Holding

A VRS is an invitation to treat; employee applications are offers that the Port Trust may accept or reject at its absolute discretion, and the High Court’s directive to accept was beyond its jurisdiction.

Summary

The Vishakhapatnam Port Trust (VPT) introduced a Voluntary Retirement Scheme (VRS) under a Ministry of Surface Transport directive, allowing employees with ten years of service or age 40+ to apply. The Trust’s Chairman limited consideration to employees below 58 years, rejecting applications of two senior employees who were over that age. The employees filed writ petitions seeking mandatory acceptance of their VRS applications; the High Court directed the Trust to accept them, which the Trust appealed. The Supreme Court held that the VRS is merely an invitation to treat; employee applications constitute offers that the Trust may accept or reject at its absolute discretion, as permitted by clause 2(b) of the scheme. The Court found the High Court’s order directing acceptance beyond its jurisdiction and set aside the order. Consequently, the appeals were allowed and the VPT’s discretion upheld.

Issues considered

The nature of a Voluntary Retirement Scheme: invitation to treat or enforceable offer?
Whether the Port Trust’s discretion to reject VRS applications, especially for employees above 58 years, is valid under the scheme.
Whether the High Court erred in directing the Trust to accept the employees' VRS applications.
Whether the employees’ applications can be considered discriminatory or violative of service rules.

Legislation cited

Subjects

voluntary retirement schemeinvitation to treatoffer and acceptancediscretion of employerseniorityage limitservice lawport trustdiscriminationwrit of mandamus

Judgment

~

A BOARD OF TRUSTEES, VISHAKHAPA TNAM PORT TRUST AND ORS.
v.
T.S.N. RAJU AND ANR.

SEPTEMBER 6, 2006

B [DR. AR. LAKSHMANAN AND TARUN CHATTERJEE, JJ.]

Service law

Voluntary Retirement Scheme-Applicable to all Ports-Chairman of a
c Port Trust Board deciding that only those employees who were below age
of 58 years were to be considered for benefit of scheme-Applicability to
employee above that age-Port Trust rejecting their application-High Court
directing acceptance of their cases-Correctness of-Held-VRS was not an
offer but merely an invitation lo treat-Application of employees constituted
D an offer which could not take effect till its acceptance in writing by Port Trust
and could be rejected or accepted at absolute discretion of latter-Correctness
of either the VRS or decision of Port Trust not to grant voluntary retirement
to eve1J1one was not questioned-High Court overlooked that application of
concerned employees could not be considered in view of their seniority in
service and it also did not find how they were disriminated against those who
E had been granted voluntary retirement-Direction for acceptance of their
application was beyond jurisdiction of High Court.

With a view to reduce surplus manpower, the Ministry of Shipping, Road
Transport and highways came out with a scheme of voluntary retirement
(YRS) applicable to all the Ports. The Chairman of appellant decided that the
F VRS should be considered in the cases of those employees who are below the
age of 58 years. Representation of respondent no.I and 2 for VRS was rejected
by appellant. Aggrieved by non-consideration of their cases, they filed writ
petitions in High Court. Single Judge allowed both the writ petitions with
direction to appellant to consider and accept their VRS applications. In writ-
G appeal therefrom, Division Bench of High Court dismissed the appeals with
directions to appellant to pass orders on the applications of the respondents
within a period of one month. Hence the present appeals.

Appellant contended that (i) it is not mandatory for any organization to
accept every application that is received from the employees seeking voluntary
H 758 "
AOARDOFTRUSTFES. VISHAKHAPATNAMPORTTRUST1·. T.S.N. RAJU 759

retirement (ii) the VRS scheme stipulated that voluntary retirement could A
not be sought for as a matter of right (iii) it was authorized to take a decision
to consider applications of only those employees who have not crossed 58 years
of age and persons beyond that age were ineligible.

Respondent contended that (i) the appellant had no discretion of refuse
the offer to go on retirement under the voluntary retirement scheme except B
in cases of the exigencies of service, compelling necessity or indispensability
of the employees concerned (ii) appellant having accepted the offer of similarly
placed employees who had also completed 57 and 58 years of age to go on
voluntary basis, declining to permit the respondent to retire on voluntary
retirement basis was discriminatory (iii) appellant had no authority to modify C
the voluntary retirement scheme.

Allowing the appeals, the Court

HELD 1. The request of the employees seeking voluntary retirement
was not to take effect until and unless it was accepted in writing by the Port
Trust Authorities. The Port Trust Authorities had the absolute discretion D
whether to accept or reject the request of the employee seeking voluntary
retirement under the scheme. There is no assurance that such an application
would be accepted without any consideration. The process of acceptance of an
offer made by an employee was in the discretion of the Port Trust. The VRS
was not a proposal or an offer but merely an invitation to treat and the E
applications filed by the employees constituted an offer. 1777-B-DI

Bank of India and Ors. v. O.P. Swarnakar and Ors., 1200312 SCC 721
and HEC Voluntary Retd. Employees Welfare Society and Anr. v. Heavy
Engineering Corpn. Ltd. and Ors., 120061 3 SCC 708, relied on.
2.1. The High Court has not seen that the respondent's application for F
voluntary retirement cannot be considered in view of the seniority of service
of the employees concerned. It also did not mentiou how there was
discrimination between those who have been granted voluntary retirement and
those who have not. 1774-E; 777-A, Bl

