Andhra HC (Pre-Telangana)
Susarla Nagabhushana Rao And Ors. vs Hindustan Shipyard Limited, Rep. By Its ... on 11 July, 1997
Equivalent citations: 1997(4)ALT681
Author: T.N.C. Rangarajan
Bench: T.N.C. Rangarajan
ORDER T.N.C. Rangarajan, J.
1. These writ petitions seek a direction to the respondents not to deduct notice pay out of the amount payable to the petitioners under the Voluntary Retirement Scheme on their retirement under the terms of the scheme. There was a voluntary retirement scheme given by the respondent-company which contained the following clauses:
"4. Benefits under the scheme:
(A) An employee whose request for voluntary retirement is accepted will be entitled to the following benefits:
(i) xxx xxx xxx (ii) xxx xxx xxx (iii) xxx xxx xxx
(iv) One month's notice pay for staff and workmen and 3 months' notice pay for officers as per the respective service conditions."
The petitioners submitted applications under the scheme which were accepted by the management and the benefits were paid as in the scheme including the notice pay. Subsequently, when some arrears were to be paid, in view of certain audit objections, respondent deducted the notice pay on the ground that it had taken more than three months for the requests to be accepted by the Corporation and since the petitioners had worked during that period and enjoyed the salary, the payment of the notice pay was a double payment. The learned Counsel for the petitioner submitted that since the scheme itself provided for a benefit which had also been acted upon the respondent had no power to go back on that and deduct the amount out of the further sums payable to the petitioners. The learned Counsel for the respondent submitted that the notice was taken to run from the date when the request was made by the petitioners and since they stayed in the job for more than three months after making the requests, the question of paying any amount in lieu of notice cannot arise.
2. After reading the terms of the scheme, I find that the question can be resolved by focussing on the issue as to the obligation of the parties to give the notice. In a normal contract of employment, if either party has right to terminate a contract by notice, the person who is terminating the contract has to give the notice and if the notice period is inadequate, he pays the amount in lieu thereof. Normally, if the employee resigns or voluntarily quits, he will have to issue notice and pay the amount in lieu thereof. But, in the case of voluntary retirement scheme even though it is the employee who quits the organisation he really responds to a scheme framed by the employer for getting rid of some employees. In this background, though the employee makes a request for being relieved, unless his request is accepted by the employer, the question of his retirement cannot arise. Thus, 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 the employment. The contract gets terminated only when the employer accepts the request made by the employee, and thereafter, if the employer does not allow the employee to work for the notice period, the salary has to be paid in lieu of that notice period. The Corporation had correctly understood this position and paid the amount due to the petitioners initially. But, however, due to audit objection which had referred to an earlier circular, which had wrongly assumed that a double payment had been made. Circular dated 29-5-1992 giving clarification was only with reference to employees who were due to retire shortly and it was observed that in respect of those who are retiring within the notice period any payment for a period beyond the date of retirement will be unjustified. That is not the situation in the present case. That clarification cannot be applied for the proposition that no notice pay should be given as the employee has been allowed to work beyond the notice period only because the employer has taken more than three months to consent to the applications of the employees for voluntary retirement. As I said earlier, it is the obligation of the employer to give the notice and the period for notice runs from the date the employer consents to the request of the employee for voluntary retirement. It follows that the period of service rendered by the petitioners after giving letters of request and until the Corporation gives 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. In the circumstances, the amount originally paid was correctly computed and there is no justification for deducting any amount as if there is a double payment. I, therefore, direct the respondents to release the amounts that have been withheld on that basis within two months from the date of receipt of a copy of this order.
3. Accordingly, the two writ petitions are allowed. No costs.