The Supreme Court on Saturday held that an employee can withdraw his resignation during the notice period and is entitled to consequential benefits from the company if he is not allowed to work.

While giving the ruling, the court referred to several of its earlier verdicts by which it has been settled that an employee remains in service if he withdraws his resignation within the notice period and thus the relationship of an employer and employee did not come to an end.

The judgment came on a petition by an employee who had challenged the Karnataka high court verdict dismissing his plea that he was entitled to be in the service of the company with all benefits after he withdrew his resignation during the notice period as per the rules of the company.

Setting aside the high court verdict, a bench comprising Justice B N Srikrishna and Justice C K Thakker directed the company to treat the employee in continuous service up to the age of superannuating and give him all benefits, including arrears of salary.

"Having given anxious consideration to the facts and circumstances of the case and in the light of Service Rules and various decisions of this court to which our attention has been invited, we are of the view that the high court was wrong in holding that it was open to the appellant to withdraw the resignation," Justice Thakker, writing the judgment for the
bench said.

The employee had tendered his resignation on January 4, 1993, which was accepted by the company on the same day and he was to be relieved from the service. Later on casual leave was granted to him from January 4 till January 13 and he was informed that he would be relieved after office hours on January 15.

However, he changed his mind and on January 8, 1993, withdrew his resignation but the company stuck to its decision of relieving him from service.

Perusing the facts and company rules which made it clear that a permanent employee may resign from service by giving one month's notice in writing or by paying one month basic pay in lieu of notice to the company, the Bench said 'since the letter of resignation was as per the company rules, it was to become effective after one month'.

'In our opinion as per the settled law, the appellant could have withdrawn his resignation before that date,' the Bench said.

The bench said since a letter of withdrawal of resignation was submitted by the employee, 'it was incumbent on the company to give effect to that letter'.

"By not doing so, the company has acted contrary to the law and against the decision of this court and hence the action of the company deserves to be quashed and set aside', the court said, adding 'the action of the company in accepting the resignation of the employee from January 4 and not allowing him to work is declared illegal'.