Is It Fair for Companies to Hold Original Certificates? Seeking Advice on Contract Dispute

Hi all members, my friend joined the company as a Software Trainee pursuant to an offer letter, whereby the following terms were agreed upon (crux of offer letter and acknowledgment):

1. For the first 6 months (probation period), he will join as a Software Trainee, and thereafter his performance will be reviewed, and if found eligible, he will be promoted as a Jr. Software Engineer.

2. The tenure of working with the company will be 2.5 years, during which period he will not be allowed to leave the company.

3. My friend has submitted original educational certificates as contract security.

4. Certificates are releasable only after 2 years and 6 months.

Now, the blunder he made is that when he got an opportunity in a much better company, he left the former company after a probation period of 6 months and joined the other company without giving notice (perhaps thinking he would get a duplicate copy of the certificates or for other reasons). When he later approached and requested the former company to return his documents retained by them, they are demanding Rs.2 lakhs for it (though it is not mentioned in the offer letter).

Considering the above factual position, could anyone suggest what would be the best option for him to get his documents back without paying such a hefty amount?

Understanding the Agreement

Furthermore, I want to understand as a prospective member of the legal fraternity:

I believe the agreement is one-sided because:

1) There is no clause for early termination, thus no option for the employee to terminate the contract.

2) There is no clause for a penalty or liquidated damages in case the employee does not serve the company for the entire contract period.

3) The right of the company to retain documents even if agreed upon between the company and the employee (as the employee is now requesting a return of the documents).

What is the validity of such contracts?

P.S. - I understand that it is ethically wrong to leave the company after the training period. I am simply seeking your suggestions for my clarity as well. Thank you in advance.

Legal Rights Regarding Original Certificates

Leaving aside the fact of quitting without resignation, original certificates are the personal property of your friend. The company has no legal right to retain them as security in this fashion. Is there a bond given by your "friend," and if so, what are the terms of the bond?

Nature of Training and Agreement Details

What is the nature of the training given by the company? Now, suddenly realizing the agreement is one-sided is of no use. Full details of the terms and conditions of employment need to be given.

Hi Mr. Nathrao, thanks for your reply. I am providing a point-wise response to your questions:

Offer letter or bond

My friend joined the company pursuant to an offer letter. The title of the letter is "OFFER LETTER," executed on the letterhead of the company, signed, and accepted by my friend, not on any stamp paper. I am not very clear whether it is a bond or not.

Terms of Offer Letter

The relevant terms of the offer letter, which I have mentioned in the above post, are:

1. For the first 6 months (probation period), he will join as a Software Trainee, and thereafter his performance will be reviewed. If found eligible, he will be promoted to a Jr. Software Engineer.
2. The tenure of working with the company will be 2.5 years, during which period he will not be allowed to leave the company.
3. My friend has submitted original educational certificates as contract security.
4. Certificates are releasable only after 2 years and 6 months.

Training Details

It was simple training. They just provided a syllabus and questions to solve by learning from YouTube and asked doubts from seniors. There were no specific training classes.

Please shed more light on this. Thanks once again.

The employer has no authority to keep the original documents of an employee. It is an illegal act. The demand for payment of some amount shall be decided in terms of the agreement signed by the employee and the employer. If the agreement specifically provides for payment of any compensation which is not otherwise illegal, then the employee is liable to pay such compensation at the time of resignation. Compelling any employee to stay for a particular period is also against fundamental rights unless there is a valid reason for it. The appointment letter is to be read minutely, including its wording, construction, etc., by a legal professional to arrive at any conclusion. Prima facie, it seems to me that the appointment letter is bad in law. You need to consult a good advocate with all the documents with you. The employee is making a grave mistake by leaving the employment abruptly; for that, he has to pay the advocate or the employer.

Thank you.

Thank you for your reply. You have addressed my query effectively. The Offer Letter/Agreement is very rigid in nature regarding the points it covers.

Probation and Promotion

It states that the employee shall be on probation for 6 months, and thereafter, his performance will be reviewed. If satisfied, he will be promoted to Junior Software Engineer.

Employment Tenure and Document Retention

Furthermore, it specifies that the employee shall not leave the company for a period of 2.5 years from the date of the offer letter. It has also been acknowledged by them through a separate Acknowledgement letter that they have retained certain original documents, which will only be released at the end of the aforementioned 2.5 years.

That's it. Other clauses such as the remuneration clause and the increment in remuneration are of no significance to mention here.

Lack of Breach Consequences

The Offer Letter/Agreement is completely silent on the breach of agreement and any consequences thereof; no notice period clause is mentioned.

Thanks and Regards,

Chetan Sharma

I agree with your point. He would be in a better position if he had given his resignation. It's just my attempt to help him in getting his documents back without losing the significant amount of money that the company is demanding, which in this case is Rs. 2 lakhs. Anyway, thanks.

Regards,
Chetan Sharma