CHAIRMAN AND M.D. INDIAN OVERSEAS BANK & ORS.versusTRIBHUWAN NATH SRIVASTAVA

                          [2011) 2 S.C.R. 556


 A CHAIRMAN AND M.D. INDIAN OVERSEAS BANK & ORS.
                                   V.
                   TRIBHUWAN NATH SRIVASTAVA
                    (Civil Appeal No. 1186 of 2005)
                          FEBRUARY 4, 2011
 B
                [AFTAB ALAM AND R.M. LODHA, JJ~]

            Service law: Retirement - Voluntary retirement scheme
      - JOB Officers and Employees Voluntary Retirement Scheme,
 C    2000 - Object and purpose of - Application for voluntary
      retirement - Acceptance and rejection of - Administrative
      decision - Judicial review - Scope of - Held: The object of
      the scheme in question was to adopt measures to have
      optimum human resources at various levels in keeping with
· D   the business strategies, skill profile to achieve balanced age
      and requirement of the bank - In the process of shedding
      surplus manpower, no organization would like to lose its best
      people - It is a matter of personnel management and the
      competent authority is expected to factor in such
 E    considerations while taking a decision on individual
      applications - Such considerations would certainly not be a
      ground for the court to interfere with the decision of the
      competent authority - However, the discretion vested in the
      competent authority is not absolute in the sense of being
 F    completely uncontrolled, whimsical or capricious - In the
      instant case, the bank had properly appraised the
      respondent's request for voluntary retirement under the
      sch~me and its decision not to accept the request was within
      the legitimate exercise of discretion that did not warrant any
 G    interference by the High Court.

          On December 15, 2000, the respondent made an
      application seeking voluntary retirement from the service
      of the appellant-bank under the 108 Officers and

 H                                 556
     CHAIRMAN AND M.D. INDIAN OVERSEAS BANK v. 557
               TRIBHUWAN NATH SRIVASTAVA
    Employees Voluntary Retirement Scheme, 2000. At that           A
    time, the respondent was working as Chief Manager {in
    Scale IV). He was a permanent employee with more than
    15 years of service and was over 40 years of age and was
    eligible for making the· application. The bank intimated
    him that his application was not accepted considering the      8
    business/organizational requirements and administrative
    exigencies of the bank.The respondent filed a writ
    petition before the High Court. The High Court allowed
    the writ petition on the ground that the bank had acted
    arbitrarily in his case and had rejected his application       C
    without according good reasons. The High Court
  - directed the bank to reconsider the matter and take a
    fresh decision. The Bank constituted a committee to
    reconsider his requ"est for voluntary retirement as
    directed by the High Court..The Com.mittee reconsidered
·· the matter taking into account the service record of the        D
    respondent. The Committee did not to accept the
    voluntary retirement application under the scheme
    keeping in view his exemplary track record, the
    specialized skill expertise, potential, training imparted,
    organizational requirement and administrative                  E
    exigencies. The decision of the Committee was
    communicated to the respondent who challenged it_
    before the High Court in writ petition. The High Court
    allowed the writ petition holding that the bank and its
    officers had acted in a highly arbitrary, discriminatory and   F
    malafide manner and had not shown any respect to the
    High Court by totally flouting its earlier judgment. It
    further held that despite the clear observation in its
    earlier judgment, the ba_nk authorities had taken the stand
    that it was the absolute discretion of the competent           G
    authority either to accept or reject 'the application. The
    instant appeal was .filed challenging the order of the High
    Court.

                                                                   H
    558      SUPREME COURT REPORTS             [2011) 2 S.C.R.


A         Allowing the appeal, the Court

       Held: 1.1. The reasonableness of a decision or an
  action can only be judged in the totality of the facts and
  circumstances and having regard to the object and
  purpose sought to be achieved. If the object is to select
8
  someone for public employment or for promotion to a
  higher post, .the o~ly rea~onable thing to do would be to
  select the most suitable and meritorious among the
  candidates. The selection of a person of inferior merit or
  someone who is not even eligible· would be wholJy
C unreasonable if the object is to choose the best as it
  should be in case of selection for public employment or
  promotion to a higher post. But in case an organisation
  undertakes manpower planning with a view to downsize
  the personnel and cut down the overhead costs, very
D different considerations would apply and in that case the
             I
  application of the yard stick for selection for public
  employment or for promotion to a higher post would lead
  to results opposed to the very object of the exercise.
  [Para 14] [571-A-D]
E                                                                '
      ,, Board of Trustees, Vishakhapatnam Port Trust and Ors. I
    v. T.S.N. Raju and Anr., (2006) 7 SCC 664 - referred to.

