Validity Of Bond/ Service Aggrement, On Company's Letter Head, As Per Indian StampACT - CiteHR
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*** URGENT HELP NEEDED ***

Hi,

To all the experts around here, my problem is very similar to those being discussed over here. I would brief you a little so that you're able to help and advice correctly.

I joined this company in Mid-August 2014. We agreed on the salary and one year commitment in the form of a "Service Agreement" worth two and a half month's of salary. The company asked for a cheque of the bond value. Dateless. Stating that it is a standard company policy, and whenever you sign a bond you have to do this. After trying to resist it, I had to give the cheque, because otherwise they won't give me the offer letter/appointment letter. Nearly two months into the job, I grew frustrated of the work environment, lack of commitment, sincerity and all those subjective issues from my boss, who happens to be the co-founder and director of the company. After trying to bear it for almost two months, I decided to quit.

I would request you to please give clarification, guide and advise on the following points, what options do I have and what would you suggest me to do. (Queries written in CAPS)

1. The bond was printed on a plain A4 size paper, with my and one of the three director's signature on all the 3 pages. PLEASE NOTE - There is no Stamp Paper in the front. There is no seal of the company on any page.
*** IS SUCH A BOND VALID IN THE FIRST PLACE?
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2. I wouldn't term it as threatening, because I don't know if its correct or not, but THEY WOULD ENCASH THE CHEQUE IF I QUIT BEFORE THE PERIOD.
*** IF I GO TO THE BANK AND "STOP PAYMENT" OF THAT CHEQUE, WHAT ACTIONS CAN THE COMPANY TAKE?
*** ARE THEY LEGALLY ENTITLED TO ENCASHING THAT CHEQUE?
*** WHAT MIGHT BE THE LEGAL CONSEQUENCES OF IT?
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3. I did not resign but wrote them a long mail stating the reasons for my disappointment and frustration and the same being the reason for my absence from the office. The reasons being the mental pressures (which are not due to the demanding work) and unhealthy work environment, lack of clarity in the job roles, plus the job roles not being the same as verbally promised (never received any document about it at all). In the long meeting post that mail, after discussions, I finally tried to talk to them to mutually end the agreement, relieve me of my duties and return my cheque.
*** THEY HAVE ASKED TO WORK FOR A MONTH WITHOUT ANY SALARY, AND AFTER THAT THEY'LL RETURN ME MY CHEQUE AND RELIEVE ME. OR ELSE THEY'RE ENCASHING THE CHEQUE AND I WILL BE FREE TO GO, WITHOUT ANY LETTER OR ANY FORMALITIES. PLEASE NOTE I HAVEN'T OFFICIALLY RESIGNED YET. I FEEL HELPLESS HERE, PLEASE ADVICE. I'M OKAY WITH SERVING A NOTICE PERIOD, BUT ATLEAST I EXPECT THE SALARY DURING THAT TIME.
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4. My offer letter states that I need to serve a notice period of 45 days after my resignation letter is accepted. I signed on the photocopy of this agreement as a gesture of "Accepted". The photocopy is with the HR.
*** IS THE NOTICE PERIOD NECESSARY, IF I HAVE NOT WORKED FOR 6 MONTHS OR MORE? (Read similar thing in the thread.)
*** DOES IT STAND VALID?
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5. WHAT IF DON'T RESIGN AND UNDERPERFORM, SHOW LACK OF COMMITMENT, BE INCOMPETENT ETC. SO THAT THESE PEOPLE KICK ME OUT. CAN THEY STILL ENCASH THAT CHEQUE? WHAT IF I DON'T CARE ABOUT THE RECOMMENDATION LETTER/RELIEVING LETTER ETC.
*** WOULD YOU SUGGEST SUCH MEASURES IN EXTREME CASES, WHERE I DON'T WANT TO LOSE THAT MONEY.
--------------------

My company is relatively small company with 3 Directors and 7 employees, but is a part of a big business group locally over here. Since I am not able to find a way right now, and till I get the chance to get some professional legal advise, I'll be joining back from tomorrow to serve the notice period.

