Voluntary Retirement Dispute: Supreme Court Rules on Employee’s Right to Withdraw Resignation

The case of M/s. New Victoria Mills & Ors. v. Shrikant Arya addresses a crucial dispute concerning the voluntary retirement of an employee under a government scheme and their right to withdraw the resignation after acceptance. The Supreme Court was called upon to determine whether an employee could withdraw a voluntary retirement request once it had been accepted, and whether delays in processing the resignation could impact its validity. Ultimately, the Court ruled that once a resignation under a Voluntary Retirement Scheme (VRS) is accepted, it is final and cannot be revoked.

Background of the Case

National Textile Corporation Limited (NTC) is a public sector undertaking with multiple industrial establishments across India. Due to financial difficulties, the company launched a Modified Voluntary Retirement Scheme (MVRS) to rationalize surplus manpower and reduce losses. The respondent, Shrikant Arya, was working as a Supervisor (Maintenance) at M/s. New Victoria Mills, one of the units operated by NTC in Kanpur, Uttar Pradesh.

The key developments in the case were:

NTC, following recommendations from the Board for Industrial and Financial Reconstruction (BIFR), decided to shut down several mills, including New Victoria Mills.
The company introduced the MVRS, offering employees compensation for voluntary retirement.
The respondent applied for voluntary retirement on July 12, 2002, requesting acceptance of his resignation along with payment of all benefits.
NTC accepted his resignation under the MVRS on May 28, 2003, with effect from June 1, 2003.
On July 1, 2003, before receiving the official acceptance, the respondent attempted to withdraw his resignation, citing unpaid provident fund dues.
Despite his request, NTC processed his resignation and formally relieved him from service on July 16, 2003.

Following these events, the respondent challenged his retirement in the Allahabad High Court, arguing that he had a right to withdraw his resignation since he had not yet been relieved from duty. The High Court ruled in his favor, prompting NTC to appeal to the Supreme Court.

Key Legal Issues

The Supreme Court had to answer the following questions:

Can an employee withdraw a resignation under the Modified Voluntary Retirement Scheme after submitting it?
Does a delay in processing a resignation affect its validity?
Are employees allowed to revoke voluntary retirement once their resignation has been formally accepted?

Petitioner’s Arguments (NTC and New Victoria Mills)

NTC, represented by legal counsel, presented the following arguments:

The resignation under the MVRS was accepted on May 28, 2003, making it final.
Once an employee’s resignation is accepted, it cannot be withdrawn unless specifically allowed by the employer.
The scheme’s Clause 5.1 clearly stated that upon acceptance of voluntary retirement, the employee’s post would be abolished, meaning that reinstatement was not possible.
The company had no obligation to keep the resignation pending due to pending provident fund payments.

Respondent’s Arguments (Shrikant Arya)

The respondent, represented by legal counsel, countered:

Since he had continued working until July 16, 2003, he had the right to withdraw his resignation before being officially relieved.
The delay in relieving him from service indicated that his resignation had not been formally accepted.
NTC’s actions were inconsistent since it canceled an earlier relieving date and delayed final processing.

Supreme Court’s Observations

After examining the facts and legal principles, the Supreme Court made the following observations:

The respondent’s resignation under the MVRS was an unconditional offer, and its acceptance by the employer made it final.
As per the scheme, once an employee’s resignation is accepted, the post is abolished, preventing the possibility of reinstatement.
“A resignation, once accepted, cannot be revoked unless the scheme specifically permits such revocation.”
The company’s internal delays in processing paperwork did not affect the validity of the resignation.
The acceptance of resignation was completed on May 28, 2003, before the respondent attempted to withdraw it on July 1, 2003.

Supreme Court’s Judgment

The Supreme Court ruled in favor of the petitioner (NTC), holding that:

The resignation of the respondent under the MVRS was valid and could not be withdrawn.
The High Court’s order reinstating the employee was incorrect.
The respondent was not entitled to any further benefits beyond what was granted under the MVRS.

Key Takeaways from the Judgment

Voluntary retirement is final: Once accepted, an employee cannot revoke voluntary retirement unless specifically allowed by the scheme.
Employer’s acceptance is conclusive: Delays in processing resignation letters do not impact the validity of acceptance.
Employees must be cautious before opting for voluntary retirement: Employees should fully understand the scheme’s terms before applying.
Legal protection for employers: The ruling protects companies from having to reinstate employees after accepting their voluntary retirement.
MVRS rules must be strictly followed: The decision reinforces that voluntary retirement schemes are contractual and must be adhered to as written.

Conclusion

The Supreme Court’s ruling in M/s. New Victoria Mills & Ors. v. Shrikant Arya sets a clear precedent for voluntary retirement cases. It affirms that once a resignation is accepted under a voluntary retirement scheme, it becomes binding and cannot be revoked. The judgment reinforces the importance of adherence to contractual terms and prevents misuse of voluntary retirement schemes by employees seeking to withdraw their applications after acceptance.

Petitioner Name: M/s. New Victoria Mills & Ors..
Respondent Name: Shrikant Arya.
Judgment By: Justice Sanjay Kishan Kaul, Justice M. M. Sundresh.
Place Of Incident: Kanpur, Uttar Pradesh.
Judgment Date: 26-09-2021.

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