Judgment This writ petition has been instituted seeking a writ of mandamus directing the respondents to forthwith restore and pay the benefits of wage revision with effect from 01-01-1997 in conformity with the final settlement of the petitioners’ accounts by taking their total length of service and to declare the consequential deductions made, as illegal. Both the writ petitioners were working with the 1st respondent Bharat Heavy Electricals Limited (henceforth referred to as ‘the BHEL’) at the relevant point of time. BHEL by a notification issued through their personnel department on 01-07-1999 announced “BHEL Voluntary Retirement Scheme”. The Scheme was kept in operation for a period of four months commencing from 01-07-1999, i.e., up to 31-10-1999. Annexure-1 thereof contained the various terms and conditions forming part of the said Scheme. Paragraph No.4 of Annexure-1 spelt out the eligibility norms of the Scheme. Any employee, who has either crossed the age of fifty years or has served the Company (BHEL) continuously as a regular employee for a minimum period of twenty years, is eligible to opt under this Scheme. The length service would also include the training period spent in the Company. Paragraph No.8 spelt out the benefits that will become admissible under this Scheme. It is specifically made clear that employees, who availed Voluntary Retirement Scheme (for short ‘VRS’) will be entitled to the benefits of wage revision due from 01-01-1997, as and when the same is implemented. Both the petitioners have opted for this VRS and their offer has been accepted by the BHEL and accordingly, the 1st petitioner was relieved from service with effect from 23-10-1999 A.N., while the 2nd petitioner has been relieved on 24-08-1999. In terms of Paragraph No.8 of Annexure to the VRS 1999, employees seeking voluntary retirement were also offered a lump sum one-time payment-VRS compensation-equivalent to one and half months salary for each completed year of service or the monthly salary at the time of voluntary retirement multiplied by the remaining number of months of service left before normal date of retirement, whichever is less. Therefore, the leftover period of service for each optee for normal retirement has to be computed first and then, the number of years of service put in by him has to becalculated to be multiplied by one and half times and in between these two benefits whichever is less the same will be multiplied by the monthly salary and paid as compensation. The petitioners assert that several clarifications with regards the terms and conditions of Voluntary Retirement Scheme (VRS) are sought for, and at one such meeting that took place on 17-07-1999, at 2 PM at the Corporate Office of BHEL, it has been specifically spelt out that service rendered on Nominal Muster Roll basis (NMR) and service rendered on Work-charged basis (WC) also should be counted towards the total length of service and the period of apprenticeship spent, in terms of the Apprenticeship Act, alone will not be counted towards the length of service. According to the 1st petitioner, he joined the BHEL at its Bhopal Unit on 25-03-1963 and worked as such till 11-05-1965 and thereafter, he joined Work charged establishment of BHEL at Ramachandrapuram on 14-05-1965 and thereafter he has become a regular employee with effect from 28-01-1967. Thus, computed, from 1963, he has rendered 36 years and 7 months of service by October, 1999. He would have attained the age of superannuation of 60 years during October 2004. Therefore, by October, 2009, he has a balance of 60 months of service leftover for his retirement. Since, he has completed more than 36 years of service, when computed from 25-03-1963 and when the same is multiplied by one and half times, it comes to 54 months. Between 54 and 60 months, 54 months being the lesser period, VRS compensation payable would, therefore, works out to 54 months of salary. Accordingly, he has been paid, the VRS compensation at the time of his retirement in October, 1999. As per the statement of final account, the compensation amount of Rs.5,72,346/-has been calculated and paid to the 1st petitioner. Similarly, insofar as the 2nd petitioner, compensation amount was calculated for 51 months and accordingly, a sum of Rs.5,48,760/-has been paid to him. That far, there is no difficulty. However, after the writ petitioners have retired from service, revision of pay of the employees of the BHEL has taken place with retrospective effect from 01-01-1997. Similarly, insofar as the 2nd petitioner, compensation amount was calculated for 51 months and accordingly, a sum of Rs.5,48,760/-has been paid to him. That far, there is no difficulty. However, after the writ petitioners have retired from service, revision of pay of the employees of the BHEL has taken place with retrospective effect from 01-01-1997. Hence, the need to recalculate the terminal benefits, in accordance with the revised pay, has