Dear All,
Whether particular contract is valid or not is totally depends upon the terms and conditions contained therein, the manner in which it is drafted subject to various provisions of law.
Suppose if an agreement of training contained a provision that employee has to serve the company for 2 year after completeion of training abroad and in case if he leave before said period he is liable to pay damages to the employer say equal to 6 months salary .....is not illegal/void.
In various judicial reveiw court held that such restriction are not treated as 'restrain in trade' hence not violative section 23/27 of contract act nor fundamental right u/a 19.
But drafting must be done carefully and restriction must not for post-employement period and it must be genuine to receover cost of training.
Employee is free to leave but they have to compensate the company,,,in my opinion such employee can not be allow to take laddu in both hands..means taking fruits of training, joining competitor and levaing it old employer in the mid of business set up..it is totaly immoral and unethical/non professional attitude.
Ya if they want to leave they can leave but pay cost of training.
Please check the attached article and judicial prouncement, for more cl;arity.
rEGARDS
aMIT kishore singh
From India, Delhi
6Whether particular contract is valid or not is totally depends upon the terms and conditions contained therein, the manner in which it is drafted subject to various provisions of law.
Suppose if an agreement of training contained a provision that employee has to serve the company for 2 year after completeion of training abroad and in case if he leave before said period he is liable to pay damages to the employer say equal to 6 months salary .....is not illegal/void.
In various judicial reveiw court held that such restriction are not treated as 'restrain in trade' hence not violative section 23/27 of contract act nor fundamental right u/a 19.
But drafting must be done carefully and restriction must not for post-employement period and it must be genuine to receover cost of training.
Employee is free to leave but they have to compensate the company,,,in my opinion such employee can not be allow to take laddu in both hands..means taking fruits of training, joining competitor and levaing it old employer in the mid of business set up..it is totaly immoral and unethical/non professional attitude.
Ya if they want to leave they can leave but pay cost of training.
Please check the attached article and judicial prouncement, for more cl;arity.
rEGARDS
aMIT kishore singh
From India, Delhi
Folks,
A Simple Explanation
Section 73 & 74 of the Contract Act are the main Statutes that will come into place:
Section 73
When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Section 74
When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
For eg:
If an employee joins a company.
Signs a Bond - Work for 2 years or else pay 3 lakhs before leaving
The Person is fully aware of what he is getting into
So the Contract will be stand good in court of law
As the Company will not be forcing the Employee to work, the Company just wants the Money and the damages caused thereby back
If the Company files a case, on the imposition of the Person to work under any circumstances then it will amount to Forced Labor and the Article 23 (1) of the Indian Constitution will come into play.
FINAL VERDICT:
CASE FILED FOR BREACH OF CONTRACT FOR MONEY - holds good in the court of law - Sec 73 & 74 for Indian Contract Act, 1872
CASE FILED FOR BREACH OF CONTRACT AND IMPOSING THE RESOURCE TO STAY BACK - Fundamental Right Breached and hence Sec 73 & 74 Null & VOid
From India, Bangalore
A Simple Explanation
Section 73 & 74 of the Contract Act are the main Statutes that will come into place:
Section 73
When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it.
Section 74
When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for.
For eg:
If an employee joins a company.
Signs a Bond - Work for 2 years or else pay 3 lakhs before leaving
The Person is fully aware of what he is getting into
So the Contract will be stand good in court of law
As the Company will not be forcing the Employee to work, the Company just wants the Money and the damages caused thereby back
If the Company files a case, on the imposition of the Person to work under any circumstances then it will amount to Forced Labor and the Article 23 (1) of the Indian Constitution will come into play.
FINAL VERDICT:
CASE FILED FOR BREACH OF CONTRACT FOR MONEY - holds good in the court of law - Sec 73 & 74 for Indian Contract Act, 1872
CASE FILED FOR BREACH OF CONTRACT AND IMPOSING THE RESOURCE TO STAY BACK - Fundamental Right Breached and hence Sec 73 & 74 Null & VOid
From India, Bangalore
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