An employee took VRS (Voluntary Retirement) from a PSU in 2002. He worked in the private sector for 5 years. He saw an advertisement from a PSU in which there was no bar on VRS optees. He applied, mentioning VRS in his resume, and got selected, joining another PSU in 2007. The first PSU came to know about it and demanded a refund of the ex-gratia as per the application form he signed for VRS in 2002, in which it was pre-printed: "I will not be allowed to join Govt/PSU, and if I do, I will have to refund the ex-gratia received."
Now, the questions are:
1. Whether such a condition from a PSU is valid in view of section 27 of the Contract Act (restraint of trade is not valid)?
2. Whether the refund can be claimed as per the Contract Act, section 73 (no loss suffered by the first PSU due to breach of contract)?
3. Whether the refund can be enforced by the second PSU?
4. Whether disciplinary action can be initiated against the employee by the second PSU? There is no rule available to charge. The rule is clear: "Dishonesty against the company" is misconduct.
From India, Salem
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2Now, the questions are:
1. Whether such a condition from a PSU is valid in view of section 27 of the Contract Act (restraint of trade is not valid)?
2. Whether the refund can be claimed as per the Contract Act, section 73 (no loss suffered by the first PSU due to breach of contract)?
3. Whether the refund can be enforced by the second PSU?
4. Whether disciplinary action can be initiated against the employee by the second PSU? There is no rule available to charge. The rule is clear: "Dishonesty against the company" is misconduct.
From India, Salem
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Dear Anonymous,
You cannot mix up the contract act conditions with the main service and gratuity act conditions. It is not a case of the contract act, rather a case of termination of services and some extraordinary act of kindness, other than the usual conditions of termination from service by the employer or the employee by virtue of his resignation due to which he could get an ex-gratia amount from his employer PSU, who allowed him to retire on VRS when the usual retirement conditions were not fulfilled, except on resignation. Any kind of ex gratia is not permissible for termination on resignation. So, they breached the specific terms of VRS on account of which the ex gratia was made to him as an act of kindness by the organization, not as an entitlement of the employee or under any section of the service contract act. The question is not whether there was any loss to the company or not, but the element of breach of faith and trust was there on the part of the employee due to his doubtful integrity to cheat the employer for which he is liable for disciplinary action, besides recovery of the ex gratia amount he claimed by false declaration just to join another PSU to extract undue and illegal benefits from the other Government organization.
So, (1) the condition of the PSU was quite valid; (2) a refund necessarily becomes due to be recovered from the employee; (3) a refund can be enforced by the present employer to be remitted to the last employer; and (4) the 2nd PSU can initiate disciplinary action against the employee on his unbecoming conduct of an employee of the PSU by hiding the information/facts of the case that he claimed the ex gratia on the condition that he would not join any other Govt/PSU in a bid to derive undue benefit from his past service. In fact, the employee proved to be a dishonest and unreliable person even for the present PSU.
From India, Delhi
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You cannot mix up the contract act conditions with the main service and gratuity act conditions. It is not a case of the contract act, rather a case of termination of services and some extraordinary act of kindness, other than the usual conditions of termination from service by the employer or the employee by virtue of his resignation due to which he could get an ex-gratia amount from his employer PSU, who allowed him to retire on VRS when the usual retirement conditions were not fulfilled, except on resignation. Any kind of ex gratia is not permissible for termination on resignation. So, they breached the specific terms of VRS on account of which the ex gratia was made to him as an act of kindness by the organization, not as an entitlement of the employee or under any section of the service contract act. The question is not whether there was any loss to the company or not, but the element of breach of faith and trust was there on the part of the employee due to his doubtful integrity to cheat the employer for which he is liable for disciplinary action, besides recovery of the ex gratia amount he claimed by false declaration just to join another PSU to extract undue and illegal benefits from the other Government organization.
So, (1) the condition of the PSU was quite valid; (2) a refund necessarily becomes due to be recovered from the employee; (3) a refund can be enforced by the present employer to be remitted to the last employer; and (4) the 2nd PSU can initiate disciplinary action against the employee on his unbecoming conduct of an employee of the PSU by hiding the information/facts of the case that he claimed the ex gratia on the condition that he would not join any other Govt/PSU in a bid to derive undue benefit from his past service. In fact, the employee proved to be a dishonest and unreliable person even for the present PSU.
From India, Delhi
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Dear Sir,
Thank you for your opinion. I feel it is emotional, not legal. I (as well as the high court) feel that there is no possibility or justification for such a claim or disciplinary action. Please go through if you get the time.
http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/4520/1/WP27374-13-23-06-2014.pdf
From India, Salem
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Thank you for your opinion. I feel it is emotional, not legal. I (as well as the high court) feel that there is no possibility or justification for such a claim or disciplinary action. Please go through if you get the time.
http://judgmenthck.kar.nic.in/judgmentsdsp/bitstream/123456789/4520/1/WP27374-13-23-06-2014.pdf
From India, Salem
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1. He clearly mentioned in his resume about his first government job and VRS.
2. How can a 2nd PSU initiate disciplinary action against an employee for his unbecoming conduct by hiding information/facts of the case? The employee claimed ex gratia on the condition that he would not join any other government/PSU to derive undue benefit from his past service. In fact, the employee has proven to be dishonest and unreliable, even for the current PSU.
From India, Hyderabad
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2. How can a 2nd PSU initiate disciplinary action against an employee for his unbecoming conduct by hiding information/facts of the case? The employee claimed ex gratia on the condition that he would not join any other government/PSU to derive undue benefit from his past service. In fact, the employee has proven to be dishonest and unreliable, even for the current PSU.
From India, Hyderabad
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Dear Sir,
It is not an extraordinary act of kindness. They paid the ex-gratia to avoid paying future salary. They gained a lot by the person leaving the company and want the ex-gratia back as well. Where is the justification in that? They have not contributed to the person getting the job in the second PSU.
Many courts, including the Supreme Court, have held that such a condition is not valid. The Hyderabad division bench has held that a VRS person can join another PSU in open competition, and it is his fundamental right.
Regarding honesty, the person never misrepresented facts on his resume. The second PSU had not established any policy. How can they penalize a person for it? If they had clearly stated the condition in their advertisement or if the person had not disclosed it, then he could be penalized. Otherwise, how can he be charged?
Thank you.
From India, Salem
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It is not an extraordinary act of kindness. They paid the ex-gratia to avoid paying future salary. They gained a lot by the person leaving the company and want the ex-gratia back as well. Where is the justification in that? They have not contributed to the person getting the job in the second PSU.
Many courts, including the Supreme Court, have held that such a condition is not valid. The Hyderabad division bench has held that a VRS person can join another PSU in open competition, and it is his fundamental right.
Regarding honesty, the person never misrepresented facts on his resume. The second PSU had not established any policy. How can they penalize a person for it? If they had clearly stated the condition in their advertisement or if the person had not disclosed it, then he could be penalized. Otherwise, how can he be charged?
Thank you.
From India, Salem
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Good Learning Curve for us/.. keep sharing post like this with closures..
From India, Hyderabad
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From India, Hyderabad
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Mr. Anonymous,
I hope you very well understand that reading between the lines can't bring perfection in knowledge. Had you read the Government/ PSU Conduct & Disciplinary Rules, you would not have stated that my opinion was emotional, not legal. Rules of Government/ PSUs are different than the CDA Rules of private companies. Whenever I say something about Government organisations or their PSUs, I don't try to make an admixture of Government Rules, private companies’ rules or form opinion merely with reference to the court judgments, ignoring the relevant rules, circumstances and the nature of the case. Any court judgment is case specific depending upon the characteristics, nature and circumstances of the case and does not have universal application on all cases of all the organisation with different nature, characteristics and circumstances of the case. In the specific case that you referred, you have perhaps not noticed that the main challenge was with reference to the competence of the authority, who initiated the disciplinary proceedings, not the organisation, which initiated the proceedings. Government/ PSU Rules very clearly lay down that the employee can be proceeded against on account of any offence related to his past service even in another Government/ PSU organisation. The delegated competent authority in current employment according to the status of the employee acts as the disciplinary authority and decides the case, not the previous employer.