2.2. Case of Respondent No. 1 could not be considered for VRS oecause G
several applications were pending and he was very junior in the rank of A.E.
By the time, the application of senior A.E's were processed, the required
number had already been arrived at and the case of respondent No. I could not
be considered. 1775-C, DI
2.3. In the case of respondent No. 2 Single Judge of High Court ought H
760 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A to have considered his application dated 27.4.2000 by which he applied while
he was in the cadre ofC.T.O.W. (Class-Ill) to go on voluntary reitrement. But
hy this time, the applications o(other A.E's who are senior in the order of
receiving, were considered and therefore, his application at this stage could
not be considered as he was the juniormost A.E. among the V.R.S. applied
B A.E's and his application dated 29.8.2000 is least in the order of seniority of
application received for V.R.S.1774-F-Gl

2.4. Respondent No.2 was posted as A.E. for the maintenance section of
C.I.S.F. residential colony consisting maintenance repairs, drains etc.,
including water supply to entire colony, thus his services are very much
essential to the department, therefore, his application dated 28.4.2000 has
c not been considered keeping in view the exigencies of work essentially of
cadre, feasibility of surrending the post etc., since as per Government
guidelines V.P.T. has to show appropriate surplus in the manpower in the cadre
without causing hindrance to the normal operations of the department Further
as per the above circular while accepting V.R.S. the Port Trust has to ensure
,D to surrender the vacancy caused due to retirement of the incumbent on V.R.S.
1775-F-H; 776-AI
2.5. The V.R.S. accepted by the Chairman, VPT to some of the employees
of the VPT who have completed 58 years of age is only prior to 23.8.2000 by
-
which time the retirement age limit of 60 years was in force and the same is
E not relevant to the case on hand as in the case of the respondent, he was holding
important works under his control and his continuance was considered
necessary in VPT service and thereby YRS was not granted to him. In the
respondent's case, no such decision has been taken even on his application
dated 13.9.2000 addressed by him direct to Deputy Chairman. The Cicular
dated 29.8.2000 that the employee who was desirous to apply for retirement
F under voluntary retirement scheme may apply direct to Dy. Chairman was
only to consolidate such application at administrative level before arriving at
decision, but does hot ensure ready acceptance as alleged by the respondents.
1776-B-DI
3. The respondents have not questioned the validity and correctness of
G the voluntary reitrement scheme introduced by the Government of India and
the decision taken by the Port Trust in its meeting of the Board of Trustess
held on 30.10.1991 pursuant to the decision of the Minsitry in terms of which
Port Trust and Dock Labour Board are not grant voluntary retirement to
everyone. 1776-FI

H 4. The Single Judge ought not to have issued the direction to the
..
BOARD OF TRUSTEES, VISHAKHAPATNAM PORTTRUSTr. T.S.N. RAJU[LAKSHMANAN,J.J76 J

Department to accept the voluntary reitrement of the respondent as on the A
date of their application and pass appropriate order. The Judge at any rate
can only direct the Port Trust to consider their application for voluntary
retirement and pass appropriate orders. The order passed by the Single Judge
is, therefore, beyond the jurisdiction of the Court in issuing such direction.
Likewise, the Division Bench also committed the same error in issuing the B
directions. 1774-G, H; 775-AI
'·
S. The High Court could not entertain grievance of the respondents even
on their own showing. It was based merely on a presumption that application
for YRS, if tiled before April, 2000, would be considered by July, 2000 when
no such circular or letter had been issued by the Port Trust. The Scheme C
also provides that the Port Trust and Dock Labour Board will have a right
not to grant voluntary retirement for the reasons recorded in writing. Such
a right given to the Port Trust was not questioned in the writ petition.
(776-G; 777-AI
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3957 of2006.
D
From the Judgment and Order dated 21.11.2005 of the High Court of
Andhra Pradesh at Hyderabad in W.A. Nos. 2105/2005 and 1558/2005.
Kailash Vasudev, Gopal Singh and Nishakant Pandey for the Appellants.
L.N. Rao, (N.P.), G. Ramakrishna Prasad, Mohd. Wasay Khan, K.P.
Kyalasanath, Suyodhan Byrapaneni and Venkat Subramaniam T.R. for the E
Respondents.
The Judgment of the Court was delivered by
DR. AR. LAKSHMANAN, J. Leave granted.
The Board of Trustees, Visakhapatnam Port Trust and others are the p
•1 appellants before us and the respondents are employees of the said Port
Trust.
The matter arises out of an insistence of two employees of the
Visakhapatnam Port Trust (in short 'the VPT') to seek retirement under a
voluntary retirement scheme, even though, according to the employer Port G
Trust they are not entitled to avail the benefit of the scheme because they
have attained the cut off age of 58 years before their cases could be considered.

The learned single Judge allowed the writ petition filed by the
respondents and directed the Port Trust to consider and accept the voluntary
retirement scheme (hereinafter called 'VRS') of the respondents as on their H
762 SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.

