LEGAL ISSUE: Whether an employee can withdraw their application for voluntary retirement after submitting it, when the scheme specifies the application is irrevocable.
CASE TYPE: Service Law
Case Name: State Bank of Patiala & Ors. vs. Kanwal Nain Singh
Judgment Date: April 03, 2018
Date of the Judgment: April 03, 2018
Citation: (2018) INSC 268
Judges: Kurian Joseph, J., Mohan M. Shantanagoudar, J., Navin Sinha, J.
Can an employee withdraw their application for voluntary retirement after submitting it, especially when the scheme explicitly states that the application is irrevocable? The Supreme Court of India addressed this crucial question in a service law matter concerning the State Bank of Patiala. This case revolves around an employee who sought to withdraw his voluntary retirement application a day after submitting it, leading to a protracted legal battle. The Supreme Court bench, comprising Justices Kurian Joseph, Mohan M. Shantanagoudar, and Navin Sinha, delivered the judgment, with the opinion authored by Justice Kurian Joseph.
Case Background
The respondent, Kanwal Nain Singh, joined the State Bank of Patiala on February 29, 1977. The bank introduced a Voluntary Retirement Scheme (VRS) on January 20, 2001, which was open from February 15, 2001, to March 1, 2001. A key clause in the scheme, Clause 9, stipulated that once an application was submitted, it could not be withdrawn and would be considered irrevocable.
On March 1, 2001, the last day of the scheme, the respondent applied for voluntary retirement. However, the very next day, March 2, 2001, he attempted to withdraw his application. The bank denied his request, citing Clause 9 of the scheme, and proceeded with his retirement.
Timeline
| Date | Event |
|---|---|
| February 29, 1977 | Kanwal Nain Singh joined State Bank of Patiala. |
| January 20, 2001 | State Bank of Patiala announced Voluntary Retirement Scheme (VRS). |
| February 15, 2001 | VRS became open for applications. |
| March 1, 2001 | Kanwal Nain Singh applied for voluntary retirement. |
| March 2, 2001 | Kanwal Nain Singh attempted to withdraw his VRS application. |
| March 30, 2001 | High Court issued interim order allowing Kanwal Nain Singh to continue in service. |
| April 03, 2002 | High Court allowed the writ petition challenging the voluntary retirement. |
| December 17, 2002 | Supreme Court set aside the High Court’s judgment in (2003) 2 SCC 721. |
| January 30, 2003 | State Bank of Patiala filed an application for clarification. |
| May 01, 2003 | Kanwal Nain Singh was promoted to Junior Management Grade Scale-I. |
| January 21, 2004 | Supreme Court allowed the clarification application in (2004) 2 SCC 193. |
| February 29, 2004 | Kanwal Nain Singh was voluntarily retired. |
| March 31, 2004 to May 14, 2004 | Ex-gratia payment was credited to Kanwal Nain Singh’s account. |
| April 27, 2004 | Review Petition of the Judgment dated 21.01.2004 was dismissed. |
| October 04, 2008 | High Court allowed the appeal, which was set aside by the Supreme Court in the present judgment. |
| April 03, 2018 | Supreme Court allowed the appeal filed by State Bank of Patiala. |
Course of Proceedings
Initially, the respondent filed a writ petition in the High Court challenging his voluntary retirement. The High Court, through an interim order on March 30, 2001, allowed him to continue in service. Subsequently, on April 3, 2002, the High Court allowed the writ petition. The State Bank of Patiala appealed this decision to the Supreme Court, which set aside the High Court’s judgment on December 17, 2002, in a judgment reported as (2003) 2 SCC 721, distinguishing the scheme from the one in State Bank of India.
The bank then filed a clarification application on January 30, 2003, regarding whether the judgment would apply to the State Bank of Patiala, a subsidiary of the State Bank of India. This application was allowed on January 21, 2004. Consequently, the respondent was retired on February 29, 2004. The respondent’s review petition against the judgment of January 21, 2004, was dismissed on April 27, 2004.
The respondent then filed an application for enhanced ex-gratia payment, which he later withdrew with the liberty to pursue other remedies. Subsequently, the respondent filed a fresh writ petition, which was initially dismissed by a single judge of the High Court. However, a Division Bench of the High Court allowed the appeal, leading to the present appeal before the Supreme Court.
Legal Framework
The core of the dispute revolves around Clause 9 of the Voluntary Retirement Scheme (VRS) introduced by the State Bank of Patiala. This clause explicitly stated that “the application once made cannot be withdrawn and the same will be treated as irrevocable.” This provision forms the basis of the bank’s argument that the respondent’s application for voluntary retirement was final and could not be withdrawn once submitted.