I request you to kindly advise on how I should take it forward. If possible, please state the relevant citations so that it'll be easier for me to understand and get out of this. If you need more information so that you could help, feel free to drop me an email at satyaki297@gmail.com

Thanks a lot.
Satyaki Purandare

P.S. - I would appreciate if I'm not given advise like "You're a quitter" and "why did you sign the bond" etc. I did whatever I did in good faith, I believed the work will be challenging but did not expect people and office culture to be so bad, I worked for the company with full commitment and I am not running away from the job because I cannot bear the work load but I want to quit because I refuse comprise my work ethics and morals and I to work at a place which does not contribute in my growth, but instead is an anchor to it. Thanks.

Hello Satyaki Purandare,

The options you (1) have & (2) can exercise [which would be different from (1)] would depend a lot on what YOUR PRIORITIES are & what you CAN HANDLE.

To address your queries:

1. The bond was printed on a plain A4 size paper, with my and one of the three director's signature on all the 3 pages. PLEASE NOTE - There is no Stamp Paper in the front. There is no seal of the company on any page.

*** IS SUCH A BOND VALID IN THE FIRST PLACE?

ANS: NO. Such Bonds are NOT valid. But that IS NOT the issue in your case. If you need to enforce this aspect, there's no other way but to go legal [at least to the Lawyer Notice stage]. Now YOU need to decide IF you wish to go that route--involving money, time & effort.

2. I ..................................... but THEY WOULD ENCASH THE CHEQUE IF I QUIT BEFORE THE PERIOD.

*** IF I GO TO THE BANK AND "STOP PAYMENT" OF THAT CHEQUE, WHAT ACTIONS CAN THE COMPANY TAKE?

*** ARE THEY LEGALLY ENTITLED TO ENCASHING THAT CHEQUE? WHAT MIGHT BE THE LEGAL CONSEQUENCES OF IT?

ANS: You can be sure they would encash the cheque. Better wait for legal members to respond to your query about the consequences of issuing Stop-Payment to your Bank. Logically, I don't see any problem, except that you MAY need to be ready that the Company would go legal on this issue.

3. I .................................................. ......................................THEY HAVE ASKED TO WORK FOR A MONTH WITHOUT ANY SALARY, AND AFTER THAT THEY'LL RETURN ME MY CHEQUE AND RELIEVE ME. OR ELSE THEY'RE ENCASHING THE CHEQUE AND I WILL BE FREE TO GO, WITHOUT ANY LETTER OR ANY FORMALITIES. .................................................. ...., PLEASE ADVICE. I'M OKAY WITH SERVING A NOTICE PERIOD, BUT ATLEAST I EXPECT THE SALARY DURING THAT TIME.

ANS: Prima-facie, this looks to be a better way out of the situation. However, this contradicts your intent of NOT serving any Notice period--looks like you are confused.

However, the only aspect you need to be careful about during this 1 month period is to ensure you don't stuck in ANY situations where you MIGHT be taken advantage of OR worse, get into a trap. Given what you mentioned about the structure of this Company, I won't rule it out altogether.

And reg the Salary for this 1 month, frankly, the better way out will be to insist for it BUT at the same time, be mentally prepared to forget it IF they say NO.

And suggest take this deal [of serving 1 month, getting the PDC back, etc IN WRITING. Not worth taking any chances @ this stage.

4. My ...................................... notice period of 45 days after my resignation letter is accepted. ....................................IS THE NOTICE PERIOD NECESSARY, IF I HAVE NOT WORKED FOR 6 MONTHS OR MORE? (Read similar thing in the thread.) DOES IT STAND VALID?

ANS: Looks like you have some earlier experience--meaning, you aren't a Fresher. I am sure you must also have read that every Company have their own set of Policies/Rules. The fact of the matter is: you ACCEPTED.

So just forget about this aspect of the case.