A date of application and pass appropriate orders and pay all the benefits
thereunder. However, the learned single Judge held that the respondents are
not entitled for pension on the ground that they have retired on attaining the
age of superannuation at the age of 60 years and they shall be entitled for
pension as per the date of retirement under the YRS to be extended to the
B respondents. The learned Single Judge further held that the salaries received
by the respondents till their age of superannuation shall not be recovered if
paid as they have worked. The learned Judges of the Division Bench, by their •
order dated 21.11.2005 dismissed the appeal filed by the VPT and directed the
VPT to pass orders on the applications of the respondents for voluntary
retirement within a period of one month from the date of judgment.
c According to the VPT, both the learned single Judge and the Judges
of the Division Bench of the High Court have mis-read the applicability of the
Scheme and directed the VPT to consider and accept the case of the
respondents and that such a direction is unsustainable in law and is likely
to have a cascading effect. Therefore, the VPT have come before this Court
D through the above civil appeals arising out of Special Leave Petition Nos.
26322-26323 of2005.

The short facts relevant to the issue in dispute are as follows:

With a view to reduce surplus manpower, the Union Ministry of Surface
E Transport (now called the Ministry of Shipping, Road Transport and Highways
- Department of Shipping) came out with a scheme of voluntary retirement.
This was made applicable to all the Ports. The scheme of voluntary retirement
was introduced in the appellant-VPT pursuant to the direction of the Ministry
of Surface Transport contained in its letter No. LB-1601617188-L.II dated
F 29.08.1991. The said scheme is annexed as Annexure-P I which reads as under:

"GOVERNMENT OF INDIA
<
MINISTRY OF SURFACE TRANSPORT

(LABOUR DIVISION)

No. LB-1601617/88-L.II New Delhi, 29th August, 1991

To
Shri P.V.R.K. Prasad
Chairman, '
Vishakhapatnam Port Trust,
BOARDOFTRUSTEES. VISHAKHAPATNAM PORTTRUSTr. T.S.N. RAJU [LAKSHMANAN,J.] 763
Vishakhapatnam-530035 A
Subject:- Voluntary Retirement Scheme for Port Trusts and Dock
Labour Boards

Sir,

I am directed to say that the matter regarding introduction of a B
uniform Voluntary Retirement Scheme for officers. employees and
workers of Port rrusts and Dock Labour Board has been under
consideration of the Government. After careful consideration it has
been decided that Port Trusts and Dock Labour Boards can introduce
Voluntary Retirement Scheme with a view to reducing surplus manpower C
subject to the following terms and conditions:-

2. (a) An employee who has completed JO years of service or completed
40 years of age may seek voluntary retirement by a written request.

(b) The Port Trust and Dock Labour Board will have the right not to
grant voluntary retirement for reasons to be recorded in writing. D
(c) The terminal payments available to an employee who seeks
voluntary retirement would be:-

1. the balance in his Provident Fund Account payable as per the
GPF/CPF regulations applicable to him; E
ii. cash equivalent of accumulated earned leave as per the rules of
the Port Trust/Dock Labour Board;

iii. gratuity as per Gratuity Act or the Gratuity Scheme applicable to
the employees; F
.. 1v. one month's/three month's notice pay (as per the conditions of
service applicable to him).

v. pens ion as per the rule Port Trust/Dock Labour Board.

(d) In addition, an employee whose request for Voluntary Retirement G
is accepted would also be entitled to an ex-gratia payment equivalent
to J Y, months emoluments (Pay+ D.A) for each completed year of
service or the discounted value of the emoluments (at J2% rate of
discount) that would have become payable for the balance months of
service left, whichever is less. For example, an employee who has put H
764 SUPREME COURT REPORTS [2006) SUPP. 5 S.C.R.
!- •
A in 24 years of service and has got only one year of service for normal
retirement, he will get ex-gratia payment of only 12 months emoluments
(pay+DA) discounted at 12% per annum and not 36 months
emoluments.

{e) In addition, the employee and his family would also be entitled to
B travel by entitled class to the place where he intends settling down.

3. While introducing the voluntary retirement scheme, Port Trusts and
Dock Labour Boards will make an assessment of surplus man-power
taking into account the present and future operational requirements. •
While accepting the Voluntary Retirement of the employee, the Port
c Trust/Dock Labour Board will also issue an order to the vacancy
caused by the Voluntary retirement would not be filled up and the post
is abolished.

4. No claim of the dependents of the employees going on voluntary
retirements for any compassionate appointment under the Port Trust/
D Dock Labour Board will be entertained.

5. The Voluntary Retirement Scheme would be financed by the Port
Trusts/ Dock Labour Boards from their own resources and no budgetary
support in the form of loans will be granted by the Government, after
seeking approval of the Ministry.
E
6. Port Trusts and Dock Labour Boards can introduce Voluntary
Retirement Scheme on the above parameters, after seeking approval
of the Ministry.