So, my advice to you is better re-read the judgment with specific reference to rules and delegations applicable in th Government/PSU orgnisations. Any PSU, may that works as a company, can not deviate from the Government rules and regulations, besides following statutory rules meant for the registered limited companies.
From India, Delhi
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I hope you very well understand that reading between the lines can't bring perfection in knowledge. Had you read the Government/ PSU Conduct & Disciplinary Rules, you would not have stated that my opinion was emotional, not legal. Rules of Government/ PSUs are different than the CDA Rules of private companies. Whenever I say something about Government organisations or their PSUs, I don't try to make an admixture of Government Rules, private companies’ rules or form opinion merely with reference to the court judgments, ignoring the relevant rules, circumstances and the nature of the case. Any court judgment is case specific depending upon the characteristics, nature and circumstances of the case and does not have universal application on all cases of all the organisation with different nature, characteristics and circumstances of the case. In the specific case that you referred, you have perhaps not noticed that the main challenge was with reference to the competence of the authority, who initiated the disciplinary proceedings, not the organisation, which initiated the proceedings. Government/ PSU Rules very clearly lay down that the employee can be proceeded against on account of any offence related to his past service even in another Government/ PSU organisation. The delegated competent authority in current employment according to the status of the employee acts as the disciplinary authority and decides the case, not the previous employer.
So, my advice to you is better re-read the judgment with specific reference to rules and delegations applicable in th Government/PSU orgnisations. Any PSU, may that works as a company, can not deviate from the Government rules and regulations, besides following statutory rules meant for the registered limited companies.
From India, Delhi
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Dear Srinivas,
Probably, you tried to do something else other than what you mentioned. In the first part of your question, you seemed to have questioned, "how 2nd PSU can initiate disciplinary action against the employee for his unbecoming behavior by hiding information/facts of the case while claiming ex gratia on the condition that he would not join any other Govt/PSU in an attempt to derive undue benefit from his past service. However, in the second part of the same paragraph, you stated, "In fact, the employee proved to be a dishonest and unreliable person even for the present PSU." So, both parts of the second paragraph give a sense of contradiction to each other. I hope I clarified your point in my previous post in response to the supplementary post of the querist, explaining how the 2nd PSU can initiate disciplinary action against the employee.
Secondly, merely mentioning in his resume about his first government job and VRS does not absolve him of his irregularity in falsely declaring that he would not join any Government/PSU after VRS. Government rules, being of a statutory nature, are sacrosanct and must be followed scrupulously by employees of the Government/PSUs.
From India, Delhi
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Probably, you tried to do something else other than what you mentioned. In the first part of your question, you seemed to have questioned, "how 2nd PSU can initiate disciplinary action against the employee for his unbecoming behavior by hiding information/facts of the case while claiming ex gratia on the condition that he would not join any other Govt/PSU in an attempt to derive undue benefit from his past service. However, in the second part of the same paragraph, you stated, "In fact, the employee proved to be a dishonest and unreliable person even for the present PSU." So, both parts of the second paragraph give a sense of contradiction to each other. I hope I clarified your point in my previous post in response to the supplementary post of the querist, explaining how the 2nd PSU can initiate disciplinary action against the employee.
Secondly, merely mentioning in his resume about his first government job and VRS does not absolve him of his irregularity in falsely declaring that he would not join any Government/PSU after VRS. Government rules, being of a statutory nature, are sacrosanct and must be followed scrupulously by employees of the Government/PSUs.
From India, Delhi
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Dear Anonymous,
Your second supplementary post is merely an assumption or wishful thinking. You could have better checked with the legal meaning of ex-gratia before stating that it is "not an extraordinary act of kindness." Undue benefit is not allowed legally, but only in cases of an extraordinary act of kindness in deference to the regular service rules.
From India, Delhi
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Your second supplementary post is merely an assumption or wishful thinking. You could have better checked with the legal meaning of ex-gratia before stating that it is "not an extraordinary act of kindness." Undue benefit is not allowed legally, but only in cases of an extraordinary act of kindness in deference to the regular service rules.
From India, Delhi
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Dear Sir,
I would like to share the legal position with respect to the condition that "I will not be allowed to join another PSU. If I wish to join, I will refund the ex-gratia"
The above condition violates the Contract act section 27 and 73.
27. Agreement in restraint of trade, void.—Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. —Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
73. Compensation for loss or damage caused by breach of contract.- When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
Kerala High Court – State of Kerala Vs United Shippers and Dredgers Ltd, 1982KLJ430, due to breach of contract, the government did not suffer any legal injury or loss, so no compensation is payable as per contract act. Even if it is assumed that the person has breached the contract, the previous PSU has not suffered any “legal injury” or loss (but gained enormously). So, their claim is invalid.
“7...If the breach has not resulted in any harm, loss or damage to the other party, the question of recompensating him or restoring to him something he has lost would not arise.
8.....section 75 would necessarily indicate that the party who complains of a breach must have really suffered some loss or damage apart from being faced with the mere act of breach of contract....If in any case the breach has not resulted in or caused any loss or damage to a party, he cannot claim compensation”
Contract act section 27
Gauhati High Court – Oil India Ltd Vs Dilip Kumar Goswami, (2000)IILLJ415 Gau, No employer can restrict future job of an ex- employee.
“The employer cannot prescribe any term and condition in order to restrict future avocation of an employee after retirement. The bar for appointment after retirement may suit the employment policy of the Public Sector Undertakings and they may by way of policy decide not to appoint any retired employee of any other Public Sector Undertakings.
13. The clarification given by the Department of Public Enterprises in Column-5 shows that the Management of Public Enterprises have been asked to exercise its own managerial discretion and prudence while disposing of the cases of voluntary retirement. The clarification further requires the Management to invoke the powers of office memorandum dated December 14, 1982, January 25, 1998 and June 23, 1998 (sic) issued by Department of Public Enterprises if they find that an employee seeking voluntary retirement has opted for a job in any other Public Sector Undertaking. This condition also appears to be contrary to the provisions of Section 27 of the Indian Contract Act. An employee going on voluntary retirement and not taking any job in any Public Sector Undertaking will be entitled to full benefits under the Voluntary Retirement Scheme, but the said benefits will be restricted to certain amounts only if such employee takes fresh employment after retirement. The clarification given to this effect cannot be said to be in keeping with the spirit of the provisions of Section 27 of the Indian Contract Act. The Company while disposing of a request for voluntary retirement cannot discriminate in respect of benefits to which an employee is entitled to on such retirement on consideration that the employee concerned was going to take over a job in some other company. A bare reading of the guideline/circular shows that this was issued without any authority of law and against the basic principles behind 'voluntary retirement'.”
Hydrabad Div Bench – S.Rami Reddy Vs Vice-Chairman and Managing Director, Andra Pradesh State Irrigation Development Corporation Limited, 2003(4)ALD609. There is no ban on VRS optees to join any other PSU in open competition
“31. According to the learned counsel, Clause 8 of G.O. Ms. No. 16, dated 22-3-2001, which requires the identified employee to give an undertaking to the effect that he would not seek re-employment in other Government undertakings, is arbitrary and illegal for it violates the provisions of Articles 16 and 21 of the Constitution of India, and in support of this submission, he placed reliance on the judgement of the Gauhati High Court reported in Oil India Ltd. v. Dilip Kumar Goswami, 1999 (7) SLR 494.
