the present one, it is possible to hold that aproceedingunderSection33C(2)oftheActwouldbemaintainable. We are, therefore, of the opinion that the questionbeing one of some importance should be considered by the largerBench as there exists an apparent conflict in the said decisions inNational Buildings Construction Corpn and A.K. Bindal”

29. A Satyanarayana Reddy and other appellants before theSupreme Court, who would collectively be referred to, hereinafter, as“ASR”, were employees of Nagarjuna Cooperative Sugars Limited[17].NSCL declared lay off of several of its employees against payment oflay off compensation.

30. The Employees Union of NSCL filed a writ petition in the HighCourt of Andhra Pradesh, claiming that lay off compensation had notbeen paid for the entire period for which they were entitled to be sopaid. During the pendency of the writ petition, NSCL was transferred 15 1972 2 SCC 116 2008 5 SCC 28017 “NSCL”, hereinafter

to one SCM Sugars Limited[18]. SCMSL absorbed some of theworkmen. Of the absorbed employees, lay off compensation was paidto some employees and not to others.

31. On 21 May 2001, the Government of Andhra Pradesh issued anOffice Memorandum[19]whereby the workmen of a company wereentitled to compensation in the event of their not having opted foremployment with the transferee company. ASR opted for voluntaryretirement and was paid special compensation in terms of the VRS.

32. As theVRSdid notprovidefor payment oflay offcompensation, ASR moved the High Court under Article 226 of theConstitution, seeking payment of lay off compensation. The transfereecompany resisted the writ petition, urging that as the workmen hadaccepted the benefits under VRS and there was cessation of employer-employee relationship, the writ petition was not maintainable and theworkmen were not entitled to any relief.

33. The High Court relegated the workmen to the IndustrialTribunal, before whom the workmen filed a petition under Section33C(2), claiming lay off compensation. The Labour Court dismissedthe application as not maintainable holding that, having received allbenefits under the VRS, the workmen were no longer “workmen”within the meaning of Section 2(s)[20]of the ID Act. Aggrieved thereby, 18 “SCMSL”, hereinafter 19 “OM”, hereinafter 20 (s)‘workman’ means any person (including an apprentice) employed in any industry to do any manual,unskilled, skilled technical, sales promotion, operational, clerical or supervisory work or any work for thepromotion of sales for hire or reward, whether the terms of employment be expressed or implied, and for thepurposes of any proceeding under this Act in relation to an industrial dispute, includes any such person whohas been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, orunskilled, skilled technical, sales promotion, operational, clerical or supervisory work or any work for thepromotion of sales for hire or reward, whether the terms of employment be expressed or implied, and for thepurposes of any proceeding under this Act in relation to an industrial dispute, includes any such person whohas been dismissed, discharged or retrenched in connection with, or as a consequence of, that dispute, or the workmen filed a writ petition in the High Court. A learned SingleJudge of the High Court upheld the decision of the Labour Court. Thedecision of the learned Single Judge was affirmed by the DivisionBench in writ appeal. The Single Judge and the Division Benchfollowed the decision in A.K. Bindal. The workmen appealed to theSupreme Court. As already noted, the matter was placed before aBench of two Hon’ble Judges, who referred it to a Larger Bench ofthree Hon’ble Judges.

34. Para 9 of the report in A. Satyanarayana Reddy notes anddiscusses the decision in A.K. Bindal.

35. The Supreme Court observed that, in Pritam Singh Gill, it hadbeen held that a claim for unpaid suspension allowance could beagitated under Section 33C (2) of the ID Act even after the employeehad been dismissed from service. The controversy in A.K. Bindal, itwas noted, was different. A.K. Bindal held that, having accepted theVRS and availed benefits thereunder, an employee could not claimhigher wages. If the VRS had also covered lay-off compensation, theworkman could not have thereafter staked a claim in that regard, aslay-off compensation would have also covered the amount received bythe workman under the VRS. Thus, it was held that the controversythat arose in Pritam Singh Gill and in A.K. Bindal were different, and