       1.2. The High Court committed the fundamental
  mistake in completely ~isconstruing the object and .
F purpose of the voluntary retirement scheme. Even though
  depending upon· personal circumstances, voluntary
  retirement under the scheme might have appeared to
  some individual officers as personally beneficial, it was
  not envisaged by the bank as a means to give personal
G rewards or to punish individual employees by granting
  or refusing to grant voluntary retirement to them. The
  objective of the scheme was to adopt measures to have
  optimum human resources at various levels in keeping
  with the business strategies, skill profile to achieve
H
  CHAIRMAN AND M.D. INDIAN OVERSEAS BANK v. ·559
         TRIBHUWAN NATH SRIVASTAVA
   balanced age and requirement of the bank. Bearing ,in A
   mind the object and purpose of the scheme, it is not
   difficult to see how the competent authority in the bank
   would deal with the applications for voluntary retirement
   made by individual officers; other things being equal
   between two applicant$ he would 1.ike to let go the one B
   with the inferior service record and lower potential and
   consequently he would accept the application of the
   officer with the lower merit and may not accept the
   request of the officer with superior merit. This is for the
   simple reason that in the process of shedding surplus c
  manpower no organisation would like to lose its best
   people. From· a purely subjective point of view, the
 . decision of the competent authority may appear to be
   "unfair" or even a 'punishment" to the officer with the
   superior merit nevertheless it would be the proper and 9
   reasonable exercise of discretion in view of the basic
   objective of the scheme. The denial of request for
 ·voluntary retirement to an officer in pr,actice may result
   in souring of relationship between the concerned officer
i and the bank (as it actually happened in the instant case) E
   and as a consequence the concerned officer in future
   may not show the same competence and efficiency in the
, discharge of his duties for which he was sought to be
   retained in service. But that is a matter of personnel
   management and the competent authority is expected to
   factor in such considerations while taking a decision on F
   individual applications. Such considerations would
   certainly not be a ground for the court to interfere with
  the decision of the competent authority. The discretion
  vested in the competent authority as stipulated in
   paragraph 4 under the heading 'General Conditions' (of G
  the scheme) must be understood in this way and not
  absolute in the sense of being completely uncontrolled,
  whimsical or capricious. Seen in this light even the grant
 ·of voluntary retirement to an employee who may not be
~ strictly eligible under the scheme may not improve the       H
   560     SUPREME COURT REPORTS             [2011] 2 S.C.R..

A claim of another applicant who might not only be eligible
  but with highly superior credentials. An. employee facing
  a disciplinary proceeding and, therefore, ineligible under
  the scheme may otherwise also be completely useless.
  The bank may try Jo get rid of him by dropping the
B disciplinary proceeding or even by waiving the eligibility
  clause in his case. At worst, the action of the bank may
  be irregular or even invalid in case of that particular
  employee. But unlike a selection for appointment or
  promotion to a superior post, this in itself would not
c provide a ground to another employee (legible and with
  superior credentials) to claim retirement as a matter of
  right. It was the definite case ~f the bank before the High
  Court that no person ineligible under the scheme was
  granted voluntary retirement. As regards the officers/
0 employees      who were allegedly allowed voluntary
  retirement even though they were given charge-sheets or
  show cause notices in contemplation of disciplinary
  proceedings, the bank in its counter affidavit had
  explained that the decision on their application for
  voluntary retirement was taken by the competent
E authority after "disposal" of the charge-sheets~ The High
  Court brushed aside the plea by observing that charge-
  sheets were not "disposed of"; a charge-sheet may be
  recalled or a proceeding arising from the charge~sheet
  may lead either to exoneration or the finding of guilt of
F the concerned employee. It further observed that the
  statement was made for obfuscation of the matter in
  issue. The High Court took a highly technical view of the
  matter. What perhaps was meant by the bank was that
  the decision to accept their request for voluntary
G retirement was taken after the proceedings against those
   officers/employees were closed/dropped. Here, it may be
   recalled that this was quite in accordance with paragraph
   10 of the "General Conditions". As regards the officers
  who were allegedly given special training and were,
H therefore, ineligible for voluntary retirement, only Mr.
 CHAIRMAN AND M.D. INDIAN OVERSEAS BA~K v. 561
        TRlBHUWAN NATH SRIVASTAVA
  Anthony Joseph, Pondicherry Branch, was in Scale IV,               A
  i.e. in the same scale as the respondent. In regard to
  Anthony Joseph, the bank in its l'ejoinder affidavit denied
  that he was given training in foreign exchange. There is
  no reason not to accept the statement made by the bank
  in this reg'ard. The bank had properly appraised the               B
. respondent's claim for voluntary retirement under the
  scheme and its decision not to accept the request was
  within the legitimate exercise of discretion that did not
  warrant any interference by the High Court. The judgment
. of the High. Court is unsustainable. [Paras 15, 17 to 23)          c
  [571-E-G; 573-C-H; 5~4-A-H; 575-A-D]