Yours faithfully
F
Sd/-

(P.K. MISHRA) Director"

On 30. I0.1991, the approval of the Board of Trustees of the appellant
G was sought for introducing the scheme of voluntary retirement. The terms and
conditions of the scheme and its applicability were detailed therein. The
scheme is annexed along with this appeal and marked as Annexure-P2 which
is reproduced hereunder:

H
' ....
BOARD OF TRUSTEES. VISHAKHAPA TNAM PORTTRUSTr. T.S.N. RAJU[LAKSHMANAN,J.] 765

"VISHAKHAPATNAM PORT TRUST A
MEETING NO. 4 OF 1991-92 OF THE BOARD OF
TRUSTEES TO BE HELD
ON 30.10.1991
AGENDA ITEM NO. 36
B
Sub: Voluntary Retirement Scheme for the Port Trusts and Dock Labour
Boards.

The Ministry has decided that Port Trusts and Dock Labour
Boards can introduce Voluntary Retirement Scheme for its officers,
Employees and Workers with a view to reduce the surplus manpower C
subject to following terms and conditions:
(a) An employee who has completed I0 years of service or completed
40 years of age may seek Voluntary Retirement by a written
request.
(b) The Port Trust and Dock Labour Boards will have the right not D
to grant Voluntary Retirement for reasons to be recorded in writing.
(c) The terminal payments available to an employee who seeks
Voluntary Retirement would be:-
(i) The balance in his Provident Fund Account payable as per E
the GPF/CPF Regulations applicable to him;

(ii) Cash equivalent of accumulated earned leave as per the rules
of the Port Trust/Dock Labour Board;

(iii) Gratuity as per Gratuity Act or the Gratuity Scheme applicable F
to the employee;

(iv) One month's/ Three month's Notice Pay (as per the conditions
of service applicable to him);

(v) Pension as per the rules of the Port Trust/ Dock Labour
Board. G

- (d) In addition, an employee whose request for Voluntary Retirement
is accepted would also be entitled to an ex-gratia payment
equivalent to I Yi months emoluments (Pay + D.A) for each
completed year of service or the discounted value of the
H
766 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A emoluments (at 12% rate of discount) that would have become
payable for the balance months of service left, whichever is less.
(e) In addition, the employee and his family would also be entitled
to travel by the entitled class to the place where he intends
setting down.
B Under the above scheme while accepting the Voluntary Retirement
of the employee, the Port Trust/Dock Labour Board will also issue an
order that the vacancy caused by the Voluntary Retirement would not
be filled up and the post is abolished and also that no claim of the
dependents of the employee going on Voluntary Retirement for any
c compassionate appointments under the Port Trust and Dock Labour
Boards will be entertained. The above scheme has to be financed by
the Port Trust/ Dock Labour Board from their own resources and no
budgetary support would be granted by the Government.

The Ministry while communicating the above scheme, has stated
D that the Port Trust and Dock Labour Boards can introduce a voluntary
Retirement Scheme on the above parameters, after making an assessment
of surplus man power taking into account the present and future
operational requirement, subject to approval of the Government.

A copy of the Ministry's letter No. LB-1601617/88-L.II, dt. 29.08.1991
E on the above subject is enclosed for reference.

In view of the Ministry's instructions, it is proposed to introduce
a Voluntary Retirement Scheme on the above parameters, in our Port
also.

F Board's approval is, therefore, requested to introduce a Voluntary
.
Retirement Scheme in our Port on the parameters prescribed by the
Ministry of Surface Transport in its letter No. LB;l6016/7/88-L.II,
dt.29.08.1991 subject to approval of the Ministry.

Encl.: As above."
G Respondent No. I T.S.N. Raju applied for voluntary retirement on
16.08.1999 but withdrew his application for YRS on 06.04.2000. He again
applied for YRS on 27.04.2000. He averred in his writ petition that the application
-
was made on the basis that Port has informally alerted that Management is
serious about considering the request of the employees seeking YRS. In the
H
.. l
BOARD OFTRUSTEES, VISHAKHAPATNAM PORT TRUSTI'. T.S.N. RAJU [LAKSHMANAN, J.) 767

counter affidavit filed by the VPT, it was categorically stated that the A
Management had issued no letter or circular to such effect. On 26.07 .2000,
respondent No. I was promoted as Assistant Engineer (Civil) on ad hoc basis
but he did not renew his application.

Respondent No.2 - R. Rama Rao applied for YRS on 28.04.2000. In a
meeting of the Heads of Department of the VPT, the concern expressed by B
the Secretary, Department of Shipping, Ministry of Surface Transport about
the YRS was discussed. It was decided by the Chairman that the YRS should
be considered in the cases of those employees who are below the age of 58
years. The said decision is annexed along with the appeal as Annexure-P3
which reads as under:
c
"VISHAKHAPATNAM PORT TRUST

ADMINISTRATION DEPARTMENT

No. ADMNNRS/2000 Date: 23.08.2000 D

C.E./C.M.E./D.C./T.M./F.A.&C.A.O

C.M.0/C.M.M./DIRECTOR (R&P)

MANAGER (OP)
E
ORDER

Sub: Grant of Voluntary Retirement under V.R Scheme to the employees-
M.O.S.T. Letter No. LB-1601617/94-L-JI, dt.29.08.1991-Reg.
During the daily HODs Meeting held on 23.08.2000, keeping in F
view the concern expressed by the Secretary (Dept. of Shipping),
M.0.S.T, Govt of India, a review has been made by the Chairman on
the implementation of voluntary retirement under the scheme to the
employees of V.P.T. and it has been decided that the Voluntary
Retirement Scheme should be considered in the case of those employees
who are below the age of 58 years. G
All the HODs are, therefore, requested to forward the V.R.S. cases
of only those employees who have not attained the age of 58 years.

