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    Employee Bond

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    kalyan4you
    The petitioner challenged a clause in his order of appointment that required him to pay Rs. 2 lakh if he resigned before completing 3 years of service. The court allowed the petition, finding the clause to be unconscionable and unenforceable. It held that identical issues were decided in a previous case, where such conditions were held to be against public policy. The court also found that precedents cited by the respondent bank were not applicable, as they did not consider unconscionable conditions in employment contracts. The respondent bank was directed to refund the Rs. 2 lakh amount paid by the petitioner along with interest.

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    Employee Bond

    Uploaded by

    kalyan4you
    49 views9 pages
    The petitioner challenged a clause in his order of appointment that required him to pay Rs. 2 lakh if he resigned before completing 3 years of service. The court allowed the petition, finding the clause to be unconscionable and unenforceable. It held that identical issues were decided in a previous case, where such conditions were held to be against public policy. The court also found that precedents cited by the respondent bank were not applicable, as they did not consider unconscionable conditions in employment contracts. The respondent bank was directed to refund the Rs. 2 lakh amount paid by the petitioner along with interest.

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    Employee Bond

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    The petitioner challenged a clause in his order of appointment that required him to pay Rs. 2 lakh if he resigned before completing 3 years of service. The court allowed the petition, finding the clause to be unconscionable and unenforceable. It held that identical issues were decided in a previous case, where such conditions were held to be against public policy. The court also found that precedents cited by the respondent bank were not applicable, as they did not consider unconscionable conditions in employment contracts. The respondent bank was directed to refund the Rs. 2 lakh amount paid by the petitioner along with interest.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    49 views9 pages

    Employee Bond

    Uploaded by

    kalyan4you
    The petitioner challenged a clause in his order of appointment that required him to pay Rs. 2 lakh if he resigned before completing 3 years of service. The court allowed the petition, finding the clause to be unconscionable and unenforceable. It held that identical issues were decided in a previous case, where such conditions were held to be against public policy. The court also found that precedents cited by the respondent bank were not applicable, as they did not consider unconscionable conditions in employment contracts. The respondent bank was directed to refund the Rs. 2 lakh amount paid by the petitioner along with interest.

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    © All Rights Reserved
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    of 9

    1

    IN THE HIGH COURT OF KARNATAKA AT


    BANGALORE
    DATED THIS THE 08TH DAY OF AUGUST, 2012
    BEFORE
    THE HONBLE MR. JUSTICE H.N. NAGAMOHAN DAS
    W.P.No.32844/2009 (S-RES)
    BETWEEN:
    ---------------SHRI PRASHANT B.NARNAWARE
    AGED ABOUT 34 YEARS
    S/O SHRI BALAJI C.NARNAWARE
    EARLIER WORKING AS SENIOR MANAGER,
    MIDDLE MANAGEMENT SCALE-III
    STAFF CODE NO.21050
    VIJAYA BANK, HEAD OFFICE
    CENTRAL ACCOUNTS DEPARTMENT
    41/2, M.G.ROAD, BANGALORE-560001
    RESIDENT OF 4-B, JEEVAN JYOTHI APARTMENTS
    DARDA LANE, RAHATE COLONY,
    WARDHA ROAD, NAGPUR-440022.
    ...PETITIONER
    (By Sri.S.VITTHAL SHETTY, ADV.)

    AND:
    --------

    1. VIJAYA BANK
    A BODY CONSTITUTED UNDER THE
    BANKING COMPANIES (ACQUISITION AND
    TRANSFER OF UNDERTAKINGS)ACT, 1980
    HAVING ITS HEAD OFFICE AT
    41/2, M.G.ROAD,
    BANGALORE-560001
    REPRESENTED BY ITS CHAIRMAN
    AND MANAGING DIRECTOR.
    2. THE DEPUTY GENERAL MANAGER
    VIJAYA BANK, HEAD OFFICE,
    PERSONNEL DEPARTMENT (HRD)
    NO.41/2, M.G.ROAD,
    BANGALORE-560001.
    ...RESPONDENTS
    (By Smt.SNEHA NAGARAJ, ADV. FOR
    M/S. SUNDARSWAMY & RAMDAS ASSTS.)
    --THIS WRIT PETITION IS FILED U/A 226 & 227 OF
    CONSTITUTION OF INDIA PRAYING TO QUASH
    CLAUSE 11(K)OF THE APPOINT ORDER DATED 7.8.2007
    AT ANNEXURE-B AND ETC.
    THIS PETITION HAVING BEEN HEARD AND
    RESERVED
    FOR
    ORDERS,
    THIS
    DAY,
    H.N.NAGAMOHAN DAS. J, PRONOUNCED THE
    FOLLOWING;

    ORDER

    In this writ petition the petitioner has prayed for a writ in


    the nature of certiorari to quash a clause in the order of
    appointment dated 7.8.2007, Annexure-B, letter dated 8.8.2009,
    Annexure-L, letter dated 3.9.2009, Annexure-N, letter dated
    6.10.2009, Annexure-Q and the indemnity bond dated
    3.10.2007, Annexure-H in so far as it relates to collecting a sum
    of Rs.2,00,000/- from the petitioner for breach of terms of order
    of appointment as damages and for a writ of mandamus to
    direct the respondents to refund the same.
    2.

