Date of Judgement:
27.09.2021
Coram:
Justice Sanjay Kishan Kaul
Justice M M Sundresh
Parties:
Appellants – M/s. New Victoria Mills & Ors.
Respondent – Shrikant Arya
Subject
If the resignation offered by an employee is accepted it cannot be withdrawn citing mere procedural or administrative reasons of delay or settlement post the resignation.
Legal Provisions
- Article 226 in the Constitution - Power of High Courts to issue writs.
- Section 25(o) of the Industrial Disputes Act - Procedure for closing down an undertaking.
Overview
- The respondent worked was an employee in the appellant textile mill. Due to precarious financial condition of the textile mill, the existence and feasibility of the mill was being considered. To safeguard the employees, a Modified Voluntary Retirement Scheme (MVRS) was introduced by the appellants to manage the surplus workforce and to reduce the financial burden of the mill. Eventually the mills were determined as a sick undertaking and were ordered to close. The condition imposed was that the mill will be closed only when the benefit of voluntary retirement was availed by every employee in the mill.
- A significant aspect of the MVRS was that once an employee is retired from duty, the corresponding post shall be abolished.
- The respondent desiring to avail the benefit addressed a letter dated 12.07.2002 which requested to accept his application of resignation and provide payment of all benefits of the respondent. There was also a dispute regarding deposition of provident fund amount to the respondent which was mentioned in the above letter.
- The provident fund not being deposited, the respondent by another letter requested the resignation letter pursuant to MVRS be suspended temporarily until the same is deposited into his account as receipt of the amount will be difficult.
- A circular was issued about the last date of duty for employees who have provided letter for resignation under MVRS, wherein it was provided the existing cut-off date shall stand cancelled and a new cut off shall be issued in future.
- The respondent, assessing the current scenario, requested his letter of resignation to be cancelled holding that his resignation was not accepted by a letter dated on 01.07.2003. However, by a circular dated 14.07.2003 resignation under MVRS was accepted and the retirement date was set as 16.07.2003.
- This triggered a litigation suit where the respondent filed a writ petition before the High Court to quash the circular dated 14.07.2003 and to allow him to join the duty again. The High Court, by an order, directed the circular to be quashed as the resignation was based on a condition that all benefits and payments be cleared first. As the provident fund was not cleared, the resignation stands cancelled. Another reason provided that once a new notification introducing new cut-off date was issued, the old cut off dates stand cancelled and the withdrawal of letter of resignation by the respondent is valid.
- Aggrieved by the same, the appellant preferred an appeal before this court by a special leave petition.
- The contention of appellant was that the respondent was not even challenging the letter which accepted the resignation of the respondent but challenged only the revised cut off and once the resignation is accepted it, it cannot be revisited as it was a postponement due to administrative reasons. With respect to delay in provident funds, the appellants informed that while crediting the amount, it was done to another person with same name and it was the fault of another department and not of the appellant.
- The counsel for the respondents argued that schemes like MVRS is an invitation to offer and will come under the contract law. The application of resignation submitted by the respondent was an offer and there was no valid acceptance. Due to this, the respondent is entitled to withdraw the same. It was also raised that the letter is preconditioned on appellants clearing the payment dues.
Issue
- Whether the application of resignation contains a precondition on payment of dues for the resignation to take effect?
Judgement Analysis
- The court after examining the relevant clauses held that the resignation was applied pursuant to and according to the MVRS by which the resignation would not be operative from future date but when it is accepted and finally after the end of cut-off date.
- The court did not accept that the application was conditional as mere clearance of dues payable after one’s resignation is a natural practice.
- The fact that there were procedural delays on account will not imply that any delay in clearance of the provident fund amount would entitle the respondent to withdraw his resignation. If there is unreasonable delay, the amount may be accompanied by an interest. In this case, the amount was transferred to another account which seemed to be the fault of another department responsible for this.
- The court held that once the resignation is accepted, the tenure comes to an end. This was done in the circular which provided that date of retirement as 01.06.2003. It was also observed that the postponement of the cut-off date is a matter of financial exercise which the respondent cannot concern himself as long as his resignation is accepted.
- The court also noted that if the compensation was provided under Industrial Disputes Act, it would be much less than the MVRS proposed by the appellant. Hence, it was observed that the appellant has taken necessary and proper steps for providing with compensation for its employees and allowed the appeal and set aside the order of the High Court.
Conclusion
Once resignation is accepted, the chapter closes. Mere procedural or administrative delays cannot entitle an applicant to withdraw the same. In the present case, the object of such scheme should be considered which is to remove financial burden of the sick industry and to provide sound compensation to its employees. A natural practice cannot act as a precondition.
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Questions:
1. If a resignation is to operate prospectively from a specified date and it is withdrawn before the date of resignation will be considered a valid revocation?