     Bank of India and Anr. v. K. Mohandas and Ors., (2009)
 5 sec 313·- relied on.
                      · Case Law Reference:                          D
     (2006) 7 sec 664           referred to          ~··Para 11

     (2009) 5 sec 313 . ·       relied on              Para 16 ·

      CIVIL APP ELLATE JURISDICTION : Civil Appeal No.1186           E
 of 2005.

     From the Judgment & Order dated 03.09.2003 of the Hig~
 Court of Judicature at Allahabad in Civil Misc. Writ Petition No.
 6162 of 2003.
                                                                     F
     C.U. Singh, Rishi Agrawala, Gaurav Goel, Mahesh
 Agarwal (for E.C. Agrawala) for the Appellants.

     Sanjay Kr. Dubey, Rupesh Kumar for the Respondent.

     The Judgment of the Court was delivered by                      G

      AFTAB ALAM, J. 1. This appeal by special leave is
 directed against the judgment and order dated September 3,
 2003 passed by ;:i division bench of the Allahabad High Court
 on a writ petition (Civil Miscellaneous Writ Petition No.6162 of    H
    562      SUPREME COURT REPORTS                    [2011] 2 S.C.R.

A 2003) filed by the respondent who was at that time working as
  an officer in the appellant-bank. The High Court allowed the writ
  petition filed by the respondent, quashed the decision of the
  bank rejecting his application for voluntary retirement under the
  bank's scheme and directed the appellant-bank to accept his
s application for voluntary retirement forthwith.
       2. This Court while granting special leave to appeal, by
  order dated February 11, 2005, stayed the operation of the
  order of the High Court coming under appeal. As a result, the
C respondent continued in service and eventually retired on
  reaching the age of superannuation on June 6, 2009. He has
  been paid his terminal dues and is also getting regularly his
  monthly pension. In view of this material change in
  circumstances during the pendency of the appeal, we
  suggested that the parties should negotiate and try to come to
D some amicable settlement. They were, however, unable to
  come to terms and the respondent insisted that the appeal be
  heard on merits and in case it is finally dismissed, then, the
  Court may consider how to appropriately mould the relief in his
  favour. We, accordingly, proceeded to examine the
E respondent's claim for grant of voluntary retirement under the,
  scheme of the bank on merits.
       3. In order to examine the case of the rival sides in
  perspective, it would be· useful to briefly state the relevant facts.
F The board of directors of the appellant-~ank in its meeting held /
  on November 25, 2000 approved a voluntary retjrement
  scheme for the officers and employees of the.bank, called the
  108 Officers/Employees Voluntary Retirement Scheme - 2000
  ("the scheme" for short). The object of the scheme was "to adopt
  measures to have optimum human resources at various levels
G in keeping with the business strategies, skill profile to achieve
  balanced age and requirement of the bank.9 The scheme
  remained in operation for 5 weeks from December 15, 2000
  to January 19, 2001.
H         4. The eligibility to apply for voluntary retirement under the
  CHAIRMAN AND M.D. INDIAN OVERSEAS BANK v. 5'53
  TRIBHUWAN NATH SRIVASTAVA [AFTAB ALAM, J.]
   scheme was laid down in Clause 4. Clause 4.1 provided that A
   all .permanent employees with 15 years of service or 40 years
   of age would be eligible to apply for voluntary retirement under
  the scheme. Clause·4.2 enumerated the six categories (from
   sub-clauses 'a' to 'f) that would not be eligible to S!'lek voluntary
   retirement under the scheme.. Under the heading 'General B
   Conditions' it was stated, in paragraph 4, that depending upon
   th9 requirement of the bank, the competent authority would have
 . absolute discretion, subject to recording the reasons for the
   decision, either to accept or reject the request of an officer/
   employee seeking voluntary retirement under the scheme.            c
   Paragraph ·10 provided that the cases of officers/employees
 . opting for voluntary retirement under the scheme against whom
   disciplinary· proceedings were contemplated would be
   considered by the respective disciplinary authorities having
. regard to the facts of each case before forwarding the request D
   of such officers/employees to the competent authority. Under
   the heading 'Clarifications' (in Annexure II to the Scheme), _it
   was stated, in paragraph 2, that disciplinary proceeding_s would
   be deemed to be pending for the purpose of VRS, if ·the •
   member had been placed under suspension or any notice had E
   been issued to him to show cause why discipli_nary proceedings
   should not be instituted against him and would be ·deemed 1o
   be pending until final orders were passed by the disciplinary
- authority.

