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Indian Law/Break Indemnity Bond


QUESTION: Respected Sir.

         I have a query regarding Indemnity Bond. I joined Union Bank of India on April,2012 as a Probationary Officer. The bond period is 3 years.
Since I am unsatisfied with my job, and wish to pursue further studies.. I want to leave this job, and I dont have the bond amount of 2 lakh rupees.

The only training I had was for a meager period of one week in my hometown only. Do I have an argument that this period in no way justifies their exortibant bond amount?
The bank's HR policies are highly questionable. Instead of giving a uniform HRA, they give rent directly to the LandLord,if provided with a Lease agreement. Since I was asssigned in my hometown, they declared that a lease agreement with my parents is illegal; At the same time passing other hometown posted employees Lease agreements on arbitrary grounds. Since this was a disparity of  9,000 rupees per  month, this is a major reason for me leaving this organisation.
I am leaving this job to pursue studies and not to do some other job.
Can the Bond Amount be calculated on pro-rata basis? In that case, I am willing to pay the amount due as cost incurred by my employee.
  Do these arguments hold me on a solid legal footing in case of a civil suit? I wish to acquire some legal counterpoints so as to negotiate for an amicable solution. The bond agreement is as under:
Indemnity bond(rs 200/- non judicial stamp paper,duly notarised)  THIS AGREEMENT is made at place on date between (name of officer),son daughter / wife s husband (DELETE INAPPLICABLE) of  Shri. (FUI.L NAME  OF FATHER/ HUSBANDJ presently residing at ( LOCAL ADDRESS OF THE OFFICER) and having a Permanent Address at ( PERMANENT ADDRESS  OF THE OFFICER) herein after referred to as the "Employee". OF THE ONE PART. AND Union Bank of India, a body corporate, constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970, having it7; Central Office at Union Bank Bhavan, 239. Vidhan Bhavan Marg, Nariman Point, Mornbal - 400021, herein after called the "Employor Bank", and which term wherever the context so requires or admits shall deem to include its successors, attorneys or assigns OF THE OTHER PART.
ob, i rc.4 WHEREAS the Employee above named has applied for the post of (Give the POST and SCALE of the OFFICER) as per the process of recruitment of Officers initiated by the Employer Bank and having come out successful in the said recruitment process the Employer Bank has agreed to provide the Employee an opportunity to work with the Employer Bank as (Give DESIGNATION of the OFFICER) in accordance with the Letter of Offer of Appointment / Employment No.(GIve APPOINTMENT LETTER No.) dated (Give DATE of APPOINTMENT LETTER), subject, inter  alia, to the Employee signing this Agreement necessitated on account of the , fact that the Employee would have to undergo a detailed and extensive training to acquire the necessary knowledge end skills which will be beneticlat to him / her, at the cost and time of the Employer Bank.
AND WHEREAS the Employee is aware that the Employer Bank has invested considerable time, money and infrastructure for the process of recruitment culminating in his / her being provided employment wito the Employer Bank and would further be incurring considerable time and money for training him / her to upgrade his / her knowledge and skills
AND WHEREAS the Employee has accepted the said Offer of Appointment / Employment and agreed to join the services of the Employer ,Bank on the terms and conditions set out in the said Letter of Appointment Employment
AND WHEREAS pursuant to the acceptance of the terms and conditions set out in the said Letter of Offer of Appnintment/ Employment by the Employee, the Employer Bank has taken the Employee in its services and shall be providing the Employee, at its cost and time, training to further acquire additional knowledge, skill and experience.
AND WHEREAS in consideration of the Employer Bank, having invested considerable time, money & infrastructure in the process of recruiting the said Employee and further, at its cost and time, providing training, thereby enabling the Employee to acquire additional knowledge, skills and experience. which are expected to be put to use by the Employee for the greater benefit of overall development of the Employer Bank, the Employee hereby undertakes and agrees as follows:
1.The Employee shall serve in the "service of the Employer bank for a minimum period of three year from the date of joining the Employer Bank. Irrespective of the place of posting or subsequent places of transfers, which are under the sole discretion of the Employer Bank
      2. Tho Employee shall not, without the express prior approval in writing of the Competent         Authority In the Employer Bank, apply any job, accept assignment or other employment of profit, whether for consideration, reward or not, until the Employee has fulfilled his / her above mentioned obligation to serve the Employer Bank for a minimum period of three years from the date of his joining the service of the Employer Bank. However, after the period of these three years If the employee opts to apply for any job or assignment outside the Employer Bank, he shall do so through the Employer Bank and Employer Bank shall have full discretion either to forward the application for the purpose of new employment / assignment or not.
3. If the Employee, for arty reason whatsoever, fails to fulfill his / her above- mentioned obligations or in the event of any breach of obligations assumed by him / her in terms of this Agreement, & / or leaves the services of the Employer Bank before completing the above mentioned minimum period of service of three years, the Employee hereby agrees, undertakes and binds himself,' herself to pay the Employer Bank a sum of Rs 2,00.000.00 (Rupees Two akhs Only) towards liquidated damages.
4.  The Employee shall be personally liable to pay the above stated amount of Rs.2,00,000.00 (Rupees Two Lakhs Only) to the Employer Bank notwithstanding and Without prejudice to the right of the Employer Bank to recover the said amount of Rs.2,00,000.00 (Rupees Two Lakhs Only) in case of the Employee's failure to make the said payment, by appropriating any sum that may be due to the Employee by way of salary, allowances, Provident Fund, Gratuity or any other terminal benefits due to the Employee, arid also taking recourse fo appropnate action in a Court of Law
5. . The above amount of Rs2,00,000.00 (Rupees Two Lakhs Only) shall constitute a debt owing to the Employer Bank and shall be recoverable by the Employer Bank from the Employee with interest thereon at 18% per annum, from the dae of breach of any of the conditions till repayment, immediately upon the Employee committing a breach of any of the conditions contained in this Agreement.
6. . The Employee further agrees that if he / she commits 3 breach of this Agreement, then without prejudice to any other remedies and powers contained in this Agreement, the Employer shall be entitled to obtain a prohibitory order or injunction prohibiting the Employee from engaging himself / herself or serving with any other person, company, establishment, firm, organisation or institution and I or from working himself / herself or with any person, company,establishment or institulion and / or from doing any act or thinq which would be in breach of and / or in violation of these presents  
7. IN WITNESS WHEREOF. the parties hereto have signed these pre43nt% or) the day month and year and al the place mentioned hereinabove.
The Employee Mr. / Ms.
Permanent Address :
1:. Name : Address :
2 Name Address :
Temporary / Local Address :   
For & On behalf of the Employer Bank UNION BANK OF INDIA By its Constituted Attorney Mr. / Ms
IN THE PRESENCE OF WITNESSES who have set their hands hereunder