76. The effect of the other contention advanced by the learned counsel for the petitioners that the condition in the impugned notice insofar as it mandates the identified employee who opts for VRS to give an undertaking that he shall not be eligible for re-employment in any Government Departments and Public Sector Undertakings, which is in consonance with sub-clause (8) of Clause 8 of G.O. Ms. No. 16, dated 22-3-2001, is arbitrary inasmuch as it takes away their right to livelihood enshrined under Article 21 of the Constitution of India, is also liable to be rejected, inasmuch, the learned single Judge of this Court, having considered this contention, in the above judgement, held thus: In the considered view of this Court, Clause 8(8) of G.O. Ms. No. 16, dated 22-3-2001 suffers from no infirmity. It does not deprive persons, who have opted for Voluntary Retirement Scheme from competing by way of direct recruitment to any Public Office.
77. It should be noted that the impugned condition only prohibits the petitioners from taking re-employment in Government Departments/Public Sector Undertakings. They are not precluded from taking employment in private organizations or compete by way of direct recruitment to public offices.”
Supreme court – Gouri Shankar Ghosh Hazara Vs Hindustan Copper, 8-5-2001, A VRS optee can join another PSU, he will be eligible for all VRS benefits
“It is clear that there was as such no embargo on an employee of a public sector undertaking being employed by another public sector undertaking”
Gujarat High Court – Lalbhai Dalpatbhai & Co Vs Chittaranjan Chandulal Pandya, AIR 1996 Guj 189. Restriction on employee after termination of employment is not valid. Employee does not have any bargaining power and has to sign on dotted line.
“9....If it is not going to benefit ”the employer in any legitimate manner, the court would not injunct the employee from exercising his skill, training and knowledge merely because the employee has agreed to it”
Gujarat High Court – Sandhya Organic Chemicals P Ltd Vs United Phosphorous Ltd, AIR 1997 Guj 177. as per contract act, service covenant beyond service period is not valid.
“16....The supreme court has also ruled that under section 27 of the contract act, a service covenant beyond the termination of the service is void”
Supreme court – Superintendence Company of India Vs Krishnan Murgai, AIR 1980 SC 1717. Post service conditions are not valid. Even partial condition is not valid. Inequality of bargaining power with employees. Harsh and oppressive conditions.
“29.A contract, which has for its object a restraint of trade, is prima facie void....whether the restraint was general or partial, unqualified or qualified, if it was in the nature of a restraint of trade, it was void.
32.....If the agreement puts a restraint even though partial, it was void and therefore, the contract must be treated as one which can not be enforced.
53....Not a Indian Decision has been brought to our notice where an injunction has been granted against an employee after the termination of his employment.
58....If the covenant is to operate after the termination of services, or it is too widely worded, the court may refuse to enforce it.
59....there is inequality of bargaining power between the parties, indeed no bargaining may occur because the employee is presented with a standard form of contract to accept or reject... ”
The Chairman has held in Annexure A, that the language of the undertaking the petitioner is clear (Annexure-C), whereas, it is a pre-printed format which the petitioner had to sign under compulsion of retrenchment.
Supreme court – Niranjan Shankar Golikari Vs Century Spinning, AIR 1967 SC 1098, negative covenant in a service agreement is void. Negative covenant after termination of contract is not valid.
Supreme court – Percept D Mark (India) Ltd Vs Zaheer Khan, AIR 2006 SC 3426, any condition after termination of contract will be invalid.
“55. On the pleading contained in the arbitration petition, there can be no escape from the conclusion that what the appellant sought to enforce was a negative covenant which, according to the appellant, survived the expiry of the agreement. This, the High Court has rightly held is impermissible as such clause which is sought to be enforced after the term of the contract is prima facie void under section 27 of the contract Act”
268. Supreme Court of India : Bank Of India & Ors vs O.P. Swarnakar Etc on 17 December, 2002, Bench: H Sema, S Sinha on the topic of VRS
..... It is difficult to accept the contention raised in the Bar that a contract of employment would not be governed by the Indian Contract Act. A contract of employment is also a subject matter of contract. Unless governed by a statute or statutory rules, the provisions of the Indian Contract Act would be only applicable at the formulation of the contract as also the determination thereof.
From India, Salem
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I would like to share the legal position with respect to the condition that "I will not be allowed to join another PSU. If I wish to join, I will refund the ex-gratia"
The above condition violates the Contract act section 27 and 73.
27. Agreement in restraint of trade, void.—Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. —Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
73. Compensation for loss or damage caused by breach of contract.- When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
Kerala High Court – State of Kerala Vs United Shippers and Dredgers Ltd, 1982KLJ430, due to breach of contract, the government did not suffer any legal injury or loss, so no compensation is payable as per contract act. Even if it is assumed that the person has breached the contract, the previous PSU has not suffered any “legal injury” or loss (but gained enormously). So, their claim is invalid.
“7...If the breach has not resulted in any harm, loss or damage to the other party, the question of recompensating him or restoring to him something he has lost would not arise.
8.....section 75 would necessarily indicate that the party who complains of a breach must have really suffered some loss or damage apart from being faced with the mere act of breach of contract....If in any case the breach has not resulted in or caused any loss or damage to a party, he cannot claim compensation”
Contract act section 27
Gauhati High Court – Oil India Ltd Vs Dilip Kumar Goswami, (2000)IILLJ415 Gau, No employer can restrict future job of an ex- employee.
“The employer cannot prescribe any term and condition in order to restrict future avocation of an employee after retirement. The bar for appointment after retirement may suit the employment policy of the Public Sector Undertakings and they may by way of policy decide not to appoint any retired employee of any other Public Sector Undertakings.
13. The clarification given by the Department of Public Enterprises in Column-5 shows that the Management of Public Enterprises have been asked to exercise its own managerial discretion and prudence while disposing of the cases of voluntary retirement. The clarification further requires the Management to invoke the powers of office memorandum dated December 14, 1982, January 25, 1998 and June 23, 1998 (sic) issued by Department of Public Enterprises if they find that an employee seeking voluntary retirement has opted for a job in any other Public Sector Undertaking. This condition also appears to be contrary to the provisions of Section 27 of the Indian Contract Act. An employee going on voluntary retirement and not taking any job in any Public Sector Undertaking will be entitled to full benefits under the Voluntary Retirement Scheme, but the said benefits will be restricted to certain amounts only if such employee takes fresh employment after retirement. The clarification given to this effect cannot be said to be in keeping with the spirit of the provisions of Section 27 of the Indian Contract Act. The Company while disposing of a request for voluntary retirement cannot discriminate in respect of benefits to which an employee is entitled to on such retirement on consideration that the employee concerned was going to take over a job in some other company. A bare reading of the guideline/circular shows that this was issued without any authority of law and against the basic principles behind 'voluntary retirement'.”
Hydrabad Div Bench – S.Rami Reddy Vs Vice-Chairman and Managing Director, Andra Pradesh State Irrigation Development Corporation Limited, 2003(4)ALD609. There is no ban on VRS optees to join any other PSU in open competition
“31. According to the learned counsel, Clause 8 of G.O. Ms. No. 16, dated 22-3-2001, which requires the identified employee to give an undertaking to the effect that he would not seek re-employment in other Government undertakings, is arbitrary and illegal for it violates the provisions of Articles 16 and 21 of the Constitution of India, and in support of this submission, he placed reliance on the judgement of the Gauhati High Court reported in Oil India Ltd. v. Dilip Kumar Goswami, 1999 (7) SLR 494.
76. The effect of the other contention advanced by the learned counsel for the petitioners that the condition in the impugned notice insofar as it mandates the identified employee who opts for VRS to give an undertaking that he shall not be eligible for re-employment in any Government Departments and Public Sector Undertakings, which is in consonance with sub-clause (8) of Clause 8 of G.O. Ms. No. 16, dated 22-3-2001, is arbitrary inasmuch as it takes away their right to livelihood enshrined under Article 21 of the Constitution of India, is also liable to be rejected, inasmuch, the learned single Judge of this Court, having considered this contention, in the above judgement, held thus: In the considered view of this Court, Clause 8(8) of G.O. Ms. No. 16, dated 22-3-2001 suffers from no infirmity. It does not deprive persons, who have opted for Voluntary Retirement Scheme from competing by way of direct recruitment to any Public Office.
