Is My Friend Stuck in a Service Bond? Navigating Legal and HR Challenges in Urgent Job Offer Situation

Hello,

I have a friend who is working with a reputed engineering company. The company had initiated one project for which the company asked to sign a bond that demands he work with them for 3 years. The issues with that bond are as follows:

1) The bond is one-sided, i.e., if he leaves the company before 3 years, he has to pay 3 lakh Rs.

2) Whosoever wants to be a part of that project has to sign the bond. However, the HR department failed to get bonds from each member of the team. Out of 70 persons, only 10 persons signed the bond.

3) Is the notarization of the bond compulsory? In this case, the bond was signed by my friend in November '06. Till date, it is not yet notarized.

4) Is the bond valid, and will he be required to pay the company the bond amount in case he decides to quit? Is there any law that can help him avoid this?

5) Can the company hold back his relieving letter? On what grounds? If yes, on what grounds. Can he take the company to court over this matter? If yes, which Act is applicable?

6) Out of 70 members, at least 25 members who were part of the team but did not sign the bond have been released by the company. Even two employees who had signed also got released. In case he decides to leave, he would be required to pay 3 lakhs to the company. Now, he has a superb job offer which he wants to accept.

On what grounds can he obtain the relieving letter from the company?

This matter is most urgent. Please reply ASAP.

Thanks,

BN

Dear friend,

I would suggest that your relieving letter has to be issued. The only thing to be considered is for what purpose the bond is executed and what the subject matter is about.

If you are able to tell, then the question arises about the payment of Rs. 3 lakhs.

I would like to bring to your notice that if there is any imparting of technology/training for enhancing your skills, then you definitely have to pay that cost since it would have been covered under the confidentiality clause in your agreement.

Strictly speaking, as per the Contract Act, 1872, and under Section 27 of the act, "Agreement in restraint of trade or business of any kind is to that extent void." But nowadays, because of globalization, the Honorable Courts are giving priorities to the above said principle and allowing them only to the extent of recovery of the amount spent by the company.

As for the notary, you need not bother about whether it has to be notarized or not because it does not affect the agreement which is duly signed by you.

I hope that I could make it very clear.

Your friendly,

S. Sateesh

Email: sateesh_sala@yahoo.com

Thank you for the prompt reply.

Point 1: It was initially decided that each member of the team had to sign the bond. In fact, only 10 out of 70 have signed the bond. Others refrained from signing the bond for various reasons. It was initially decided that other monetary benefits would also be provided after the completion of the project, but it was only communicated verbally. To date, nothing has been provided.

Point 2: Two employees who had signed the bond left the organization when the project was incomplete and still got released without any consent.

Point 3: The bond is one-sided. It does not mention what benefits are to be provided after the completion of the three years. Technical training was provided in the project, which enhanced the employees' skill sets.

Considering all these points, can the company stop releasing funds and ask for repayment?

Thank you.