The Service Bond/ Service Agreement Bond is very much legal in India. It depends on employer to employee for the kind of recovery amount they would incur from the employee. Certainly, breach of bond/agreement within the stipulated period of time states that the loss to the company by training the employee has to be acquired.
There are types of Service Bonds depending on the organizations: Generally, a short-term corporate bond is usually less than five years, and then is 5 - 10 years and long term can be above 10 years.
You must be assessing as to why the service is categotized - This is because of the corporates have the higher yeilds and their employees are bradawls for profits and by providing them training they are upholding business. If such an employee breaches the bond within the required period as per bond agreed they would be a high risk for the company in terms of quality and manpower as well.
I hope the above information serves your purpose.
Please see the interesting decision (latest) with regard to service bond in india