Holding

A conditional order accepting voluntary retirement does not become effective, and thus does not create a vested right, until its conditions are satisfied; consequently the employer may withdraw the scheme.

Summary

The respondent, an employee of Power Finance Corporation Ltd., applied for voluntary retirement under a scheme intended to reduce surplus staff. The corporation accepted his resignation on 20 December 1994, subject to the clearance of outstanding dues, and said the acceptance would be effective from 31 December 1994. The respondent sought deduction of a portion of the dues and asked for a relieving order, but the dues were not settled. Before the conditions were fulfilled, the corporation withdrew the voluntary retirement scheme, arguing that the acceptance was conditional and therefore not yet effective. The Supreme Court held that a conditional order does not create a vested right until its conditions are satisfied, and consequently the corporation was entitled to withdraw the scheme. The appeal was allowed, reversing the High Court’s decision and dismissing the writ petition.

Issues considered

Whether the order accepting the employee's voluntary retirement created a vested right in his favour.
Whether a conditional order of acceptance becomes effective before the stipulated conditions, such as clearance of dues, are fulfilled.
Whether the employer can withdraw the voluntary retirement scheme after a conditional acceptance has been issued.

Subjects

voluntary retirementconditional ordervested rightservice lawemployment terminationscheme withdrawalcivil appeal

Judgment

t
A POWER FINANCE CORPORATION LTD.
v.
PRAMOD KUMAR BHATIA

MARCH 17, 1997

B [K. RAMASWAMY AND G.T. NANAVATI, JJ.)

Se1vice. Law:

Voluntary retirement-Order accepting the offe,.,_When becomes effec-
c tive-Scheme framed by Corporation· to relieve surplus staff-Employee ap-
plying for voluntary retirement under the Scheme-Co1poratio11 accepted the
resigiiation by proceedings dated December 20, 1994 subject to the clearance '
of the outstanding dues-Acceptance was to be given effect from
31.12.1994-Meanwhile the Corporation withdrew the Scheme-High Cowt
holding that order dated 20.12.1994 created a vested right in the employee and
D the same cannot be divested by subsequent orders-Held, Order dated
20.12.1994 is a conditional order in that 1111til the dues are paid the order does
not become effective- Unless the employee is relieved of the duty after
acceptance of the offer of voluntary retirement or resignation, jural relation-
ship of ihe employee and the employer does not come to an end.-Since the
E order accepting the voluntary retirement, was conditional one and before
compliance with the conditions the Corporation withdrew the Scheme, the
order did not become effective-Thereby no vested right has been created in
favour of the employee.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2416 of
F 1997.

From the Judgment and Order dated 1.11.96 of the Delhi High Court
in W.P. No. 2086 of 1995. •

G P.P. Rao and S. Nandrajog for the Appellant.

AK. Sikri and Ms. Madhu Sikri for the Respondent.

The following Order of the Court was delivered :

H Leave granted. We have heard learned counsel on both sides.
1170
POWER FINANCE CORPN. LTD. v. P.K. BHATIA 1171

This appeal by special leave arises from the judgment of the Division A
Bench of the Delhi Court, made on 1.11.1996 in C.W. No. 2086/95.

The admitted position is that the respondent, while working in the
appellant-Corporation, had applied for voluntary retirement, pursuant to
the scheme framed by the Corporation to relieve the surplus staff. Initially,
by proceedings dated December 20, 1994, the Corporation accepted his B
resignation subject to the clearnnce of the outstanding dues. The accep-
tance was to be given effect from December 31, 1994. By letter dated
January 6, 1995, he requested for deduction of a sum of Rs. 37,521.20 out
of the outstanding dues. He also requested thus:

"I once again request you that the formal relieving order relieving c
me from PFC w.e.f. 31.12.1994 be handed over to me immediately.
My service period for which ex-gratia is payable be informed to
me and my dues be paid immediately."

Based thereon, it is contended by Mr. P.P. Rao, learned senior D
counsel for the appellant, that acceptance of the voluntary retirement of
the respondent was a conditional one. He himself understood that unless
he is relieved of the duties after_payment of outstanding dues, the voluntary
retirement does not become effective. In the meanwhile, realising the
mistake committed by the appellant for effecting the voluntary retirement
scheme which docs not apply to the Corporation since there is no surplus· E
staff, the appellant withdrew the scheme. Therefore, there was neither the
scheme nor a concluded order of voluntary retirement of the respondent
relieving him from the duties. The High Court, therefore, is not right in
holding that the order dated December 20, 1994 created vested right in the
respondent and the same cannot be divested by subsequent orders.
F
Initially, Mr. A.K. Sikri appeared on behalf of the respondMt and
argued the matter. Before the order could be dictated, the respondent
himself appeared and said that his counsel may be relieved and he may be
permitted to argue the matter. Accordingly, we permitted him to argue the
matter. He stated that he was relieved from the duty on the basis of an G
endorsement made on the letter dated December 20, 1994 and what he
meant by writing the letter dated January 6, 1995 was to seek a certificate
for relieving him from the duty~ The acceptance of the voluntary retirement
having become effec~ive from December 31, 1994, vested right had been
created in him. Therefore, the view of the High Court is in accordance with
~ H

•
-il
1172 SUPREME COURT REPORTS [1997] 2 S.C.R.

A Having regard to the respective contentions, the question: that arises
for consideration is: whether the respondent acquired a vested right after
acceptance of the voluntary retirement by proceedings dated December 20,
1994? It is seen that the ~rder is a conditional order in that until the dues
are paid, the order does not become effective. The respondent himself
admitted that the outstanding dues could be· adjusted from the amount
B
payable to him. Admittedly, no such adjustment has been made. He,
therefore, rightly understood that unless he is relieved of the duties of the
post, after the payment of the outstanding dues, the order accepting his
voluntary retirement does not become effective.

c of .theIt duty,
is now settled legal position that unless the employee is relieved
after acceptance of the offer of voluntary retirement or
resignation, jural relationship of the employee and the ·employer does not
come to an end. Since the order accepting the voluntary retirement was a
conditional one, the conditions ought to have been complied with. Before
the conditions could be complied with, the appellant withdrew the scheme.
D Consequently,· the order accepting voluntary retirement did not become
effective. Thereby no vested right has been created in favour of the
respondent. The High Court, therefore, was not right in holding that the
respondent has acquired a vested right and, therefore, .the appellari\. has
no right to withdraw the scheme subsequently.
E The appeal is accordingly allowed. The judgment of the High Court
stands reversed. The writ petition stands dismissed. No costs.

R.P. Appeal allowed ..