• Broke the company bond and company has sent me a legal letter

I was working at a company in Delhi last year and I resigned after 2 months as I didn’t like the atmosphere and the job just didn’t suit my career aspirations. I had signed a bond of 1 year. I resigned the job in a proper manner by handing the resignation letter to the Assistant Regional Manager of the Regional Office. Now they have sent me a letter asking to pay the dues with is Rs 60,000 or else they would sue me in the court of law. Now I don’t have that much money and I don’t belong to a well-to-do family. What can i do here? Please help!
Asked 5 years ago in Labour

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16 Answers

Did the company spend any money on your training 

 

Send reply denying your liability to make payment of Rs 60 k 

 

in the event company sues you engage lawyer and contest the suit 

 

 

Ajay Sethi
Advocate, Mumbai
99775 Answers
8145 Consultations

Ask company to return your X std certificate 

 

if company refuses file police complaint under section 406 of IPC for criminal breach of trust 

 

company cannot retain your original documents 

Ajay Sethi
Advocate, Mumbai
99775 Answers
8145 Consultations

It is not criminal case 

 

company will file civil suit to recover Rs 60 k 

Ajay Sethi
Advocate, Mumbai
99775 Answers
8145 Consultations

- 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.

- Hence, better serve the notice period only , and tender your resignation with the request of issue experience certificate and to return the certificates submitted by you , and dont take tension of the bond amount .

 

You can contact me for further details. 

Mohammed Shahzad
Advocate, Delhi
15814 Answers
242 Consultations

An employment bond is reasonable because it protects the interest of the employer. It enables the employer to claim compensation for time and resources spent on training an employee. If a bond is considered a valid contract, the company can go to court. The main reason for an employer to include an employee bond is to prevent the employee from leaving the organisation, or retention.

Bonds are applicable only if the company has spent money on the personal grooming and enhancement of the employees, but not just a training that helps employees perform better. Also to prove that the bond is legal, it should not be one sided or just favour the employer. In case an employer has incurred monetary expenses for training the employee for the particular employment, he can claim for damages in respect of the monetary loss that he has incurred.

The employment bond will not be enforceable if it is either one sided, unconscionable or unreasonable. Therefore, it is pertinent to be cautious while drafting the employment bond because it is mandatory that the conditions mentioned in the employment bond, including the compulsory employment period and amount of penalty are reasonable in order for it to be valid under the Indian law. 

In your case send reply notice . Deny their claim ,if the company sue agisnt you then approach a local lawyer and conduct the case.

For an employee bond to be valid, the employer should be able to prove that the said bond is necessitated to prevent diversion of business, and because he has invested a certain amount in training an employee. Basically, under Section 27 of the Indian Contract Act, 1872, an employer is not permitted to put a restriction, directly or indirectly forcing the employee to work for the employer or restricts the employee to work for a competitor

Ajay N S
Advocate, Ernakulam
4124 Answers
114 Consultations

You have to abide by the conditions of the employment offer letter.

Since you have signed the bond you are liable towards the conditions of the employment bond.

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.

Indian law mandates the employment bonds to be “reasonable” in order to be valid. The term reasonable remains undefined anywhere in the Indian law and therefore the courts have given meaning to “reasonable” depending upon the facts and circumstances of the cases. The proposition which has emerged till now is that conditions stipulated in the contract should be necessary to protect the interest of the employer and compensate the loss caused by breach of contract. Additionally, the penalty or compulsory employment period stipulated should not exorbitant.

Thus you can issue a reply notice denying the allegations and wait for them to initiate legal action through court of law which you can challenge based on merits on your side.

 

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

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

Thus, you issue a legal notice to them to return your 10th Certificate which is held by them illegally failing which you can inform them that you will drag them to court competent to retrieve your certificate.

 

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

This is a civil matter hence no complaint with the police is maintainable.

If they have given 7 days time, let them take any action after that 7 days.

You can wait for them to take any action  for recovery through court of law.

In the meantime you can issue a reply notice to them denying their allegations and demand your 10th certificate.

Most likely they may not proceed to court of law to recover this small amount  because they may have to spend an equal amount towards litigation for recovery.

 

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

- This is called notice period , hence if you will not work for the notice period then will have to pay the same , as mentioned in offer letter . 

Mohammed Shahzad
Advocate, Delhi
15814 Answers
242 Consultations

You are liable to pay only Rs 32000 at most and not Rs 60000 as claimed 

Ajay Sethi
Advocate, Mumbai
99775 Answers
8145 Consultations

At most company will file civil suit against you to recover the dues 

 

it is not a criminal offence 

Ajay Sethi
Advocate, Mumbai
99775 Answers
8145 Consultations

You don't worry if the company is demanding anything in excess,  you can fight against them properly in the court of law especially if there's no such condition in the employment offer letter.

If the employment bond states that you are required to pay only two months salary,  then the company's case against you,  if any would not be maintainable in case they make a demand for more than what is mentioned in the employment offer letter. 

 

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

You should have thought over the consequences at the time of leaving the job. 

What is the use of repenting now after doing the mistake. 

Anyway you may adopt the steps as suggested in the previous posts to protect your interests. 

 

T Kalaiselvan
Advocate, Vellore
89977 Answers
2492 Consultations

You reply to any notice if send to you by company through lawyer later contest it on merits

Prashant Nayak
Advocate, Mumbai
34514 Answers
249 Consultations

Don't be panic and afraid. The old employer  can approach civil court / labour court for getting damages as per bond by way of filing petition. So when the company filed any case against you, contest the same with the help of an advocate.Your liability is limited up to pay 2 months salary 

Ajay N S
Advocate, Ernakulam
4124 Answers
114 Consultations

- contact me for further suggestion. 

Mohammed Shahzad
Advocate, Delhi
15814 Answers
242 Consultations

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