77. It should be noted that the impugned condition only prohibits the petitioners from taking re-employment in Government Departments/Public Sector Undertakings. They are not precluded from taking employment in private organizations or compete by way of direct recruitment to public offices.”
Supreme court – Gouri Shankar Ghosh Hazara Vs Hindustan Copper, 8-5-2001, A VRS optee can join another PSU, he will be eligible for all VRS benefits
“It is clear that there was as such no embargo on an employee of a public sector undertaking being employed by another public sector undertaking”
Gujarat High Court – Lalbhai Dalpatbhai & Co Vs Chittaranjan Chandulal Pandya, AIR 1996 Guj 189. Restriction on employee after termination of employment is not valid. Employee does not have any bargaining power and has to sign on dotted line.
“9....If it is not going to benefit ”the employer in any legitimate manner, the court would not injunct the employee from exercising his skill, training and knowledge merely because the employee has agreed to it”
Gujarat High Court – Sandhya Organic Chemicals P Ltd Vs United Phosphorous Ltd, AIR 1997 Guj 177. as per contract act, service covenant beyond service period is not valid.
“16....The supreme court has also ruled that under section 27 of the contract act, a service covenant beyond the termination of the service is void”
Supreme court – Superintendence Company of India Vs Krishnan Murgai, AIR 1980 SC 1717. Post service conditions are not valid. Even partial condition is not valid. Inequality of bargaining power with employees. Harsh and oppressive conditions.
“29.A contract, which has for its object a restraint of trade, is prima facie void....whether the restraint was general or partial, unqualified or qualified, if it was in the nature of a restraint of trade, it was void.
32.....If the agreement puts a restraint even though partial, it was void and therefore, the contract must be treated as one which can not be enforced.
53....Not a Indian Decision has been brought to our notice where an injunction has been granted against an employee after the termination of his employment.
58....If the covenant is to operate after the termination of services, or it is too widely worded, the court may refuse to enforce it.
59....there is inequality of bargaining power between the parties, indeed no bargaining may occur because the employee is presented with a standard form of contract to accept or reject... ”
The Chairman has held in Annexure A, that the language of the undertaking the petitioner is clear (Annexure-C), whereas, it is a pre-printed format which the petitioner had to sign under compulsion of retrenchment.
Supreme court – Niranjan Shankar Golikari Vs Century Spinning, AIR 1967 SC 1098, negative covenant in a service agreement is void. Negative covenant after termination of contract is not valid.
Supreme court – Percept D Mark (India) Ltd Vs Zaheer Khan, AIR 2006 SC 3426, any condition after termination of contract will be invalid.
“55. On the pleading contained in the arbitration petition, there can be no escape from the conclusion that what the appellant sought to enforce was a negative covenant which, according to the appellant, survived the expiry of the agreement. This, the High Court has rightly held is impermissible as such clause which is sought to be enforced after the term of the contract is prima facie void under section 27 of the contract Act”
268. Supreme Court of India : Bank Of India & Ors vs O.P. Swarnakar Etc on 17 December, 2002, Bench: H Sema, S Sinha on the topic of VRS
..... It is difficult to accept the contention raised in the Bar that a contract of employment would not be governed by the Indian Contract Act. A contract of employment is also a subject matter of contract. Unless governed by a statute or statutory rules, the provisions of the Indian Contract Act would be only applicable at the formulation of the contract as also the determination thereof.
From India, Salem
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I would like to add further to the discussion that if such were the case, no ex-serviceman could join any PSU or government jobs after taking premature retirement from the armed forces with F&F dues. So, restricting a PSU employee from pursuing any vocation after termination would amount to discrimination.
From India, Pune
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From India, Pune
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Was ex gratia paid to all those who took VRS? When you left by VRS, how many years of service did you put in? The prior condition that if you opt for VRS and take ex gratia, then you cannot get/seek employment in the State Government/PSU is legally valid. You will have to refund the ex gratia amount. You can quote various judgments, but specific details of why the judgment has come need analysis. I agree with the learned member Shri Dhingra in his opinion. Your current employer will take action when the previous PSU writes to them. The source of PSU finance is basically the Government, and the rules are by and large common.
From India, Pune
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From India, Pune
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Was ex gratia paid to all those who took VRS? - Yes
When you left by VRS, how many years of service did you put in? - 16
The prior condition that if you opt for VRS and take ex gratia, then you cannot get/seek employment in State Government/PSU is valid legally. It is violating contract act 27 and a number of supreme court decisions (no employer can restrict an employee after termination).
You will have to refund the ex gratia amount. It is violating contract act 73 (no loss suffered by PSU 1).
You can quote various judgments, but specific details of why the judgment has come need analysis - yes.
I agree with learned member Shri Dhingra in his opinion - fine.
Your current employer will take action when the previous PSU writes to them. The rules state "dishonesty against the company and within company premises" is misconduct. If the employer is allowed to initiate disciplinary action for any problem outside the company, no employee will be safe (like housing loan default, credit card default, phone bill, house tax, etc. - which are all pertaining to Government agencies).
The source of PSU finance is basically the Government, and rules are by and large common - yes. But, any contract has to be signed as per legal provisions. Any contract violating the contract act is invalid and not enforceable.
From India, Salem
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When you left by VRS, how many years of service did you put in? - 16
The prior condition that if you opt for VRS and take ex gratia, then you cannot get/seek employment in State Government/PSU is valid legally. It is violating contract act 27 and a number of supreme court decisions (no employer can restrict an employee after termination).
You will have to refund the ex gratia amount. It is violating contract act 73 (no loss suffered by PSU 1).
You can quote various judgments, but specific details of why the judgment has come need analysis - yes.
I agree with learned member Shri Dhingra in his opinion - fine.
Your current employer will take action when the previous PSU writes to them. The rules state "dishonesty against the company and within company premises" is misconduct. If the employer is allowed to initiate disciplinary action for any problem outside the company, no employee will be safe (like housing loan default, credit card default, phone bill, house tax, etc. - which are all pertaining to Government agencies).
The source of PSU finance is basically the Government, and rules are by and large common - yes. But, any contract has to be signed as per legal provisions. Any contract violating the contract act is invalid and not enforceable.
From India, Salem
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Well, if you are so sure about the legal position, all the best. People have given opinions. Remember, PSUs also have their legal advisors, and no such term or condition will be approved by the respective State Government if it violates the law. This condition of refunding ex gratia is seen in VRS offers made by various state PSUs.
From India, Pune
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From India, Pune
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I need a transfer letter format for the sister concern company as new employees from my company are being transferred from the parent company to the sister concern. Request you to please send me the format for that.
Thank you.
From India, Mumbai
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Thank you.
From India, Mumbai
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Nathrao ji,
Sorry for not appearing on the site for about 50 days due to ill health on account of post-operative problems and other preoccupations. Also, I am thankful to you for agreeing with my viewpoint.
Anyway, let the anonymous author be happy with his own contentions. As per my guess, it was not his practical or personal problem. Rather, probably as a law student, it can be his moot court problem or a regular law school essay on a particular theoretical problem with reference to the citations he put. At Lawyers Club India, I usually avoid responding to such students' exercises, specifically of the anonymous authors, as they start putting a lot of supplementary questions resulting in a waste of precious time of other members just to solve their own academic exercises.
Here, I thought most people come with their own personal or official problems to expect some guidance in doing things appropriately. So, I tried to solve his problem by virtue of my knowledge and experience.
Had he some real problem of his own, he would have come forward with the real situation faced by him along with the case history, other backgrounds, and the present status of his case with the whole lot of references that he subsequently brought one by one as well as his own contentions to call for opinions of other experts with practical experience. These moot court problems or the academic exercises have nothing to do with the practical aspects of law. These exercises are meant just to make mock exercises of mock courts to know how effectively, rightly or wrongly, the law students can justify their point. You would have noticed, initially he simply put an academic type of question without discussing the background of his case, circumstances, and characteristics of the case if he really would have faced such a problem.