arisen. While recalculating the additional/differential amount payable to the petitioners, the respondents have excluded the length of service rendered by the petitioners on the Work-charged establishment. Consequently, in case of the 1st petitioner, as against 54 months of salary paid as compensation, only 48 months is reckoned as eligibility for VRS compensation and similarly in case of the 2nd petitioner, as against 51 months, only 48 months of VRS compensation has been ordered to be paid. Hence, the present writ petition has been instituted questioning the downsizing of the quantum of VRS compensation. Heard the learned counsel for the petitioners Sri Praveen Kumar and Sri S.V. Bhatt, learned Standing Counsel for the respondent BHEL. The learned Standing Counsel for the respondents has drawn my attention to the contents of Paragraph No.5 of the counter affidavit, wherein they have disputed the correctness of the clarification dated 17-07-1999, said to have been passed on by the Corporate Office of the BHEL, which is enclosed as Annexure-3 to the writ petition. On the other hand, it is asserted in Paragraph No.5 that the respondents have received clarification from the Corporate Office of the BHEL on 28-07-1999, which is appended as Annexure-1 to the counter affidavit, wherein the Corporate Office has made it patently clear that only the training period, in respect of trainees recruited against permanent vacancies, is to be reckoned for computing the lump sum amount representing VRS compensation and no other period of service is to be taken into account for the said purpose. Hence, it is urged that the service on NMR or WC basis is not liable to be computed for the purposes of VRS benefits. According to the learned Standing Counsel, erroneously VRS compensation was paid to the petitioners calculating it at 54 and 51 months respectively duly reckoning the NMR/WC service put in by them. Hence, it is urged that the service on NMR or WC basis is not liable to be computed for the purposes of VRS benefits. According to the learned Standing Counsel, erroneously VRS compensation was paid to the petitioners calculating it at 54 and 51 months respectively duly reckoning the NMR/WC service put in by them. When the Internal Auditors have raised an objection and pointed out the error committed while making payment of compensation, the BHEL had reexamined the entire matter and reckoned the regular service rendered by the writ petitioners excluding the service rendered by them on NMR/WC basis and hence, ordered for payment of VRS compensation for 51 months or 48 months as the case may be. Therefore, the learned Standing Counsel has urged that the erroneous computation made at the time when the voluntary retirement benefits are settled in favour of the writ petitioners, does not create any right in their favour. Per contra, the learned counsel for the petitioners submits that the impugned action of the respondents is grossly in violation of the principles of natural justice, inasmuch as the writ petitioners have not been put on notice at all and that the amounts, which have already been paid are, sought to be, recovered/adjusted unjustly from them. The learned counsel for the petitioners has also placed strong reliance upon the Judgment rendered by the Supreme Court in SYED ABDUL QADIR AND OTHERS v. STATE OF BIHAR AND OTHERS ( (2009) 3 SCC 475 ), in support of his contention that no recovery shall be affected when the employees are not at fault. One of the modes of brining about termination of the relationship of master and servant between an employer and an employee is by way of acceptance of the offer made by the employee for voluntary retirement. The offer of voluntary retirement, in juxtaposition to the penalty of compulsory retirement, enables the employer to retire an employee earlier in point of time than the normal time of retirement on attaining the age of superannuation, without attaching any stigma. Some of the employers, with a view to reduce their manpower and consequently to effectively utilize their manpower resources, have introduced VRS. Subject to the eligibility, any employee can make an offer and the employer is at liberty to accept the same. Some of the employers, with a view to reduce their manpower and consequently to effectively utilize their manpower resources, have introduced VRS. Subject to the eligibility, any employee can make an offer and the employer is at liberty to accept the same. The terms and conditions subject to which the offer made by the employee would be accepted by the employer are not maters left for speculation, but are completely contemplated and provided for in advance. In the instant case, Paragraph Nos.4 and 8 of Annexure-1 to the BHEL VRS announced on 01-07-1999, by providing for every detail did not leave anything for speculation or guess work. In addition to various payments, such as, contributory provident fund, gratuity, encashment of leave, etcetera, the