whose dismissal, discharge or retrenchment has led to that dispute, but does not include any such person—(i)who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of1950), or the Navy Act, 1957 (62 of 1957); or(ii)who is employed in the police service or as an officer or other employee of a prison; or(iii)who is employed mainly in a managerial or administrative capacity; or(iv)who, being employed in a supervisory capacity, draws wages exceeding one thousand sixhundred rupees per mensem or exercises, either by the nature of the duties attached to the office orby reason of the powers vested in him, functions mainly of a managerial nature.(i)who is subject to the Air Force Act, 1950 (45 of 1950), or the Army Act, 1950 (46 of1950), or the Navy Act, 1957 (62 of 1957); or(ii)who is employed in the police service or as an officer or other employee of a prison; or(iii)who is employed mainly in a managerial or administrative capacity; or(iv)who, being employed in a supervisory capacity, draws wages exceeding one thousand sixhundred rupees per mensem or exercises, either by the nature of the duties attached to the office orby reason of the powers vested in him, functions mainly of a managerial nature.

there was no conflict between the said decisions. Paras 17 and 18 of the report thereafter went on to hold thus:

“17. We think it appropriate to say that though there is cessation ofrelationship between the employee and the employer in VRS but ifit does not cover the past dues like lay-off compensation,subsistence allowance, etc., the workman would be entitled toapproach the Labour Court under Section 33C(2) of the Act. If it isspecifically covered, or the language of VRS would show that itcovers the claim under the scheme, no forum will have anyjurisdiction.

18. With the aforesaid clarification, we would have directed to listthe matter before the two-Judge Bench. It is not so required. It isnoticeable that the claim relating to lay-off compensation is notcovered in VRS. The Labour Court, the learned Single Judge andthe Division Bench have declined to entertain the claim on theground that they had no jurisdiction to adjudicate the controversy.We have already held that the claim pertaining to lay-offcompensation having not been part of VRS, the Labour Court hasjurisdiction to adjudicate under Section 33C(2) of the Act.Therefore, we set aside the judgment and order of the High Courtand that of the Labour Court.”

36. Thus, even while holding that availment of the VRS resulted incessation of employer-employee relationship, the Supreme Court heldthat, if the VRS did not cover past dues like lay-off compensation,subsistence allowance etc., the workman could approach the LabourCourt in respect of the said dues under Section 33C (2) of the ID Act.On the other hand, if the VRS covered lay-off compensation, no forumwould have any jurisdiction to grant the said amount, once VRS havebeen availed by the employee.

37. Inasmuch as lay-off compensation was factually not covered inthe VRS, the Supreme Court held that the Labour Court hadjurisdiction to adjudicate on the entitlement of the workman to lay-offcompensation under Section 33C (2). The decision of the High Court and the Labour Court were, therefore, set aside, and the appeal wasallowed.

Other Decisions Cited

38. Mr. Prabhakar also cited Bank of India, IFCI, M S Gahlot andMaharashtraStateFinancialCorporationEx-EmployeeAssociation.

39. O.P. Swarnakar dealt with an entirely different controversy,viz. the right of an employee to withdraw an option for availing VRSunder the “Employees Voluntary Retirement Scheme” of the StateBank of India and other Banks. The decision does not contain anyauthoritative declaration of the law regarding the entitlement of aperson, who had availed the VRS and left the employment of theemployer on that basis, to subsequently claim emoluments or financialbenefits relating to a period prior to the cessation of employment.

40. IFCI

40.1IFCIinvolved31employeesoftheIndustrialFinanceCorporation of India Ltd[21], who availed voluntary retirement and wereaccordingly relieved from duty on 25 February 2008 after having beenpaid all the benefits available under the VRS. The pay scales of theposts held by the employees were subsequently revised withretrospective effect, dating back to a period prior to the employees 21 “IFCI”, hereinafter

availing the VRS.The employees contended that they would beentitled to the benefit of the revised pay scales and, accordingly, toenhanced pension.

40.2The Supreme Court was concerned with whether they wereentitled to do so.

