Madhusudhan Reddy 14 July 2015

Breaching service agreement- solution?

I am Ravi, resident of Vijayawada, Andhra Pradesh. I got job as Administrative officer in XXXX Insurance Company on 26/11/2012.

Before joining the company, I signed on a service agreement as per the format given by company (executed on Non-judicial Stamp Paper of Rs.100/-) with two surety’s and a witness accepting conditions as shown below and then posted the same to XXXX

Have to serve the company for four (4) years.
In the event of resigning from the Company during the probationary period (1yr) , liable to pay the salary received during entire service in the Company in addition to an amount of Rs. 25,000/- (Rupees Twenty five thousand) towards partial cost of training.

After completing all the formalities, I joined the company after the training period of 1 month in shimoga, Karnataka which comes under the regional office Hubli, Karnataka.

After working for six (6) months, I left my job without informing to anybody and gave my resignation letter after 1 month saying medical reasons. On his (chief regional manager (CRM), Hubli) demand, I sent a hardcopy also. Meanwhile, I joined in Indian Railways.

But, as per the service agreement, I need to work for four years. I quit the company in June,2013 (with 6 months service only). So, as per the agreement I need to pay all my salary + training cost which is equal to 2 lacs to the company on his demand.

From June,2013, He has been keep on following me, sending notices to me, to my surety's to pay the liquidated damage amount 2 lacs. I tried to negotiate the amount twice, but no use. Finally, he filed a case and sent an original suit on June 2015 from hubli court for the recovery of 2 lacs with compound interest of 12% Pa since my resignation and nominal court fee. Court hearing is on 28th july 2015.

I request you to suggest me what to do in this situation. All I was trying to do is to save my money as I am from middle class family.

Some more Information:

He knows exactly where I am working (Indian Railways) now through private investigation and RTI.
I communicated with him twice requesting to reduce the amount. Because of it, in the court suit it is written that defendant (myself) is committed to pay the amount.
He is too personal about me. Because, he is not taking any kind of action on another employee who resigned from his office (Hubli) during my resignation time. As far as I know, no CRM is very much concern about resignations at many XXXX regional centres in India.
Now, my two surety’s (who are my brother friends doing jobs) also started worrying about this court suit as they also got the copies to settle the amount.

My Concerns:

I heard through my friends circle etc.. that this kind of bonds are not claimable as they need registration. Is it true?
Is there any valid point from my side on which I can fight against that company to save my money 2 lacs + 12% compound interest? Because, this amount almost 2.5 lacs is more valuable to me for the survival of my family which I am unable to throw it simply for that mighty company XXXX
Is it worth full to contest in the Hubli district court by traveling such a long distance (720km from my native place Vijayawada)? Or should I simply leave it and pay the amount what they demand?
If at all, nothing from our side to fight then is there any chance to negotiate the amount in the court? Do they agree for it? How far the court will save my money.
What is the approximate advocate fee will be if I can fight?

The reasons which are forcing me to fight for my money are

Bond, is it claimable or not?
Same person (CRM) is not taking any action on other employee who quit from his office.
I survived in shimoga, Karnataka for six months while I am doing job in XXXX there. Obviously living costs will be there. What If I pay back all the amount I got from the company? What about my living costs?

So, kindly suggest me the best way how to come out from this situation. Please suggest me such that it should not trouble my surety’s, I want to completely take them away from this problem.

Waiting for your valuable suggestions.

Reply Follow

8 Replies

GULJIT SINGH LUGGANI 15 July 2015

interact at luggani@hotmail.com

Kumar Doab (FIN) 16 July 2015

Once the matter is in court the decision by court of law is pleasure of court.

The court may award prorated settlement.

There are judgments awarding prorated payment.

The basis of Bond seems to be the training.

Was any such training provided?

If you wish to contest then consult an able labor law consultant/service matters lawyer/law firm with copies of all docs on record.

Your lawyer can advise you on no case on other employees as well.

Madhusudhan Reddy 16 July 2015

Yes Sir

There was a training period (class room) of only one month to give us knowledge about insurance policies.

I am ready to pay 25000/- towards training costs. But, 2 lacs is really a huge amount to me.

Prorated payment? Is it worthful to contest ?

Kumar Doab (FIN) 17 July 2015

The question arises if the establishment wants to sell insurance policies and want the employee to handle its counters, then who will train for it: Area Councilor, DC, DGP or father of the employee or someone else?

If tomorrow the employer decides to sell Bhajiya and want the employee to handle its counters, then who will train for it?