This issues with the approval of the Chairman.
H
768 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.
f- ..
A SECRETARY

VISHAKHAPA TNAM PORT TRUST'

On 29.08.2000, respondent No. I made a representation to the Chairman
of the VPT to consider his application dated 27.04.2000 which he had made
B before being promoted as Assistant Engineer. However, his case could not
be considered for YRS because there were several applications pending and
he was very junior in rank of A.E.(C). By the time the applications of senior
A.E.s were processed, the required number had already been arrived at and
the case of respondent No. I could not be considered.
c Being aggrieved by non-consideration of his case, respondent No.I
filed Writ Petition No. 17697 of2000 before the High Court of Andhra Pradesh
on 03.09.2000 with the following prayers:

"For the reasons and in the circumstances stated in the accompanying
D affidavit, the petitioners herein pray that this Hon'ble Court in the
interest of justice be pleased to issue a writ or direction more particularly
one in the nature of writ of Mandamus

(i) declaring the action of the rr.spondents in not accepting the offer
of the writ petitioner to retire from the service of the
E Vishakhapatnam Port Trust on Voluntary retirement basis as unjust
and illegal; and

(ii) consequently direct the respondents to treat the writ petitioner
to have retired from its service on voluntary retirement basis with
immediate effect by extending all the terminal benefits that flow
F therefrom and pass such order or further order or orders as are
deemed fit and proper in the circumstances of the case."

Being aggrieved by non-consideration of his case, respondent No.2
Rama Rao filed Writ Petition No. 23543 of 2000 before the High Court on
18.09.2000 with the following prayers:
G
(i) declaring the action of the respondents in not accepting the offer
of the writ petitioner to retire from tht: service of the Vishakhapatnam
Port Trust on Voluntary retirement basis as unjust and illegal; and

H
(ii) consequently direct the respondents to treat the writ petitioner to . ~.
BOARD OF TRUSTEES, VISHAKHAPATNAM PORTTRUST 1·. TS.N. RAJU (LAKSHMANAN, ll 769
have retired from its service on voluntary retirement basis with A
immediate effect by extending all the terminal benefits that flow
therefrom and pass such order or further order or orders as are
deemed fit and proper in the ckcumstances of the case."

Both these writ petitions were heard together. The VPT filed a detailed
counter affidavit denying the allegations of the respondents that cases of B
others similarly situate had been considered and they had been discriminated
' against by the VPT.

The retirement age of the employees of the VPT was rolled back from
60 years to 58 years. Respondent No. I (Born on 01.08.1942) and Respondent
No. 2 (Born on 23.09.1941) were superannuated from service on 30.11.2000. C
The learned single Judge passed a common judgment and allowed both the
writ petitions and directed the VPT to consider and accept the YRS of the
respondents herein with certain other directions. Being aggrieved, the VPT
preferred two separate Letter Patent Appeals being Writ Appeal Nos. 2 !05
and 1558 of2005. By the impugned common final judgment, both the appeals D
had been dismissed with a direction to the VPT to pass orders on the
applications of the respondents within a period of one month. Aggrieved by
the above common judgment, the VPT has come before us by filing the above
civil appeals.

We heard Mr. Kailash Vasudev, learned senior counsel assisted by Mr. E
Gopal Singh, learned counsel for the appellants and Mr. L.N. Rao, learned
senior counsel assisted by Mr. G. Ramakrishna Prasad, learned counsel for the
respondents.

Mr. Kailash Vasudev, learned senior counsel has submitted that the
Division Bench has not appreciated the contentions of the VPT against the F
order of the learned single Judge. According to him, it was specifically argued
that undeniably it is not mandatory for any organization to accept every
application that is received from the employees seeking voluntary retirement
and that the VPT was authorized to take a decision on 23.08.2000 to consider
applications of only those employees who have not crossed 58 years of age. G
It is further submitted that the learned single Judge and of the Division Bench
,•
of the High Court have failed to appreciate that the scheme clearly stipulates
of basic condition that voluntary retirement under a scheme cannot be sought
for as a matter of right. The factual position with regard to the other employees
whose cases for voluntary retirement were considered had been placed by
filing a counter affidavit but has been overlooked by the High Court. Learned H
770 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A senior counsel further submits that the High Court has erred in directing that
even though the writ petitioners had continued in service beyond 58 years
till their superannuation and had received salary they would not be required
to refund the excess amount received and that they shall be extended benefits
under the YRS as on the date of their applications. It is further urged that a
person who has crossed the age of 58 years is not eligible to be considered
B for retirement under the YRS. Respondent No.2 had in fact completed the age
of 58 years by 23.09.1999. Therefore, learned senior counsel would submit that
the orders of the learned single Judge as well as the Division Bench are
arbitrary and have been passed without taking into consideration these vital
facts.
c Learned senior counsel appearing for the respondents/writ petitioners
submitted that the Port Trust has no discretion to refuse the offer to go on
retirement under the voluntary retirement scheme except in cases of the
exigencies of service or the compelling necessity or the indispensability of the
employees concerned.
D
The Port Trust having accepted the offer of similarly placed employees
who have also completed 57 years of age and also 58 years of age to go on <
voluntary basis, declining to ·permit the respondents to retire on voluntary
retirement basis is clearly discriminatory.