40.3The relevant clause of the VRS, applicable in the said case, wasreproduced in para 8 of the report thus:

“8.7. The benefits payable under this Scheme shall be in full andfinal settlement of all claims of whatsoever nature, whether arisingunder the Scheme or otherwise to the officer (or to his nominee incase of death). An officer who voluntarily retired under thisScheme will not have any claim against IFCI of whatsoever natureand no demand or dispute will be raised by him or on his behalf,whether for re-employment or compensation or back wages.”

40.4The Supreme Court noted that, while Clause 8.7 of the VRSbarred any further claim being raised against IFCI by an employeewho had availed the VRS, a subsequent clarification issued on 4January 2001 extended the benefit of future pay revision to VRSoptees. The said clarification read thus:

“2.Certain queries have been received relating to the saidScheme. Accordingly, the following clarifications are issued forinformation of all concerned:

(i) In regard to Para 8.7 of the Scheme, it is clarifiedthat the officers, opting for voluntary retirement under theabove Scheme, will be entitled to receive the benefit ofrevision in pay scales in respect of arrears of pay andallowances, gratuity, leave encashment, pension/ProvidentFund, pursuant to pay revision. However, there will be nochange in the voluntary retirement amount, in terms of Para7.5 of the Scheme.

40.5Another VRS was floated on 1 February 2008 which is referredto, in the judgment as the “VRS-2008”. Clause 7.2 of the VRS 2008extended, to optees thereunder, the benefit of pension as per the IFCIPension Regulations. Clause 9.4, however, read thus:

“9.4. The benefits payable under the Scheme shall be in full andfinal settlement of all claims whatsoever, whether arising under theScheme or otherwise to the employee (or to his nominee in case ofdeath). An employee, who is voluntarily retired under the Scheme,will not have any claim against IFCI whatsoever and no demand ordispute will be raised by him or on his behalf whether for re-employment or compensation or back wages.”

40.6Thus, in para 13 of the report, the Supreme Court observed thatthe VRS-2008 envisaged full and final settlement of all claims, whileretaining the entitlement to benefit of pension under the IFCI PensionRegulations.

40.7There was a subsequent upward revision of pay scales in theIFCI, implemented w.e.f. 1 November 2013. The respondents beforethe Supreme Court claimed the benefit of the said pay revision fromthe IFCI. The claim was rejected by the IFCI, relying on Clauses 9.4and 9.12 of the VRS-2008. The respondents, thereupon, moved theHigh Court by way of a writ proceeding. The writ petition wasdismissed by a learned Single Judge. The respondents filed a LettersPatent Appeal which was allowed by the Division Bench, holding that,as the revised pay scale had been made applicable from 2007, whenthe private respondents were still in service, they were entitled to itsbenefit.

40.8The Supreme Court, in further appeal, observed that there couldbe no quibble with the fundamental principle that any VRS schemewas a package deal, to which nothing could be added or subtracted,nor any concession granted which the scheme did not envisage. Theclauses of the scheme were, therefore, required to be scrupulouslyfollowed.The VRS optees would be entitled only to the benefitswhich the VRS itself expressly provided.

40.9The Supreme Court thereafter referred to A.K. Bindal andproceeded to hold thus:

‘25.TheUnionofIndiamovedanapplicationforclarification/modification of the above order which was heard on18-8-2000 and the following order was passed:

“Having heard learned Solicitor-General, for the applicantUnion of India and learned Senior Counsel Mr Sanyal, forthe contesting respondents, purely as an ad hoc measureand without prejudice to the rights and contentions of theparties in the main matter, we deem it fit in the interest ofjustice to modify our order dated 19-4-2000 to thefollowing effect:

(i) The authorities shall pay as an ad hocmeasure and on account Rs 1500 to Class Iemployees; Rs 1000 to Class II employees; Rs 750to Class III employees and Rs 500 to Class IVemployees consisting of various categories in eachof the classes, per month with effect from 1-4-2000.This payment will be without prejudice to the rightsand contentions of the parties in the pendingmatters.

(ii) We make it clear that this order will notaffect whatever payment by way of HRA is beingreleased or was released by the authorities to theemployees concerned.