       5. On December 15, 2000, the respondent made an                F
  application seeking voluntary retirement from the service of the
  bank under the scheme. At that time, the respondent was
  working as C.hief Manager (in Scale IV), Indian Overseas Bank,
  Allahabad. It is not disputed that he was quite eligible for
  making the application in that he was a permanent employee          G
  with more than 15 years of service and. was over 40 years of
  age. Nevertheless, the bank did not accept his request and
  intimated him by letter dated February 21, 2001 that "the
  Competent Authority has decided not to accept his application
. considering (the) business/organizational requirements ;md          H·
    564      SUPREME COURT REPORTS                  (2011) 2 S.C.R.


A administrative exigencies of the bank".

          6. The respondent challenged the decision of the bank
    communicated ~o him vide letter dated February 21, 2001 in a
    Writ Petition (CMWP No.4167 of 2001) before the Allahabad
8   High Court. In the supplementary counter affidavit filed in the
    case on behalf of the bank, it was stated that in Scale IV, to
    which the respondent belonged, there were 187 posts out of
    which 80 persons had applied for VRS under the scheme. The
    management accepted the applications of only 22 officers and
C   the rest of the applications were rejected taking into account
    the various considerations, and the merits and demerits of the
    Qfficers. In paragraph 6 of the supplementary counter affidavit,
    it was asserted that it was purely within the discretion of the
    bank to acceptor not to accept the application of any particular
    officer for grant of voluntary retirement under the scheme. The
0   High Court took exception to the stand of the bank that the
    matter lay purely within the discretion of the competent authority
    and criticised it as opposed to the mandate of Article 14 of the
    Constitution. The High Court also took the view that the words
    "taking into account the various considerations and merits and
E   demerits of the officers" provided a very vague basis to decide
    whether or not to accept the application for VRS made by
    different officers. It also noted the allegations made on behalf
    of the respondent that the bank had allowed voluntary retirement
    even to officers aga,nst whom disciplinary proceedings were
F   pending or contemplated and who, therefore, were not eligible
    under the scheme. It, accordingly, allowed the respondent's writ
    petition by judgment and order dated November 27, 2002
    holding that the bank had acted arbitrarily in his case and had
    reje,cted his application without according good reasons. The
G   High Court quashed the order dated February 21, 2001 and
    directed the bank to reconsider the matter in light of the
    observations made by it and take a fresh decision, on the
    respondent's application for grant of VRS in accordance with
    the law and the scheme, within 6 weeks from the date of
H   production of a certified copy of its order.
 CHAIRMAN AND M.D. INDIAN OVERSEAS BANK v. 565
 TRIBHUWAN NATH SRIVASTAVA [AFTAB ALAM, J.]
   ··7. The respondent submitted a copy of the High Court A
 order to the bank along· with his representation dated
 December 7, 2002 whereupon the board.of directors of the
 bank in its meeting held on January 11, 2003 constituted a
 committee consisting of the Chairman and Managing Director,
 the Executive Director and the General Manager (Personnel) B
 to reconsider his request for voluntary retirement as directed
 by the High Court. The Committee in its meeting held on
 January 11, 2003 reconside~ed.the matter in great detail, taking
 into account the service record. of the respondent. The
 Committee noted that the respondent was an agricultural C
 engineering graduate and was appointed a!? a clerk in the bank
 on October 26, 1970. For his sincere and hard work, he was
 promoted as officer in Junior Management Grade Scale I on
 June 1, 1975, within 5 years of his appointment as clerk. His
 performance in the post was exemplary. The bank, therefore,
 decided to utilize his services abroad and posted him to the D
 Hong Kong branch. Ordinarily, overseas assignments are given
 to Middle Management Grade Officers in Scale II and above
 but in the· case of the respondent, who was at that time an officer
 in the Junior Management Grade I, he. was given the
 assfgnment in view of his dedicated work and educational E
 background. Even while serving abroad he was promoted to
 Middle Management Grade Scale II on July 1, 1982. After
 completing foreign assignment for a term, he was posted to the
·Lucknow region in August, 1982 and his services were utilized
 at the Varanasi Cantonment and Lucknow Branches. While F
 working at Lucknow, the respondent was able to canvass a
 good number of deposit accounts and provided satisfactory
 customer service which earned him appreciation from the Zonal
 Manager. In view of his rich experience in Lucknow, the bank
 elevated him in position and posted him as Senior Manager G
 in the Kankhal branch, which was selected by the Bank
 Management. as the best branch during his tenure. The
 Committee further noted that considering his potential and
 ability the bank provided him various in-house and external
 trainings. He was promoted to the Middle Management Grade H
       566    SUPREME COURT REPORTS                    [2011] 2 S.C.R. -


