VRS Application must be withdrawn during the validity period of the Scheme

Supreme Court: Deciding the nature of Voluntary Retirement from Service (VRS) Schemes, the Court explained that where the Scheme is contractual in nature and not statutory in character, provisions of the Contract Act, 1872 would apply. It was further held that the VRS Scheme floated by the employer would be treated as invitation to offer and the application submitted by the employees pursuant thereto is an offer which does not amount to resignation in praesenti and the offer can be withdrawn during the validity period. This would be the position even when there is a clause in the Scheme that offer once given cannot be withdrawn at all. However, exception to this principle is that in such cases offer is to be withdrawn during the validity period of the Scheme and not thereafter even when if it is not accepted during the period of the Scheme.

The Bench of Dr. A.K. Sikri and R.K. Agrawal, JJ was dealing with the VRS Scheme for the employees of Madhya Pradesh State Road Transport Corporation which provided certain conditions and also a specific form in which the application/option for VRS under the Scheme was to be made. Further, one of the conditions in the VRS Scheme was that once the application form for opting VRS is submitted, it would not be open to the applicant to withdraw the same. This Scheme was declared open on July 01, 2005 and was to last till August 01, 2005. However, in October, 2006, the validity of the Scheme was later on extended till July 31, 2007. Hence, the question that arose before the Court was whether validity of the Scheme was extended up to July 31, 2007 and the employees could withdraw their offer before this date or the date on which the initial scheme expired, i.e. August 01, 2005 and the withdrawal thereafter was not permissible.

It was noticed by the Court that analysis of the factual background of the case amply demonstrates that it is not a case of extension of the original Scheme as there was a big gap/hiatus between August 01, 2005 and October 12, 2006. The main reason for such ‘extension’ was to attract more such employees to opt for VRS as the Corporation had decided to close down its operations and wanted its employees to take an honorable exit with ‘golden handshake’. Hence, as far as the first set of employees are concerned, they could withdraw their option, before it was accepted, by August 01, 2005 and not thereafter. [Madhya Pradesh State Road Transport Corporation v. Manoj Kumar, 2016 SCC OnLine SC 874, decided on 29.08.2016]

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