(iii) The direction that payments as earlier issuedby us on 19-4-2000 will stand modified by thepresent order.

(iv) According to this order, all arrears witheffect from 1-4-2000 to 31-7-2000 will be clearedwithin ten weeks from today and the currentpayment be made with effect from 1-8-2000 alongwith the salary payable for the month of August2000.

(v) Future payments shall accordingly be madefrom month to month regularly along with usualsalaries payable to them.

This order is passed purely as an ad hoc measure and willnot come in the way of the ultimate decision of this Court.This order will also not be treated as a precedent in anymatter in view of the special facts of the present case. Weexpress no opinion about the nature of the order passed bythe learned Single Judge of the High Court. That questionwill abide by the decision in the main matter. In view of thepresent order, IAs are disposed of.”

40.10 Following the said decision, the Supreme Court held that therespondents before it could not claim the benefit of the revised payscales even if they were applied retrospectively from a period prior tothe respondents availing the VRS.

41. MaharashtraStateFinancialCorporationEx-EmployeeAssociation merely held that VRS optees could not claim parity withothers, who had retired upon achieving the age of superannuation.They were not, therefore, entitled to the benefit of pay revision towhich such superannuated employees would be entitled. Paras 40 and41 of the report in that case may be reproduced:

“40.However, in the opinion of this Court, employees whosecured VRS benefits and left the service of MSFC voluntarilyduring this period, stand on a different footing. They cannot claimparity with those who worked continuously, discharged theirfunctions, and thereafter superannuated. VRS employees chose toopt and leave the service of the Corporation; they found the VRS

offer beneficial to them. Apart from the normal terminal benefitsthey were entitled to, the additional amount each of them wasgiven — was an ex gratia amount, equal to a month's salary foreach completed year of service. Other retired employees werenever given such amounts. This has been emphasised in A.K.Bindal v Union of India:

“33.The Voluntary Retirement Scheme (VRS) which issometimes called Voluntary Separation Scheme (VSS) isintroduced by companies and industrial establishments inorder to reduce the surplus staff and to bring in financialefficiency. The office memorandum dated 5-5-2000 issuedby the Government of India provided that for sick andunviable units, the VRS package of the Department ofHeavy Industry will be adopted. Under this Scheme anemployee is entitled to an ex gratia payment equivalent to45 days' emoluments (pay + DA) for each completed yearof service or the monthly emoluments at the time ofretirement multiplied by the balance months of service leftbefore the normal date of retirement, whichever is less. Thisis in addition to terminal benefits. The Government wasconscious about the fact that the pay scales of some of thePSUs had not been revised with effect from 1-1-1992 andtherefore it has provided adequate compensation in thatregard in the second VRS which was announced for allCentral public sector undertakings on 6-11-2001. Clause (a)of the Scheme reads as under:

(a) Ex gratia payment in respect of employeeson pay scales at 1-1-1987 and 1-1-1992 levels,computed on their existing pay scales in accordancewith the extant Scheme, shall be increased by 100%and 50% respectively.

34. This shows that a considerable amount is to be paidto an employee ex gratia besides the terminal benefits incase he opts for voluntary retirement under the Scheme andhis option is accepted. The amount is paid not for doing anywork or rendering any service. It is paid in lieu of theemployee himself leaving the services of the company orthe industrial establishment and foregoing all his claims orrights in the same. It is a package deal of give and take.That is why in the business world it is known as “goldenhandshake”. The main purpose of paying this amount is tobring about a complete cessation of the jural relationshipbetween the employer and the employee. After the amountispaidandtheemployeeceasestobeundertheemployment of the company or the undertaking, he leaves

with all his rights and there is no question of his againagitating for any kind of his past rights with his erstwhileemployer including making any claim with regard toenhancement of pay scale for an earlier period. If theemployee is still permitted to raise a grievance regardingenhancement of pay scale from a retrospective date, evenafter he has opted for Voluntary Retirement Scheme andhas accepted the amount paid to him, the whole purpose ofintroducing the Scheme would be totally frustrated.”

