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    Bond

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    Three trainees signed bonds agreeing to two years of training and five years of employment with Fertiliser and Chemical Travancore Pvt. Ltd. They resigned after five months of training. The High Court of Kerala ruled the employer suffered losses from the breach and was owed damages. In another case, an employee contracted for three years but left after 14 months. The court ruled the employer did not need to prove specific damages from the breach. In a third case, the Calcutta High Court held that if an agreement stipulates liquidated damages for breach, the employer can sue for recovery of those damages without needing to prove actual damages occurred.

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    Bond

    Uploaded by

    Meet Khurana
    96 views2 pages
    Three trainees signed bonds agreeing to two years of training and five years of employment with Fertiliser and Chemical Travancore Pvt. Ltd. They resigned after five months of training. The High Court of Kerala ruled the employer suffered losses from the breach and was owed damages. In another case, an employee contracted for three years but left after 14 months. The court ruled the employer did not need to prove specific damages from the breach. In a third case, the Calcutta High Court held that if an agreement stipulates liquidated damages for breach, the employer can sue for recovery of those damages without needing to prove actual damages occurred.

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    employee bond

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    Three trainees signed bonds agreeing to two years of training and five years of employment with Fertiliser and Chemical Travancore Pvt. Ltd. They resigned after five months of training. The High Court of Kerala ruled the employer suffered losses from the breach and was owed damages. In another case, an employee contracted for three years but left after 14 months. The court ruled the employer did not need to prove specific damages from the breach. In a third case, the Calcutta High Court held that if an agreement stipulates liquidated damages for breach, the employer can sue for recovery of those damages without needing to prove actual damages occurred.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    96 views2 pages

    Bond

    Uploaded by

    Meet Khurana
    Three trainees signed bonds agreeing to two years of training and five years of employment with Fertiliser and Chemical Travancore Pvt. Ltd. They resigned after five months of training. The High Court of Kerala ruled the employer suffered losses from the breach and was owed damages. In another case, an employee contracted for three years but left after 14 months. The court ruled the employer did not need to prove specific damages from the breach. In a third case, the Calcutta High Court held that if an agreement stipulates liquidated damages for breach, the employer can sue for recovery of those damages without needing to prove actual damages occurred.

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    of 2

    Fertiliser and Chemical Travancore Pvt. Ltd v.

    Ajay Kumar and Others

    Three trainees were selected by the employer who signed a bond stating that
    they would obtain two years of training in the company and after the training
    they will put in at least five years of service in the company. In the event of
    breach of this condition Rs. 10,000 was to be paid as reasonable amount of
    compensation for the damages to be likely incurred by the employer. The trainee
    resigned after five months of training. The High Court of Kerala held in this case
    that though the candidates were selected for training and not for permanent
    service, it still involved a lot of time, energy and expenses of the employer. The
    employer will surely suffer loss when a trainee breaks the condition of bond and
    walks off. The employer is derived of the expected service of a competent person.
    Breach of bond by the trainee is aspect entailing damages to the employer. Only
    the quantum of damages needs to be decided.

    Toshinial Brothers (Pvt.) Ltd v. Eswarprasad

    An employee was engaged as Sale engineer; He was contracted for a period of


    three years however he left the undertaking after serving for 14 months only. In
    this case it was held that it is not necessary for the employer to prove any post
    breach damages separately. It is to be kept in mind that the concerned employee
    was recipient of special favour or concession or training at the cost and expenses
    wholly or in part of the employer, and the employee has breached the bond. The
    breach constitutes legal injury resulting to the employer. The High Court also
    clarified the position that the statutory exception for mitigating the quantum of
    damages will have no bearing.

    Subir Ghosh v. Indian Iron and Steel Company

    The Calcutta High Court dealt with the scope of Section 74 of the Indian Contract
    Act, in the context of a trainee. The terms of trainee contract contained a
    provision agreeing to serve the company for a particular period of time and to
    pay a fixed sum of damages in the event of a breach. The High Court held that
    since the stipulation in the agreement was for payment of liquidated damages, it
    is immaterial to specifically plead or prove damages and that it is open to the
    management to sue for recovery of the liquidated damages.

    According to Section 27 of the Indian Contract Act, 1872, the terms and
    conditions of the contract are valid only during the existence of the contract. It
    cannot be enforced after the contract is terminated.

    In Superintendence of Company v. Krishan Mugai, it was held that, in a contract


    of restraint of trade a restriction is put on the future liberty by one party on the
    other party to carry on his trade, profession or business in such manner and with
    such person as he chooses. A contract of this nature is prima facie void but
    becomes binding and valid if it can be proved that it is necessary from the point
    of view of parties and also to the community. Such interests are valid as they
    take care of the interest of the employer and do not cause any undue hardship to
    the employee, who will receive a wage or salary for the period in question. But if
    the covenant is to operate after the termination of services, or is too widely
    worded, the court may refuse to enforce it.

    Conclusion
    The employment bond is considered reasonable as it is necessary to protect the
    interest of the employer. However, the restraints stipulated upon the employee
    in the contract should be “reasonable” and “necessary” to safeguard the interests
    of the employer or validity of bonds comes under scrutiny. The employee cannot
    be compelled to work for any employer by enforcing the employment bond. In
    the event of a breach of contract by the employee, the only remedy available to
    the employer is to obtain a reasonable compensation amount.

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