Voluntary Retirement Scheme Does Not Extinguish Employee's Right To Challenge Disciplinary Penalties: Delhi HC

Background

D.P. Sharma, formerly employed by the Delhi Electric Supply Undertaking (DESU), later taken over by BSES Rajdhani Power Ltd., faced disciplinary proceedings in 1990 for alleged misconduct in 1980 and 1982. Despite being exonerated by the Inquiry Officer in 1997, the Disciplinary Authority (DA) disagreed, imposing a penalty of a three-stage reduction in pay scale, which was eventually reduced to a two-stage reduction by DESU's Chairman in 1999. Dissatisfied, Sharma challenged the order in 1999 by filing a writ petition before the Delhi High Court.

In 2003, Sharma opted for voluntary retirement under BSES's SVRS, tendering an undertaking that the salary at that time, reduced due to the penalty, would form the basis for his retirement benefits. Subsequently, in 2015, the Disciplinary Authority reaffirmed the original punishment, leading Sharma to file another writ petition challenging the decision.

In 2019, a Single Judge of the Delhi High Court quashed the disciplinary proceedings and upheld Sharma's challenge, despite BSES's argument that Sharma's SVRS application precluded any further claims. BSES Rajdhani then appealed this decision.

Arguments

BSES Rajdhani, represented by Mr. Sandeep Prabhakar, argued that by accepting the SVRS, Sharma had effectively extinguished all past claims against the company, including claims for enhanced financial benefits like pay scale revisions. BSES pointed to specific clauses within the SVRS and the undertaking signed by Sharma, asserting that these amounted to a “complete cessation” of the employer-employee relationship. Relying on A.K. Bindal v. Union of India, BSES emphasized that financial claims arising after the cessation of employment cannot be reopened once the employee opts for voluntary retirement.

In response, Mr. Anuj Aggarwal, counsel for Sharma, argued that the benefits being claimed were not covered under the SVRS package. He cited the Supreme Court's judgment in A. Satyanarayana Reddy v. Labour Court, which clarified that only claims specifically covered under the terms of the SVRS are extinguished by opting for voluntary retirement. Sharma's case, he argued, involved entitlements that were not included in the SVRS, thus allowing him to pursue these benefits post-retirement.

Court's Reasoning

Firstly, the court examined the scope and content of the SVRS and Sharma's undertaking. It acknowledged that while Sharma had accepted the scheme with the understanding that his salary would be calculated based on his reduced pay scale, the benefits being claimed did not form part of the retirement package.

Secondly, the court analyzed BSES's reliance on the A.K. Bindal judgment. In that case, the Supreme Court ruled that an employee who avails voluntary retirement cannot later seek financial benefits like pay revision. However, the court here noted that A.K. Bindal dealt with pay revisions directly linked to retirement packages, whereas Sharma's claim arose from a disciplinary action unrelated to the SVRS package itself. Thirdly, the court referred to A. Satyanarayana Reddy, which allowed employees to claim certain financial benefits post-retirement if those claims were not explicitly covered under the SVRS. In Sharma's case, the court found that the pay revision linked to the penalty reduction was a separate issue, not part of the retirement benefits package under SVRS.

The court further held that voluntary retirement under SVRS does not equate to an absolute waiver of all financial claims unless expressly stated in the scheme. Sharma had retired based on a reduced pay scale, but that did not bar his right to challenge the disciplinary proceedings and seek a reversal of the punishment affecting his pay. The court reasoned that allowing BSES's argument would undermine the purpose of judicial scrutiny in such disciplinary cases. Lastly, the court addressed BSES's argument regarding the timing of their plea, as BSES had only raised the SVRS defense during the final stages of the proceedings. The court rejected this argument, emphasizing that legal defenses based on established law can be raised at any stage, provided they are valid.

Counsel for the Appellant: Mr. Sandeep Prabhakar, Mr. Amit Kumar, Mr. Vikas Mehta, Mr. Pratap Behra, and Mr. Shaswat Jena

Counsel for the Respondent: Mr. Anuj Aggarwal, Ms. Divya Aggarwal, Mr. Manas Verma, Mr. Pradeep Kumar, and Mr. Avinash Kumar

Click Here To Read/Download The Order