Arguments
Appellant (State Bank of Patiala) Arguments:
- The bank argued that the respondent’s case had already been decided by the Supreme Court in (2003) 2 SCC 721 and (2004) 2 SCC 193, which upheld the irrevocability of the VRS application.
- The bank contended that the High Court erred in reopening the case based on a subsequent judgment (Food Corporation of India & Ors. Vs. Ramesh Kumar, (2007) 8 SCC 141) which dealt with a different scheme.
- The bank emphasized that the respondent was bound by the earlier Supreme Court judgments, which were judgments in personam.
- The bank submitted that the ex-gratia payment was calculated based on the total length of service till the date of actual retirement under the Scheme i.e. 29.03.2001.
Respondent (Kanwal Nain Singh) Arguments:
- The respondent sought enhanced ex-gratia payment based on his actual length of service and his promoted scale of pay.
- The respondent argued that the subsequent judgment in Food Corporation of India & Ors. Vs. Ramesh Kumar, (2007) 8 SCC 141 allowed for withdrawal of voluntary retirement applications before acceptance, and this principle should apply to his case.
- The respondent contended that the ex-gratia payment was not acceptable to him.
| Main Submission | Sub-Submissions (Appellant) | Sub-Submissions (Respondent) |
|---|---|---|
| Irrevocability of VRS Application |
✓ The respondent’s case was already decided by the Supreme Court. ✓ The High Court erred in reopening the case. ✓ The respondent was bound by the earlier Supreme Court judgments. |
✓ The judgment in Food Corporation of India & Ors. Vs. Ramesh Kumar, (2007) 8 SCC 141 should apply. |
| Ex-gratia Payment | ✓ The ex-gratia payment was calculated based on the total length of service till the date of actual retirement under the Scheme i.e. 29.03.2001. |
✓ The respondent sought enhanced ex-gratia payment. ✓ The ex-gratia payment was not acceptable to him. |
Issues Framed by the Supreme Court
The Supreme Court did not frame specific issues, but the core issue was whether the High Court was correct in reopening the case of the respondent, which had already been decided by the Supreme Court in earlier judgments. The sub-issues were related to the applicability of the judgment in Food Corporation of India & Ors. Vs. Ramesh Kumar, (2007) 8 SCC 141 and the ex-gratia payment.
Treatment of the Issue by the Court
| Issue | How the Court Dealt with the Issue |
|---|---|
| Whether the High Court was correct in reopening the case of the respondent? | The Supreme Court held that the High Court was incorrect in reopening the case. The respondent’s case was already decided by the Supreme Court, and the High Court should not have revisited the issue based on a subsequent judgment that was not applicable to the respondent’s case. |
| Whether the judgment in Food Corporation of India & Ors. Vs. Ramesh Kumar, (2007) 8 SCC 141 is applicable to the respondent’s case? | The Supreme Court held that the judgment in Food Corporation of India & Ors. Vs. Ramesh Kumar, (2007) 8 SCC 141 was not applicable to the respondent’s case. The respondent was bound by the specific terms of the VRS, which stated that the application was irrevocable. |
| Whether the respondent was entitled to enhanced ex-gratia payment? | The Supreme Court did not directly address the issue of enhanced ex-gratia payment. The Court acknowledged that the ex-gratia payment was credited to the respondent’s account in 2004, while the calculation was as on 30.03.2001. However, the Court directed the appellant bank to pay a compensation of Rs. 1,00,000/- towards belated payment, instead of directing enhanced ex-gratia payment. |
Authorities
| Authority | Court | How the Authority was Used | Legal Point |
|---|---|---|---|
| State Bank of India v. N.J. Paul [(2003) 2 SCC 721] | Supreme Court of India | Distinguished | The Court distinguished the scheme that operated in State Bank of India from the present case. |
| State Bank of Patiala v. Kanwal Nain Singh [(2004) 2 SCC 193] | Supreme Court of India | Followed | The Court followed the earlier judgment that allowed the appeal filed by the appellant bank. |
| Food Corporation of India & Ors. Vs. Ramesh Kumar [(2007) 8 SCC 141] | Supreme Court of India | Distinguished | The Court distinguished this judgment, stating that it was not applicable to the respondent’s case because the respondent was bound by the specific provision in the VRS that the application once made was irrevocable. |
Judgment
| Submission | How the Court Treated the Submission |
|---|---|
| The respondent’s case had already been decided by the Supreme Court in (2003) 2 SCC 721 and (2004) 2 SCC 193. | The Court upheld this submission and stated that the respondent was bound by the earlier judgments. |
| The High Court erred in reopening the case based on a subsequent judgment. | The Court agreed with this submission and stated that the High Court was not correct in its approach. |
| The judgment in Food Corporation of India & Ors. Vs. Ramesh Kumar, (2007) 8 SCC 141 should apply to the respondent’s case. | The Court rejected this submission and distinguished the case. |
| The respondent sought enhanced ex-gratia payment. | The Court did not grant enhanced ex-gratia payment but directed the bank to pay a compensation of Rs. 1,00,000/- for the belated payment. |
| The respondent was bound by the provision in the Scheme that the application once made was irrevocable. | The Court upheld this submission and stated that the respondent was bound by the provision. |
How each authority was viewed by the Court?