 A    Ill during 1992 and further promoted to the Senior Management
      Grade Scale IV in the year 1998. His services were well utilized
    - not only to core banking but also in specialized areas like foreign
      exchange, overseas trading, etc. and he had a track record of
      unblemished service. He had scored good ratings in all
  B confidential reports. He had been given .good exposure
      including foreign postings and had a lot of potential. Therefore,
      the bank did not want to lose the benefit of his services. The
      Committee concluded that keeping in view the past track
      record, the specialized skill expertise, potential, training
  c   imparted, organizational requirement and administrative
      exigencies, the services of the respondent were required for
      the development of the bank· and hence, resolved not to accept
      the voluntary retirement application under the scheme. The
      decision of the Committee was communicated to the
      respondent who once again challenged it before the High Court
  0
      in Civil Miscellaneous Writ Petition No.6162 of 2003.

          8. In the second round of litigation, the appellant-bank,
    while resisting the writ petition filed by the respondent before
    the High Court on merits, once again referred to paragraph 4
  E of the General Conditions of the scheme, taking the stand that
    the acceptance or rejection of the request for voluntary
    retirement under the scheme lay within the absolute discretion
    of the competent authority .

.._F      9. The rejection of the respondent's application for
    voluntary retirement by the bank for the second time and the
    reiteration that the matter was within the absolute discretion of
    the competent authority, seems to have offended the High Court
    and it wrote a rather angry judgment. The High Court observed
  G that the bank and its officers had acted in a highly arbitrary,
    discriminatory and malafide manner and had not shown any
    respect to the High Court by totally flouting its earlier judgment.
    It further said that despite the clear observation in its earlier
    judgment, the bank authorities had again "dared" to take the
    stand that ·it was the absolute discretion of the competent
  H
      CHAIRMAN AND M.D. INDIAN OVERSEAS BANK v. 567
      TRIBHUWAN NATH S.RIVASTAVA [AFTAB ALAM, J.]

  authority eith~r to accept or reject the application. The court A
 went on to say that the Chief Regional Manager of the bank
 who had filed the counter affidavit had absolutely no respect
  for the High Court and further that the court was at first inclined
  to issue a notice of contempt to him for invoking the absolute
  discretion of the competent authority which, according to the .B
  High Court, amounted to grossly contemptuous averments. The
  High Court, however, refrained from issuing any contempt
  notice assuming in his favour that he was probably not able to
  understand what he said in the affidavit. Adverting to the merits
  of the case, the court accepted the respondent's allegations         c
  that even while his request was turned down many officers who
  were not eligible were granted voluntary retirement under the
  scheme. The court held that tlie bank authorities had adopted
  a 'pick and choose' policy In accepting and rejecting the -
. applications made by different officers/employees for grant of 0
  voluntary requirement. The High Court in its judgment (at page
   19 of the SLP paper book) gave a list of employees, whq,
   according to the respondent, were allowed voluntary retirement            ~
  even though they were charge-sheeted or given show cause
   notice in contemplation of disciplinary proceedings and who E
  were, therefore, ineligible in terms of Clause 4.2(c) of the
   scheme. The High Court gave another list of officers/employees
   (at page 20 of the SLP paper book) who, according to the
   respondent, were granted voluntary retirement even though they
  were given specialized training in the.area of credit and foreign
   exchange and were, for that reason, ineligible in terms of clause F
  4.2(e) of the scheme. The High Court observed that the bank
   acted in a highly arbitrary and discriminatory manner by allowing
  voluntary retirement to officers/employees who were ineligible
   under the scheme and on the other hand denying it to the
   respondent who according to its own showing had a sterling G ·
   record. In this connection, the High Court made the following
   observation: · ·                                                ·
...
        "In our opinion the· petitioner is fully eligible for VRS, 2000, ·
        and his application has been rejected arbitrarily and has H
    568       SUPREME COURT REPORTS                 [2011] 2 S.C.R.


