FACTS:

The Ministry of Finance, Government of India contemplated manpower planning to address the issue of
overstaffing in banks. A voluntary retirement scheme (VRS) was introduced to downsize the workforce.
In a letter, the Director (IR & BOH), Ministry of Finance, intimated to the concerned banks that most of
the banks had 25% surplus manpower, and 50% quota for promotion to the officers' cadre should suffice.
The Scheme was introduced by the banks with the approval of the Board of Directors. The Scheme was
open to all permanent employees of the Bank, except those specifically mentioned as 'ineligible', who
had put in 15 years of service or have completed 40 years of age as on 31-12-2000. A mere request of an
employee seeking voluntary retirement under the Scheme will not take effect until and unless it is
accepted in writing by the Competent Authority. The employees seeking retirement under the Scheme
were not entitled to dispute the payments received under the Scheme on any ground whatsoever. The
Competent Authority shall have absolute discretion either to accept or reject the request of an employee
seeking Voluntary Retirement under the scheme depending upon the requirement of the bank. The ex-
gratia payable to an employee on opting for Voluntary Retirement under this scheme would be paid to
him within 45 days from the date of his relieving. The VRS was voluntary in nature, and the employee
seeking retirement under the Scheme would not be eligible for any retrenchment compensation payable
under the provisions of the Industrial Disputes Act. The employees specified therein, including
specialised officers, were not eligible to seek voluntary retirement. An employee who would seek
voluntary retirement under this Scheme would not be eligible for re-employment in the Bank or any of
its subsidiaries. The vacancy caused by voluntary retirement shall not be filled up by new recruitment.

ISSUES:
• Whether an employee could withdraw a Voluntary Retirement Scheme (VRS) application before it
was accepted by the Competent Authority?
• Whether the employer bank gets the authority to unilaterally determine the jural relationship of
master and servant between the parties after applying under VRS?
• Whether the voluntary retirement scheme an offer or an invitation to offer?

RATIO/ RULES:
 An employee can withdraw a VRS application before it was accepted by competent authority.
 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.
 It is an invitation to offer.
 In the absence of any other independent contract, statute, or statutory rules to the contrary, the
application filed by the employees will be considered an ‘offer’ under Section 5 of the Indian
Contract Act.
 When the Bank accepts the proposal, it will be considered a promise under Section 2(b) of
the Indian Contract Act.
APPLICATION/ ANALYSIS:
 The court believes that the employees have the right to change their minds and revoke their
acceptance of the scheme if they're worried, they won't get the benefits they were promised. So, if
the employees feel uncertain or worried about the changes to the scheme, they're within their rights
to back out of it. Even if some employees only opted for certain benefits that weren't affected by the
changes, the court still believes their concerns are valid and they have the right to reconsider their
decision.
 In Power Finance Corporation Ltd. v. Pramod Kumar Bhatia, 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. Since the
order accepting the voluntary retirement was a conditional one, the conditions ought to have been
complied with.
 “Offers and Invitations to Treat: It is sometimes difficult to distinguish statements of intention which
cannot, and are not intended to result in any binding obligation from offers which admit of
acceptance, and so become binding promises. A person advertises goods for sale in a newspaper, or
announces that he will sell them by tender or by auction; a shopkeeper displays goods in a shop
window at a certain price; or a bus company advertises that it will carry passengers from A to Z and
will reach Z and other intermediate stops at certain times. In such cases it may be asked whether the
statement made is an offer capable of acceptance or merely an invitation to make offers, and do
business. An invitation of this nature, if it is not intended to be binding, is known as an ‘invitation to
treat.”

CONCLUSION:
The Supreme Court of India addressed the crucial question of employee rights within Voluntary
Retirement Schemes (VRS). The court's verdict established that the Bank of India's VRS scheme
functioned as an "invitation to offer" rather than a binding contract. This crucial distinction
empowered employees with the right to withdraw their applications for VRS before formal
acceptance by the bank. This judgment served to safeguard employee autonomy and ensure informed
decision-making regarding their retirement plans. The court's reasoning centered on the notion that
until the bank's acceptance, the employee's application remained an expression of interest, not a
definitive commitment. This ruling offered clarity and protection for employees navigating VRS
options, empowering them to make well-considered choices about their future.