5. WHAT IF DON'T RESIGN AND UNDERPERFORM, SHOW LACK OF COMMITMENT, BE INCOMPETENT ETC. SO THAT THESE PEOPLE KICK ME OUT. CAN THEY STILL ENCASH THAT CHEQUE? WHAT IF I DON'T CARE ABOUT THE RECOMMENDATION LETTER/RELIEVING LETTER ETC. WOULD YOU SUGGEST SUCH MEASURES IN EXTREME CASES, WHERE I DON'T WANT TO LOSE THAT MONEY.

ANS: While you seem to be PRESUMING what they MIGHT do or not do, pl note that THEIR actions aren't in your hands. And you also seem to forget about the timeline--WHEN they will kick you out. What IF they take 1 or 2 yrs to do so [for whatever reasons]? Are you ready for that scenario--career-wise and emotionally?

Another presumption is that you would given the money....what IF they play around with delaying tactics?

Now coming to your remarks in the PS "I would appreciate if I'm not given advise like "You're a quitter" and "why did you sign the bond" etc". Pl note that when you ask for suggestions/advice, it's always better to keep an open mind on what's coming. Even though you might have done what you did "in good faith", like you mentioned, it's a fact that you ERRED in your judgement. Right? Then why should you take offence when someone points it out? It only points out to one factor that you missed out initially in your eagerness to land with just about any job that gives you the salary you are looking for. Nothing wrong, per se, in this--EXCEPT that you failed to see that this wasn't a plain deal right from the word go. No professional Organization takes PDCs [in your case Undated] in lieu of Notice Periods/Performance. That itself OUGHT to have been a red herring for you.

I shall suggest that you get out of here as smoothly as possible. AND, also suggest discuss with any reliable advocate about the steps you be taking from on UNTIL you get relieved FORMALLY. This is to ensure that all subsequent steps don't give them a chance to trap you.

And finally, pl LEARN from this experience.

It's always wise to ACT with the Best-case-Scenario in mind BUT ALSO with the Worst-case-Scenario right from the beginning--especially where there are no reference points to go by. Hope you get the point.

All the Best.

Rgds,

TS

Dear All,
My employer has similar clauses of training expenses. But there is no training program. Rather, I have trained 10 new people who joined under me. Also they have 1 year of work bond, failing which employee become liable to pay 6 months of salary and 25k INR of training cost.
And final problem is that employer deducts salary without notice for 5 minutes of late coming(which is 2.5% of slaray for per day incident). But we stretch for many nights and weekends also. And there is no over-time policy.
My salary has been deducted twice without notice, where management folks just cite some HR policy which only exists in rumours. Our bond is not on any stamp paper but just company letter head.
Please advice.

Hello Sir, I have signed offer letter in the beginning in which it was stated that i have to sign a service bond of 2 years after completion of my 6 months period and if i sing the bond i have to be a part of company for 2 years and if i wish to leave i have to pay 50000. after 6 months now i am not signing the service bond and they are still asking me to pay 50000. even they have not given any training directly asked me to work on project. what should i do?
Hello Experts
I need your advice on a similar matter,I signed off a commitment or service with my employer, which was not on a stamp paper, but it was mentioned on that document that if I leave before 2 years i have to pay an amount of INR 500000, again which is applicable if company invests on my training etc.which has not happened at all,an in case of un-forceful personal circumstances the bond is not applied.As I am getting married and my husband live in another city and I will not be able to continue with my services, they have asked me to give a proof of my wedding which i will do, but i want to know what is the authenticity of a bond signed on a normal plain paper also i have not been given any training from company so is the bond still valid ? As i asked them for the copy of bond they refused to give a copy of that too. please advise.

Hello Mr Nathrao
Thanks for your comments, but few more things to tell is that they hired me for a new department and promised me a lot of other things like sales support and resources, which again did'nt happen, over that i am not being paid the signing amount so is that professional or ethical ?? i dont want to compromise on my rights, the document mentions that for unforeseen reasons the bond is not applicable and i am not getting married to quit this job, I am moving out coz m getting married.please give advice as per which i can legally challenge the unethical stuff.