E The Port Trust has committed illegality in not passing any orders on the
application dated 13.9.2000 to retire from its service on voluntary retirement
basis though the application has been forwarded for acceptance by the Head
of the Department, Financial Advisor & Chief Accounts Officer and the
Yigi lance Department. It is, therefore, contended that the Port Trust has not
F acted fairly and justly in the case of respondent - Sri Rama Rao.

Jn Bank of India & Ors. v. O.P. Swarnakar & Ors., (2003] 2 SCC 721,
the moot question posed and answered by this judgment was whether the
YRS is an offer/proposal or merely an invitation to offer. The question was
whether the Banks intended to make an offer or merely issued an invitation
G to treat is essentially a question of fact. Jn paragraph 49, this Court held as
under:

"49. An offer indisputably can be made to a group of persons
collectively which is capable of being accepted individually but the
question which has to be posed and answered is as to whether having
H regard to the service jurisprudence: the principles of Indian Contract
BOARDOFTRUSTEES, VISHAKHAPATNAMPORTTRUST •·. T.S.N. RAJU [LAKSHMANAN.J.j 771
... ·\
Act would be applicable in the instant case. It is the specific case of A
the "Banks" that the schemes had been floated by way of contract.
It does not have any statutory flavour. Reference to the pension
scheme framed under the regulations was made for computation of the
pension."

The learned Judges of the Bench have also elaborately discussed the use of B
the term "offer" or "proposal" and held in paragraphs 59, 60, 61, 62 and 74
as under:

"59. The request of employees seeking voluntary retirement was not
to take effect until and unless it was accepted in writing by the
competent authority. The Competent Authority had the absolute C
discretion whether to accept or reject the request of the employee
seeking voluntary retirement under the scheme. A procedure has been
laid down for considering the provisions of the said scheme to the
effect that an employee who intends to seek voluntary retirement
would submit duly completed application in duplicate in the prescribed D
form marked "offer to seek voluntary retirement" and the application
so received would be considered by the competent authority on first
come first serve basis. The procedure laid down therefor suggests
that the applications of the employee would be an offer which could
be considered by the bank in terms of the procedure laid down
therefor. There is no assurance that such an application would be E
accepted without any consideration."

"60. Acceptance or otherwise of the request of an employee seeking
voluntary retirement is required to be communicated to him in writing.
This clause is crucial in view of the fact that therein the acceptance
or rejection of such request has been provided. The decision. of the F
) authority rejecting the request is applicable to the Appellate authority.
The application made by an employee as an offer as well as the
• decision of the bank thereupon would be communicated to the
respective General Managers. The decisions making process shall
take place at various levels of the banks." G
"61. The following, therefore, can be deduced:

(i) The banks treated the application from the employees as an offer
which could be accepted or rejected.

H
772 SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.

A (ii) Acceptance of such an offer is required to be communicated in
writing.

(iii) The decision making process involved application of mind on the
part of several authorities.

(iv) Decision making process was to be formed at various levels.
B
.....
(v) The process of acceptance of an offer made by an employee was 4
in the discretion of competent authority.

(vi) The request of voluntary retirement would not take effect in
praesenti but in future.
c
(vii) The Bank reserved its right to alter/rescind the conditions of the
scheme."

"62. From what has been noticed before, it is apparent that the
Nationalized banks in terms of the scheme had secured for themselves
D an unfettered and unguided right to deal with the jural relationship
between themselves and their employees" ~

"74. We, therefore, have no hesitation in coming to the conclusion
that the voluntary scheme was not a proposal or an offer but merely
an invitation to treat and the applications filed by the employees
E constituted an 'offer'."

In HEC Voluntary Retd. Employees Welfare Society & Anr. v. Heavy
Engineering Corpn. Ltd. & Ors., [2006] 3 SCC 708, this Court in paragraph
11 held as under:

F "I I .An offer for voluntary retirement in terms of a scheme, when
accepted, leads to a concluded contract between the employer and the
employee. In terms of such a scheme, an employee has an option
either to accept or not to opt therefor. The scheme is purely voluntary, 6

in terms whereof the tenure of service is curtailed, which is permissible
in law. Such a scheme is ordinarily floated with a purpose of downsizing
G the employees. It is beneficial both to the employees as well as to the
employer. Such a scheme is issued for effective functioning of the
industrial undertakings. Although the Company is "State" within the
meaning of Article 12 of the Constitution, the terms and conditions
of service would be governed by the contract are employment. Thus,
H unless the terms and conditions of such a contract are governed by
BOARDOFTRUSTEES. VISHAKHAPATNAM PORTTRUST 1·. T.S.N. RAJU[LAKSHMANAN.J.] 773
..... a statute or statutory rules, the provisions of the Contract Act would A
be applicable both at the formulation of the contract as also the
determination thereof. By reason of such a scheme only is an invitation
of offer floated. When pursuant to or in furtherance of such a Voluntary
Retirement Scheme an employee opts therefore, he makes an offer
which upon acceptance by the employer gives rise to a contract. B
Thus, as the matter relating to voluntary retirement is not governed
,. by any statute, the provisions of the Contract Act, 1872, therefore,
would be applicable too. See Bank of India v. O.P. Swarnakar, [2003]
2sec121."
•,
We have carefully considered the rival submissions made by the C
respective parties. We have also perused the pleadings, judgments delivered
by the learned single Judge and the Division Bench, voluntary retirement
scheme, annexures and documents.

