I’m Post Graduate M.Tech qualifies Engineer. I had joined one one MNC and I had to sign a bond for 3 years of minimum service. If I fail to serve company for 3 years I had to pay 1 year CTC(6.20Lks). I was not given any training or any reasonable reason expenditures on me. Now they are simply telling thay had incurred loss if I leave company. In this circumstances is Bond Enforceable ??
Bond is enforceable. You cannot be force to work but you are bind by the undertaking given if not serve the lock in period.
No recovery of payment towards work done. Take advantage of poor language of bond. If it was equivalent to one year salary than could have recover but not CTC amount.
In case you fail to pay company would sue you to recover Rs 6 lakhs
take the defence that company has not spent any money on your training , that bond is unsustainable
Paid amount is equivalent to 1 year CTC. That too they have literally blackmailed me of bond value not paid relieving documents can not be provided. In this circumstances what I could have done ??
Have you paid whole CTC amount or yet to repay them back. If not paid any amount I will say don't any single penny to them. In India there is no law of bond applicable for employment.
If you want to file case against company then can file suit in the Labour court of city.
You reply to the notice if any sent by employer and contest the case if any filed by him. Nothing to worry
Under the Indian Law, the employment agreements with negative covenants is valid and legally enforceable if the parties agree with their free consent i.e. without fraud, coercion, undue influence, mistake and misrepresentation. .
The Indian courts have held that in the event of a breach of contract by the employee, the employer shall be entitled to recover damages only if a considerable amount of expenditure was borne by the employer.
Indian law mandates the employment bonds to be “reasonable” in order to be valid.
The validity of Employment bonds can be challenged on the basis of Section27 of the Indian Contract Act. Section 27 of the Indian Contract Act, 1872 prohibits any agreement in restraint of trade and profession. Any agreement in trade and profession according to Section 27 is void.
As per the mandate of Section 27, any terms and conditions of an agreement which directly or indirectly compels the employee to serve the employer or puts a restriction on them joining the competitor or other employer is not valid under the Indian law, The employee has right to resign from the employment even if he has agreed in the employment bond to serve the employer for a specific period of time.
If an employment bond is breached, the employer might be entitled to compensation. The compensation awarded should be reasonable to compensate the loss and should not exceed the penalty, if any stipulated in the contract. The court computes the reasonable compensation amount by computing the actual loss incurred by the employer having regard to all facts and circumstances of the case. Even if the bond stipulates payment of any penalty amount in the event of breach, it does not mean that the employer shall be entitled to receive the stipulated amount in full; the courts shall determine the reasonable amount of compensation to be paid.
An employee was engaged as Sale engineer; He was contracted for a period of three years however he left the undertaking after serving for 14 months only. In this case it was held that it is not necessary for the employer to prove any post breach damages separately. It is to be kept in mind that the concerned employee was recipient of special favour or concession or training at the cost and expenses wholly or in part of the employer, and the employee has breached the bond. The breach constitutes legal injury resulting to the employer. The High Court also clarified the position that the statutory exception for mitigating the quantum of damages will have no bearing.
You can fight it out legally if the company-is not providing the relieving letter or not returning your certificates in the event of tendering your resignation without paying the requisite bond amount
Bond is legally enforceable. But our law provides some safeguards for any agreement that are of such nature, if permitted , it would defeat the provisions of any law.
The company must establish that it is not making any undue profit at the cost of its employees by collecting the bond money nor it is using such practice of collecting bond money as to a way of making profit for the company, because company can not make profit in normal course from its administrative activities which are not part of its business activities.
So you can easily defend the case .
Engage one lawyer to defend in court.
File a specific performance suit against them for returning the documents.
1. See in case they file a suit to recover the amount. You may contest same on ground of actual damages.
See you could have denied paying the amount and if they filed for the amount , you may contest same before the court.
1. Contractual obligations embraced by an individual with his free consent cannot be avoided by him. The contract ranks sacrosanct.
2. The employer indeed incurs loss if the employee leaves prematurely.
3. The contract has to be perused to determine what all is included within CTC which you are liable to pay to the employer.
4. You may opt for phone consulting with a lawyer on this portal.
You can file a suit for mandatory injunction seeking court directions to company to issue reliving letter. Feel free to contact me for further guidance if you need in karnataka. Send legal notice first
You should sue the company to recover your bond amount and relieving letter
Dear Sir,
You are suggested to take the relieving letter first and then file the case for damages caused by them and ask for the compensation.
Nothing. Bond is legal in India to work with bonds that prescribe a reasonable penalty as compensation in case of breach
File a complaint under employee protection laws and specific performance suit for return of documents
- As per Specific Relief Act, if any employee quits before the notice period, the Employer can only recover the Notice pay, and the Company cannot force to serve the entire notice period.
- Further, the resignation decision is the employee’s decision, and the employer cannot sue for breach of contract, if the employee leaves without serving contractual notice.
- Except, recovery of the said amount, company cannot harm you for the same
- Further, no employer can refused to return the original certificates or to issue relieving letter .If they are doing so, their act is illegal, unjustified and against the fundamental rights of the employee.
- Further, the employment bond with the negative covenant is valid and legally enforceable, if the parties agree with their free consent i.e. without force, coercion, undue influence, misrepresentation and mistake, but it is not enforceable, if it is either one sided, unconscionable or unreasonable.
- Further, section 27 of the Indian Contract Act prohibits any agreement in restraint of trade and profession.
- Further, legally the notice period cannot be more than 3 months .
- Hence as per rule the said Bond is not enforceable , and you are not liable to pay the bond amount of one year , but you may have to pay the notice period of 3 months.
- Further , if have already resigned and company is asking for the bond amount , then you should reply the same as i mentioned above
Good luck and dont forget to rating Positively.
The terms & conditions of your employment agreement are sacrosanct & needs to be perused to guide you properly.
However, going by contents of post, if you breach the agreement you are liable to pay 6.20 lakhs to Company.
If the stand taken by you is correct i.e., not giving training, under said circumstances, you need to seek explanation / details of alleged expenditure incurred by company on you and also the details of expenditure.
You can issue NOTICE to the company, saying that, the company has not provided any training and had not incurred any expenditure on your alleged training, and that, to substantiate their allegations demand them to provide details of training and expenditure alleged to have been incurred on you.
No, under above circumstances, the bond is not enforceable.
Reply to your second post:
If you have paid one year CTC as mentioned in your post.
You can issue notice to the company for refund of money and damages.
If company does not respond, you can sue the company for refund of money with interest, furnish relieving letter, no due certificate and also for damages against company for mental torture caused by them.
Normally the service contracts or service rules or letters of appointment contain a stipulation that an employee can resign from the service after giving a notice of one or two or three months and failng which the employee has to pay salary corresponding to the notice period. If such stipilation is there in the contract of service then employee is liable to serve such notice on the comapny or inlieu there of , pay to the company. The contact is binding on him under the Contact Act and the comapny is entitled to take legal action for recovery of the same.
Please talk to HR manager of your company as HR is meant for employee benefit. Still they are not helping you then you can take legal action against the company to recover your bond amount and relieving letter .
1. You ought to have discharged your contractual obligations in letter and spirit.
2. If there is a violation of contract then employer is free to sue you for damages on account of breach of contract.
Yes bond is enforceable if you accepted the terms and conditions where a specific amount is mentioned to be given by in case of resignation before completion of bond period.
