Karnataka High Court

Vijaya Bank vs Abhimanyu Kumar on 28 February, 2025

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 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

     DATED THIS THE 28TH DAY OF FEBRUARY, 2025

                      PRESENT

     THE HON'BLE MR. N.V. ANJARIA, CHIEF JUSTICE

                          AND

       THE HON'BLE MR. JUSTICE K.V. ARAVIND


        WRIT APPEAL NO.138 OF 2024 (GM-RES)

BETWEEN:

1.   VIJAYA BANK
     (NOW KNOWN AS BANK OF BARODA)
     AN UNDERTAKING OF THE
     GOVERNMENT OF INDIA
     INCORPORATED UNDER THE
     BANKING COMPANIES
     (ACQUISITION AND TRANSFER OF
     UNDERTAKINGS) ACT, 1980
     HAVING ITS HEAD OFFICE AT
     NO.41/2, M.G. ROAD
     BANGALORE - 560 001
     REPRESENTED BY ITS
     GENERAL MANAGER.


2.   VIJAYA BANK
     (NOW KNOWN AS BANK OF BARODA)
     FOREX AND TREASURY MANAGEMENT
     DIVISION, 6TH FLOOR, VIJAYA BANK
                                  -2-


     HEAD OFFICE, 41/2, M.G. ROAD
     BANGALORE - 560 001
     REPRESENTED BY ITS
     GENERAL MANAGER.
                                              ... APPELLANTS

(BY SRI S.R. KAMALACHARAN, ADVOCATE FOR
 SRI PRADEEP S. SAWKAR, ADVOCATE)

AND:
1.     ABHIMANYU KUMAR
       S/O SRI ASHOK PANDEY
       AGED ABOUT 35 YEARS
       MUH-BARADARI KATARA
       PO-PS BHAGWAN BAZAR DISTRICT
       CHAPTRA (SAM)
       BIHAR - 841 301.
                                             ... RESPONDENT

(BY SMT. BHARMAL SHIRIN SHABBIRBHAI, ADVOCATE
 FOR SRI MENTO ISAC, ADVOCATE)
                        ---

THIS WRIT APPEAL IS FILED UNDER SECTION 4 OF THE KARNATAKA HIGH COURT ACT, 1961, PRAYING TO SET ASIDE THE ORDER DATED 19.04.2023 PASSED BY THE LEARNED SINGLE JUDGE IN W.P. No. 6063/2014 AND DISMISS THE SAID WRIT PETITION AND ETC.



       THIS WRIT APPEAL HAVING BEEN HEARD AND
RESERVED       FOR    JUDGMENT,           COMING   ON   FOR
PRONOUNCEMENT             THIS     DAY,    JUDGMENT     WAS
PRONOUNCED AS UNDER:

CORAM: HON'BLE THE CHIEF JUSTICE MR. JUSTICE N. V. ANJARIA and HON'BLE MR JUSTICE K.V. ARAVIND

C.A.V. JUDGMENT

(PER: HON'BLE THE CHIEF JUSTICE MR. JUSTICE N. V. ANJARIA)

The present appeal is directed against the judgment and

order dated 19.04.2023 passed by learned Single Judge,

whereby writ petition came to be allowed and learned Single

Judge held that the appellant-Bank-the respondent in the writ

petition, since was not justified in recovering the bond amount

of Rs.3,00,000/-, it was required to refund the said amount to

the petitioner.

2. Two prayers were made in the petition. First was to set

aside condition in Clause 11(k) of the letter of

selection/appointment issued to the petitioner. It was secondly

prayed to set aside the indemnity bond dated 02.11.2011

insofar as it related to recovery of sum of Rs.3,00,000/-. The

petitioner prayed to direct the respondents to refund the

amount.

2.1 The original petitioner-respondent herein who is a

Chartered Accountant, came to be selected for the post of

Probationary Manager (Generalist) in the appellant-Vijaya

Bank. Pursuant to selection letter dated 07.10.2011, he joined

services on 02.11.2011.

2.2 As per Clause 11(k) of the selection letter, the petitioner

is required to serve the Bank for a minimum period of three

years from the date of joining and was further required to

execute the indemnity bond for Rs.3,00,000/-. It was the

condition that the amount will be required to be paid, if he

leaves the service or resigns from the services of the Bank

before the stipulated period of three years.

3. It is the case of the petitioner that prior to his appearing

in the selection process by the appellant-Bank, he had applied

in August 2011, for employment in the Steel Authority of India

Limited (SAIL). The SAIL issued offer letter of appointment on

02.04.2012. It was stated that having received the said letter of

offer, the petitioner opted to join the services under the same.

The petitioner stated that therefore, he tendered his resignation

from the services of the appellant-Bank, on 05.04.2012 stating

that he had preferred employment under the SAIL, instead of

the appellant-Bank for the reason that the posting as well as

the scale of pay are favourable to him.

