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TMI Blog2009 (12) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... irculars dated 17.8.2007 and 12.10.2007 directing the petitioner to comply with the conditions mentioned in the said circular by his letter dated 14.7.2008. Thereafter there were other correspondence between the parties and once again a request was made by the petitioner on 7.10.2008 and since there was no response to the said request of the petitioner to be relieved, he filed the writ petition challenging the letter dated 14.7.2008 as per Annexure-B and circular No. 1320 dated 17.8.2007 and circular No. 1170 dated 12.10.2007 vide Annexures-K & L respectively. 3) In response to the said writ petition the respondents appeared and filed their statement of objections admitting that the petitioner had resigned on 9.7.2008, but the resignation was not accepted since he was required to fulfil certain conditions as per the respondent-company's rules and regulations and that the petitioner's sudden resignation would create a vacuum in the department, particularly when he is a well experienced senior officer. That the terms and conditions mentioned in the circulars were part of the service conditions which were informed to the petitioner and therefore, the resignation would be acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises for our consideration is, as to whether, the conditions imposed in Annexure-B namely letter dated 14.7.2008 on the basis of the clauses of the circulars dated 17.8.2007 and 12.10.2007 are valid in the eye of law. 9) In order to consider the same, it is necessary to extract the letter dated 14.7.2008 (Annexure-B) wherein conditions have been imposed by the respondents on the appellant so as to process the resignation tendered by the appellant. The said letter reads as follows : "This has reference to your letter of resignation dated 9.7.2008. To enable us to process your resignation, you are hereby advised to comply with the following as per Company Rules: I) In line with Clause 16.6 of BEML service Rules, you are required to pay No compensation amount of Rs.2.5 Lakhs as damages applicable for your Grade, since you have not completed minimum service period of 2(Two) years after your Promotion. II) You will have to serve the company for a period of 3(Three) months from the date of your resignation as per Company Rules. III) In addition, you will have to execute an undertaking on a stamp pater of value Rs.20/- that you will not join our Competitors/ Customer Organisati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s service conditions of BEML with immediate effect. 1) Executives on the rolls of BEML shall not join any past, current and future competitors or organisations with which BEML has business dealings elther as an associating organisation or as partners, vendors, suppliers, customers, technology partners financiers etc., for a period of 2(two) years from the date of resigning from the services of BEML. II) Executives resigning from the services of BEML on the ground of personal reasons without disclosing the organisation they are joining will have to sign an undertaking that they are not joining nor shall join any competitor or organisations with which BEML has business dealings either as an associating organisation oras partners, vendors, suppliers, customers, technology partners, financiers etc., within a period of 2(two) years from the date of resigning and relief from the services of BEML iii) Further in the event of violation of the undertaking given or failure on the part of any Executive to adhere to the conditions at 3(1) and (Il) will render them liable for damages to the extent of Rs.2 lakhs for Executives in Grade 1 & II Rs.3 lakhs for Executives In Grade III & IV Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved, on the one hand by brining in the performance based monetary and non monetary compensation/benefits to the Executive and on the other hand, build the required safe guards Into the system so as to preempt the possibility of key executive to use the benefits as a stepping stone for leaving the organisation for greener pastures. In view of the foregoing the fact that substantial enhancement has been effected by the granting additional Increments and by enhancing conveyance, professional upgradation allowances etc., and reduction In the span for promotion In some cases, it has been decided to incorporate the following two clauses under Rule-16 of BEML service Rules relating to Resignation as a part of BEML Service conditions. 16.5 Executives joining BEML, are required to serve the organisation for a minimum period of 03 (three) years after training/ contract appointment period and therefore, shall not apply for outside employment for the stipulated period. In the event of leaving the organisation any time during this period he/ she would be liable to pay compensation amount linked to the respective grades in BEML as per enclosure. 16.6 Executives, on promotion shall also be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even without seeking employment in those competitor or customer organisations of the respondent. Therefore, we do not find any object being served by imposing such a conditions in clause No. 16.6 of the circular dated 12.10.2007. 12) Apart from that the condition regarding in Clause 3.3 of circular dated 17.8.2007 with regard to monetary compensation would also not in any way assist the respondents company, in as much as the object of retaining employees by such condition would not in any way advance the aims objects mentioned in the circular. 13) That apart we also find that the conditions mentioned at the time of tendering resignation are unconscionable conditions support of the said view we rely upon the decision of the Apex Court reported in the case of Central Inland Water Transport Corporation Limited V/s Brojonath (1986 3 SCC 156). 14) In the said decision it has been stated that an unconscionable bargain or contract is one which is irreconcilable with what is right or reasonable or the terms of which are so unfair and unreasonable that they shock the conscience of the Court. Equity however interfered in many cases of harsh or unconscionable bargains, while in other case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and I the context of Article 14 of the Constitution held that it is difficult to give an exhaustive list of all bargains which would result in an unfair and unreasonable contract, or a contract having an unfair and unreasonable clause entered into between the parties who are not in equal bargaining power and stated that the spirit of Article 14 would apply where a man has no choice or rather no meaningful choice, but to give his assent to a contract or to sign on the dotted line in a prescribed or standard form or to accept the said rules as part of the contract. Further unfair, unreasonable and unconstitutional clause in the contract or form or rules may be particularly where the bargaining part of the contracted party is not equal. The Apex Court then referred to Section 23 of the Contract Act which deals with the object of an agreement being opposed to public policy an held that contracts which contain terms which are so unfair and unreasonable that they shock the conscience of the Court are opposed to public policy and require to be adjudged void. 18) We also hold that the conditions mentioned in Clause 16.6 is a restraint on trade and therefore hit by section 23 of the Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X
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