To withdraw Resignation or Application for VR

The issue concerning the right of an employee to withdraw the resignation, after its
submission to the employer, was dealt with comprehensively by a three-Judge Bench in Raj
Kumar. The facts of the case were: An IAS Officer submitted resignation with a request that
it be accepted at the earliest. The said letter was forwarded to the Government of India,
which had accepted the same and informed the State Government to relieve him of his
duties. Before the said decision of the Government of India was communicated to him, the
officer changed his mind and submitted a letter to the State Government withdrawing his
resignation. The State Government, however, relieved him from his duties. Shah, J (for self,
Ramaswami and Mitter, JJ) observed:

“On the plain terms of the letters, the resignation was to become effective as soon as it was
accepted by the appointing authority. No rule has been framed under Art. 309 of the Constitution
which enacts that for an order accepting the resignation to be effective, it must be communicated
to the person submitting his resignation. . . . where a public servant has invited by his letter of
resignation determination of his employment, his services normally stand terminated from the
date on which the letter of resignation is accepted by the appropriate authority and in the absence
of any law or rule governing the conditions of his service to the contrary, it will not be open to the
public servant to withdraw his resignation after it is accepted by the appropriate authority. Till the
resignation is accepted by the appropriate authority in consonance with the rules governing the
acceptance, the public servant concerned has locus paenitentiae but not thereafter. . . . In the
present case the resignation was accepted within a short time after it was received by the
Government of India. . . . the appellant cannot profit by the delay in intimating acceptance or in
relieving him of his duties.”1

Raj Kumar is an authority for the proposition that in the realm of employment relationship,
public or private, a resignation letter cannot be permitted to be withdrawn once the employer
formally communicates his acceptance. This is notwithstanding the fact that the notice period
has not expired because the transaction stands completed in all respects once acceptance
is communicated. However, a few later judges infused grave misconceptions born out of, if I
may be permitted to say so, their unfulfilled creative urges and diluted the law for no
convincing reason. I propose to cite the decisions together with the reasoning and
conclusions reached by smaller benches of two-judges in the following cases, before
analysing the judicial aberrations manifested therein. The first in this chain is that of Balram
Gupta, in which the facts disclosed that the appellant submitted a letter giving three months’
notice indicating his desire to voluntarily retire on the expiry of the said period, i.e., March 31,
1981. The Government accepted the same and issued an order on January 20, 1981
allowing him to retire on the expiry of the said three months. Subsequent to the
communication of its acceptance by the Government, the employee, submitted a letter on
January 31, 1981 offering to withdraw the said application, which was rejected by the
Government. Allowing the appeal, Sabyasachi Mukharji, J (for self and Oza, J) observed:

1
. Raj Kumar v. Union of India, 1970 I LLJ 13 (15) (SC), per Shah, J.
 “We hold, therefore, that there was no valid reason for withholding the permission by the
respondent. We hold further that there has been compliance with the guidelines because the
appellant has indicated that there was a change in the circumstances, namely, the persistent and
personal requests from the staff members and relations which changed his attitude towards
continuing in Government service and induced the appellant to withdraw the notice. In the modern
and uncertain age it is very difficult to arrange one's future with any amount of certainly, a certain
amount of flexibility is required, and if such flexibility does not jeopardize Government or
administration, administration should be graceful enough to respond and acknowledge the
flexibility of human mind and attitude and allow the appellant to withdraw his letter of retirement in
the facts and circumstances of this case. Much complications which had arisen could have been
thus avoided by such graceful attitude. The court cannot but condemn circuitous ways "to ease
out" uncomfortable employees. As a model employer the government must conduct itself with
high probity and candour with its employees.”2 (Italics supplied).

Then follows the case of Power Finance Corporation,3 wherein the issue, though borne out
of the withdrawal of VRS application, turned on the short question “whether the formal
acceptance of the VRS application by management would create a vested right in favour of
the employee.” For this reason, the decision does not directly fall within this realm. Even so,
one observation made by Ramaswamy, J (for self and Nanavati, J) deserves special
mention and has been analysed in the following paragraphs. In Nand Keshwar Prasad, the
facts were: an employee, against whom serious allegations of misconduct were made,
submitted his resignation on September 28, 1983 to be effective from January 21, 1984. The
management by letter dated September 30, 1983 accepted the resignation and paid wages
till January 21, 1984 by depositing the amount in his account and asked him not to attend
office from October 1, 1983. The employee, thereafter, by a letter dated 1 October 1983,
informed that the resignation letter had not been voluntarily written but he was forced to
tender the resignation and was also forced to receive the acceptance letter and was not
allowed to resume duties, which contention was rejected by the management. The Labour
Court held that the acceptance of resignation was in order and that no mala fides could be
attributed to the employer. The High Court rightly refused to interfere with the decision of
Labour Court. Dismissing the appeal, a Division Bench of SCI comprising Ray and
Srinivasan, JJ observed:

“. . . the law is well settled by this Court in a number of decisions that unless controlled by
condition of service or the statutory provisions, the retirement mentioned in the letter of
resignation must take effect from the date mentioned therein and such date cannot be advanced
by accepting the resignation from an earlier date when the concerned employee did not intend to
retire from such earlier date. It has also been held by this Court that it is open to the concerned
employee to withdraw letter of resignation before the same becomes effective. It, however,
appears to us that it is not the case of the appellant that though he had tendered resignation
voluntarily intending to retire from a prospective date but later on he had changed his mind and
had withdrawn the same before it became effective. . . . The appellant . . . took the stand that
there was no voluntary resignation on his part but a letter purporting to be voluntary resignation
was obtained from him under threat and coercion and such purported resignation letter could not

2
. Balram Gupta v. Union of India, AIR 1987 SC 2354, per Mukharji, J.
3
. Power Finance Corporation Ltd. v. P.K. Bhatia, 1997 II LLJ 819 (821) (SC), per Ramaswamy, J.
 be given effect to. . . . we do not think any interference by this Court is called for in exercise of
jurisdiction under Article 136 of the Constitution.” 4

In Shambhu Murari Sinha, Phukan, J (for self and Venkatarama Reddi, J) observed:

“Coming to the case in hand the letter of acceptance was a conditional one inasmuch as though
option of the appellant for the voluntary retirement under the scheme was accepted but it was
stated that the 'release memo along with detailed particulars would follow'. Before the appellant
was actually released from the service, he withdrew his option for voluntary retirement by sending
two letters . . . and, therefore, the jural relationship of employee and employer between the
appellant and the respondents did not come to an end on the date of acceptance of the voluntary
retirement and said relationship continued till 26th of September, 1997. . . Therefore, in view of
the settled position of the law and the terms of the letter of acceptance, the appellant had locus
poenitentiae to withdraw his proposal for voluntary retirement before the relationship of employer
and employee came to an end.”5

I propose to analyse the above decisions in some detail.

Balram Gupta v. Union of India

The question that fell for determination was “can a party retract from a contract after its
consummation”? How does it matter whether the party is an employee or a service provider
or a builder, as long as the transaction squarely falls within the ambit of the law of contract
and the law is well settled? It is trite for Mukharji, J to infuse such expressions as
“uncertainty of future”, “flexibility in administration”, “graceful attitude” and “model employer”
into the judgement to justify an otherwise mediocre line of reasoning. The court was called
upon to declare the law and not to deliver sermons from the pulpit, much less workout a
compromise between the disputants. The learned judge further observed: “the appellant has
indicated that there was a change in the circumstances, namely, the persistent and personal
requests from the staff members and relations which changed his attitude towards
continuing in Government service and induced the appellant to withdraw the notice.” Is it
possible to elevate the above observation to the status of an “argument” on which a judicial
decision could be founded? It is shocking that fiction of this standard with no basis in facts,
and which had not been judicially established before any forum below, could form the basis
of a judicial decision touching upon an important point of law! Barring a nude “tell-and-sell”
averment from the employee, what was the evidence that the apex court had in its
possession to draw the inference that the government was adopting “circuitous ways to ease
out uncomfortable employees”? At a more basic level, was it a case of termination or
resignation? Where is the question of easing out “uncomfortable” employees in a case of
voluntary resignation, and what prompted the learned judge to make a “reckless” statement
of this kind? The Delhi HC rightly rejected the story spun by the employee that “the director