3.1 The petitioner thereafter requested the appellant-Bank to

relieve him from the employment. The petitioner addressed

communication dated 29.05.2012 asking for waiver of the

Indemnity Bond. The request of the petitioner was refused by

the Bank on 06.06.2012. The Bank also sent the reminder to

the petitioner to pay the Bond amount. The petitioner further

stated that on 13.07.2012, he was forced to pay the Bond

amount which he paid by cheque. The petitioner was given

relieving letter dated 21.07.2012. The petitioner subsequently

joined the services under the SAIL on 28.08.2012.

3.2 The petitioner's case proceeds to state further that in the

month of September 2012, he came to know about the

Department of Public Enterprise Guidelines (DPE Guidelines)

dated 29.07.2004 and that the said guidelines permitted,

according to the petitioner, transfer of Indemnity Bond amount

as well as the remainder period of the Bond. The petitioner

issued notice dated 25.05.2013 to the Bank seeking transfer of

the Bond amount. The request and the claim was refused by

the Bank by reply dated 19.08.2023.

3.3 Contending in his petition that he was in unequal position

when sought for employment under the appellant Bank, that

demand of indemnity bond was an unconscionable contract

and that he was made to sign the selection letter by coercion,

the petition was filed to claim refund of the amount.

3.4 Contesting the petition, the appellant Bank denying the

allegations about the coercion and unconscionable agreement,

etc., or that the Bank forced the petitioner to sign the selection

letter and conditions therein, submitted that the DPE

Guidelines were not applicable to the Bank and that the Bank

was under the Department of Finance to be governed

accordingly.

4. Learned Advocate Mr. S.R. Kamalcharan for learned

Advocate for Mr. Pradeep S Sawkar for the appellant

submitted, assailing the impugned judgment and order of

learned Single Judge that Clause No.11(k) in the selection

letter given to the petitioner was explicit and was binding to the

petitioner, requiring him to pay the sum of Rs.3,00,000/- in the

event he leaves services of the Bank. It was submitted that

having agreed to serve the Bank for a period of three years

under the conditions of the Bond, the petitioner voluntarily

opted to discontinue the services of the Bank and joined the

other employer.

4.1 It was submitted that, not only the petitioner was bound

by the condition, but he also paid the Bond amount. Decision

of the Supreme Court in Cauveri Coffee Traders, Mangalore

vs. Honor Resources (International) Company Ltd. [(2011)

10 SCC 420] for the proposition that when a party to a contract

knowingly accepts the benefits of the contract or conveyance

or an order, he cannot turn around at a later stage to deny the

binding effect thereof.

4.1.1 It was submitted that the post on which the petitioner

joined was of Manager (Generalist) which was a post with

technical responsibilities and for which the Bank imparted

training to the petitioner by investing the amount and incurring

the expenses. It was sought to be submitted that in that light

also, the payment of the bond amount was justified to be

nature of compensation stipulated in the conditions of contract

for loss or damage. It was submitted that validity of Clause

11(k) is not under challenge.

4.2 On the other hand, learned Advocate Smt. Bharmal

Shirin Shabbirbhai for learned Advocate Mr. Minto Isaac for the

respondent-petitioner supported the judgment and order of

learned Single Judge raising all the contentions which was

canvassed before learned Single Judge. It was contended that

the petitioner was forced to sign the Indemnity Bond which was

unjust and unfair. It was sought to be contended that the Bank

had an upper hand and he was in unequal position when

sought for employment with the appellant Bank, having less

bargaining power.

4.2.1 It was next submitted that the Indemnity Agreement

was an agreement in the nature of a restraint agreement and

amounted to unconscionable contract. Learned Advocate

relied on DPE Guidelines, on which learned Single Judge

rested his reasoning. It was submitted that the guidelines

permitted the transfer the amount as well as the period of the

Bond when an employee of the public sector entity joins the

services of the Central Government, State Government and

autonomous body. According to the contention of the

petitioner, he is entitled to the said benefit and it was not

permissible for the Bank to ask him to pay the bond amount.

5. Clause 11(k) in the selection letter reads as under,

"You are required to produce certain certificate/documents and execute

bonds/agreements at the time of joining the services of the Bank, the particulars of which are furnished hereunder:

(a) Certificates in original along with two Photostat copies as proof of having passed the Final examination of C.A (qualified as Chartered Accountant) organised by the 'Institute of Chartered Accountants of India'

(b) SSLC or its equivalent certificate on original along with two Photostat copies thereof in proof of your age and date of birth. Certificates in original along with two Photostat copes thereof in support of your educational qualifications.

(c) Six copies ................

(k) You are required to serve the Bank for a minimum period of 3 years from the date of joining the bank and should execute an indemnity bond for Rs.3.00 lakhs. The said amount has to be paid by you in case you resign from the services of the bank before completion of the stipulated minimum period of 3 years. For this purpose, you have to bring a blank non-judicial stamp paper of requisite value procured in the State of your joining (ie., Karnataka @ Rs.100/-)"

5.1 The respondent-petitioner signed the indemnity bond on

02.11.2011. The indemnity bond contained the following terms

and conditions,

"(i) The Officer shall serve the Bank for a minimum period of three years.