Jn our opinion, under the Scheme, the Chairman of the Port Trust has
an absolute right either to accept or not to accept the applications filed by D
the employees for retirement under the voluntary retirement scheme. We have
already reproduced the entire scheme dated 29.8.1991 of the Government of
India, Ministry of Surface Transport. The Government of India has decided
that Port Trust and Dock Labour Board can introduce voluntary retirement
scheme with a view to reduce surplus manpower subject to the terms and
conditions set out in the voluntary retirement scheme. Clauses 2(a) and 2(b) E
of the Scheme are very relevant for the present purpose. Clause 2(a) clearly
stipulates that an employee who has completed ten years of service or
completed 40 years of age may seek voluntary retirement by a written request.
Clause 2(b) clearly stipulates that the Port Trust and Dock Labour Board will
have a right not to grant voluntary retirement for reasons to be recorded in p
writing. Clause 6 of the said Scheme provides that the Port Trust and Dock
Labour Board can introduce a voluntary retirement scheme on the parameters
mentioned in the scheme framed by the Government of India after seeking
• approval of the Ministry.

A meeting of the Board of Trustees of the VPT was held on 30.10. 1991. G
In the said meeting, the Trustees considered the YRS formulated by the
Government of India and decided to introduce the voluntary retirement scheme
on the parameters suggested by the Government oflndia in VPT also. Board's
approval was, therefore, sought to introduce the YRS in the VPT on the
parameters prescribed by the Ministry of Surface Transport in its letter No. H
774 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A LB-1601617/88-L.II, dated 29.8.1991 subject to approval of the Ministry.
Annexure P-3 is relevant to be considered in the present context. By the
said order, VPT, Administration Department, passed an order stating that a
review has been made by the Chairman on the implementation of voluntary
retirement under the scheme to the employees of VPT and that it has been
B decided that the voluntary retirement scheme should be considered in the
cases of those employees who are below the age of 58 years. In view of the
said decision, the Heads of the Department were requested to forward the
voluntary retirement scheme cases of only those employees who have not
attained the age of 58 years. Though it is contended that the Port Trust had
C no authority to modify the voluntary retirement scheme, we are unable to
accept the said submission made by the respondent in view of clause 2(b)
of the Scheme which enable the Port Trust and Dock Labour Board to alter
the scheme and also have a right not to grant voluntary retirement for the
reasons to be recorded in writing.

D We have perused the order passed by the learned single Judge. In our
view. the order of the learned single Judge is without jurisdiction and beset
with material irregularities. The learned single Judge oaght to have seen that
under the scheme the Chairman of VPT has absolute right either to accept or
not to accept the applications filed by the employees for retirement under the
voluntary retirement scheme. The learned single Judge also did not mention
E how there was discrimination between those who have been granted voluntary
retirement and those who have not. The learned single Judge in the case of
Sri Rama Rao (respondent No.2 herein) has not noticed that he had made a
representation on 29.8.2000 addresssed to the Chairman while he was in the
category of CTOW and his application was not considered as he was the
F junior most Assistant Engineer. The learned single Judge ought to have
considered his application dated 27.4.2000 by which he applied while he was
in the cadre of C.T.O. W. (Class-III) to go on voluntary retirement. But by this
time, the applications of other A.E's who are senior in the order of receiving,
were considered and therefore, his appiication at this stage could not be
•
considered as Sri Rama Rao being the junior most A.E. among the V.R.S.
G applied A.E's and his application dated 29.8.2000 is least in the order of
seniority of application received for V.R.S. In any event, the learned single
Judge ought not to have issued the direction to the Department to accept the
voluntary retirement of the respondent as on the date of their application and
pass appropriate order. The learned Judge at any rate can only direct the Port
H Trust to consider their applications for voluntary retirement and pass
~ ~
BOARD OF TRUSTEES, VISHAKHAPATNAM PORT TRUST r. T.S.N. RAJU [LAKSHMANAN, J.] 775
appropriate orders, The order passed by the learned single Judge is, therefore, A
beyond the jurisdiction of the Court in issuing such direction, Likewise, the
Division Bench also committed the same error in issuing the directions.

" Respondent No, i T,S.N. Raju applied for voluntary retirement on
16.08.1999 but withdrew his application for YRS on 06.04.2000. He again
applied for YRS on 27.04.2000. He averred in his writ petition that the application B
~
was made on the basis that Port has informally alerted that Management is
serious about considering the request of the employees seeking YRS. In the
, counter affidavit filed by the YPT, it was categorically stated that the
Management had issued no letter or circular to such effect. On 26.07.2000,
respondent No. I was promoted as Assistant Engineer (Civil) on ad hoc basis
but he did not renew his application.
c
On 29.8.2000, respondent No. I made a representation to the Chairman
of the YPT to consider his application dated 27.4.2000 which he had made
before being promoted as A.E. However, his case could not be considered for
YRS because several applications were pending and he was very junior in the D
rank of A.E. By the time, the applications of senior A.E's were processed, the
required number had already been arrived at and the case of respondent No. I
could not be considered.