The training that is required to be imparted in order to enable the employee to handle the counters of employer should be without any cost to employee………………..say insurance products/other products, policies, strategies etc……….

It is felt that it is made mandatory by regulator IRDA that each insurer shall train its employees and each employee shall pass the test conducted by Insurance Instt, Isn’t it?

And only the candidates that are sponsored by insurers can take this exam, Isn’t it?

The training that is imparted is to be arranged by company, Isn’t it?

Usually the insurers ask the candidates/agents to prepare some DD favoring the council and insurer, Isn’t it?

If yes the fee is paid by candidate, then where is the question of BOND?

Moreover the fee is so nominal that it is few hundred rupees.

Who provided the training? What is the actual cost of training/per person?

This is not an exercise to earn for insurer.

Did the insurer declare in its job advertisement that the candidate shall have to pass an exam and sign a BOND?

What exactly you have signed; some Committement, Service Agreement, Indemnity Bond?

There are unlimited number of threads at LCI on similar queries in both Forum and Experts section that you can search:

Just type the key words in box titled ‘Search Q &A’ in Exeperts section and

Just type the key words in box titled ‘search topics and Posts’ in Forum section

e.g.;

https://www.lawyersclubindia.com/experts/Payment-of-indemnity-bond-419196.asp#.VaioI7V-jMo

Once the matter is in court the decision by court of law is pleasure of court.

If you wish to contest then consult an able labor law consultant/service matters lawyer/law firm dealing in such matters with copies of all docs on record.

Your lawyer that has examined each doc on record and inputs can advise you the best.

In your place your lawyer or even union leaders can appear.

Your counsels may opine that you shall be covered b y the def. of ‘Workman’ as in ID Act and can approach other forums as well e.g. Labor Court. Development Officer of the LIC is covered.

Madhusudhan Reddy 17 July 2015

I've gone through few threads which are realted to my situation. Getting mixed opinions.

Meanwhile I contacted two advocates.

one is civil lawyer who said simply go for settlement/pay the amount as I've already signed and committed to pay the bond amount as per the service agreement and also I've replied to the company notices once requesting to reduce the amount which results nothing.

Another is Service matter lawyer said service agreement is not valid but in the court suit it is cleary written that I've committed to pay the bond amount. So, he suggested me to approach a lawyer near by the hubli court and contest.

Now, I scare about what if I dont get the judgement favor , though I contest by paying lawyer fee and travelling such a long distances which results me in huge loss that cannot be digested.

Following things are worrying me

I left the company without any prior notice to the company. They repeatedly asked reasons for my unauthorized absence to my duties. After few days, I had sent my resignation letter through email just before the day I joined in new job……… Do they object this point?
When he asked me to pay the bond amount I replied that I need some time to arrange such huge amount Instead of saying that I don’t pay. That’s what he mentioned in court suit that defendant initially agreed to pay………… Does judgement go in their favour? As I indirectly committed to pay the amount.
They filed the court suit against me on 1/6/2015 and eventually first hearing was on 30/6/2015. But, I got the court suit on 6/7/2015 through registered post. So, I could not attend the first hearing and for second hearing also the time is short !....... Should I attend the second hearing at any cost or can I wait for third hearing?
While I am contesting in the court, does it show any effect on my current job ( Indian Railways) through the person who filed suit against me. Because he has personal contacts with Railway employees.

Sir, In order to give you the clear picture of my present situation to take your suggestions about on what points I can contest so that I will approach an advocate in hubli in person to fight, I am attaching the copy of service agreement I signed and the court suit he filed against me also to this thread.

I just disclosed company names, person names etc as I am posting in the public forums. Please dont mind.

Attached File : 317979 20150717160210 57195285 copy service agreement.doc downloaded: 88 times

Madhusudhan Reddy 17 July 2015

Court Suit

Attached File : 317979 20150717160418 57195285 court suit.pdf downloaded: 76 times

Kumar Doab (FIN) 17 July 2015

Why this officer is not acting or has not acted in case of other employees/in similar situation may very well be a vigilance matter. You are closest to the facts and you alone would have to find and decide.

There is nothing wrong in consulting lawyer of our choice and your union leaders.

You have already discussed with a service matters lawyer and your counsel has already opined.

You have already cited medical reasons.

Everyone needs time to go thru the matter and consult so if you have asked for time and have consulted then it is your right.

Indian Railways is neither surety nor liable to pay and any attempt to involve it as per your counsels might be a transgression.

Finally it is your call and decision to proceed further as deemed fit at your end.