• Service bond transfer from state government corporations to other government departments

TSGENCO/TSTRANSCO/TSSPDCL/TSNPDCL, which are electrical companies and undertaking of telangana state execute a bond of service of 5 years before joining as an employee in it. The bond is as follows : 

"At the time of joining, the candidate shall have to execute a
Bond to serve TSTRANSCO for a minimum period of 5 years in addition to one year training
period. The candidate who leaves the Corporation during the training period of one year shall
refund the emoluments received by him/her during training period plus Rs. 50,000/- (Rupees
Fifty Thousand only) by way of liquidated damages. The candidate who leaves the
Corporation without serving a minimum period of five years after completion of training, shall
pay to the Corporation a sum of Rs. 1,00,000/- (Rupees One Lakh only) by way of
liquidated damages."

Central Govt PSUs follow DoPT guidelines of bond transfer if an employee joins another state/central govt departments. But what is the case with these state government undertakings. Are there any guidelines/circular as such?
Asked 4 years ago in Business Law

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4 Answers

Well, there is ni specific guideline or circular as yet governing such bond related dispute as yet.

Still section 27 of the Indian Contract Act holds the field which mskes all contract in restraint of trade as void.

Now while determining the liquidated damages it is well settled by catena of supreme court decision that the party claiming such damages will have to prove loss caused to the company.

If imparting oi f training is part of the job itself then leaving job before stipulated tenure wouldn't be considered to be an act causing loss to the company.

So under the circumstances i don't find the employee to be liable either for damages of one lakh or for refund of emoluments received which is an acknowledgeacknowledgement for the service rendered to the employer.

Devajyoti Barman
Advocate, Kolkata
22515 Answers
402 Consultations

5.0 on 5.0

Dear Client,

Read Below -

The bond executed by employees of the Public Enterprises, who have received scientific/technical training at the cost of Public Enterprises and have applied through proper channel during the currency of the bond join Central Govt./State Govt. services or take up employment under quasi-government organizations or any other public enterprise either on the basis of competition examinations/tests/interviews organized by those organizations or

the Union Public Service Commission should not be enforced subject to the condition that a fresh bond is taken to ensure that the employee serves the new employer for the balance of the original bond period.

Department of public enterprises guideline for transfer of bond is as follows:

“Enforcement/transfer of bond in respect of employees of Public Enterprises who leave the services of one Undertaking to join another Undertaking/ Government. (DPE O.M. No. 15(2)/2003-DPE(GM)/GL-57 dated 29th July, 2004) |”

Adv. Yogendra Singh Rajawat

Yogendra Singh Rajawat
Advocate, Jaipur
21481 Answers
31 Consultations

4.4 on 5.0

Dear Friend,

There are some citations/judgments on this issue which as become burning problem among the young youth who are joining PSU's and other organisations. If you send scanned copies of relevant documents i will check up and let you know.

Kishan Dutt Kalaskar
Advocate, Bangalore
6050 Answers
381 Consultations

4.8 on 5.0

The bond executed by employees of the Public Enterprises, who have received

scientific/technical training at the cost of Public Enterprises and have applied through

proper channel during the currency of the bond join Central Govt./State Govt. services or

take up employment under quasi-government organizations or any other public enterprise

either on the basis of competition examinations/tests/interviews organized by those

organizations or the Union Public Service Commission should not be enforced subject to

the condition that a fresh bond is taken to ensure that the employee serves the new

employer for the balance of the original bond period.

This rule is applicable to the state PSUs as well.

T Kalaiselvan
Advocate, Vellore
78105 Answers
1543 Consultations

5.0 on 5.0

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