COMMISSIONER OF INCOME TAX Vs. P SURENDRA PRABHU

JUDGEMENT

(1.) SINCE the issues involved in these two appeals are inter-related, they are heard together and disposed of by this common judgment.

(2.) THE facts in IT Appeal No. 189/2005 are as under: the assessee was an employee of Canara Bank, which is a nationalised bank. The bank had floated a scheme called Canara Bank Employees Special Voluntary Retirement Scheme ("voluntary Retirement Scheme" for short ). The objective of the scheme is to have an ideal manpower for the bank and to have optimum human resources in keeping with the business strategies, skill profile towards achieving a balanced age profile and meeting the latest requirements of the bank. The scheme, apart from others, provides eligibility criteria, benefits available under the scheme, and other general conditions. The scheme is available to all permanent workmen/officer employees of the bank, provided they have completed fifteen (15)years of actual service or forty (40) years of age and the eligibility to be reckoned as on 1st Jan. , 2001. The employees who seek voluntary retirement under the scheme require to make appropriate application and it is the prerogative of the bank's management either to accept the request for voluntary retirement under the scheme or to reject the same depending upon the requirement of the bank. Clause (6) of Annex. I to the circular issued by the bank, dt. 11th Dec. , 2000, provides for benefits available under the scheme for those employees seeking voluntary retirement under the scheme. Apart from payment of gratuity, provident fund/pension, encashment of privilege leave, the scheme also provides for payment of "ex gratia amount" as specified in Clause 6. 1 of the Annexure to the circular. A scheme similar to the one floated by the respondent-bank came up for consideration before the supreme Court in the case of Bank of India v. O. P. Swaranakar AIR2003 SC 858 , 2003 (1 )AWC798 (SC ), JT2002 (10 )SC 436 , (2003 )I LLJ819 SC , (2003)2 SCC721 , [2002 ]supp5 SCR438 , 2003 (1 )UJ225 (SC ), (2003 )1 UPLBEC594. The question before the Court was, whether an employee, who opts for voluntary retirement pursuant to or in furtherance of a scheme floated by the nationalised banks and the State Bank of India would be precluded from withdrawing the said offer? While answering the question in negative and in favour of the employees of the bank, the Supreme Court has elaborately dealt with the status of employees in nationalised banks, the true intendment of the schemes floated by the banks, and whether the principles of Contract Act would be applicable in a case where an offer is made under a scheme to a group of persons and accepted individually by the employees of the bank. While answering the last issue, the Court has specifically observed :

(3.) NOW having noticed the scheme floated by the bank and its limited operation insofar as contractual relationship between the employer and the employee, we proceed to narrate the facts in brief for the disposal of these appeals.