Civil suit for excess recovery by employer
Alok
(Querist) 10 February 2015
This query is : Resolved
Hello Experts,
I need urgent attention to below given matter.
I left an Pvt Company registered in Delhi and office in Noida where they agreed to relieve me by mentioning INR 1,08,000 /- (Short Notice period money + Training Bonds amount ), signed by me and I have handed over cheques to them for the same amount as per details mentioned in short notice period recovery notice. No break-up of liability was mentioned in due letter and only sum was there.
I was chasing this company to seek my Exp, NOC letters etc but didn’t get any response over phone call for next 11 days after cheques hand over ( handed over on 14th Sep 2007) and during one call made to HR to ask for letters required by next employer including break-up of liability, I got to know that they are preparing to send legal notice to me. As they were not issuing any break-up of how this much needed then I decided to stop cheque payments and notified HR person by email and call.
Below given is the email which was sent by me to inform about cheque payment stop:
***********************************************************
Hi , ,
I have observed that the declared amount by you to be paid against short notice period is high. The amount to be paid should be less than the conveyed amount.
I request you to send me the letter for the final amount to be paid with break up. For the mean time please don't deposit the handed over cheque to for the amount INR 54,000 /- dated 15 Sep 2007 and INR 54,000 /- dated 20 Sep 2007. Please confirm that do I need to pay the full month salary or only basic salary for the short noice period.
I have requested my bank to stop these cheque payment.
After getting final amount letter to be paid from , I will hand over fresh cheuqe for the amount to be conveyed. The cheque is only stopped because of discrepancy in sum of the payment to be made by me to as per the letter issued by you.
Regards
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After few months, I received a legal notice from this company asking INR 5,00,000 for loss in project and replied from my side mentioning same amount to be payable for my mental stress and suffer caused in absence of requested exp and NOC letters due to them.
After few months ( ~1 year) of last working day with this company, I received court Civil suit copy where they asked for INR 14,00,000 for “Short Notice period money + Training Bonds amount + Project loss which was participated by me” but Employment agreement only says for 2 months notice period and no clause to share/bear project profit/loss.
I would like to get experts view on this considering Due letter signed for INR 1,08,000 /- , cheques handed over but no break-up was given stating leave balance etc..:
1. Can employer ask for higher amount than INR 1,08,000 stated in due letter as they didn’t give me break-up. Delhi Shops and Establishment act says Employer needs to settle balance Annual Leaves in employee account during employee’s exit but they didn’t consider this?
2. Can employer ask for full Bond amount even if Employee has served some period for that bond. I saw few rulings by HC and SC asking to consider training bonds on prorate basis by considering served period out of total period?
3. Can ignorance of law when due letter was signed takes over any law/policy. In my case if I signed letter to give INR 1,08,000 /- when was not aware about Leave settlement and Training Bond rulings then it cant be considered now and base is only INR 1,08,000 to talk further?
4. Does court considers mental suffer of defendant party on such matters where contract or conditions are always put in favor to employer and employee has to sign considering circumstances?
Thanks a lot in advance.
DR.VEDULA GOPINATH
(Expert) 11 February 2015
There has been some litigation on
Employee Bond matters.
Some of the decisions are much in favour of the employee justifying that it is opposed to public policy.
In few cases proportionate amount was ordered to be paid by employee to the employer.
For example if an employee gives bond for serving 5 years to a tune of Rs.5 lakhs.
If he has already served 2.5 yers, he is required to pay only Rs.2.5 lakhs. Also the amount due including leave encashment etc. can be adjusted .
Normally the employment contract the reference reg. Notice period payment gives unfair advantage to employer and gives raw deal to employee.
Of late some of the progressive employers are waiving payment of notice period as the resigned employee working longer time shall give negative results to employers regarding the efficiency or otherwise.
I can comment more after going thru the employment contract.
M V Gupta
(Expert) 11 February 2015
I am in general agreement with what is stated by Shri Gopinadh on the general trend in the decided cases on enforcement of service bonds.You have not stated the period of service put in by you and the details of the service bond given by you. If the employer has not incurred any expenditure to impart training to u and u have not caused any loss to the employer by damaging any of their property or by leaking any confidential information to third parties, the court may refuse to enforce the bond given by u. The claim made by ur employer for alleged business loss sustained by them,may not be allowed buy the court. Better engage an experienced Advocate to defend u.
Rajendra K Goyal
(Expert) 11 February 2015
1. Generally not, since they have filed case, defend the case on merits. Engage some experienced lawyer.
2. Depends upon bond terms and claim. Court would decide on merits.
3. Details of the letter need to be referred, consult your lawyer.
4. Generally not considered till specific relief if claimed would be decided on merits.
Alok
(Querist) 12 February 2015
Dear Gopinath, Gupta, Goyal,
Thank you for quick response.
I worked with that employer for 2.8 years and left on 06-Sep-2007.
There were 3 training bonds and per my calculation if I take months duration of the contracts on prorate basis :
Sr. No. Trainings in 2007 Amount "Training Cost" Bond Period (Months) Bond Period Served
1 1st Training (15-Jan) 20,625 55,000 12 7.5
2 2nd Training (2-Jan) 1,833 5,500 12 8
3 3rd Training (5-July) 12,375 13,500 24 2
I was not ware with laws and policy like leave encashment at exit time and HR person from that organization says they dont settle leaves but I can see its should be must as per http://www.delhi.gov.in/wps/wcm/connect/doit_labour/Labour/Home/Acts+Implemented/Details+of+the+Acts+Implemented/The+Delhi+Shops+Act,+1954/ stating "Leave" in point 22.
My advocate says since I signed paper to pay Rs. 1,08,000 /- in Sep, 2007 month so they will claim that as "Ignorance of law is not an excuse" but I logically differ here as this employer tried to ignore some laws and I am sure they will be aware with leave settlement etc..
I am not willing to give up until they settle balance leaves at that time and calculates trainings cost on prorata basis.
The loss they are asking is the delay in Project where I was participating but they only issued paper on 06-Sep saying I need to pay Rs 1,08,000 and my last working day in company is 06-Sep. There was nothing mentioned in letter and no discussion was done on project side. Also there were many persons working on project and they are making all false claims for total delay to me even which were resulted by their physical items delivery.
I would like to know if I can defend and prove employer is doing wrong to ask for excess money by ignoring leave settlement and served bond period even when I signed Letter for liability due to short period and training expenses. They didnt issue any break-up of how total was arrived and I asked for the same.
prabhakar singh
(Expert) 13 February 2015
Your case about validity of the bond would be governed by exception 1 to section 27 of the Idian Contract Act.
And the matter of compensation by section 74
of the said Act as the penalty is stipulated by the bond.
ALL DEPENDS HOW ONE DEVELOPS ONE'S CASE IN COURTS.
T. Kalaiselvan, Advocate
(Expert) 13 February 2015