Hello Sonileoz,

Forgetting about 'ETHICS' for a moment, I think Nathrao has already suggested you a way out "Try your level best for a negotiated exit and not a court room battle".

If you REALLY want to sort things out legally, the best way is to do the following:

1] Hire a Lawyer & explain the case to him to take it forward.

2] Be prepared for the Company to respond legally too......which COULD mean that your Dues, etc are bound to get involved....after all you can't expect them to just sit & watch. Whether what they are doing is 'right' or 'wrong' will be decided by the Court......after years. It's not for YOU or anyone else to decide. If the Court decides in the end that the Company is wrong, then MAYBE you will have the option to file a defamation OR monetary Claims suit again.

3] Also be prepared to spend time, energy, & MONEY [as Fees to the lawyer....let me remind you here that NOT ALL advocates are ethical, so you will need to be prepared for this possibility].......at this point of time, it would be tough to quantify on these aspects. The time would be in years for sure.....IF you know the way Courts operate in India.

4] You are getting married.......though nothing can be said at this point of time, when your case begins to drag/languish in the Courts, you need to be sure that you will get the support of your husband/family. It's easier saying 'sure....why not' now, but when your family begins to grow, try saying the same thing THEN.

5] You didn't mention how big is your present Company.....if they are reasonably large, then they CAN.....repeat CAN [whether they do it or not is a different issue & upto them].....give a bad BC feedback for your next job.

SO GOING LEGAL IS QUITE SIMPLE......when one is ready to face all the above consequences.

The Company has already given you an option of proving that you are really getting married.....by asking for the Wedding Card. In their position, what would you be doing?

I know you may not like the above points.

But suggest ALWAYS try to 'FIRST look before you leap'.

Also a piece of advice for YOUR benefit:

You mentioned '....they hired me for a new department and promised me a lot of other things like sales support and resources, which again did'nt happen'.

I am not sure of your experience level. But, pl understand that IF you are looking for a job where there's 100% adherence to commitments & 100% compatibility to what you seek in the job, forget it. You won't find it anywhere INCLUDING IN Google, Amazon, Microsoft, etc. And I am saying this from inside knowledge.

There are many ways to resolve the issues you mentioned......rather than using them as grounds to leave the Company OR going legal.

I recollect a Quote by Zig Ziglar: "Attitude & Aptitude determine your Altitude in life & career".

All the Best.

Rgds,

TS

My wife borrowed one lakes on demand of non-judicial bond paper with security of signed cheque leaf.
My wife paid interests more than one lakes. Bond is not signed both party. . Interests per month Rs no 9000. witness signed. Loan le lender has died.. now his wife threteteing me to pay assets one lakss or put in case . we are afraid. Please advise me.

I want to resign from the company after one month of joining in which I have signed 2 year bond and I have given a post dated cheque of 200000. I am on 6 month probation period.There are also 3 month notice period.
I don't want to pay this amount. even I don't got any salary from the company.
This bond amount and duration is not written in employment letter but I have signed on stamp paper. In that stamp paper there are written this thing.
Is this bond is legal which is not written in employment letter?
Even they are not giving copy of that signed bond.
Please tell me can I have to pay this amount after due date of post dated cheque
What problem should I face if I don't give that bond money?

Sir, I got an offer letter since 2016 from Pvt company form business profile and there was no any bond condition and statement in offer letter. Later on when induction program took place, I signed a form without reading because, there were other joining formalities, (Service Bond for 1 year). They told me later about this, that I signed a bond for one year. They hired me for a role and later on they changed my duties and role also. I served for 8 month ( 1 month notice period). They were forcing me to do new responsibilities, I gave my resignation letter and no HR member talked to me why i am leaving, I handover all the company's things and filled employee existing form. After 2 month they mailed me and asking me about the bond money, I replied to them and told all the possible situation that if any HR member talk to me before leaving then I complete my Period. after leaving the company I Join the different sector and different profile. Now I need my reliving letter and they are asking the same. Is it fine or Suggest me how can i come over this situation.

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