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Hitesh Chauhan (Manager)     14 January 2010

Bond with a company

One of my friend has signed bond (service level agreement) of one year which costs around one lacks. The bond was signed on non judicial stamp paper of 50 Rs.He joined that company around 10 days back but the problem is that due to some reasons he wants to break that bond. I just want to know what action could be taken by company if he breaks the bond?? Please help..


 7 Replies



Hitesh Chauhan (Manager)     14 January 2010


Thanks for your kind response. The bond is saying that that company is incurring a great deal of expense for training him in tools and software. secondly the bond is saying that he can not join other company before completing one year service.

This a three pages bond I am writing it in brief here. Please reply and tell me if bond is legal in india in any form and if legal what type of actions could be taken by company.

Thanks a lot for giving your precious time.

R.R. KRISHNAA (Legal Manager)     14 January 2010

Well, service bonds are legal even typed in white paper.  The best remedy would be to gently negotiate with the company and get relieved without incurring any costs.  Your friend may contact the higher officials of the company and request for relieving him from the post without any sort of liability.  There is no other way out.



there will be one clause of the breaking of contract, can u pls post full text.

Hitesh Chauhan (Manager)     15 January 2010

Full text is here-( I am replacing company name by 'XYZ' as it is not right to write it here)

This Agreement, with an effective date of 5th january ,2010 is by  and between 'XYZ' and Alok(My friend)  ...full address.

It is understood by the employee that company is incurring a great deal of expense for training him in tool/software,training materials,training time both vocal and practical,etc amounting to approximately Rs. 1,00,000.

Employee agrees that if he were to leave the company within one year of training,this is not sufficient time for him to implement or work on the projects realated to company.

Employee agrees that he is specifically restricted from taking up of job with any of the clients of XYZ,directly or indirectly.Further ,he agrees that he is restricted from applying for or accepting any job either in india or elsewhere in the world during or before the completion of one year from the date of training i.e. January 5, 2010 Employee further agrees that he is also specifically restricted from working with any clients of the company,in existence at the time of his employment with the company and for one year from the date of leaving the services of the company.

Employee undertakes to work with the XYZ untill the agreement period is completed.If for any reason the services of Employee are terminated by himself,by XYZ ,Employee undertakes to pay back all the training expenses incurred by XYZ during his training in Tools/Software.Any breach of the employment agreement or this agreement would be considered due clause.Employee understands that repayment of training cost will not be an adequate relief to XYZ.If for any reason employee leaves the company before the completion of one year from the date of commencement of training,he agrees to compensate XYZ an additional amount of 1,00,000.

 Further it there are data security clause of company.

Please see it and suggest .

Vijayarajan (Executive Director)     16 January 2010

I dont feel that the company can recover the amount from an employee with the agreement. How and under which act the amount can be recovered? The courts will definitly quash these type of agreements. A person in search of employment with poor financial status may sign any amount of agreement at the time of appointment. That too he might not have read it. Just by putting a signature in an agreement will not lead to a bonded labour. Let the company approach a court to get an order to get the amount recovered under RR act. The courts will examine the authority of the company to get an illeagal agreement leading to bonded labour. The company will be put into troubles to prove the cost of training.

Ajith (Head (HRD))     16 January 2010

The Agreement is not illegal as per the constitution and bye-laws of the company and no Court would dismiss if petition is filed by the company in India, irrespective of the employee's income or property assets.  Better solution is the genetle negotiation with the employer.   There are certain clever solutions for the employee to exercise which is his own discretion, so far as any disguesting treatment is there among the inter-personal relationship.  However, as long as there is no other obligations, no employer would insist for binding any employee with such bonds as I have experienced and to my opinion.   However, mutual understanding is the best certificate than the highest diginity of a citizen. 

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