• Stuck with a company bond

I joined a mnc in Mumbai as a trainee and signed a bond with them worth of rs 1 lac for 2 years .but i didnt make any notary as guarantee from parents side (they want ).But due to bad working condition i left the job within a week nd informed them through email.
After two month they send me a latter to ask me to deposit 1 lac rupee as per bond otherwise they will take legal action against me.
I read on internet that these contract are not enforceable as per the section 27 of indian company act 1872.
I dont want to give any amount to the company so i want to ask what are my options regarding this? And will it affect my future job since i am a government job aspirant.
Asked 7 years ago in Civil Law

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8 Answers

The employment bond would not be enforceable if it is one sided or unreasonable .such a bond is void for being in restraint of trade

2) the compulsory bond period should not be unreasonable

3) in your case compensation for breach of contract is reasonable at Rs 1lakh

4) further bond period of. 2years is reasonable and can be enforced

5) it would not affect your future job

Ajay Sethi
Advocate, Mumbai
95215 Answers
7611 Consultations

5.0 on 5.0

1) offer to rejoin the company

2) mention that you are unable to pay the bond amount as you are jobless with no source of income

3) company can take legal proceedings against you to recover bond amount with interest

4) you will have to pay the money if decree is passed against you

Ajay Sethi
Advocate, Mumbai
95215 Answers
7611 Consultations

5.0 on 5.0

1. What you call a bond is a contract, the obligations whereunder are sacrosanct which have to be inescapably honoured.

2. You left the job in the most casual manner. The departure from job has to be in accordance with the contract.

3. Your understanding of section 27 of Contract Act is flawed. It does not give an escape route to an employee who violates the contractual obligations.

4. Put up the letter to your lawyer for an appropriate reply.

Ashish Davessar
Advocate, Jaipur
30763 Answers
972 Consultations

5.0 on 5.0

company can sue only when a loss incurred by the company in breach of notice period. you have left the company within 7 days hence no loss has incurred. that bond is illegal and it cannot be enforced in India because of section 27 as well as article 23 (bonded labour is unconstitutional) of the Indian constitution.

if that bond is executed it means company make its employee bound to work even if company incurred no loss.

Shivendra Pratap Singh
Advocate, Lucknow
5127 Answers
78 Consultations

4.9 on 5.0

loss concept is apply in execution of bond because if company suffered any loss due to non-completion of a job or work and employee has left the company then it is said that company suffer loss therefore it can execute that bond.

Shivendra Pratap Singh
Advocate, Lucknow
5127 Answers
78 Consultations

4.9 on 5.0

Dear Concerned,

Just ignore this - there is no legal sanctity of these one sided contracts and hence you need not to worry. The company follow sending these legal notices as a practice and can not bind you to work with them until they have invested phenomenally on your training and development.

Best of Luck

Atulay Nehra
Advocate, Noida
1309 Answers
58 Consultations

5.0 on 5.0

I dont want to give any amount to the company so i want to ask what are my options regarding this? And will it affect my future job since i am a government job aspirant.

What you have done is a wrong act.

You should not have opted for this appointment if you were not interested to continue with the same.

An employment bond is an agreement that one comes to with an employer prior to becoming a member of staff. Such agreements tend to stipulate the conduct that the employee is expected to uphold as a member of the company.

Section 27 of The Indian Contract Act, 1872 invalidates agreements that are in restraint of professions, trade or business.

A bond that prescribes an unjust amount of penalty or a work tenure that is unmistakably long or prohibitions that are unreasonable is void for being an agreement in restraint of trade.

However, bonds that prescribe reasonable compensations for breach are valid.

T Kalaiselvan
Advocate, Vellore
85416 Answers
2239 Consultations

5.0 on 5.0

so i want to ask you what kind of action company can take against me?

They may file a money recovery suit against you.

Legally as well as professional wise.and how will it affect my future?

If the money is recovered it may not affect you in any manner but it will not affect your profession in any manner even if the recovery is not possible.

T Kalaiselvan
Advocate, Vellore
85416 Answers
2239 Consultations

5.0 on 5.0

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