A         been discriminated again. He has also been unnecessarily
          harassed by the respondents, as stated in para 18 of the
          petition by first transferring him to Chennai during the
          pendency of his writ petition and then po~ting him under
          an officer 3 years his junior.
B
          The respondents themselves have admitted that the
          petitioner has been working with utmost sincerely (sic),
          honestly and diligence in discharging his duties in the
          bank. It seems that the policy of the bank is to punish the
          good, honest and competent officers and to reward those
c         who are not. This, in our opinion, will lead to total
          demoralization of the good, honest and competent
          officers and employees of the bank if it is permitted to
          continue any further. The VRS scheme was floated for
          giving the benefit to the good officers and not for those
D         who are having a bad service record, but it seems that
          the Bank in total disregard of the scheme has adopted a
          policy of pick and choose. Thus merit has in fact become
          demerit in the Bank. Those who are competent are
          denied VRS but those having a bad record are being
E         given benefit of the VRS."

          (emphasis added)

         10. Proceeding thus, the High Court allowed the
F respondent's writ petition and by judgment and order dated
 . September 3, 2003, set aside the decision of the appellant-
   bank not to accept the respondent's request for voluntary
   retirement and observing that any further re.mand would not
   serve any useful ·purpose, the High Court went on to direct the
   bank to accept the respondenfs application for grant of
G voluntary retirement.

       11. Mr. C.U. Singh, learned senior counsel appearing for
  the appellant-bank submitted that the High Court was in grave
  error in reviewing the bank's decision on the respondent's
H application for voluntary retirement as an appellate authority
CHAIRMAN AND M.D~ INDIAN OVERSEAS BANK v. 569
TRIBHUWAN NATH SRIVASTAVA [AFTAB ALAM, J.]
and substituting its own decision for that of the bank. Mr. Singh     A
further submitted that the High Court was equally in error in
denying to the competent authority in the bank the absolute
discretion for accepting or rejecting the request for voluntary
retirement made by an .officer of the bank as expressly
stipulated in the scheme. Learned counsel asserted that in the        B
matter of voluntary retirement under the scheme, the bank has
an absolute discretion to grant or reject the request and the
legal position in this regard was settled by this Court. In support
of the submission he referred to a decision of this Court in
Board of Trustees, Vishakhapatnam Port Trust and Ors. v. T.S.N.       c
Raju and Anr., (2006) 7 SCC 664, and relied upon the
observations made in paragraphs 22, 33 and 34, which are as
under:

     "22. In our opinion, under the Scheme, the Chairman of the
     Port Trust has an absolute right either to accept or not to      D
     accept the applications filed by the employees for
     retirement under the voluntary retirement scheme ...

     33. In our opinion, the Chairman is competent to frame the
     scheme having regard to the exigencies of work and no            E
     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.                                             F

      34. 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 G
      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. We, therefore, have no hesitation in coming to H
    .'
      570      SUPREME COURT REPORTS                  [2011) 2 S.C.R..

 A          the conclusion that VRS was not a proposal or an offer but
            merely an invitation to treat and the applications filed by
            the employees constituted an offer."

         12. T'1e decision relied upon by Mr. Singh evidently
    supports his contention but the observations made by this Court
 8
    as quoted above need to be understood in the context of the
    case. In the case of T.S.N. Raju, the Chairman of the Port Trust
   made a review on the implementation of the scheme for
   voluntary retirement and keeping in view the concern expressed
 C by the Secretary, Department of Shipping, Ministry of Surface
   Transport, Government of India, took the decision that the
   request for voluntary retirement under the scheme should be
    considered only in case of employees who were below the age
   of 58 years. The application of T.S.N. Raju (and another
   respondent in that case) came up for consideration after they
 D had crossed the age of 58 years and were accordingly rejected
   on the basis of the decision of the Chairman. They challenged
   the action of the Port Trust in rejecting their request for voluntary
   retirement, taking the plea before the court that the Port Trust
   had no discretion to reject their request to take retirement under
 E the voluntary retirement scheme except in cases of the
   exigencies of service or the compelling necessities or the ·
   indispensability of the employees concerned. It was to rebut
   such sweeping assertion of right that this Court made the
   observation that under the scheme, the Chairman of the Port
 F Trust had the absolute right to accept or not accept the request
   for voluntary retirement under the scheme.
         13. The observations made in T.S.N. Raju do not mean
   that this Court endorsed or approved the discretion vested in
 G the employer (be it the Port Trust or the bank) as absolute in
   the manner of an unruly horse prancing beyond the control of
   anyone or anything. In the 62nd year of the Republic, it is rather
   late in the day for the State or any of the State's agencies or
   instrumentalities to claim absolute discretion, like the discretion
   of a despot or a discretion completely divorced from
. H
  CHAIRMAN AND M.D. INDIAN OVERSEAS BANK v. 571
  TRIBHUWAN NATH SRIVASTAVA [AFTAB ALAM, J.]

