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Indian Law/Regarding transfer of service bond


QUESTION: Sir I joined PSU namely NHPC ltd in the month of Dec 2011 and i executed service bond for the period of four years i.e. up to 20 Dec 2015 for 2.5 lacs. Before joining in NHPC i applied for Engineering Services through UPSC and i given my written exam. Later joining in NHPC i attended the interview in Jan 2012 and same has been intimated to NHPC. Now i got slected for th Department of Ministry of Defense. Accordingly i resigned from the services with 3 months notice period and at the time of resignation i also enclosed acceptance for transfer of bond by the Defense. Now her the issue is NHPC is saying that i need to Pay the service bond say 2.5 lacs rupees by stating the reasons as

    1. that i have not sned the application through proper channel
    2.If any one not sent the application through proper channel  / intimation of interview is not considering for Bond Transfer.

How can i sent my application through proper channel as i given the exam before joining in NHPC sp it is not possible at all. Here question is my servicer will be trasfered to ministry of Defense or not, if not trasfered how much amount i need to pay for breaching of bond. You are requested please kindly give me expert advice and guide me what i need to do?

ANSWER: As per Govt. Guidelines,an employee of a Govt./Semi-Govt. Organisation can move from one Govt./Semi-Govt. Organisation can move to another Govt./Semi-Govt. Organisation only through proper channel.Moreover,it is specifically mentioned in the recruitment notice of such type of organisation to apply through proper channel.However,since you had appeared in the exam. prior to your joining the NHPC,the above pre-condition is not applicable.Since you are now working in a PSU,you are to appear for interview with NOC from your NHPC. Since you have not applied through proper channel,you shall not be able to enjoy transfer benefit.
Regarding enforcement of Bond against you,the relevant Govt. Guideline is reporoduced below:
Enforcement/transfer of bond in respect of employees of Public Enterprises who leave the services of one Undertaking to join another Undertaking/ Government.

The undersigned is directed to refer to this Departmentís OMs No. BPE/GL-017/77/MAN/2(11)/75-BPE(GM-I) dated 13.6.1977 and 23.5.1981 and No. 17/20/84-GM dated 5.2.1985 on the subject mentioned above, which were deleted vide this Departmentís O.M. No. 20(5)/95-DPE(GM) dated 10th December, 1997. After deletion of these guidelines, Department of Public Enterprises received references from various quarters for revival of these guidelines to enable them to regularize enforcement/ transfer of bond in the case of public sector employees joining services in Central Govt./State Govt./Autonomous Bodies. The position has been reviewed and after careful consideration, it has been decided to revive this Departmentís OMs dated 13.6.1977, 23.5.1981 and 5.2.1985 with the following modifications:

(a) The bond executed by employees of the Public Enterprises, who have received scientific/technical training at the cost of Public Enterprises and have applied through proper channel during the currency of the bond join Central Govt./State Govt. services or take up employment under quasi-government organizations or any other public enterprise either on the basis of competition examinations/tests/interviews organized by those organizations or the Union Public Service Commission should not be enforced subject to the condition that a fresh bond is taken to ensure that the employee serves the new employer for the balance of the original bond period.

(b) The terms of bond whereby an employee of a Central public enterprise receiving scientific and technical training out the expenses of the Govt./Public Sector Enterprises undertakes to repay this specified amount in the event of his failure to serve the enterprise for a stipulated period after completion of his training should not be enforced against an employee who leaves service of public enterprise to secure, with proper permission, employment under the Central Govt., a public enterprise or an autonomous body wholly or substantially owned/financed/controlled by the Central/State Govt. A fresh bond should be taken from the person concerned to ensure that he serves the new employer for the balance of the original period.

(c) To ensure that the requirement of obtaining a fresh bond from a person, where necessary, is fulfilled, the enterprise with whom the employee has executed the original bond may at the time of forwarding his application write to the organization etc. under whom the employee intends to take up another appointment intimating them about the bond obligation of the individual and clarifying that in the case of his selection for the new post, his release will be subject to the condition that the new organization take from him a fresh bond binding him to serve them for the balance of the original bond period; in case he fails to serve the new department/organization etc. or leaves it before completion of the original bond period for a job where exemption from bond obligation is not available, the proportionate bond money should be realised from the individual and refunded to the first organization with whom he originally executed the bond.

2. All the administrative Ministries/Departments are requested to kindly issue necessary instructions accordingly to the public sector enterprises under their administrative control.

(DPE O.M. No. 15(2)/2003-DPE(GM)/GL-57 dated 29th July, 2004)

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QUESTION: Ok sir i do accept that my application has not through proper channel if at all i had to pay the BOND amount then how much it would be is it Full i.e., 2.5lacs or proportionately because my service bond is going to complete in 4 months up to 21 Dec 2015

Even if you have  executed a service-bond,you should not agree to pay any amount.Such type of bond is one sided contract executed under compulsion and it has no validity in the eye of law.As per section 27 of the Contract Act,all agreements in restraint of any trade,profession or business are void.It also violates Article 19 of our Constitution,which guarantees freedom of professions to all individuals.The courts in India have held in its various judgments that in the event of breach of contract by the employee, the employer shall be entitled to recover only the actual loss suffered by it.Damages are calculated as per the provisions of section 73 and 74 of the Indian Contract Act. Even if the bond stipulates payment of any penalty amount in the event of breach, it does not mean that the employer shall be entitled to receive the stipulated amount in full; the courts shall determine the reasonable amount of compensation to be paid based on the period of service rendered,terms and conditions of service etc.
References of leading case laws on the relevant matter are given below:
1 Central Inland Water Transport Corporation v Brojonath Ganguly, (1986)IILLJ171SC

2 Niranjan Shankar Golikari v The Century Spinning and Manufacturing Company Ltd, AIR 1967 SC 1098

3 Nandganj Sihori Sugar Company Ltd v Badrinath Dixit, & Ors, AIR1991 SC 1525

4.Sicpa India Limited v. Shri Manas Pratim Deb
Further,as per Govt. Guidelines,amount is recoverable by PSU provided they have spent towards research and technical training.So,they can claim compensation only if the said stipulation is applicable.
Accordingly,please take further action in consultation with a layer.

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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



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.

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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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