- State Bank of India v. N.J. Paul [(2003) 2 SCC 721]*: The Court distinguished this case, stating that the scheme in that case was different from the one applicable to the respondent.
- State Bank of Patiala v. Kanwal Nain Singh [(2004) 2 SCC 193]*: The Court followed this judgment, which had already decided the issue against the respondent.
- Food Corporation of India & Ors. Vs. Ramesh Kumar [(2007) 8 SCC 141]*: The Court distinguished this case, stating that it was not applicable to the respondent’s case because the respondent was bound by the specific provision in the VRS that the application once made was irrevocable.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the fact that the respondent’s case had already been decided by the Supreme Court in earlier judgments. The Court emphasized the principle of finality of judgments and held that the High Court should not have reopened the case based on a subsequent judgment that was not applicable to the respondent’s specific circumstances.
| Sentiment | Percentage |
|---|---|
| Finality of Judgments | 40% |
| Specific Terms of the VRS | 30% |
| Inapplicability of Subsequent Judgment | 20% |
| Belated Payment | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 20% |
| Law | 80% |
The Court’s reasoning was primarily based on legal principles and the specific terms of the VRS, with less emphasis on the factual aspects of the case. The legal considerations weighed heavily in the Court’s decision.
The Court reasoned that since the VRS scheme clearly stated the application was irrevocable and the Supreme Court had already upheld this in previous judgments, the High Court was wrong to re-examine the case. The Court’s logic was linear, following established legal precedent and the specific terms of the contract.
The Court considered the judgment in Food Corporation of India & Ors. Vs. Ramesh Kumar [(2007) 8 SCC 141], which allowed for withdrawal of voluntary retirement applications before acceptance. However, the Court distinguished this case, stating that it was not applicable to the respondent’s case because the respondent was bound by the specific provision in the VRS that the application once made was irrevocable. The Court rejected the argument that the principle of withdrawal should apply to the respondent’s case.
The Supreme Court held that the respondent was bound by the provision in the scheme that the application once made was irrevocable. The Court stated that “As far as the respondent is concerned, his fate was sealed when this Court declared that he was bound by the provision in the Scheme that the application once made was irrevocable. For all intents and purposes, the respondent is bound by that Judgment for ever.”
The Court further observed that “The High Court, with great respect, was not correct in its approach in reopening the case of the respondent on the basis of subsequent Judgment of this Court in Food Corporation of India & Ors. Vs. Ramesh Kumar , reported in (2007) 8 SCC 141 in the matter of withdrawal of application for voluntary retirement before the same is accepted.”
The Court also noted that “all that the respondent prayed for in the interlocutory application, which was withdrawn with liberty, was to seek enhanced ex-gratia. It appears that under the cover of the liberty granted at the time of withdrawal to pursue any remedy, if available and in accordance with law, a fresh writ petition was filed, which ultimately led to the impugned Judgment.”
There was no minority opinion in this case. The bench was unanimous in its decision.
Key Takeaways
- Employees who apply for voluntary retirement under a scheme that specifies the application is irrevocable are bound by that condition.
- Courts should not reopen cases that have already been decided by higher courts, especially when the subsequent judgment is not applicable to the specific facts of the case.
- Specific terms of a contract or scheme are binding on the parties involved.
- The principle of finality of judgments is crucial in the judicial system.
Directions
The Supreme Court directed the appellant bank to pay an amount of Rs. 1,00,000/- (Rupee One Lakh) by way of compensation to the respondent in full and final settlement of all claims towards belated payment. The Court also clarified that there shall be no recovery of the benefits already paid to the respondent during the period he was in service.
Development of Law
The ratio decidendi of this case is that when a voluntary retirement scheme explicitly states that the application is irrevocable, an employee cannot withdraw their application after submitting it. This case reinforces the principle of finality of judgments and the binding nature of contractual terms. There is no change in the previous positions of law, but it clarifies the application of the principle in specific cases.
Conclusion
The Supreme Court allowed the appeal filed by the State Bank of Patiala, setting aside the High Court’s judgment. The Court held that the respondent’s application for voluntary retirement was irrevocable as per the scheme’s terms and that the High Court was incorrect in reopening a matter already decided by the Supreme Court. The Court also directed the bank to pay a compensation of Rs. 1,00,000/- to the respondent for the belated payment of ex-gratia.