 reasonableness.                                                     A

     14. But at the same time, it must also be realized that
 reasonableness is not something in the abstract. The
 reasonableness of a decision or an action can only be judged
 in the totality of the facts and circumstances and having regard    B
 to the object and purpose sought to be achieved. For example,
 if the object is to select someone for public employment or for
 promotion to a higher post, the only reasonable thing to do
 would be to select the most suitable and meritorious among the
 candidates. The selection of a person of inferior merit or          C
 someone who is not even eligible would be wholly unreasonable
 if the object is to choose the best as it should be in case of
 selection for public employment or promotion to a higher post.
 But in case an organisation undertakes manpower planning with
 a view to downsize the personnel and cut down the overhead
 costs, very different considerations would apply and in that case   D
 the application of the yard stick for selection for public
 employment or for promotion to a higher post would lead to
 results opposed to the very object of the exercise. ·

        15. We feel that the High Court committed the fundamental E
  mistake in completely misconstruing the object and purpose of_
  the voluntary retirement scheme. As wrongly assumed by the
  High Court, the object of the scheme was not to reward the good
  officers or to punish the bad ones. Even though depending upon
  personal circumstances, voluntary retirement under the scheme F
  might have appeared to some individual officers as personally
  beneficial, it was not envisaged by the bank as a means to give
  personal rewards or to punish individual employees by granting
- or refusing to grant voluntary retirement to them. The objective
  of the scheme as stated in the circular issued by the bank was G
  "to adopt measures to have optimum human resources at
  various levels in keeping with the business strategies, skill
  profile to achieve balanced age and requirement of the bank".

     16. In Bank of India and Anr. v. K. Mohandas and Ors.,
 (2009) 5 sec 313, one of us (Lodha, J.) had the occasion to         H
    572       SUPREME COURT REPORTS                  [2011] 2 S.C.R.


A examine the genesis and raison d'etre of the voluntary schem~
  framed by the banks; in that judgment it was observed, In
  paragraphs 3, 4, 5 and 36, as follows:

          "3. In the month of May, 2000, Government of India, Ministry
B         of Finance (Banking Division), advised the nationalized
          banks to carry out detailed manpower planning as these
          banks were foµnd to have 25% of their manpower as
          surplus. A Human Resource Management Committee was
          constituted to examine the said issue and to suggest
          suitable remedial measures.
c
          4. The Committee so constituted observed that high
          establishment cost and low productivity in public sector
          banks affect their profitability and it was necessary for
          these banks to convert their human resources into assets
D         compatible with business strategies. Inter alia, the
          Committee placed the draft voluntary retirement scheme
          with the Central Government that would assist the banks
          in their efforts to optimize their human resources and
          achieve a balanced age and skills profile in keeping with
E         their business strategies.

          5. With the approval of the Central Government, Indian
          Banks' Association (IBA) circulated salient features of the
          draft scheme to the nationalized banks for consideration
          and adoption by their respective boards vide its letter
F         dated 31-8-2000. The Board of Directors of each of the
          nationalized banks, keeping in view the objectives,
          considered the draft scheme and adopted it separately.
          36. Any interpretation of the terms of VRS 2000, although
G         contractual in nature, must meet the test of fairness. It has
          to be construed in a manner that avoids arbitrariness and
          unreasonableness on the part of the public sector banks
          who brought out VRS 2000 with an objective of rightsizing
          their manpower. The banks decided to shed surplus
H         manpower. By formulation of the special scheme (VRS
                         I
 CHAIRMAN AND M.D. INDIAN OVERSEAS BANK v. 573
 TRIBHUWAN NATH SRIVASTAVA [AFTAB ALAM, J.]
      2000), the banks intended to achieve their objective of A·
      rationalising their force as they were overstaffed. The
      special Scheme was, thus, oriented to lure the
      employees to go in for voluntary retirement. In this
      background, the consideration that was to pass between
      the parties assumes significance and a harmonious B
      construction to the Scheme and the Pension Regulations,
      therefore, has to be given." (emphasis added)

       17. Bearing in mind the object and purpose of the scheme
  as explained in the decision in Bank of India it is not difficult to   C
  see how the competent authority in the bank would deal with
  the applications for voluntary retirement made by indivic;iual
· officers; other things being equal between two applicants he
  would like to let go the one with the inferior service record and
  lower potential and consequently he would accept the
  application of the officer with the lower merit and may not            D
  accept the request of the officer with superior merit. This is for
  the simple reason that in the process of shedding surplus
  manpower no organisation would like to lose its best people.

