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March 13, 2007
SC Prevents Denial of Job Offer, Invoking Principles of Contract Law
In a recent ruling, a Division Bench of the Supreme Court of India
("SC") invoked the principles of contract law to block a public sector undertaking, the Food Corporation of India
("FCI"), from denying a job offer under a "compassionate appointment scheme"
("Scheme") to the dependent of a retired employee.
Under
the Scheme, the benefit of "compassionate appointment"
extended to dependants of employees who sought
voluntary retirement on medical grounds, subject to
stipulated conditions. One such condition was that the worker
should seek such retirement before the age of 55 years. The Scheme
also stated that such appointment "is not as a matter of
right but purely at the discretion of the competent
authority". The employee had made a composite application for voluntary retirement on medical grounds, on condition that his son be employed in his place, as provided in the Scheme. On the date of the application, the employee's age was over 55 years. FCI nevertheless accepted the application, and issued an office order retiring the employee from service. However, the proposal for the appointment of the retired employee's son was rejected on the ground that the retiring employee had crossed the stipulated age limit at the time of making his application. The
retired employee and his son petitioned the High Court to quash
the rejection order.
The court upheld the contention of FCI that the son was not
entitled to the appointment as the employee had crossed the
stipulated age limit when he made the application. The matter went
in appeal before a Division Bench of the High Court. Following
precedent, the Division Bench held that once FCI accepted the
application of its employee for retirement under the Scheme, and
retired the employee, it was obliged to appoint the
dependent of such employee, and could not turn down the employee's
request on any technical ground. FCI went in appeal to the SC against the ruling
of the Division Bench of the High Court.
The SC held that having unconditionally accepted the
conditional offer, FCI was bound by its terms. The apex court
observed that when an offer is conditional, the offeree has the
choice of either accepting the conditional offer, or rejecting it,
or making a counter offer. But what the offeree cannot do, when an
offer is conditional, is to accept a part of the offer, which
results in performance by the offeror, and then reject the balance
contract on the ground that the condition subject to which the
offer is made is not met. Having denied the employee the
opportunity to withdraw the offer, and having retired him by
accepting the conditional offer, FCI could not thereafter refuse
to comply with the condition subject to which the offer was made. The
ruling by the SC is significant as it establishes that that in
addition to reliance on specific provisions in prevailing
employment and labour laws to resolve employer-employee disputes,
the principles of other general laws ~ in this case the law of
contract
~ assume relevance to ensure an equitable outcome to such
disputes. Source:
Food Corporation of India & Anr vs Ram Kesh Yadav & Anr, SC 2007 230, Civil Appeal No. 3451 of 2006
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