ANSWER: Bonds are one sided contract executed under compulsion and it has no validity in the eye of law except in case of recovery of reasonable expenses like actual training expenses.As per section 27 of the Contract Act,all agreements in restraint of any profession is void.It also violates Article 19 of our Constitution,which guarantees freedom of professions to all individuals.Therefore,in the instant case,Babk has no authority to implement the Bond unless it is for recovery of substantial actual expenses incurred for providing say external training traing abroad.It is suggested that let them prove before the court actual expenses incurred by them for the said training and you should not under any circumstances agree to pay any amount from your own pocket.Apparently, you have a strong case in the matter and nothing to worry about.Please take appropriate action in consultation with a lawyer.

---------- FOLLOW-UP ----------

QUESTION: Thanks for the helpful reply Sir..
If the Bank refuses to issue me a relieving letter , do I have any recourse to obtain the same?
And is on-the-job training included for training expenses?

If you submit letter of resignation as er terms of your contract,bank is legally bound to release you.If they do not confirm acceptance of your resignation,please serve a legal notice threatening to take legal actions,if they do not release you within the scheduled date and also settle your outstanding dues.

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Arun Kumar Maitra


Contract Law,Companies Act,Sale of Goods Act,Partnership Act,Negotiable Instument Acts,Constitution of India,Arbitration Act,Consumer Protection Act,Maternity Act,Payment of Gratuity Act,Payment of Bonus Act,Shops & Establishment Act etc.The answer to the grievance of the particular online query depends on the facts of the particular case and law applicable to it.However,my comments relating to the various queries raised through the "All Experts" should not be treated as legal advices and should not at all be relied upon.I do not accept any responsibility for them.They will only give you some ideas about the probable merits of your cases.Ultimate actions/decisions in the matter may please be taken in consultation with the Legal Experts in the relevant fields.My purpose of giving the comments is to increase my own knowledge on the subjects and share it with others.It is purely of academic interest to me. I strongly feel the more knowledge we share,the more we shall be able to learn because there is neither any age nor any end to learning.


I have experience of dealing with matters relating to holdings of board/general meetings,maintenance of statutory registers,filing of necessary returns with the RoC,obtaining licenses for import,replies to Parliament Questions,dealing with the Parliamentary Committees,appearing before various courts to defend my employers,filing affidavits/counter -affidavits,preparing written statements/re-joinder,giving advice to management on complicated legal issues,preparation,drafting and vetting of contracts etc. I have more than 35 years of experiences to deal with the Company Law and Other Commercial Laws of leading Organisations in the country both in Public as well as Private Sectors.

Member,Inst. of Chartered Accountants of India Member,Inst. of Company Secretaries of India; Member,Bar Council of India Member,All India Management Association Member,Delhi Management Association Ex. Vice-Chairman,Durgapore Chapter of the I.C.A.I. Expert ,CA Club India Expert ,Lawyers Club India Expert,AllExperts Ex. Faculty ,I.C.S.I as well as I.C.W.A of India Retd. Co. Secy. & G.M.(Law)/NFL(A Mini-Ratna A Schedule Central P.S.U.),New Delhi Ex.V.P.(Secretarial Dept.),Jaiprakash Associates Ltd. Ex. Co. Secy.,MAMC(A Govt. of India Enterprise),Durgapore



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Obtained ''A'' Grade Certificate in the Parliamentary Procedure from the Secy. General of Parliament in 1994-95.It was in connection with a training course conducted by the BPE for PSU Executives.

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I am presently working as a Company Secretary in Old World Hospitality Pvt. Ltd.located in Delhi.It is engaged in Hospitality Industry.It has Units in India and abroad.It has been given the responsibility to look after operation & Management of ''India Habetat Centre'' located at Lodhi Road,New Delhi.

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