Indemnity Bond
Anish
(Querist) 25 October 2008
This query is : Resolved
I'm a graduate engineer. My previous company, where i joined as trainee just after my graduation in Dec 2005, made me sign an Indemnity Bond in Jan 2007. They said they would send me to Germany for Advanced training initially of for 3 months and it would extend for 2 years.
They sent me to Germany for 3 months and i returned in April 2007. But instead of training I was made to work on an Indian Project which i was already working on back in India. That is I practically did the same work i was doing in India apart from the fact that i was doing it sitting in Germany. I complained to the management but they told me that the Germans were not interested in training Indian people.
I left the organization in July 2008.
The bond is on stamp paper and was for a period of 3 years, starting from "the day i return from training."
The amount of the bond being 2 lakhs. Now the company has sent a notice(on their letter head)to me claiming the amount and legal action if i do not pay.
I asked them through Registered mail and E-mail as to why they were claiming the amount as they had not provided any training. The HR Head responded to the email saying "You have signed a bond and if you had a problem you should have said it earlier."
But i had complained to Vice President and also a to member of the Board of Directors.
when i told the HR Head about this through email, he did not respond.
Now they have sent a notice through an advocate through registered mail, which i could not receive as i was not at home.
My question is...how should i act and should i receive the next notice...?If they file a case how can i prove that the bond is not valid..?
Thanks in advance
ARVIND JAIN
(Expert) 25 October 2008
bond is not legal.they cant recover any thing.challange it court when they file suit.
Anish
(Querist) 25 October 2008
Thank You Mr. Arvind Jain for your reply.
But I have a few question as i am not clear how things work in the legal system. Here are my questions:-
1. Should I receive and reply to the notice from the Advocate...? Do i have to reply to the Company or to the Advocate
2. How and on what grounds can i prove that the bond is not valid...?
3. Can I file a suit against the company as they have not settled my account(sum of Rs 44000 approx. is to be given to me including bonus) and they are refusing to give me the experience certificate...
H. S. Thukral
(Expert) 25 October 2008
Dear Shri Arvind Jain :
I have been going through such issues for quite some time and on this portal I have replied to some queries to my ability but frankly I am not convinced. I read one judgment where an employee is sent abroad on training or deputation and the employer ensures that he does not avail this opportunity to join any other employer while abroad by taking a surety by way of bond. The amount,it was held could be recovered. You are much experienced therefore kindly throw more light on this issues. In my opinion such cases are covered under section 74 of the Contract Act and employer when challenged would have to show a loss though not actual loss equivalent to bond but all the same he can recover reasonable damages.
Anish
(Querist) 25 October 2008
I would like to clarify that i did not avail this opportunity to join any other employer while abroad.
I was sent abroad saying that i would receive training there, but nothing of that sort happened. The company is least bothered about the training, its intention is to trick an employee into signing the bond and stay with the organization. I stayed there for One and a half year after the supposed "training" but decided to leave due to the lack of transparency in their appraisal system.....
Anish
(Querist) 25 October 2008
oops i clicked on resolved
Murali Krishna
(Expert) 25 October 2008
As Harbhajan Thukral rightly said, the indemnity bond is part of service agreement. Hence, the company can enforce its rights against the employee who left the organisation prior to the completion of the agreed period. As the amount indicated amounts to liquidated damages, I feel that the company has a right to proceed against its employee. Further the employee can ask for offset of his amounts.
Anish
(Querist) 25 October 2008
Can the company claim even if it has not provided any training...?
ANAND SUMAN
(Expert) 27 October 2008
Dear Mr. Anish,
This has become a general practise in modern globalized world. By this, company had started to harass its employees.
Legally speaking, company can file a suit in civil court or if there is any arbitration clause in that bond, before the arbitrator. I am also contesting a similar case against HCL company and therefore being an advocate, what i can suggest you is:
1. If any legal notice comes, receive that notice and make a reply to the same advocate through an advocate. The simple reason is that if you will not receive the notice, the company appoints an arbitrator or file a suit in civil court as the case may be and an ex-parte decree would be passed against you.
2. Contest the case on the ground that the bond (agreement) is void as per the express law of indian contract act, 1872 because the company had sent you abroad on the pretext of training while there was no training and the company used you to make money. The company had commited fraud and cheated you and thus the agreement is void.
Rest I will suggest after viewing the case history and other documents.
If you need my assistance in replying the legal notice or contesting the case, feel free to contact at any time.
Best Regards,
ANAND SUMAN
Advocate
(Founder Director)
ANAND LEGAL SOLUTION
E- 42 B, Third Floor,
Jawahar Park, Khanpur
New Delhi- 110 062
Mob. 9958330546 (Delhi)
E-mail: anandlegalsolution@hotmail.com
advocateanandsuman@hotmail.com
H. S. Thukral
(Expert) 27 October 2008
Dear Ashish:
Certain contracts are illegal and void if the same are against Public Policy or are contracts between the parties where one party is deprived of bargaining power because of economic inequalities. Could such contract ( between you and employer)
be called one such contract? Another provision in the contract act is that parties can name pre-assessed damages which are payable on breach of contract. It is also provided that the damages so provided should be realistic and not by way of penalty.
Your case has to be tested on the principles and provisions of law as enunciated above.
I will advise you not to pay anything at this juncture and wait for the next step from the employer and then seek advice if necessary.
Manish Singh
(Expert) 29 October 2008
I conucur with the views of Mr. Thukral.
