Puneet.sarin
Manager-legal & Finance
Adv.mayur
Advocate
+3 Others

I was asked to leave in 1st week May this year. In lieu of my track record & duration of service, the company offered to waive off my 3 months notice and also offered to pay me salary during this (3 month) period.

My reporting manager had a discussion with me in which, he said that in lieu of the company paying me 3 months of notice pay, I would not be allowed to join a competitor.

I honored this commitment ( I joined a competitor in Sept) and the company also paid me salary for May, June & July '13.

Howeverm when I went to the office (around 3rd June), I was asked to sign the Non-Compete agreement before I could collect my paycheck for May. This agreement had a clause at the end which said I cannot join a competitor for 12 months from the day of my relieving. This was contradictory to what I was told earlier, however, I had no choice but to sign or rick losing 3 months pay. And since I have a family to support, I signed the document and also submitted a signed cheque (blank) in favor of the company.

My previous employer recently presented the cheque to my account to recover 1 month's pay, which has bounced due to insufficient funds. I have not yet requested for a 'Stop Payment' on the cheque. But I am sure they will now register a case & send me a notice.

My Questions are: 1) Is their stand justifiable by law and 2) What are my options now and what should be my course of action?
14th October 2013 From India, Pune
Hi Aka2808 !

Here's revert to the query raised in pointwise form:

1. Stand of company justifiable by law: Interesting question but core question is what is justifiable? Anything which can stand to the tests of reasonableness by courts is justifiable. If you can prove that whatever they did was unfair and unequitable then you are justified. Ok. let me not confuse you further.

What they did may amount to fraud provided you have written email or some document to justify that they really committed to you about 3 months of Non-Compete clause. The clause of 1 year is not excessively longer too to attract wrath of unreasonableness of court. So you should be having concrete documents to indicate that.

2. Options available now. You took everything in good trust and then at that very moment your trust was broken by depositing that cheque and asking for compensation.Question is what to do now. In first place you should have got the cheque stopped. But you have failed to do that and meanwhile company has deposited and made that cheque bounced. As I can see the legal solution doesn't seem to be feasible for you, as I can see that you don't look t have that deep pockets to absorb that long legal tussle apart from mental agony that you may go through of company you had that much of trust in.

So there's 2 options available as of now:

a. Speak to the HR head and try to convince of the deal striked by you and your ex-employer;

b. If HR Head refuses to budge then try to negotiate the compensation somehow.

One critical thing: Cheque bouncing is one of the events which will ruin your credit history on basis of which you may be denied loan at latter stage and as I understand it takes now atleast a year to come back at same level of credit rating. So avoid cheque bouncing instances.

-----

Puneet Sarin

CA LL.B
15th October 2013 From India, Gurgaon
Hi Puneet,
Thanx a lot for your detailed response. Pretty much puts things into perspective. I wanted to check if I could request for a stop payment now
and would it really do any good.
Rest, you have addressed all of my concerns exhaustively.
However, what if I were to counter their claim that they verbally promised me something and presented a different picture at a time when they knew I would not refuse signing on their terms, since it was my salary at stake and also that if they pay me for 3 months, that is ideally the ONLY period that I would not join a competition and not for the balance 9 months, since I have skills and expertise in only that field/ Line of Business and honouring a 12 month commitment would potentially mean staying jobless for 9 months. That is like taking away somebody's source of income/ livelihood without providing the person with any alternative.
Your thoughts?
15th October 2013 From India, Pune
My Thoughts- It doesn't matter as famous Harvey Spector says in celebrated series "SUITS". Though it seems punchline but its very true.
While you are justified in saying that company is restricting with your right to work, which is guaranteed by Constitution itself, Employer is justified in saying such condition as reasonable condition to protect one's business. So that view will hold valid in court of law which could be evidenced.
About stopping cheque now: There's no extra edge that you can obtain now but as protection you can always do that but its not suggested as per what we have already discussed.
15th October 2013 From India, Gurgaon
You can avoid 138 case by taking stand that cheque is issued as security. There are judgements that cheques issued when there is no debt at the time of ISSUING OF CHEQUE, 138 is not attracted.
15th October 2013 From Saudi Arabia, Dhahran
you may join competitor by proving that you have left job not on own but on companies request as stated earlier. then court may hold this 12 month restriction as unreasonable. also, you may ask company to pay 12 months salary if they want 12 months to stay at home without job.
15th October 2013 From India, Mumbai
For verbal assurances, there is no legal base. If you have given a written commitment, willingly or unwillingly, it is binding on you. It is a sort of bond, which you are suppose to honor for 12 months, and for which your Company has taken Security cheque, so that this bond has some value. Since you did not keep your commitment, company has deposited the cheque, which is bounced.

Primarily, there are two faults, for which you may be penalized.

1. You did not honor the written commitment.

2. Bouncing cheque is an offence.

The abovestated are the real facts in your case.

To escape from the punishment, your stand can be :

a. Indian constitution allows, any person, to work anywhere, at anytime, and nobody can be stopped/restricted, from his livelihood.

b. If you are sure that there is no other liability on your part, payable to Company, stating such reason, you can protect yourself, for not honouring the cheque.

Suggestion : take a very lenient view with your ex-employer, talk to them in a very soft way stating that such thing has happened because this was the only option you have and hence you joined the competitor company. Tell them this is a matter of your survival. Practically, no company moves further for any kind of action.
16th October 2013 From India, Mumbai
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