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(ii) The Officer shall not leave the services of the Bank during the initial period of three years without the written consent of the Bank Management.

(iii) The Officer agrees, undertakes and binds himself/herself to indemnify and pay a sum of Rs.3.00 lakhs (Rupees Three Lakhs only) to the Bank by way of compensation/liquidated damages in the event of leaving/resigning from the services of the Bank before putting minimum service of three years aforesaid."

5.1.1 The aforesaid Clause in the selection letter and

stipulation in the bond are clear. It is stated that if the petitioner

wants to leave the service before completion of three years, he

will have to pay the bond amount of Rs.3 lakhs. In other words,

the selection and appointment of the petitioner to the posts of

Manager was on condition that he would serve with the bank

for minimum three years. Admittedly, the petitioner left before

three years and joined the service under SAIL. On similar lines

were the terms and conditions contained in the bond which

bind the petitioner.

5.2 The petitioner accepted those conditions at the time of

entering the services of the bank. He consciously accepted the

selection on such terms and conditions including the bond

amount and the payability thereof. Having agreed to and

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accepted the conditions, it is not open for the petitioner to resile

therefrom when admittedly he left the bank before three years

without completing the agreed and stipulated period of service.

5.3 It was sought to be contended by the petitioner that he

was made to sign the bond and the bond conditions out of

coercion. Not only that there is nothing to suggest that the

petitioner is pressurized or acted under coercion to enter the

service with the aforesaid conditions, the bald averments in this

regard amount to approbating and reprobating. The petitioner

blew hot and cold in his conduct to suit his convenience.

5.4 It is well settled that the plea of coercion, duress or undue

influence has to be cogently established. The Supreme Court

in New India Assurance Co. Ltd. vs. Genus Power

Infrastructure Ltd. [(2015) 2 SCC 424], after discussing the

decisions on the line, held that 'it is therefore clear that a bald

plea of fraud, coercion, duress or undue influence is not

enough and the party who sets up a plea, must prima facie

establish the same by placing material before the Chief

Justice/his designate'. The Court was addressing the issue

about receipt of payment under insurance policy and that the

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respondent had signed the letter of subrogation in favour of the

appellant.

5.4.1 The Supreme Court observed,

"...the plea raised by the respondent is bereft of any details and particulars, and cannot be anything but a bald assertion. Given the fact that there was no protest or demur raised around the time or soon after the letter of subrogation was signed, that the notice dated 31.03.2011 itself was nearly after three weeks and that the financial condition of the respondent was not so precarious that it was left with no alternative but to accept the terms as suggested, we are of the firm view that the discharge in the present case and signing of letter of subrogation were not because of exercise of any undue influence. Such discharge and signing of letter of subrogation was voluntary and free from any coercion or undue influence."

(para 10)

5.5 Decision of the Madras High Court in Bindu Kelunni

vs. Blue Dart Aviation Ltd., which was A.S. No.77 of 2012

decided on 02.06.2017, contained the similar facts, though it

arose from the civil proceedings. The trial court had held that

the appellant-defendant was liable to pay certain sum with

interest for committing breach of the bond executed by her. It

was held that the submission on the part of the defendant that

the bond was obtained by misrepresentation was not

acceptable, for, the defendant had undertook to pay certain

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sum in the event of her leaving the services of the plaintiff

within three years. It was stated that abrupt exit by her resulted

into inconvenience and loss to the employer and that the

amount of bond was a pre-estimate of damages.

5.6 The plea raised by the petitioner that the clause in the

selection letter and the conditions in the bond were obtained

from him by way of misrepresentation or through undue

influence, was taken for the sake of taking. The petitioner

while tendering his resignation by letter dated 05.04.2012 had

confirmed that he was willing to serve for three months notice

period and that will pay the bond amount of Rs.3,00,000/-.

Extracting the same from the said letter of resignation of the

petitioner,

"I am willing to resign from my office due to my selection with SAIL. I further wish to let you know that I am ready to pay the exit amount as referred in the terms and conditions of my appointment letter. I am ready to serve the three month's notice period starting from 05.04.2012."

5.7 The Department of Public Enterprises Guidelines would

not apply. Learned Single Judge could not but misdirected

himself in relying on the said Guidelines to hold that the Bank

was in error in demanding and collecting the sum of

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Rs.3,00,000/-. The petitioner was intimated by letter dated 6th

June 2012 that the DPE Guidelines were not applicable since

the banks were not covered thereunder.

5.7.1 The public sector banks which are the nationalized

Banks are guided by the instructions issued by the parent

Ministry which is the Department of Finances and Services and

Department of Economic Affairs (Banking Division), Ministry of