employee seeking voluntary retirement will also be paid a lump sum one-time payment equivalent to one and half months salary for each completed year of service or the monthly salary at the time of voluntary retirement multiplied by the remaining number of months of service before normal date of retirement, whichever is less. What is meant by the expression “completed year of service” is not defined, precisely. But however, it is clear that in addition to the normal terminal benefits, such as, contributory provident fund and gratuity, the VRS compensation amount would be paid for each completed year of service. Therefore, in my opinion, to understand the true width of the expression “completed year of service”, one has to look at it from the perspective of the necessity or obligation to pay provident fund and gratuity. In other words, if for a particular length of service rendered by an employee provident fund and gratuity become payable, such length of period cannot, therefore, be excluded for the purpose of computation of VRS compensation benefits. To put it differently, if for the service rendered on NMR basis or WC basis by an employee, if contributions are needed to be made by the employer towards provident fund and if retirement gratuity is also liable to be paid for such length of service, then, for computing the VRS compensation benefits the said length of service shall not be omitted. It is, therefore, appropriate for us to examine as to whether the Provident Fund and Miscellaneous Provisions Act, 1952, requires an employer to make contributions for such service or not. It is, therefore, appropriate for us to examine as to whether the Provident Fund and Miscellaneous Provisions Act, 1952, requires an employer to make contributions for such service or not. Similarly, one should examine the Payment of Gratuity Act to know whether for purposes of payment of Gratuity such services is to be reckoned or not. With a view to provide the institution of provident funds for employees in factories and other establishments, the Parliament enacted the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. The various expressions used in the said Statute have been defined in Section 2 of the aforementioned Act. The expression `employee’ has been defined in Section 2(f) of the said Act, as any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment and who gets his wages directly or indirectly from the employer. Section 6 of the said Act has thrust a compulsion on every employer to make a contribution at a fixed percentage of wages payable to each of the employees employed by him. It is therefore significant to understand the true meaning of the expression `employee’ used by the aforesaid Act. It is clearly stated that employee means any person who is employed for wages in or in connection with the work of an establishment. Therefore, the essential condition for a person to be an employee within the terms of this definition, he should be employed for wages in or in connection with the work of the establishment. The words chosen viz., `employed for wages’ clearly imply some sort of contract of service representing the existence of `master and servant relationship’. The definition insists upon the person to be employed and such employment must be in or in connection with the work of the establishment. What factors constitute a true contract of service between two persons, has fallen for consideration before the House of Lords in Short v. J & W Henderson Ltd., (1946 Appeal Cases (AC) 24 (HL)). Lord Thankerton in his speech has pointed out the following factors: (1) The maters’ power of selection of his servant (2) the payment of wages or other remuneration (3) the masters’ right to control the method of doing the work (4) the masters’ right of suspension or dismissal. Lord Thankerton in his speech has pointed out the following factors: (1) The maters’ power of selection of his servant (2) the payment of wages or other remuneration (3) the masters’ right to control the method of doing the work (4) the masters’ right of suspension or dismissal. It is hardly in doubt that both salary and wages are the same form of emoluments paid to an employee by the employer as a measure of recompense for his labour. (See Mohmedalli v. Union of India AIR 1964 SC 980 ). A clear distinction is required to be maintained between a `contract for service’ and a `contract of service’. In the case of a `contract for service’ the master can order or require what is to be done while in the case of a `contract of service’, the mater can order or require not only what is to be done, but also, the manner in which it has to be done. In Dharangadhara Chemical Works Limited v. State of Saurashtra ( AIR 1957 SC 264 ), the legal principle has been summarized in the following words: “… The principle which emerges from these authorities is that prima facie test for the determination of the relationship between master and servant