I have joined a company where I signed 2 years of agreement in 100 rupees of stamp paper. In the bond, they have stated if I breach the agreement less than 2 years I have to pay 1 lakh rupees but they can terminate me anytime with 1 month of notice. I am working for 3 months only.
So, I want to ask,
a. Is this one-sided bond? b. Is such bond legal in India?
Kindly help me.

From India, Kolkata

Hi :
Bonds are not legal in India. If you have signed the agreement please check if the Employment agreement (Bond) has been registered. In case it is registered then the terms mentioned in the agreement will be legally applicable to you.
- Gia

From India, Pune

Dear Ankur, As far as my knowledge is concern bond is legal in India as I have seen many organizations who goes on to the court when there is a breach of agreement/bonds.
From India, Delhi

Dear Ankul,
There is nothing named as one side bond in India. It is only the clause mentioned in it, matters. Again to know more about the legality of Employment Bond, please use research tab given in this community, as this topic has been discuss several times.

From India, Bangalore

Dear Ankul,
As per the Indian contract act, the agreement had between you and your employer is lawful. As you told, you have signed on Rs 100/- stamp paper to accept the conditions as you pointed out (In the bond they have stated if I breach the agreement less than 2 year I have to pay 1 lakh rupees but they can terminate me anytime with 1 month of notice), which means you have accepted the terms offered by the offeror (your company). So, that means you have entered in the contract to serve for 2 years and in case of void the contract by you, you are ready to pay the 1 lakh or in case of the contract void by the offeror they will give 1 month notice.

From India, Hyderabad

Bonds will be considered valid only if the organisation has invested some money in you gaining certain rare skill sets, which you are expected to either transfer to other colleagues in the organisation, or use those skill sets to exploit commercial value out of it for a justifiable period. But, in case the company has just signed a bond stating that they are training you, then it is not valid. And then again such transfer of skills so acquired, if transferable within a period less than two years, then the bond is valid only for lesser period.

And in case during the course of so called training, the product so derived out of the training is exploited commercially by the company, then such bond is invalid. Two cases, I would like to quote here are as follows:

Case No 1

HMT versus Ex Engineer Trainees of HMT.

In the year 1988 - 89, when Titan watches launched their products in India, they drew all their technical staff from HMT. Out of these over 45 Engineers who were serving the so called bond on account of being recruited as Engineer trainees in HMT, joined Titan. Kindly remember that HMT is a PSU and hence their agreements and contracts apart from systems are very strong. So, they filed a case against all these 45 employees. Titan helped them engage a good lawyer in Bangalore, since these cases were filed in Bangalore. The engineers, stated in their favour that in the guise of training, HMT has used the produce of their training by selling the products and have got a commercial gain and so it cannot be called a training. The case went up to Supreme court. HMT could not prove that the training given to them was something unique and that the produce used was not exploited commercially. Hence, the SC stuck down the bonds. In one stroke of pen, 1000's of Engineer Trainees in various organisations including IT companies got relief from the bond.

Around early Nineties, the electronic division of NTTF went to court against their trainees. NTTF used to go to the Villages and identify and admit rural candidates for their Diploma in Electronics course. They did charge a fee and also got funding from a Danish charitable trust. NTTF desired to launch Televisions at that time. So they got the students to sign a bond that after their training, they will work in NTTF to produce the televisions for a period of two years. For a lay man it would sound a good proposition, since these rural youth were finding it hard to make a living. And NTTF went to their villages and identified smart youth who had passed their high school and brought them for a meagre fees which was further subsidised by a Danish charitable trust and gave them a valid Diploma recognised by All India Council of Technical Education and also they were being given jobs for two years. What more can a person ask

But, then, many companies lured these boys the moment they finished the Diploma at a higher salaries. NTTF went to court against these boys. The court judgement was that they were students that passed out from a course. The Danish trust which subsidised the cost of the course did so to develop Indian youth and NTTF did not invest anything since the non subsidised part of the cost of the course was collected as fees. And the electronic products that were manufactured by them during their course of study was sold commercially outside. Hence, the bond is not valid.

So, to all my friends here who state that bond is valid just because it is signed in INR 100 stamp paper, please do not get psyched by the bond paper or stamp paper. No bond is enforceable in India and the exception is when the person is trained for a certain skills which is not easily available. But even then, the term of the bond period must be commensurate with the investment made in such training. Spending some USD 1,000 or USD 2,000 for some course and then asking for a bond of 2 years is not commensurate with the money spent.

Similarly, hiring a consultant and getting you trained for 15 days attracts only a 15 day bond period and not beyond that. But, in case they have sent you to Harvard or Stanford and spent at least 50% ctc of what you earn in 2 year period, then the bond would be valid, since it has not only cost so much, but, also the person has been trained abroad at a substantial cost. But, if they send you to same Harvard or Stanford for a 2 to 3 week program then the bond is valid only for that 2 to 3 weeks equivalent time. Since the court believes that what you learnt in two weeks can be transferred in the same period of two weeks and you do not have to sign two years bond. And the person who learnt from you in two weeks can train others for a period of two weeks.

Many companies get the bond signed, knowing very well that it is not enforceable. It is only a psychological pressure on the person not to leave in 2 years. And if they leave, they want to harass the person with legal notices. And in case they do go to court, it gets thrown out of the window. They just cause this stress, to highlight to the incumbent staff in the company that they can harass you too. TCS used to advertise in the newspapers the name and the quantum of the money the person has to pay because the person broke the bond in the United States. They would have advertised about 100,000 of them in the past so many years. Till date they have not recovered a single penny.

Smart guys keep sending emails to the HR regularly at least once a month drawing attention to the training that has been promised in lieu of the bond and reminding them that no training has been given. And they request them to kindly organise the training soon. This becomes a record. They keep sending them every month. And in case they do organise the training, the smart guys write to the HR department after the training that what was taught was basic things and does not warrant a two year bond period and so to organise in depth training as promised in the bond. They keep writing regularly to the HR department and keep record of all these by taking hard copies. And they resign any time they desire and walk out. And when HR asks them to serve the bond, they write back quoting all their past mails. And there is no case at all.

SO, do not worry about the bonds. Bonded labour has been abolished. Keep record of all the training given and not given and keep reminding the HR department regularly that they have a commitment to give the training which warrants a 2 year bond period and to organise that.

In fact in one interesting case, the labour court has given a compensation to an employee from the company since they wasted two useful years promising him training and they did not give any.

We are a free country and no body can enslave us with bonds. We need to understand this.

So do not worry about the bond. Its just a piece of paper

From Indonesia, Jakarta

Thanks for the brief explanation about the bond.Willful and loyal working conditions should be provided in the organizations to retain the talent but not with bonds.
From India, Secunderabad
Suresh P

Dear Anonymous
May I request you to share citation or the link for complete text of the above narrated case, HMT Vs Ex Engineer Trainees, Supreme Court verdict.
I am in need of this to face a similar situation now.

From India, Pune

The case was fought between 1987 and 1991, in the pre internet era. The All India Reporter has the cases posted in their reporters. It's HMT vs Others. Any good lawyer will be able to give you a copy of the All India Reporter.
From Indonesia, Jakarta
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