41. For the above reasons, it is held that VRS employees cannotclaim parity with others who retired upon achieving the age ofsuperannuation. Likewise, those who ceased to be in employment,for the reason of termination, or their dismissal, etc. would not beentitled to the benefit of pay revision.”

The Sequitur

42. The decisions which are crucial to the issue in controversy are,therefore, A.K. Bindal and A Satyanarayana Reddy. Read together,these decisions make the issue of whether the financial benefit whichis being claimed by the VRS optee was included in the VRS package,crucial and dispositive of the optee’s right to claim the said benefit. Inother words, financial benefits which are subsumed by the VRSpackage would not be available to the VRS optee, after cessation ofhis employment with the employer. Financial benefits such as lay-offcompensation, suspension allowance and the like, which are not partof the VRS package could nonetheless be claimed, provided theentitlement to such compensation arose at a time when the optee wasin service.

43. In the present case, the last salary drawn by the respondent wasspecifically entered, in the form under which the respondent appliedfor VRS, as ₹ 6600+DA 3894/-. This was the reduced pay scale to which the respondent was entitled consequent on implementation of

the punishment awarded to him by the punishment order dated 2September 1997. Clause 2 of the declaration/undertaking provided bythe respondent while availing the VRS specifically noted that, forcalculation of benefits under the VRS, the respondent’s salary, as on31 December 2003, would be the last salary drawn. This salary, in theVRS, was the reduced salary after implementation of the punishmentimposed on the respondent.

44. The pay drawn by the respondent at the time of availing VRSwas, therefore, an integral part of the VRS package. The paymentreceived by the respondent from the appellant under the VRS packagewas also computed on the basis of the said pay scale.

45. As such, we are of the opinion that this case would be governedby the principles laid down in A.K. Bindal, rather than those containedin A Satyanarayana Reddy. As in the case of A.K. Bindal, therespondent seeks an enhancement of the pay scale to which he wasentitled at the time when he ceased to be in the employment of theappellant, after having opted for voluntary retirement under the SVRSand availed financial benefits thereunder. The Supreme Court hasclearly held in A.K. Bindal that this is impermissible.

46. The claim of the respondent cannot be likened to the claim ofthe appellant before the Supreme Court in A Satyanarayana Reddy,which was for lay-off compensation which formed no part of theentitlementsundertheVRS.Unlikelay-offcompensationorsuspensionallowance,whichhavebeenexemplifiedinASatyanarayana Reddy as emoluments which are outside the VRS, the

pay scale to which the respondent was entitled was, to repeat, anintegral part of the SVRS package.

47. Having opted for the SVRS package, therefore, the respondentcannot have, at a later stage, claim any financial benefit on the basis ofthe impugned judgment of the learned Single Judge. The SVRS, andthe benefits availed by the respondent thereunder, constituted apackage deal. Elements which formed part of the package could not,thereafter, be retrospectively varied.

48. As the ultimate punishment awarded to the respondent was byway of a reduction in his pay scale by two stages for two years withcumulative effect, the respondent, having thereafter opted forvoluntary retirement under the SVRS on the basis of such reduced payscale, cannot now seek reversal of that position and claim upwardrevision of the pay scale drawn by him at the time of opting forvoluntary retirement. Any such upward revision would alter the termsof the SVRS, which stood availed and implemented. Having availedthe benefits of the SVRS at the reduced pay scale, the respondentcould not have continued to contest the reduction of his pay scaleconsequent on the order dated 12 August 1998 of the DisciplinaryAuthority as modified by the Appellate Authority on 11 February1999.

49. For the aforesaid reasons, we are persuaded to set aside theimpugned judgment dated 13 August 2019 and order dated 5 February2020 of the learned Single Judge, albeit for reasons other than thosewhich persuaded the learned Single Judge to rule in the respondent’s favour.

50. The appeal stands allowed accordingly with no order as tocosts.

C.HARI SHANKAR, J.

OCTOBER 4, 2024Dsn/yg/aky

DR. SUDHIR KUMAR JAIN, J.

Click here to check corrigendum, if any