4
. Nand Keshwar Prasad v. IFFCO Ltd., 1998 II LLJ 1008 (1011) (SC).
5
. Shambhu Murari Sinha v. Project & Development India Ltd., 2002 II LLJ 430 (433) (SC), per Phukan, J.
informed him of his union activities and hence had decided to ease him out”, as being false
with no backup evidence, and dismissed his appeal. Mukharji, J accepted the legal position
as enunciated in Raj Kumar (supra), which means that the ratio of the said decision was
binding on him, nevertheless proceeded to justify his own decision to the contrary on such
flimsy grounds like “undue delay” in intimating the action and so forth. In this process, the
learned judge committed factual errors of grave magnitude, which I would like to highlight
here. The resignation letter was submitted on 24-12-1980 with a request to be relieved on
31-3-1981, which means it was a three months’ notice. The government communicated its
acceptance on 20-1-1981. The time taken by government was 26 days. Could this be
branded as undue delay? The employee thereafter changed his mind and submitted another
letter on 31-1-1981 withdrawing his application, i.e., 11 days after receipt of communication.
In Raj Kumar, the officer submitted his resignation on 30-8-1964 which was in principle
accepted by Government of India on 31-10-1964. As a matter of fact, in that case, as on the
date the officer submitted his withdrawal letter, i.e., on 27-11-1964, there was no formal
communication from government accepting his resignation. The time taken by the
government accepting the resignation “in principle” was 60 days in Raj Kumar as against 26
days in Balram Gupta. If this not a case of distorted comparison, what else could it be? This
one infirmity is sufficient to throw the decision of Mukharji, J overboard, given the fact that he
based his decision on the only premise of “undue delay” (as compared to Raj Kumar), which
is proved false on facts. This decision is thus nothing more than a product of
misrepresentation of facts and misapplication of law thereto. It is not in dispute that the ratio
of Raj Kumar was binding on the Bench, as the said decision was not overruled by a larger
Bench. Further, Mukharji, J himself acknowledged that Raj Kumar was binding on him (Para
11), but made a faint attempt to distinguish, when there was nothing in it to distinguished.
For all these reasons, Balram Gupta should be treated as per incuriam. It is equally startling
that the subsequent decisions (discussed below) were, in part, based on a blind reliance
placed on Balram Gupta, and should, therefore, be treated as equally defective and non est.
The High Court was right and SCI clearly wrong.

Power Finance Corporation v. P.K. Bhatia

The issue raised in this case was different and had nothing to do with the withdrawal of
application made for voluntary retirement. Even so as already pointed out above, one
observation made by Ramaswamy, J deserves some analysis. The learned judge observed:
“It is now settled legal position that unless the employee is relieved of the duty, after
acceptance of the offer of voluntary retirement or resignation, jural relationship of the
employee and the employer does not come to an end.” Having said that much, the learned
judge did not choose to cite even one decision in support of his gloss. What is the settled law
and settled by which court? Was it based on any known legal principle or a product of his
wild imagination? If he was referring to Balram Gupta, albeit sub silentio, then his
observation cannot be sustained as the said decision was based on a misrepresentation of
facts and misapplication of law. Going by a process of elimination, the only case which could
be relied upon is that of the Constitution Bench in Gopal Chandra (infra), in which there is
nothing to suggest that a resignation continues to hang in balance even after its acceptance
by the employer, and hence the above observation cannot derive any support from that
decision. Thus, the only decision which governed the issue is that of Raj Kumar, which
clearly laid down that the “resignation becomes effective on its acceptance by the employer.”
These facts go to prove that there is no merit in the observation of Ramaswamy, J. For that
matter, there was no decision of SCI which propounds that the right to withdraw resignation
survives even after the communication of its acceptance by the employer. Further, the said
question was never at issue in any forum below, much less agitated before the apex court. In
the light of this factual position, the observation of Ramaswamy, J was not only per incuriam,
but was a digressive obiter, with no binding force on any court.
Nand Keshwar Prasad v. IFFCO
Though the conclusion reached by the Bench was right, one observation made therein
deserves to be highlighted. It was held: “it is not the case of the appellant that though he had
tendered resignation voluntarily intending to retire from a prospective date but later on he
had changed his mind and had withdrawn the same before it became effective.” The second
part of this observation is clearly misconceived. Assuming for the sake of argument that the
employee had changed his mind after the employer formally communicated his acceptance,
would that fact alter the legal position materially? Again what is meant by the cryptic
expression “before it became effective”? In this connection, it is worthwhile to note what the
American Jurisprudence has to say on this aspect. It says, “the contract of employment is
terminated where the employee tenders his resignation and the proffer is accepted by the
employer."6 The implication of this rule is two fold, i.e., the contract of employment can only
be terminated by a bilateral act, that is to say, (i) resignation by the employee; and (ii) its
acceptance by the employer and the formal communication thereof to the employee. The
Bench admittedly relied on earlier decisions including Gopal Chandra in support of this line
of reasoning. It is therefore necessary to take a look at Gopal Chandra. It was a case of
resignation by a sitting judge of High Court to the President of India and its subsequent
withdrawal. The observation of Sarkaria, J (Para 51) is reproduced below:

