- (1.) The short question involved in this writ application is, whether the petitioners are entitled to exemption of tax for compensation to the extent of Rs.5 lakhs under the Optional Early Retirement Scheme introduced by the Reserve Bank of India for voluntary retirement of its employees.
(2.) The petitioners are all ex-employees of Reserve Bank of India (RBI). On or about 11th August, 2003, RBI introduced an Optional Early Retirement Scheme, hereinafter referred to as the OERS, under which employees who had completed 25 years of full-time regular service and had also completed 50 years of age as on 1st August, 2003 were given the option to take voluntary retirement.
(3.) The terms and conditions on which the petitioners were offered voluntary retirement under the OERS are extracted hereinbelow for convenience: "(b) The Scheme is applicable to employees who have completed 25 years 1 of full-time regular service in the Bank and have also completed 50 years of age. Only an employee who has completed 25 years of service and 50 years of age as on 1st August 2003 (for convenience), will be eligible to apply for retirement under the Scheme. (c) The Scheme will be available to an employee entirely at his/her option/ . discretion. The employees in the Bank's service would be fully entitled to continue in service, with all benefits for which they are eligible, if they decide not to opt for this facility. The eligible employees should apply in the prescribed application form. (e) On acceptance of an employee's application by the Bank, his/her date of relieving from service, will be decided by the Bank in keeping with administrative exigencies/convenience and advised in writing. Once an employee's application under OERS has been accepted, the option will be irrevocable. (g) Income Tax shall be deducted at source on the entire amount payable as Ex-gratia. (j) As retirement under OERS is optional, it shall not be negotiable and shall not be deemed or construed as a subject matter of right or contract of service. It will not be a subject matter of any industrial disputes under the provisions of the Industrial Disputes Act, 1947 and shall not be cited as precedent, custom, convention, usage or practice, anytime in future. (k) As retirement under OERS is optional, the employee seeking retirement under the OERS will not be eligible for any retrenchment compensation payable under the provisions of the Industrial Disputes Act. (q) The benefit of counting of service in excess of six months as a completed year of service under the Scheme of OERS towards computing the "Ex- gratia", will not be applicable for the purpose of determining the required minimum period of service of 25 years. (r) In the case of an employee whose application for retirement under OERS is accepted, he/she will be permitted to retain the Bank's/Leased flat beyond the date of retirement for a maximum period of 3 months, if he / she is in occupation of residential accommodation provided by the Bank, recovery of rent being made at normal rate for the first 2 months and leased flat rental ceiling in the case of an officer and twice the amount of normal rent in the case of an employee in Class III or Class IV, for the 3rd month. As provided in the Scheme, in such cases, the Ex- gratia amount and other dues will be payable only after the employee hands over vacant possession of the Bank's/Leased flat.";