So, let him be happy with his own contentions and try his luck practically in a real court of law with such type of his own contentions when he becomes a qualified lawyer.
From India, Delhi
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Sorry for not appearing on the site for about 50 days due to ill health on account of post-operative problems and other preoccupations. Also, I am thankful to you for agreeing with my viewpoint.
Anyway, let the anonymous author be happy with his own contentions. As per my guess, it was not his practical or personal problem. Rather, probably as a law student, it can be his moot court problem or a regular law school essay on a particular theoretical problem with reference to the citations he put. At Lawyers Club India, I usually avoid responding to such students' exercises, specifically of the anonymous authors, as they start putting a lot of supplementary questions resulting in a waste of precious time of other members just to solve their own academic exercises.
Here, I thought most people come with their own personal or official problems to expect some guidance in doing things appropriately. So, I tried to solve his problem by virtue of my knowledge and experience.
Had he some real problem of his own, he would have come forward with the real situation faced by him along with the case history, other backgrounds, and the present status of his case with the whole lot of references that he subsequently brought one by one as well as his own contentions to call for opinions of other experts with practical experience. These moot court problems or the academic exercises have nothing to do with the practical aspects of law. These exercises are meant just to make mock exercises of mock courts to know how effectively, rightly or wrongly, the law students can justify their point. You would have noticed, initially he simply put an academic type of question without discussing the background of his case, circumstances, and characteristics of the case if he really would have faced such a problem.
So, let him be happy with his own contentions and try his luck practically in a real court of law with such type of his own contentions when he becomes a qualified lawyer.
From India, Delhi
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Mr. Selvan,
Thank you for showing concern for my health. I am recovering gradually. I shall view the link when I find it convenient and am comfortable sitting for long periods before my desktop. Currently, I can only say that the Contract Act is not only the basis for regulating all appointments but should also be considered a supplementary tool to the service rules.
Regarding the legal aspect of the case, it is rare to find similarities between cases, as this depends on the nature, characteristics, and the ground realities of the cases being compared.
From India, Delhi
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Thank you for showing concern for my health. I am recovering gradually. I shall view the link when I find it convenient and am comfortable sitting for long periods before my desktop. Currently, I can only say that the Contract Act is not only the basis for regulating all appointments but should also be considered a supplementary tool to the service rules.
Regarding the legal aspect of the case, it is rare to find similarities between cases, as this depends on the nature, characteristics, and the ground realities of the cases being compared.
From India, Delhi
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I came across an article by an eminent SC lawyer, explaining in detail why an employer cannot enforce ANY condition on an employee after the period of employment (after retirement, resignation, dismissal, VRS, etc.). It is applicable for all cases of bond, undertaking, appointment order, or any other type of promise to do or not do something like not doing some business, not joining a competitor, not joining another PSU, etc. This article will be very useful for many people.
From India, Salem
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From India, Salem
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Mr. Sas,
You should not forget that the condition was imposed prior to leaving service and that the agreement of the employee with his employer was sacrosanct for the purpose of service laws read with the contract act. However, if you believe that an article by some lawyer can render the law as null and void, nobody prohibits you from doing so, provided you are able to convince the judge that there is no need to follow the law of the land in view of such an article.
From India, Delhi
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You should not forget that the condition was imposed prior to leaving service and that the agreement of the employee with his employer was sacrosanct for the purpose of service laws read with the contract act. However, if you believe that an article by some lawyer can render the law as null and void, nobody prohibits you from doing so, provided you are able to convince the judge that there is no need to follow the law of the land in view of such an article.
From India, Delhi
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Mr. Sas,
In Section 27 of the Contract Act, there is an exception as well, which the article has referred to but which you intended to ignore. I won't make it easy for you by providing a ready-made answer to your academic query. I would only advise you to reread at least the full part of the paragraphs on the 2nd page of the article that refer to Justice A.P. Sen's judgment.
Moreover, I have already clarified that in your case, the condition was imposed prior to leaving service and that the agreement of the employee with his employer was sacrosanct for the purpose of service laws as read with the Contract Act.
However, if you believe that an article by some lawyer can render the law null and void, that is a sheer misunderstanding. A judge in the case is not bound to follow the text of any such article. I stress once again, it is not any article written by any Supreme Court lawyer based on any judgment that could render the law of the land null and void. It is the reality of the situation, characteristics, circumstances, etc., attached to the case in particular that allow the law to be interpreted correctly in the courts of law.
From India, Delhi
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In Section 27 of the Contract Act, there is an exception as well, which the article has referred to but which you intended to ignore. I won't make it easy for you by providing a ready-made answer to your academic query. I would only advise you to reread at least the full part of the paragraphs on the 2nd page of the article that refer to Justice A.P. Sen's judgment.
Moreover, I have already clarified that in your case, the condition was imposed prior to leaving service and that the agreement of the employee with his employer was sacrosanct for the purpose of service laws as read with the Contract Act.
However, if you believe that an article by some lawyer can render the law null and void, that is a sheer misunderstanding. A judge in the case is not bound to follow the text of any such article. I stress once again, it is not any article written by any Supreme Court lawyer based on any judgment that could render the law of the land null and void. It is the reality of the situation, characteristics, circumstances, etc., attached to the case in particular that allow the law to be interpreted correctly in the courts of law.
From India, Delhi
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Dear Dhingra Sir,
Forget all the cases. Will the constitution of India and contract law enacted by the parliament hold superior position to the circulars, guidelines formed by by some persons or companies (may be due to ignorance or due to ulterior motives etc)?
Central Government Act
Article 19(1)(g) in The Constitution Of India 1949
(g) to practise any profession, or to carry on any occupation, trade or business
Central Government Act
Article 21 in The Constitution Of India 1949
21. Protection of life and personal liberty No person shall be deprived of his life or personal liberty except according to procedure established by law
Central Government Act
Section 27 in The Indian Contract Act, 1872
27. Agreement in restraint of trade, void.—Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. —Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void." Exception 1.—Saving of agreement not to carry on business of which goodwill is sold.—One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business. 16 [***]
Section 73 in The Indian Contract Act, 1872
73. Compensation for loss or damage caused by breach of contract.—When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. —When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it." Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
I have published the writ petition I myself prepared against my first PSU who instigated my second PSU to take disciplinary action against me and caused my dismissal. I am demanding reinstatement due to non payment of notice period salary and causing my dismissal. Pl. visit tiny.cc/sailwp when you are free. I have provided links to more than 40 cases where it has been held that an employer has no say on the employee after the termination of employment.
Just because an employee has counter signed an appointment order or given an undertaking it does not become enforceable. It has to be reasonable and justifiable (like protection of trade secret, protection from competition etc).
From India, Salem
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Forget all the cases. Will the constitution of India and contract law enacted by the parliament hold superior position to the circulars, guidelines formed by by some persons or companies (may be due to ignorance or due to ulterior motives etc)?
Central Government Act
Article 19(1)(g) in The Constitution Of India 1949
(g) to practise any profession, or to carry on any occupation, trade or business
Central Government Act
Article 21 in The Constitution Of India 1949
21. Protection of life and personal liberty No person shall be deprived of his life or personal liberty except according to procedure established by law
Central Government Act
Section 27 in The Indian Contract Act, 1872
27. Agreement in restraint of trade, void.—Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. —Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void." Exception 1.—Saving of agreement not to carry on business of which goodwill is sold.—One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business. 16 [***]
Section 73 in The Indian Contract Act, 1872
73. Compensation for loss or damage caused by breach of contract.—When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. —When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it." Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
I have published the writ petition I myself prepared against my first PSU who instigated my second PSU to take disciplinary action against me and caused my dismissal. I am demanding reinstatement due to non payment of notice period salary and causing my dismissal. Pl. visit tiny.cc/sailwp when you are free. I have provided links to more than 40 cases where it has been held that an employer has no say on the employee after the termination of employment.
