Breech the rules & service bond between the corporate company & me
Querist :
Anonymous
(Querist) 02 October 2011
This query is : Resolved
Respected Sir's.
I am Ram from Hyd, My previous company is in Pune ( worked in Pune-2 months & chennai -on site project deputation-5 months).
I was served 7 months ( 6 months prohibition period) to the company. I am under 2yrs bond(Rs.100/-stamp paper) & 2 lacs bond break amount, 1 month notice period in writing.
I did'nt give any resignation letter/email in writing but i told to my management VERBALLY 1.5 months before from the day I left the company.
Reason of left is my father critical health condition. the same i told to my reporting manager, discussed & requested during the notice period but they didn't agree & not showned any humanity(they said,"bring ur father here & take treatment here but co. dont allow u to go before bond period and also company will not pay anything for the treatment, etc..)
Now they send a lawyer Notice (RPAD) to me saying that within 7 days have to re-join or else pay 2.5 lac.
But father health condition is too serious & my presence is compulsory here. so that, i could not re-join there & also not able to pay that much.
Due to my bad financial condition, I have joined in a new firm in my native, I told all details to them,they were accepted my previous company situation.
Is that bond legally valid?
if yes, what they will do generally?
bcoz as per current situation of me, unable to pay even small amount also.
will i servive on humanity point of view if they file a case on me in any court?
If i concern a good lawyer, which kind of approach is best to minimise this issue?
hope i will get best solution.
thanks in advance.
Regards
Ram
mahendrakumar
(Expert) 02 October 2011
you are legally liable to pay them as you had signed the bond and the agreement.
try to meet the company HR in person and settle the issue amicably
Chanchal Nag Chowdhury
(Expert) 02 October 2011
U have neither sought a valid release nor have U performed your duties. Your humanity point does not wash in a commercial environment especially when U have not resigned.
There is no alternative before U but to rejoin. U may then negotiate a formal parting with your employer.
Biswanath Roy
(Expert) 02 October 2011
Terms and conditions of the bond is binding upon you legally which you cannot by-pass merely on pleas. Joining in a new service during subsistence of the bond is a serious offense and you are liable for damages. Otherwise on the ground of illness of your father if you were absent from your job during the bond period you could have got shelter under Article 226 of the Constitution of India on the ground of natural justice.
prabhakar singh
(Expert) 02 October 2011
Your's is an agreement of service and not a bond as you name it.The default or breach on your part of the agreement not agreeing to serve company for period specified confers right in your company to claim a fixed damages of Rs.2lakhs.
The question then arises for consideration that can such a condition be arrived at mutually under law.the law governing contracts in India is known by name Indian Contract Act.It is section 27 of this Act that governs such a situation.It bars such contracts with few exceptions such as to ,say::"very agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
Exception 1 : Saving of agreement not to carry on business of which good will is sold - One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the court reasonable, regard being had to the nature of the business."
Testing on the parameter of this section i found the agreement not enforceable against you,on following grounds:....
a]The enforcement clause is exparte and not mutual,the company has not bound it what it shall give in compensation to you when it fails to keep you employed for the same period for any reason whatsoever.
b]the company does not seem to have extended any extra training to you incurring any special expenditure to the extent of amount agreed.
c]Despite the quantum of damages pre fixed,
only such amount can be realized in case,a court finally opines the restrictions imposed valid,which company strictly proves to have been caused to it due to breach of yours'.And that arbitrarily prefixed or even demanded above that by notice.According to me section 74 of Indian Contract will keep you safe from any such arbitrariness of the clause.
d]your reason to leave the job is justified
and reasonable and can not be proved as a decision deliberately made to cause any loss to company.May be company as business has to concentrate on its profits, but that it can not do on my father's cost whom i am liable to maintain and look after as he has brought us,and my liability towards him his personal social as well as legal,courts are also human,they will consider this aspect also,while dealing with reasonableness of the clause.
e]your present employer can not be called competitor of your past employer as two concerns are doing their business in proximity as for as territory of their business is concerned.May there business not be similar but you have not specified,which can serve an additional ground.
Having explored these points i think suit is the only remedy by which your previous employer can seek enforcement of default/compensation clause,which is not so easy,they will need a suit to be filled
,then get it decreed then execution,not so easy ,all this can take from them more than
the damages payable by you,as a business concern they may not take such a nonviable decision .
IMPORTANT ADDENDA BY MODIFICATION::::
The notice seems to make the damages even higher from 200k to 250k,which is bad in law.
you have not stated clearly what the terms are in effect and in black and white,if they really offend section 27 of contract or not.
you have also not stated if your current employer is in competitive business of your previous employer or not.A popular case law against employee,though not applicable to your facts is NIRANJAN SHANKAR GOLIKARI V. THE CENTURY SPINNING AND MFG. CO. LTD. 1967 AIR 1098 1967 SCR (2) 378.