is the existence of the right in the master to supervise and control the work done by the servant not only in the matter of directing what work the servant is to do but also the manner in which he shall do his work, or to borrow the words of Lord Uthwatt at page 23 in Mersey Docks & Harbour Board v. Coggins & Griffihs (Liverpool) Limited, (1947) 1 AC 1 : `The proper test is whether or not the hirer had authority to control the manner of execution of the act in question.” The nature or extent of control requisite to establish the relationship of `employer and employee’ varies from business to business and is by its very nature incapable of a precise decision. There cannot be any abstract test for the purpose of yielding an instantaneous and satisfactory result to disclose the control which is required to establish a contract of service. In Bank Voor Handel en Scheepvaart N.V. v. Slatford ((1952) 2 All ER 956, 971), Denning, L.J said that `the test of being a servant does not rest nowadays on submission to orders. In Bank Voor Handel en Scheepvaart N.V. v. Slatford ((1952) 2 All ER 956, 971), Denning, L.J said that `the test of being a servant does not rest nowadays on submission to orders. It depends on whether the person is part and parcel of the organization. In United States v. Silk ((1947) 331 US 704), the Judges of the Supreme Court of United States of America observed that the test to be applied was not that of power of control, but whether the men were employees “as a matter of economic reality”. In Market Investigations Limited v. Minister of Social Security, Cooke, J. said : “… The fundamental test to be applied is this. `Is the person who has engaged himself to perform these services performing them as a person in business on his own account?’ If the answer to that question is `yes’ then the contract is a contract for service. If the answer is `no’ then the contract is contract of service. No exhaustive list has been compiled and perhaps no exhaustive list can be compiled of the considerations which are relevant in determining that question, nor can strict rules be laid down as to the relative weight which the various considerations should carry in particular cases. The most that can be said is that control will no doubt always have to be considered, although it can no longer be regarded as the sole determining factor; and that factors which may be of importance are such matters as whether the man performing the service provides his own equipment, whether he hires his own helpers, what degree of financial risk he takes, what degree of responsibility for investment and management he has, and whether and how far he has an opportunity of profiting from sound management in the performance of his task.” In Regional Regional Provident Fund Commr. v. T.S. Hariharan ( (1971) 2 SCC 68 ), the Supreme Court has held that: “………in the light of the foregoing discussion it appears to us that employment of a few persons on account of some emergency or for a very short period necessitated by some abnormal contingency which is not a regular feature of the business of the establishment and which does not reflect its business prosperity or its financial capacity and stability from which it can reasonably be concluded that the establishment can in the normal way bear the burden of contribution towards the provident fund under the Act would not be covered by this definition. The word “employment” must, therefore, be construed as employment in the regular course of business of the establishment; such employment obviously would not include employment of a few persons for short period on account of some passing necessity or some temporary emergency beyond the control of the company………” From the above principles, it emerges that if BHEL had occasion to engage the petitioners herein either in its work charged establishment or on nominal muster roll basis they do not cease to be the employees of the BHEL. BHEL remunerates them by paying them wages and it also exercises control over them. The work turned out or performed by them is also supervised in the process. Therefore, BHEL would have surely made contributions in terms of Section 6 of the Employees Provident Fund Act when the petitioners were engaged on NMR or Work-charged establishment. When we look at the definition of the expression `employee’ as defined in Section 2(e) of the Payment of Gratuity Act, 1972, one would appreciate that that it is couched in very liberal and in wide terms. Any person employed on wages in any establishment or factory to do any skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work, whether the terms of such employment are express or implied, he answers the definition of the expression `employee’. As per Section 4 of the Payment of Gratuity Act, Gratuity becomes payable to such an employee on termination of his employment after he has rendered continuous services for not less than five years (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease. As per Section 4 of the Payment of Gratuity Act, Gratuity becomes payable to such an employee on termination of his employment after he has rendered continuous services for not less than five years (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease. It therefore becomes imminently clear that for the service rendered by an employee on Nominal Muster Roll basis or on Work-charged establishment, he earns a right to receive gratuity for the corresponding length of service put in by him. In the instant case, the service rendered by the petitioners on NMR basis or work-charged establishment could not have been ignored completely for the purposes of payment of gratuity by BHEL, upon accepting their offer to retire voluntarily. If the petitioners are entitled to receive gratuity and provident fund for a particular length of service, as part of their terminal benefits, it defies logic to declare the said length of service as inadmissible for payment of voluntary retirement compensation. I am conscious that payment of gratuity and provident fund are strictly regulated by the statutory compulsions thrust upon every employer, whereas retirement of an employee upon accepting his offer of voluntary retirement is purely a contractual aspect. The terms and conditions subject to which such a contract would be worked out cannot and perhaps may not be regulated by any statutory exercise. It is in an exclusive domain between the employer and the employee concerned. The terms and conditions may be set most favourably and may not even be most favourable. But, nonetheless, once the same have been settled through imprecisely and acted upon, they cannot be resiled or withdrawn. It is therefore important to note that as per the terms and stipulations contained in the Voluntary Retirement Scheme (VRS) offered, the petitioners have been paid the compensation benefits. Once the compensation benefit is paid, there is no provision left in the scheme either for reviewing or recalling any of the benefits so offered. But, for another term contained in the voluntary retirement scheme that the pay of the petitioners would be re-fixed in the revised scales of pay there would not have been an occasion at all for BHEL to give a fresh look to the compensation and other terminal benefits paid to the petitioners. But, for another term contained in the voluntary retirement scheme that the pay of the petitioners would be re-fixed in the revised scales of pay there would not have been an occasion at all for BHEL to give a fresh look to the compensation and other terminal benefits paid to the petitioners. Since the revised pay scales have been brought into force with effect from 1.1.1997, on which date the petitioners were effectively in employment of BHEL, the necessity to pay them the benefits of this pay revision had occasioned. The payment of differential amount due to the revision of pay scales is entirely a different aspect and it has nothing to do with the terminal benefits which have been worked out and paid to the petitioners earlier. The action of the respondent – BHEL in adjusting the compensation paid earlier while calculating the arrears payable upon pay revision amounted to reviewing the entire issue unilaterally. In spite of noticing that the decision taken by it is likely to gravely impact the petitioners and other similarly placed employees, the BHEL has not chosen to comply with the principles of natural justice. Principles of natural justice require every administrative or quasi judicial exercise to be carried out in accordance therewith. An opportunity of hearing is so essential to be provided to every person who is likely to be impacted by any decision that might be taken against such person. In the instant case, BHEL has unilaterally downsized the VRS compensation amount payable to the petitioners and on that basis, adjusted the alleged additional amount paid earlier to the petitioners from out of the differential pay revision amount payable to them. This exercise of power of reviewing the earlier decision is clearly unsustainable. Even for this reason, the action of the respondent falls outside the parameters of fairness in action. For the aforementioned reasons, I am of the opinion that the petitioners have made out a case to conclude that they have been validly and rightly paid their voluntary retirement scheme compensation amount duly reckoning the services rendered by them either on NMR basis or for their service in the work charged establishment. Hence, they are entitled to be repaid the entire amount adjusted/ withheld by the respondents. Hence, they are entitled to be repaid the entire amount adjusted/ withheld by the respondents. It is only appropriate that the said amounts should carry 6% interest thereon and shall be paid within a maximum period of two months from the date of receipt of this order. Accordingly, this writ petition stands allowed. No costs.