Just because an employee has counter signed an appointment order or given an undertaking it does not become enforceable. It has to be reasonable and justifiable (like protection of trade secret, protection from competition etc).
From India, Salem
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Mr. Sas,
You are free to assume anything. Nobody can prohibit you from doing so.
If you feel that the agreement was violative of any constitutional provision, why not file a case in the competent court of law to get a judgment to confirm your perception? Also, if the employee is aggrieved by disciplinary action despite deriving undue benefits for no work from his previous employer, you may take up his case with the CAT/competent court to confirm your opinion. But if you insist on Constitutional provisions and Sec. 27 of the Contract Act, do not forget that besides departmental disciplinary action, he can also be proceeded against under the provisions of CrPC and IPC for deriving undue profit without providing any service.
Rather, you or the said employee should be thankful to the departmental authorities for choosing only disciplinary action instead of filing an FIR with the police.
To be frank, if there is any truth in this case (not a hypothetical case) and had I been at the helm of affairs, I would have definitely taken action to put such a person behind bars under the provisions of the law. In that case, I would have liked to see how the Constitution of India or your interpretation of Sec. 27 of the Contract Act would come to the rescue.
From India, Delhi
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You are free to assume anything. Nobody can prohibit you from doing so.
If you feel that the agreement was violative of any constitutional provision, why not file a case in the competent court of law to get a judgment to confirm your perception? Also, if the employee is aggrieved by disciplinary action despite deriving undue benefits for no work from his previous employer, you may take up his case with the CAT/competent court to confirm your opinion. But if you insist on Constitutional provisions and Sec. 27 of the Contract Act, do not forget that besides departmental disciplinary action, he can also be proceeded against under the provisions of CrPC and IPC for deriving undue profit without providing any service.
Rather, you or the said employee should be thankful to the departmental authorities for choosing only disciplinary action instead of filing an FIR with the police.
To be frank, if there is any truth in this case (not a hypothetical case) and had I been at the helm of affairs, I would have definitely taken action to put such a person behind bars under the provisions of the law. In that case, I would have liked to see how the Constitution of India or your interpretation of Sec. 27 of the Contract Act would come to the rescue.
From India, Delhi
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Mr. PS DHINGRA,
You gave your views (which had only emotional content and not any legal basis) voluntarily. When your views are found to have no legal basis, you have started making personal accusations against me. I have already proved that I have done nothing wrong in the Karnataka High Court, arguing myself. If you have an open mind, please read the judgment in the link below. You may think you know more than the High Court Judge. Nobody stops you.
http://judgmenthck.kar.nic.in/judgme...23-06-2014.pdf
Lastly, I have started this discussion, and I am the owner of this thread. You might have held a post of "helm of affairs," but your views need not always be right. If I had committed fraud, embezzlement, etc., there was nothing stopping my employer or previous employer from filing an FIR. The maximum that can be done against me was a civil suit for recovery, which will not even be admitted as it is well beyond the limitation period as per law (which was also confirmed by the Karnataka High Court).
From India, Salem
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You gave your views (which had only emotional content and not any legal basis) voluntarily. When your views are found to have no legal basis, you have started making personal accusations against me. I have already proved that I have done nothing wrong in the Karnataka High Court, arguing myself. If you have an open mind, please read the judgment in the link below. You may think you know more than the High Court Judge. Nobody stops you.
http://judgmenthck.kar.nic.in/judgme...23-06-2014.pdf
Lastly, I have started this discussion, and I am the owner of this thread. You might have held a post of "helm of affairs," but your views need not always be right. If I had committed fraud, embezzlement, etc., there was nothing stopping my employer or previous employer from filing an FIR. The maximum that can be done against me was a civil suit for recovery, which will not even be admitted as it is well beyond the limitation period as per law (which was also confirmed by the Karnataka High Court).
From India, Salem
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Dear SAS1234,
Here, the members are providing service for the queries on a voluntary basis. This site is mainly for those who are seeking guidance only, and those who are guiding are not receiving any benefits except gaining some knowledge by sharing.
Let us first understand one thing: whoever is asking for guidance is simply raising a question. Those who are interested and able to guide are offering their replies. Here, no one is compelling you to follow the advice given by our members.
Furthermore, the person posing the query is never obligated to follow the advice and has the right to act on their own judgment. If you are not interested and unwilling to accept the reply, it is up to you, and no one can compel anyone to follow or not to follow. Those seeking advice who are completely confused and unable to proceed further may gain some insight and decide how to proceed after receiving replies from our knowledgeable members.
If you find the replies given by our members unacceptable, you are free to leave without any need for argument.
Wishing you all the best, and you can provide details of the further course of action on this issue so that it can be a learning experience for our members and beneficial for those facing similar situations.
From India, Kumbakonam
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Here, the members are providing service for the queries on a voluntary basis. This site is mainly for those who are seeking guidance only, and those who are guiding are not receiving any benefits except gaining some knowledge by sharing.
Let us first understand one thing: whoever is asking for guidance is simply raising a question. Those who are interested and able to guide are offering their replies. Here, no one is compelling you to follow the advice given by our members.
Furthermore, the person posing the query is never obligated to follow the advice and has the right to act on their own judgment. If you are not interested and unwilling to accept the reply, it is up to you, and no one can compel anyone to follow or not to follow. Those seeking advice who are completely confused and unable to proceed further may gain some insight and decide how to proceed after receiving replies from our knowledgeable members.
If you find the replies given by our members unacceptable, you are free to leave without any need for argument.
Wishing you all the best, and you can provide details of the further course of action on this issue so that it can be a learning experience for our members and beneficial for those facing similar situations.
From India, Kumbakonam
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Supreme Court of India
Olga Tellis & Ors vs Bombay Municipal Corporation & on 10 July 1985
Equivalent citations: 1986 AIR 180, 1985 SCR Supl. (2) 51
7-judge constitutional bench held:
"No individual can barter away the freedoms conferred upon him by the Constitution. A concession made by him in a proceeding, whether under a mistake of law or otherwise, that he does not possess or will not enforce any particular fundamental right, cannot create an estoppel against him in that or any subsequent proceeding. Such a concession, if enforced, would defeat the purpose of the Constitution. Were the argument of estoppel valid, an all-powerful state could easily tempt an individual to forego his precious personal freedoms on the promise of transitory, immediate benefits."
Article 19(1)(g) in The Constitution Of India 1949
(g) to practice any profession or to carry on any occupation, trade, or business
To work in any company is a fundamental right as per 19(1)(g). An employee cannot be denied the fundamental right by the undertaking forcefully obtained by PSU1 on payment of some money on the pretext of VRS or ex-gratia.
One more similar undertaking by the Govt from an employee was quashed by the court:
"Dealing with an undertaking obtained from the concerned employee that he would not claim the salary of the higher post or any other benefit was held to be illegal by the Apex Court in Secretary-cum-Chief Engineer, Chandigarh v. Hari Om Sharma 1998 SCC (L & S) 1273. In paragraph 8 of the aforesaid decision, it was held thus:
Learned Counsel for the Appellant attempted to contend that when the Respondent was promoted in a stop-gap arrangement as Junior Engineer I, he had given an undertaking to the Appellant that on the basis of the stop-gap arrangement, he would not claim promotion as of right nor would he claim any benefit pertaining to that post. The argument, to say the least, is preposterous. Apart from the fact that the Government in its capacity as a model employer cannot be permitted to raise such an argument, the undertaking which is said to constitute an agreement between the parties cannot be enforced at law."