As already noticed, Sri Rama Rao (respondent No.2) was appointed as
sub-overseer on 2.1.1969 in the Civil Engineering Department of YPT and E
completed about 31 years of service as on date of his retirement on
superannuation by 30.11.2000 A/N. He has been promoted as Assistant
Engineer initially on ad hoc basis and subsequently regularized as A.E. w.e.f.
17.1.2000. The Scheme of YRS has been introduced in YPT as per Ministry
of Surface and Transport (Labour Division) letter No. L.B. 1601617/88-L.II
F
dated 29.08.1991 with a view to reduce surplus manpower subject to sustain
condition specified therein.
-lo

It is true that Sri Rama Rao (respondent No.2 herein) has applied for
retirement under the voluntary retirement scheme vide his application dated
28.4.2000 seeking retirement w.e.f. 30.11.2000. Sri Rama Rao was posted as G
A.E. for the maintenance section of C.l.S.F. residential colony consisting
maintenance repairs, drains etc., including water supply to entire colony, thus
his services are very much essential to the department, therefore, his
application dated 28.4.2000 has not been considered favourable keeping in
~

view the exigencies of work essentially of cadre, feasibility of surrendering the
post etc., since as per Government guidelines Y.P.T. has to show appropriate H
776 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A surplus in the manpower in the cadre without causing hindrance to the normal
operations of the department. Further as per the above circular while accepting
V.R.S., the Port Trust has to ensure to surrender the vacancy caused due to
retirement of the incumbent on V.R.S.

This apart, the V.R.S. accepted by the Chairman, VPT to some of the
B employees of the VPT who have completed 58 years of age is only prior to
23.8.2000 by which time the retirement age limit of 60 years was in force and ..
the same is not relevant to the case on hand as in the case of the respondent,
he was holding important works under his control and his continuance was
considered necessary in VPT service and thereby YRS was not granted to
C him. In the respondent's case, no such decision has been taken even on his
application dated 13.9.2000 addressed by him direct to Deputy Chairman. The
Circular dated 29.8.2000 that the employee who was desirous to apply for
retirement under voluntary retirement scheme may apply direct to Dy. Chairman
was only to consolidate such applications at administrative level before
arriving at a decision, but it does not ensure ready acceptance as alleged by
D the respondents. We have already reproduced the prayers made in the writ
petition of both the respondents. The prayer was to declare the inaction on
the part of the Port Trust in not accepting the offer of the respondents to
retire from service of the Port Trust on voluntary retirement basis as unjust
and illegal. A further prayer was also made to direct the Port Trust to treat
E the respondent to have retired from its service on voluntary retirement basis
with immediate effect by extending all the terminal benefits that flow therefrom
and pass such other or further order or orders as are deemed fit and proper
in the circumstances of the case.

The respondents have not questioned the validity and correctness of
F the voluntary retirement scheme introduced by the Government of India and
the decision taken by the Port Trust in its meeting of the Board of Trustees (

held on 30.10.1991 pursuant to the decision of the Ministry in terms of which
Port Trust and Dock Labour Board are not to grant voluntary retirement to
..
everyone. It is not in dispute that beneficial scheme was introduced with a
view to reduction of surplus manpower.
G
The High Court, in our opinion, could not entertain grievance of the
respondents even on their own showing. It was based merely on a presumption
that applications for YRS, if filed before April, 2000, would be considered by
July, 2000 when no such circular or letter had been issued by the Port Trust.
H The Scheme also provides that the Port Trust and Dock Labour Board will
..
BOARDOF1RUSTEES, VISHAKHAPATNAMPORT1RUST 1•. T.S.N. RAJU [LAKSHMANAN, J.j 777
have a right not to grant voluntary retirement for the reasons recorded in A
writing. Such a right given to the Port Trust was not questioned in the writ
petition. In our opinion, the Chairman is competent to frame the Scheme
having regard to the exigencies of work and no one can claim voluntary
retirement as of right. The learned Judges of the High Court have also not
seen that the respondent's application for voluntary retirement cannot be
considered in view of the seniority of service of the employees concerned. B

In our opinion, the request of the employees seeking voluntary retirement
was not to take effect until and unless it was accepted in writing by the Port
Trust Authorities. The Port Trust Authorities had the absolute discretion
whether to accept or reject the request of the employee seeking voluntary C
retirement under the scheme. There is no assurance that such an application
would be accepted without any consideration. The process of acceptance of
an offer made by an employee was in the discretion of the Port Trust. We,
therefore, have no hesitation in coming to the conclusion that the YRS was
not a proposal or an offer but merely an invitation to treat and the applications
filed by the employees constituted an offer. D
The reasons assigned by the learned single Judge and the learned
Judges of the Division Bench in the orders are erroneous and unsound and,
therefore, they are set aside.

For the foregoing reasons, we allow the appeals and set aside the order E
passed by the Division Bench affirming the order of the learned single Judge.
However, there shall be no order as to costs.

v.s.s. Appeal allowed.