THE ADVISE IS THAT YOU VISIT A LAWYER AS YOU HAVE SO FAR NEITHER RESIGNED NOR HAVE SO FAR COMMUNICATED ABOUT CAUSE OF YOUR ABSENCE OR ILLNESS OF YOR FATHER.
Sailesh Kumar Shah
(Expert) 02 October 2011
I endorse the opinion of Shri Prabhakar Singh.It would be helpful to author in near future.
Guest
(Expert) 02 October 2011
Law may probably not extend any helping hand to you in breach of service conditions case. What can help you is only the sympathetic consideration by your previous employer on account of your compelling grounds. So, it would be better, if you can convince the authorities of your previous company to relax the conditions of bond.
R.Ramachandran
(Expert) 02 October 2011
While agreeing that any agreement is binding on the parties, it should also be realised that it has become the order of the day for the industry/Companies to impose such unreasonable conditions and to get the employee sign such agreements under duress.
According to me, if some expenditure has been incurred by the Industry/Company either on training the employee or in sending the employee to some forein soil to get additional exposure etc., company can be reasonably expected to impose conditions to with a view to protect its interests / to allow it to recoup the benefit of the expenditure incurred by it.
But to impose conditions like that the employee is to work for a minimum period of 2 years, and to pay huge sum of money in the event of breach of such contract etc., to my mind is challengable. Unfortunately, the fact is, most of the people have suffered without agitating these matters before the Courts. That is why there is lack of precedents in such cases.
One should, for a change, challenge the action of the company.
prabhakar singh
(Expert) 02 October 2011
s2(e) Every promise and every set of promises, forming the consideration for each other, is an agreement;
s2(g) An agreement not enforceable by law is said to be void;
s2(h) An agreement enforceable by law is a contract;
prabhakar singh
(Expert) 02 October 2011
s27. Agreement in restraint of trade, void
Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
Exception 1 : Saving of agreement not to carry on business of which good will is sold - One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the court reasonable, regard being had to the nature of the business.
prabhakar singh
(Expert) 02 October 2011
74. Compensation of breach of contract where penalty stipulated for
1[When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
Explanation.— A stipulation for increased interest from the date of default may be a stipulation by way of penalty.]
Exception.— When any person enters into any bail-bond, recognizance or other instrument of the same nature or, under the provisions of any law, or under the orders of the 2[Central Government] or of any 3[State Government], gives any bond for the performance of any public duty or act in which the public are interested, he shall be liable, upon breach of the condition of any such instrument, to pay the whole sum mentioned therein.
Explanation.— A person who enters into a contract with Government does not necessarily thereby undertake any public duty, or promise to do an act in which the public are interested.
prabhakar singh
(Expert) 02 October 2011
My opinion is based on provisions of Indian CONTRACT Act.the relevant section that i bore in my mind are also given separately so that one may not feel difficulty in reading them.
This type of problem often comes in this section ,it would be better to arrive at consensus on this issue so that opinion seekers may not be swept away a mist our difference,without knowing which way to go.
prabhakar singh
(Expert) 02 October 2011
A query of this type was put on this forum by
a HR Tapan Amoria on 20/08/2009 in FORUM section "What is the legality of "Service Bond" in India, whereby company signs the one sided contract that if employee leaves the organization before the stipulated time certain sum will be recoverd from him.
What is the procedure to recover that sum."
THREE REPLIES WERE SUBMITTED AS FOLLOWS:
1]BY R.R. KRISHNAA
Legal Manager "Service bonds are legal and can be enforced. Companies can file civil suit for recovery of money (stated in the service bond) in case if an employee breaches the terms of the service bond.
"
2]BY ShriGopal Soni
translator "I think the unreasonable and arbitrary conditions are legally challengeable."
3]BY Pradeep Saluja
Service "service bond does not have much validity in t he eyes of law being of its one sided. as such it only has a salutary effect on the mind of an employee. but it is advisable to tie up with the boss in an amicable manner and only then leave the organisation"
But participants may be said to have their own interest,this is why my strive is to resolve it legally and without bias with help of contract Act.
Querist :
Anonymous
(Querist) 02 October 2011
Thanks for your valuable responses.
but i told verbally..is it not acceptable when this issue goes to court as a case?
and i concerned a lawyer, he said that " we can give a reply which highlights the company's harassment, etc.."
will i exempted from repay that huge payment?
Raj Kumar Makkad
(Expert) 02 October 2011
Much has been opined on your simple query. I do no want to add your burden to read detailed replies.
Querist :
Anonymous
(Querist) 02 October 2011
one more point i want to add to my query.
my prohibition period 6 months after that i did not received any hard copy from management.
Thanks
Querist :
Anonymous
(Querist) 02 October 2011
6 months observation period and then they will take in permanent payroll.