    Petitioner joined the service of respondent bank on

    15.11.1999 as Assistant Manager. Subsequently on 22.2.2007


    petitioner was promoted to the cadre of Manager. Thereafter on
    7.8.2007 petitioner was selected and posted as Senior Manager.
    3.

    On 17.7.2009 petitioner submitted his resignation

    as per Annexure-K to the post of Senior Manager. On 8.8.2009


    respondent bank informed the petitioner to pay a sum of

    Rs.2,00,000/- for acceptance of resignation in terms of the order


    of appointment and also the bond executed by the petitioner.
    Petitioner submitted a reply requesting the respondents to waive
    the payment of Rs.2,00,000/- as the same was contrary to the
    banking regulations and opposed to public policy. This request
    of the petitioner came to be rejected. Finally on 6.10.2009, the
    respondent bank accepted the resignation of petitioner subject
    to payment of Rs.2,00,000/-. Accordingly, the petitioner made
    payment of Rs.2,00,000/- and he was relieved from service on
    20.10.2009. Now the petitioner is before this court interalia
    contending that the condition in the order of appointment and
    the bond obtained by the respondents to pay a sum of
    Rs.2,00,000/- as contrary to law and banking regulations.

    4.

    After service of notice the respondent bank entered

    appearance and filed statement of objections interalia justifying


    their action in imposing the condition to pay a sum of

    Rs.2,00,000/- and recovering the same at the time of relieving


    the petitioner from service.
    5.

    Heard arguments on both the side and perused the

    entire writ papers.


    6.

    It is relevant to extract the relevant clause in the

    recruitment notification dated 26.12.2006, Annexure-A and the


    same reads as under:
    (w) selected candidates are required to execute an
    indemnity bond of Rs.2.00 lakh (Rs.Two Lakh only)
    indemnifiying that they will pay an amount of Rs.2.00 lakh to
    the Bank if they leave the service before completion of 3 years.

    7.

    Similar condition was imposed in the order of

    appointment dated 7.8.2007, Annexure-B. To this effect the


    respondents obtained a indemnity bond from the petitioner as
    per Annexure-H dated 3.10.2007. It is on the basis of this
    condition in the order of appointment and the indemnity bond

    the respondent bank insisted the petitioner to pay a sum of


    Rs.2.00 lakhs since the petitioner tendered his resignation
    before the completion of three years period of service.
    8.

    Identical issue came up for consideration before a

    Division Bench of this Court in W.A.No.2736/2009 disposed


    on 9.12.2009.

    The Division Bench by following the law

    declared by the Apex court in Central Inland Water Transport


    Corporation Limited vs/ Brojonath (1986 3 SCC 156) held that
    a condition as unconscionable and unenforceable in the eye of
    law. For the reasons stated in the order in W.A.No.2736/2009
    this writ petition is liable to be allowed.

    9.

    Learned counsel for the respondents contends that

    collecting the damages of Rs.2.00 lakhs from the petitioner for


    breach of conditions of employment is legal and placed reliance
    on the following decisions:
    i)

    AIR 1967 SC 1098

    ii)

    AIR 1980 SC 1717

    iii)

    (1973) 2 SCC 303

    iv)

    (2001) 8 SCC 722

    v)

    AIR 1962 SC 1314

    vi)

    MANU/TN/0675/2010

    10.

    The Supreme Court in AIR 1967 SC 1098 and AIR

    1980 SC 1717 considered the effect of condition in the contract


    after the termination of contract under Section 27 of the
    Contract Act. The Supreme Court in 1973(2) SCC 303
    considered the effect of condition in the contract where a
    employer granted scholarship to the employee for further
    studies. In 2001(8) SCC 722 the Supreme Court considered the
    condition in the contract relating to giving advance notice
    before tendering resignati\on by the employee.

    Therefore, these judgments have no application to the


    facts on hand. In the instant case we are dealing with
    unconscionable condition in the contract under Section 23 of
    the Contract Act.

    11.

    Further the Supreme Court in AIR 1962 SC 1314

    and MANU/TL/0675/2010 has not considered the scope of


    unconscionable condition in contract of employment and the
    scope of Section 23 of the Contract Act was not considered and
    examined.

    Therefore, even these judgments have no

    application to the facts on hand.


    For the reasons stated above, the following:
    ORDER
    i)

    Writ petition is hereby allowed.

    ii)

    The

    condition

    in

    recruitment

    notification

    Annexure-A, order of appointment, Annexure-B


    and indemnity bond Annexure-H in so far as it
    relates to demanding and recovering a sum of
    Rs.2.00

    lakhs

    as

    damages

    is

    held

    as

    unconscionable, unsustainable and unenforceable


    in law.

    iii)

    Respondents are hereby directed to refund the


    amount of Rs.2.00 lakhs together with interest @
    9% to the petitioner.

    iv)

    Ordered accordingly.

    Sd/JUDGE.

    DKB.

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