       18. From a purely subjective point of view the decisi9n of·       E
 the competent authority may appear to be "unfair" or even a
 'punishment" to the officer with the superior merit nevertheless
 it would be the proper and reasonable exercise of discretion
 in view of the basic objective of the scheme. We are not
 unconscious that the denial of request for voluntary retirement         F
 to an officer in practice may result in souring of relationship
 between the concerned officer and the bank (as it actually
 happened in this case) and as a consequence the concerned
 officer in ·future may not show the same competence and
 efficiency in the discharge of his duties for which he was sought       G
 to be retained in service. But that is a matter of personnel
 management and the comp~tent authority is expected to factor
 in such considerations while taking a decision on individual
 applications. Such considerations would certainly not be a
 ground for the court to interfere with the decision of the              H
    574     SUPREME COURT REPORTS                  [2011) 2 S.C.R. -

A competent authority. The discretion vested in the competent
  authority as stipulated in paragraph 4 under the heading
  'General Conditions' (of the scheme) must be understood in
  this way and not absolute in the sense of being completely
  uncontrolled, whimsical or capricious.
8
        19. Seen in this light even the grant of voluntary retirement
  to an employee who may not be strictly eligible under the
  scheme may not improve the claim of another applicant who
  might not only be eligible but with highly superior credentials.
C An employee facing a disciplinary proceeding and, therefore,
  ineligible under the scheme may otherwise also be completely
  useless. The bank may try to get rid of him by dropping the
  disciplinary proceeding or even by waiving the eligibility clause
  in his case. At worst the action of the bank may be irregular or
  even invalid in case of that particular employee. But unlike a
D selection for appointment or promotion to a superior post, this
  in itself would not provide a ground to another employee
  (legible and with superior credentials) to claim retirement as a
  matter of right.

E        20. In this case, however, we need not go into that aspect
  of the matter because it was the definite case of the bank
  before the High Court that no person ineligible under the
  scheme was granted voluntary retirement. As regards the~
  officers/employees who were allegedly allowed voluntary
F retirement even though they were given charge-sheets or show
  cause notices in contemplation of disciplinary proceedings, the
  bank in its counter affidavit had explained that the decision on
  their application for voluntary retirement was taken by the
  competent authority after "disposal" of the charge-sheets. The
G High Court brushed aside the plea by observing that charge-
  sheets were not "disposed or; a charge-sheet may be recalled
  or a proceeding arising from the charge-sheet may lead either
  to exoneration or the finding of guilt of the concerned employee.
  It further observed that the statement was made for obfuscation
  of the matter in issue.
H
CHAIRMAN AND M.D. INDIAN OVERSEAS BANK v. 575
TRIBHUWAN NATH SRIVASTAVA [AFTAB ALAM, J.]  ,
     21. We are of the view that the High Court took a highly A
technical view of the matter. What perhaps was meant by the
bank was that the decision to accept their request for voluntary
retirement was taken after the proceedings against those
officers/employees were closed/dropped. Here, it may be
recalled that this was quite in accordance with paragraph 1O B
of the "General Conditions".

      22. As regards the officers who were allegedly given
special training and were, therefore, ineligible for voluntary
retirement, only Mr. Anthony Joseph, Pondicherry Branch, was
in Scale IV, i.e. in the same scale as the respondent. In regard C
to Anthony Joseph, the bank in its rejoinder affidavit denied that
he was given training in foreign exchange. We see no reason
not to accept the statement made by the bank in this regard.

     23. In light of the discussion made above, we are clearly D
of the view,·rthat the bank had properly appraised the
respondent's ctaim for voluntary retirement under the scheme
and its decision not to accept the request was within the
legitimate exercise of discretion that did not warrant any
interference by the High Court. We are, therefore, constrained E
to hold that the judgment of the High Court coming under
appeal is quite unsustainable.

    24. We, accordingly, allow the appeal, set aside the
impugned judgment and order passed by the High Court and           F
dismiss the writ petition filed by the respondent.

       25. There will be no order as to costs.

     26. We are told that some other case(s} between the
parties are pending before the High Court on some other G
issues. Needless to say that that case will be decided on its
own merits and the decision in this appeal will not prejudice
the case of the respondent.

D.G.                                             Appeal allowed.
                                                                   H