“In the case of a Government servant or functionary who cannot, under the conditions of his
service/or office, by his own unilateral act of tendering resignation, give up his service/or office,
normally, the tender of resignation becomes effective and his service/or office-tenure terminated,
when it is accepted by the competent authority. In the case of a Judge of a High Court, who is a
constitutional functionary and under Proviso (a) to Article 217 (1) has a unilateral right or privilege
to resign his office, his resignation becomes effective and tenure terminated on the date from
which he, of his own volition, chooses to quit office. If in terms of the writing under his hand
addressed to the President, he resigns in praesenti the resignation terminates his office-tenure
forthwith, and cannot therefore, be withdrawn or revoked thereafter. But, if he by such writing,
chooses to resign from a future date, the act of resigning office is not complete because it does
not terminate his tenure before such date and the Judge can at any time before the arrival of that
prospective date on which it was intended to be effective withdraw it, because the Constitution
does not bar such withdrawal.”7 (Italics supplied).

Sarkaria, J rightly distinguished the case of a government servant, whose conditions of

service permit resignation, in which case the acceptance thereof by the employer is
necessary; from that of a High Court Judge holding a constitutional position, who has a
unilateral right to resign his office, whose resignation becomes effective on the date he
chooses of his own volition, and no acceptance is necessary. More importantly, Sarkaria, J
concluded that, in the former case, the resignation becomes effective when it is accepted by
the competent authority whereas, in the latter, the resignation once submitted becomes final,
and there can be no question of withdrawing it in view of the absence of the requirement of
6
. American Jurisprudence Vol. 53, p. 111 Section 34.
7
. Union of India v. Gopal Chandra Misra, AIR 1978 SC 694, per Sarkaria, J.
acceptance by the authority. There is nothing in the said decision, which could lend support
either to the reasoning or the conclusion reached by the learned judges. On the contrary, the
expression “resignation becomes effective”, as interpreted by the Constitution Bench, richly
endorses the view that it means “acceptance” by the authority. At this point, it is necessary to
note that Sarkaria, J relied on (Para 46) the following observation of Mukherjea, J in Jai
Ram’s case.

“‘It may be conceded that it is open to a servant, who has expressed a desire to retire from
service and applied to his superior officer, to give him the requisite permission, to change his
mind subsequently and ask for cancellation of the permission thus obtained; but, he can be
allowed to do so as long as he continues in service and not after it has terminated’." 8

The reference made by Sarkaria, J to the above observation, and his attempt to rely thereon
are not free from serious fallacies of grave magnitude. In Jai Ram’s case, two points were
urged: (1) under Rule 56(b)(i), the age of retirement was 60, and not 55 years and before the
government could ask a public servant to retire at 55, he should be given an opportunity to
represent against the said pre-mature retirement as per the provisions of GOIA; since this
was not done, the order of termination was invalid; and (2) although the employee applied
for on his own and obtained leave preparatory to retirement, yet there was nothing in the
Rules which prevented him from changing his mind at any subsequent time and expressing
a desire to continue in service, provided he indicated this intention before the period of his
leave expired. The most critical fact in Jai Ram’s case was that the application for premature
retirement was made by the employee on his own volition, and there was no order from
government compelling him to retire prematurely; and by the same token, the question of
giving an opportunity to represent against such an order [as contemplated by s. 240(3) of
GOIA] did not arise. Mukherjea, J decided the case against the appellant solely on the first
point, in view of which the second one, i.e., subsequent change in mind and expressing his
desire to continue in service, lost its force, as was observed by the learned judge himself
(Para 7). Having said that much, Mukherjea, J proceeded further to make the above-cited
observation. The next question is: what was the nature of the aforesaid observation? Could
it be said to constitute the ratio decidendi of the case or merely an obiter dictum? The
decision on the second point was dependent on the first one relating to the principle. Given
the fact that Mukherjea, J disposed the case on the first point, and in principle, there was no
warrant for his second observation. The observation, which was made in the last paragraph
of the judgment (cited above), was more in the nature of obiter as the possibilities of the kind
mentioned therein did not demand any consideration for arriving at the decision that he did.
Further, Mukherjea, J did not give any reasons for making the aforesaid observation or for
reaching the said conclusion.
8
. Jai Ram v. Union of India, AIR 1954 SC 584, per Mukherjea, J.
According to Prof. Fitzgerald, "A decision passes sub silentio in the technical sense that has
come to be attached to that phrase, when the particular point of law involved in the decision
is not perceived by the court or present to its mind. The court may consciously decide in
favour of one party because of point A, which it considers and pronounces upon. It may be
shown, however, that logically the court should not have decided in favour of the particular
party unless it also decided point B in his favour; but point B was not argued or considered
by the court. In such circumstances, although point B was logically involved in the facts and
although the case had a specific outcome, the decision is not an authority on point B. Point
B is said to pass sub silentio."9 Jai Ram’s case is a striking example of the above rule in so
far as the observation made by Mukherjea, J. It is well settled that a decision is an authority
for what it decides and not what can logically be deduced therefrom. The only thing in a
judge's decision binding as an authority upon a subsequent Judge is the principle upon
which the case was decided. Statements which are not part of the ratio decidendi are
distinguished as obiter dicta and are not authoritative. Mere casual expressions do carry no
weight at all. Not every passing expression of a judge, however eminent, can be treated as
an ex cathedra statement, having the weight of authority. It may be an expression of a
viewpoint or a sentiment with no binding effect. In the final analysis, the said observation of
Mukherjea, J could not be relied upon for determining the meaning of the expression
“resignation becomes effective”. From the above discussion as well as from the standpoint of
law and common sense, a resignation letter or an application for voluntary retirement
becomes effective the moment the employer communicates his written acceptance, and not
the date on which the employee is actually relieved. The service rules or the standing orders
prescribe the period of notice to be given by the employee while terminating the contract.
The only implication of the notice is that, having served it, the employee has to attend duties
till the expiry of the notice period or, in the alternative, pay to the employer an amount
equivalent to the salary for the unexpired portion of notice. The employer, of course, has the
right to waive the notice period at his discretion, without the employee having to pay any
amount to the employer, but that is a different issue. In the face of a conspectus of
authorities to the contrary, to suggest that locus paenitentiae survives till the last day of
notice period, even when the employer had communicated his acceptance, is repugnant to
the rudimentary legal principles.

