Hindustan Shipyard Limited, Visakhapatnam vs Susarla Nagabhushana Rao and Others

M.N. Rao, J.—These two writ appeals are brought against the common order passed by our learned brother T.N.C. Rangarajan, J., in W.P. Nos. 8952 and 20689 of 1995 by which the plea of the respondent-workmen that the appellant - Hindustan Ship Yard Limited -has no power to deduct the three months'' notice pay paid to them under the voluntary retirement scheme by deducting the same from the wage revision arrears was accepted and a consequential direction was issued that they arc entitled to the notice pay with interest under the terms and conditions of the voluntary retirement scheme.

The voluntary retirement scheme was introduced by the appellant for the purpose of achieving optimum man power utilisation and for improving the over-all performance levels of the organisation. An employee coming within the scheme will be entitled to the following benefits:

The balance is the provident fund account as per the Provident fund Rules he is entitled to get.

Encashment of unavailed leave.

Payment of gratuity as per the Gratuity Act or scheme.

One month''s notice pay for staff and workmen and three months'' notice pay for Officers as per the respective service conditions.

Ex-gratia payment equivalent to 1 1/2 month''s emoluments - basic pay plus D.A.

Entitlement to charges for travel to the place where the employee intends to settle down as per T.A. rules.

In respect of the respondents in these writ appeals, who are officers, they are entitled to three months'' notice pay on their option to retire voluntarily from service. In the beginning, when the scheme was introduced, there was no time lag between the expiry of the notice period and the date of acceptance of the request of the employee for voluntary retirement. Subsequently, a stage was reached, very understandably, as large amounts had to be paid to these employees, when the Hindustan Ship Yard Ltd., felt that approval could not be accorded due to paucity of funds. Ultimately, when funds could be generated, it was found in some cases that there was considerable interregnum between the end of the notice period and the acceptance of the request of the concerned officer for voluntary retirement. It must be mentioned in this context that after giving the notice, every employee was required to work until the request for voluntary retirement was accepted. So, during the interregnum between the expiry of the notice period and the date of acceptance of the request, the employees who were working had to be paid salary for the period during which they worked. After the acceptance of the request for voluntary retirement, the employees were relieved and when they made claims in consequence of revision in the pay scales for payment of arrears, the management withheld the amount equivalent to the notice pay period on the ground that payment of such amount was not permissible under the voluntary retirement scheme. It appears there was an objection by the Audit Department and, therefore, the Management had to resort to this course of action. Amounts ranging, we are told, from Rs.3,000/- to Rs. 10,000/- due to each of the respondent officers were with held.

Challenging the action of the Hindustan Ship Yard, the affected employees filed two writ petitions from out of which the present appeals arise. Our learned brother T.N.C. Rangarajan, J., allowed both the writ petitions on the view mat the obligation of the employee to give notice and the period of notice runs from the date the employer consents to the request of the employee for voluntary retirement and, therefore, the period of service "rendered by the petitioners (respondents herein) after giving the willingness and until the Corporation gave its consent for voluntary retirement cannot be counted against the notice period required to be given by the employer for the purpose of calculating the notice period". For reaching the above conclusion, the reasoning given by our learned brother is :

".... the voluntary retirement itself is, in fact, a termination by the employer and this is the real reason why the scheme itself provides for payment of notice pay which amounts to payment in lieu of notice that the employer has to give for putting an end to the contract of employment. The contract gets terminated only when the employer accepts the request made by the employee; and thereafter, if the employer docs not allow the employee to work for the notice period, the salary has to be paid in lieu of that notice period."

Sri Krishna Murthy, learned Counsel for the appellant, contends that the view taken by the learned Judge is not permissible in law; for any period beyond the notice period, the workman is not entitled to any remuneration. Had the notice been given by the employee, he would have walked out of the employment immediately after the completion of the notice period and so is the case of a notice given by the employer which would result in the contract of employment getting terminated by the end of the notice period. There cannot be a different consideration in the case of the voluntary retirement scheme.

We are not inclined to accept the contention of the learned Counsel for the appellant. The Hindustan Ship Yard Ltd., in the Circular dated 14-3-1989 in regard to the implementation of the voluntary retirement scheme, inter alia, stated :

"The introduction of the scheme is subject to the approval of the Government, availability of funds allocated for this purpose and acceptance/rejection of the request of the employees will be purely at the discretion of the Management and the employee docs not have any right to claim for acceptance of his request for voluntary retirement under the scheme."

The acceptance of the request for voluntary retirement, it will be seen from the above condition, depends upon the discretion of the management and there is no right vested in the employee to insist upon the management to accept his request for voluntary retirement. When the employee has no option to insist upon his right under the scheme to seek retirement voluntarily, the period during which he worked beyond the expiry of the notice period cannot be a ground for with-holding the notice period pay. The requirement of notice is an inducement to the employee to seek voluntary retirement. The salary for one month or three months depending upon the cadre of the employee, was required to be paid when the request for voluntary retirement was accepted. Such acceptance shall coincide with the date with effect from which the employee wanted to be relieved. When such an employee is relieved, he is paid salary for one month or three months as the case may be. In the beginning when the scheme was put into action, there was absolutely no difficulty in making payments to the employees; as funds were available, the payments were immediately made coinciding with the expiry of the notice period. It was the financial stringency of the Organisation that had resulted in the acceptance of the request long after the expiry of the notice period. The pay for the notice period, it could not be said, that the employee was not entitled to. This peculiar situation presented itself only in respect of the voluntary retirement scheme introduced by the Hindustan Ship Yard Ltd., on 30-6-1989 which came into effect from 25-5-1989 but not for the subsequent schemes.

For these reasons, the writ appeals fail and accordingly they are dismissed. The appellant is given two months'' time with effect from today to repay the withheld amounts concerning the notice pay period to the respondent employees. No costs.