From India, Salem
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Olga Tellis & Ors vs Bombay Municipal Corporation & on 10 July 1985
Equivalent citations: 1986 AIR 180, 1985 SCR Supl. (2) 51
7-judge constitutional bench held:
"No individual can barter away the freedoms conferred upon him by the Constitution. A concession made by him in a proceeding, whether under a mistake of law or otherwise, that he does not possess or will not enforce any particular fundamental right, cannot create an estoppel against him in that or any subsequent proceeding. Such a concession, if enforced, would defeat the purpose of the Constitution. Were the argument of estoppel valid, an all-powerful state could easily tempt an individual to forego his precious personal freedoms on the promise of transitory, immediate benefits."
Article 19(1)(g) in The Constitution Of India 1949
(g) to practice any profession or to carry on any occupation, trade, or business
To work in any company is a fundamental right as per 19(1)(g). An employee cannot be denied the fundamental right by the undertaking forcefully obtained by PSU1 on payment of some money on the pretext of VRS or ex-gratia.
One more similar undertaking by the Govt from an employee was quashed by the court:
"Dealing with an undertaking obtained from the concerned employee that he would not claim the salary of the higher post or any other benefit was held to be illegal by the Apex Court in Secretary-cum-Chief Engineer, Chandigarh v. Hari Om Sharma 1998 SCC (L & S) 1273. In paragraph 8 of the aforesaid decision, it was held thus:
Learned Counsel for the Appellant attempted to contend that when the Respondent was promoted in a stop-gap arrangement as Junior Engineer I, he had given an undertaking to the Appellant that on the basis of the stop-gap arrangement, he would not claim promotion as of right nor would he claim any benefit pertaining to that post. The argument, to say the least, is preposterous. Apart from the fact that the Government in its capacity as a model employer cannot be permitted to raise such an argument, the undertaking which is said to constitute an agreement between the parties cannot be enforced at law."
From India, Salem
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I filed an Original Application in the Central Administrative Tribunal, Madras bench asking to quash the claim of PSU-1 on me (based on my undertaking to refund ex-gratia amount on joining any other PSU). The CAT, instead of issuing an arrest warrant on me as suggested by a learned member of this group, has stayed the claim of the PSU-1.
[URL: https://drive.google.com/open?id=0BxP4Z8a7CqZGRG0xQTNlZ1FwOFk]
Hope to get justice some day.
From India, Salem
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[URL: https://drive.google.com/open?id=0BxP4Z8a7CqZGRG0xQTNlZ1FwOFk]
Hope to get justice some day.
From India, Salem
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Mr. SAS,
Why do you feel that anybody should reply to your post when you serve a legal notice to the contributors who try to make you aware of the legal implications of a case? Secondly, why do you think that you could have been arrested if your PSU has not filed any criminal case against you? I really wonder about your thoughts if you consider any reply to your post at CiteHR as an FIR against you.
Do you believe that the CAT has the power to order the police to arrest anyone? Also, do you think that if a stay is granted, it can be treated as quashing of the claim? However, nobody would have any objection if you want to live with your own perceptions.
Now, if you feel that a legal notice should be served to me for replying to your post, you may feel free to do so.
From India, Delhi
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Why do you feel that anybody should reply to your post when you serve a legal notice to the contributors who try to make you aware of the legal implications of a case? Secondly, why do you think that you could have been arrested if your PSU has not filed any criminal case against you? I really wonder about your thoughts if you consider any reply to your post at CiteHR as an FIR against you.
Do you believe that the CAT has the power to order the police to arrest anyone? Also, do you think that if a stay is granted, it can be treated as quashing of the claim? However, nobody would have any objection if you want to live with your own perceptions.
Now, if you feel that a legal notice should be served to me for replying to your post, you may feel free to do so.
From India, Delhi
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Hyderabad division bench has squarely dealt with such an undertaking signed by a VRS Optee.
[URL: https://www.legalcrystal.com/case/436364/s-rami-reddy-vs-development-corporation](https://www.legalcrystal.com/case/436364/s-rami-reddy-vs-development-corporation)
It should be noted that the impugned condition only prohibits the petitioners from taking re-employment in Government Departments/Public Sector Undertakings. They are not precluded from taking employment in private organizations or competing by way of direct recruitment to public offices. The apprehension of the petitioners that if they give an undertaking in terms of Clause 8(8) of G.O. Ms. No. 16, dated 22-3-2001, they would be barred from seeking employment in any organization, is misplaced inasmuch as even if they give such an undertaking, they would not waive their fundamental right to equality enshrined under Article 14 and the other fundamental rights guaranteed under Part III of the Constitution of India. If at any future point in time, the petitioners apply for employment and their cases for employment are rejected on the ground of their having undertaken not to claim re-employment, they are not entitled to claim employment. Then they would be at liberty to assail the same.
------------------------------------------------
I cited more than 40 cases where the courts held that an employer cannot enforce any condition after termination of an employee, by whatever name it is called, like a bond, undertaking, confidentiality, non-compete, training bond, etc. Anyone can read and understand the legality or otherwise of such an undertaking if they have an open mind.
[URL: https://docs.google.com/document/d/1TM5IVzbbY07n5yPEkNytxjQEU9r0rKjPEC2BZx8vQEU/edit](https://docs.google.com/document/d/1TM5IVzbbY07n5yPEkNytxjQEU9r0rKjPEC2BZx8vQEU/edit)
A stay is rarely given by CAT unless the CAT is convinced that a gross illegality has been committed.
When the claim is quashed, an appeal can be filed. Does it make the quashing not correct? Once a stay is granted, the concerned party has to get it vacated. Till that time, the claim is null and void.
Let us talk on legal merits by citing judgments, not by what one feels. No offense meant.
From India, Salem
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[URL: https://www.legalcrystal.com/case/436364/s-rami-reddy-vs-development-corporation](https://www.legalcrystal.com/case/436364/s-rami-reddy-vs-development-corporation)
It should be noted that the impugned condition only prohibits the petitioners from taking re-employment in Government Departments/Public Sector Undertakings. They are not precluded from taking employment in private organizations or competing by way of direct recruitment to public offices. The apprehension of the petitioners that if they give an undertaking in terms of Clause 8(8) of G.O. Ms. No. 16, dated 22-3-2001, they would be barred from seeking employment in any organization, is misplaced inasmuch as even if they give such an undertaking, they would not waive their fundamental right to equality enshrined under Article 14 and the other fundamental rights guaranteed under Part III of the Constitution of India. If at any future point in time, the petitioners apply for employment and their cases for employment are rejected on the ground of their having undertaken not to claim re-employment, they are not entitled to claim employment. Then they would be at liberty to assail the same.
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I cited more than 40 cases where the courts held that an employer cannot enforce any condition after termination of an employee, by whatever name it is called, like a bond, undertaking, confidentiality, non-compete, training bond, etc. Anyone can read and understand the legality or otherwise of such an undertaking if they have an open mind.
[URL: https://docs.google.com/document/d/1TM5IVzbbY07n5yPEkNytxjQEU9r0rKjPEC2BZx8vQEU/edit](https://docs.google.com/document/d/1TM5IVzbbY07n5yPEkNytxjQEU9r0rKjPEC2BZx8vQEU/edit)
A stay is rarely given by CAT unless the CAT is convinced that a gross illegality has been committed.
When the claim is quashed, an appeal can be filed. Does it make the quashing not correct? Once a stay is granted, the concerned party has to get it vacated. Till that time, the claim is null and void.
Let us talk on legal merits by citing judgments, not by what one feels. No offense meant.
From India, Salem
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Dear Mr. SAS,
Your post has nothing to do with your previous post of 3 November. The essence of your previous post was different, and I raised some relevant questions based on that. However, you have avoided responding to those questions.
Is there a specific reason why you chose not to address my questions? I am not concerned about how infrequently the CAT intervenes in matters or the number of cases you can cite. My interest lies solely in your thoughts on your 3 November post, particularly regarding the powers of the CAT to issue arrest orders or whether any post on citehr can serve as the basis for a criminal offense akin to an FIR.
Could you please provide answers to the questions I have raised?
Thank you.