Shambhu Murari Sinha v. Project & Development India Ltd.

The facts disclosed that the management sent a formal letter accepting the application for
voluntary retirement with the further information to the effect that “release memo along with
9
. Fitzgerald. Prof. P.J., Salmond on Jurisprudence, 12th edn., p. 153.
detailed particulars would follow.” Phukan, J held that the said phrase transformed the
acceptance letter into a conditional one. This is a perverted observation on the part of the
learned judge. Does the phrase, “release memo along with detailed particulars would
follow”, impose any condition? Or does it merely give information as to the next logical step
to follow consequent upon the acceptance of his application? Simply stated, “a condition is
something which requires the party to perform some act before the result can follow”. Could
it be said that the said communication spelled out or imposed a condition on the employee?
That is the extent to which the vagaries of judicial intellect displayed their casual, free-for-all
play, while disposing of cases at the level of the apex court! This decision, with all its
fundamental fallacies, does not deserve any further analysis. With the sole exception of
Nand Keshwar Prasad, the other three cases commencing from Balram Gupta relate to the
question of withdrawal of resignation or VR application by the employees, after the formal
acceptance of the same was communicated to, and acknowledged by, the employees. What
was the provocation for the learned judges to permit the employees to approbate and
reprobate in a quixotic manner? A contract of employment is still a ‘contract’ within the
meaning of the Contract Act, 1872 and has all the attributes of a civil or commercial contract,
further tempered by the law of employment relations. By the same token, the concept of
locus paenitentiae applies to employment contracts with as much force as it applies to any
other contract. Raj Kumar is an authority for the proposition that once the employer formally
communicates his acceptance of resignation and/or application for voluntary retirement to
the employee, the transaction is complete and the legal right of employee to withdraw it
thereafter stands extinguished. In Raj Kumar, Shah, J discussed the application and scope
of locus paenitentiae in some detail, and his reasoning was consistent with settled legal
position relating to contracts. The said case was decided by a three-judge Bench and is
therefore binding on all coordinate Benches of three or lesser number of judges. Further, the
ratio of Raj Kumar was affirmed by the Constitution Bench (Paras 47 & 50) in Gopal
Chandra (supra). In addition, there is no law which stipulates that the employer should retain
the employee in his active service till the expiry of the notice period. The employer would be
well within his legal right to accept the resignation and relieve him on the same day itself, the
only legal requirement being that he should compensate the employee by paying him the
residual salary for the unexpired portion of the notice period, and nothing more. It is not in
doubt that Balram Gupta, Nand Keshwar and Shambhu Murari, not to speak of the
misplaced obiter of Ramaswamy, J in Power Finace, are the outcomes of gross
misconceptions, perverse and are clearly wrong.  There is no justification for judicial feather-
bedding or for carving out an oasis by giving license to the employees to play hide-and-seek,
and resign-and-retract with impunity.