Indian Law/Service Bond

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Question
QUESTION: Sir,
I have a joined a PSU on Jan, 2011 then I have signed a service bond for 5 years amounting 3 lakhs(amount is proportional to the number of years served).After 1 year I was regularised.
In our Bond notice period was not mentioned and not even in offer or appointment letter. But in our company's HR policy notice period is  mentioned of 3 months. I have got another job offer can you say whether I have to serve notice period if I leave the company and pay bond money?
Awaiting your quick response.

ANSWER: If it is mentioned in your service contract that you shall be governed by the service rules of the company issued from time to time,you are definitely governed by the same.So,your appointment letter is to be read alongwith the service rules of the company.Accordingly,you take appropriate decision in the matter in consultation with a lawyer.You may also seek extension of joing time from your new employer.Even if you have signed a service-bond,you should not agree to pay any amount from your own pocket.Such 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.

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QUESTION: Sir,
     Thank You very much for your quick response.I will get back to you after checking my Appointment letter thoroughly.

ANSWER: Unless you get the release order,your new employer may not allow you to join.So best course would be to discuss to seek extension of joining time by three months and serve the notice in consultation with a lawyer.

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QUESTION: Sir,
In my appointment letter it is mentioned that "You are governed under service rules of company from time to time".In the service bond I have signed for an amount of 3 lakhs for a period of 4 years.The bond states
"if candidate leaves service before expiry of one year-actual training expenses incurred subject to max of 3 lakhs"
"if candidate leaves after one yearbut before completing 4 years then proportionately less by 1/4 of training expenses inurred  for every year of service completed to a max of 3 lakhs"
I am coming under the second clause.
Sir, I have not undergone any external training then how the training cost is to be estimated?
Also under provident fund a handsome amount has been accumulated.Can I claim that amount if I do not pay service bond?Is that amount calculated by the company adjustable I mean bargained?

Answer
As I have already explained to you that service-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.Training expenses to be recovered against service-bond means substantial training expenses incurred in providing training to an employee e.g. training expenses borne by the company for providing training to an employee abroad.In the instant case ,company has merely provided inhouse-training to an employee.Hence. it does not come under the category of substantial training expenses.Therefore,company has no right to recover it.Further,as per the provisions of the CPF Act,no adjustyment/attachment/recovery can be made against PF dues.It is the fundamental right of an employee to claim his PF dues after his retirement from service.
In view of the above,it is suggested that you serve a legal notice to release you as per your notice and settle your legal dues.Pl. also threaten them that otherwise you shall be compelled to take suitable legal action against them.  

Indian Law

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Arun Kumar Maitra

Expertise

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.

Experience

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.

Organizations
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

Publications
Nil.

Education/Credentials
M.Com;LL.B;A.C.A;A.C.S.

Awards and Honors
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.

Past/Present Clients
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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