From India, Delhi
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Your post has nothing to do with your previous post of 3 November. The essence of your previous post was different, and I raised some relevant questions based on that. However, you have avoided responding to those questions.
Is there a specific reason why you chose not to address my questions? I am not concerned about how infrequently the CAT intervenes in matters or the number of cases you can cite. My interest lies solely in your thoughts on your 3 November post, particularly regarding the powers of the CAT to issue arrest orders or whether any post on citehr can serve as the basis for a criminal offense akin to an FIR.
Could you please provide answers to the questions I have raised?
Thank you.
From India, Delhi
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Please find my views on the points:
Q: Why do you feel that anybody should reply to your post when you serve a legal notice to the contributors who try to make you aware of the legal implications of a case?
Ans: Giving legal points and advice is always appreciated. Throwing personal accusations like "fraud, cheating, misappropriation, you must be arrested, etc." is not in good taste from a senior member.
Q: Secondly, why do you think that you could have been arrested if your PSU has not filed any criminal case against you? I really wonder about your thought; if you consider any reply to your post at CiteHR as an FIR against you.
Ans: The worst that can be done against me was a civil suit for recovery. The arrest and putting behind bars were suggested by you, and the criminal offense was also suggested by you.
Q: Thirdly, do you believe that the CAT has the power to order the police for the arrest of anyone?
Ans: I am not a judge of the CAT, and I cannot answer this question. What I can say is that CAT could have refused to hear or could have refrained from giving a stay.
Q: Fourthly, do you think if a stay is granted that can be treated as quashing of the claim?
Ans: A stay is not granted just like that. Only if there is a prima facie illegality committed, a stay is granted. Moreover, the claim (of PSU-1) has already been quashed by the Karnataka High Court.
Q: I am not concerned with the rarity of a stay by the CAT on any matter or how many cases you could quote in your case.
Ans: Shows that you are not concerned about legality and merit and concerned only about what you feel is right.
From India, Salem
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Q: Why do you feel that anybody should reply to your post when you serve a legal notice to the contributors who try to make you aware of the legal implications of a case?
Ans: Giving legal points and advice is always appreciated. Throwing personal accusations like "fraud, cheating, misappropriation, you must be arrested, etc." is not in good taste from a senior member.
Q: Secondly, why do you think that you could have been arrested if your PSU has not filed any criminal case against you? I really wonder about your thought; if you consider any reply to your post at CiteHR as an FIR against you.
Ans: The worst that can be done against me was a civil suit for recovery. The arrest and putting behind bars were suggested by you, and the criminal offense was also suggested by you.
Q: Thirdly, do you believe that the CAT has the power to order the police for the arrest of anyone?
Ans: I am not a judge of the CAT, and I cannot answer this question. What I can say is that CAT could have refused to hear or could have refrained from giving a stay.
Q: Fourthly, do you think if a stay is granted that can be treated as quashing of the claim?
Ans: A stay is not granted just like that. Only if there is a prima facie illegality committed, a stay is granted. Moreover, the claim (of PSU-1) has already been quashed by the Karnataka High Court.
Q: I am not concerned with the rarity of a stay by the CAT on any matter or how many cases you could quote in your case.
Ans: Shows that you are not concerned about legality and merit and concerned only about what you feel is right.
From India, Salem
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When you realize, "I am not a judge of the CAT and I cannot answer this question," what was your intention to inform the forum members, like "The CAT instead of issuing an arrest warrant on me as suggested by a learned member of this group, has stayed the claim of the PSU-1?" Before making your post, you could have better made sure about the CAT's jurisdiction.
A matter of common sense, which you should have understood well, when there was no criminal FIR, how could any court order your arrest, especially when the CAT did not have the power to do so? Anyway, you may live with your own perceptions. Best of luck!
From India, Delhi
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A matter of common sense, which you should have understood well, when there was no criminal FIR, how could any court order your arrest, especially when the CAT did not have the power to do so? Anyway, you may live with your own perceptions. Best of luck!
From India, Delhi
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Members of the community may feel free to read my post dated 19th July 2016 and can see if I made any personal accusations anywhere, as contended by the author. My post started with the words, "IF AN EMPLOYEE."
Members may also like to see the advice of Shri S. Prabhkakar, dated 25th of July 2016, where he tried to give clarification stating, "Here the members are providing service for the query on a voluntary basis. This site is mainly for those seeking guidance only, and those guiding are not receiving any benefit except gaining knowledge through sharing. When the member raised objections to my post, I tried to make him understand what the employer could have been capable of doing legally.
Anyway, I can only wish him the best of luck if he is satisfied only with the interim stay by the CAT.
From India, Delhi
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Members may also like to see the advice of Shri S. Prabhkakar, dated 25th of July 2016, where he tried to give clarification stating, "Here the members are providing service for the query on a voluntary basis. This site is mainly for those seeking guidance only, and those guiding are not receiving any benefit except gaining knowledge through sharing. When the member raised objections to my post, I tried to make him understand what the employer could have been capable of doing legally.
Anyway, I can only wish him the best of luck if he is satisfied only with the interim stay by the CAT.
From India, Delhi
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The post number 24, dated 19 July 2016, was edited by the administrator to remove the wild personal allegations made by the learned senior member, which the member has conveniently forgotten. I hesitate to reproduce the original unkind post here. The learned member can check his inbox for the email dated 26 July, in which I have included the original post.
I hold no hard feelings or grudges against anyone. I understand that all views are personal and do not have any bearing or effect on others. I will provide updates on further developments as they occur.
Satyameva Jayate !!
From India, Salem
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I hold no hard feelings or grudges against anyone. I understand that all views are personal and do not have any bearing or effect on others. I will provide updates on further developments as they occur.
Satyameva Jayate !!
From India, Salem
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If you "hate to reproduce the original unkind post again" and bear no hard feelings or grudge against anyone, what was your objective in stating on 3rd November, "The CAT instead of issuing an arrest warrant on me as suggested by a learned member of this group, has stayed the claim of the PSU-1," when neither I nor any other members desired to know the outcome of your application or whether you are arrested or not?
However, if you want to make the members feel that you are the best judge of the world or you want to show them that you are the best equipped with legal knowledge, you may post anything here or in other various forums.
Now, I would be curious to know the final verdict in your case. You would be welcome to post it here along with a copy of the judgment for the guidance of one and all.
Best of luck.
From India, Delhi
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However, if you want to make the members feel that you are the best judge of the world or you want to show them that you are the best equipped with legal knowledge, you may post anything here or in other various forums.
Now, I would be curious to know the final verdict in your case. You would be welcome to post it here along with a copy of the judgment for the guidance of one and all.
Best of luck.
From India, Delhi
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Central Administrative Tribunal quashed the "Refund of Ex-gratia on joining another PSU" on January 24.
Click the link to read the judgment in CAT, Madras website:
https://cis.cgat.gov.in/catlive/pdf/judge.php?file=TDNVd01TOWpZWFJrYjJNdmFuVmtaMlZ0Wlc 1MEwycDFaR2RsYldWdWRDOHlNREkwTDBwaGJuVmhjbmt2TWpZe k16RXdNREEzTkRjeU1ERTJYekZsWkRsa01HUTRZMkl4Wmpnd05 6a3laREpqTVdJMk1EWmpOV0l3TXpFMkxuQmtaZz09
From India, Salem
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Click the link to read the judgment in CAT, Madras website:
https://cis.cgat.gov.in/catlive/pdf/judge.php?file=TDNVd01TOWpZWFJrYjJNdmFuVmtaMlZ0Wlc 1MEwycDFaR2RsYldWdWRDOHlNREkwTDBwaGJuVmhjbmt2TWpZe k16RXdNREEzTkRjeU1ERTJYekZsWkRsa01HUTRZMkl4Wmpnd05 6a3laREpqTVdJMk1EWmpOV0l3TXpFMkxuQmtaZz09
From India, Salem
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Enforcement of negative covenants in employment terms.pdf
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