Financial Emergency No Ground To Force Employee To Continue; Refusal To Accept Resignation May Amount To ‘Bonded Labour’ Under Article 23: Kerala HC
Even after more than 20 months had elapsed, the employer refused to accept the resignation
The Kerala High Court while upholding an employee’s right to be relieved from service has held that financial difficulties of an employer cannot justify forcing an employee to continue in service against his will. The bench further observed that refusal to accept a resignation in such circumstances may amount to “bonded labour” prohibited under Article 23 of the Constitution of India.
The present matter concerned a Company Secretary who tendered his resignation on 18-03-2024. Even after more than 20 months had elapsed, the employer refused to accept the resignation and relieve him from service, citing the company’s precarious financial condition and asserting that his services were indispensable.
Justice N. Nagaresh observed, “…Financial issues or financial emergency cannot be a reason to force a Company Secretary to work for an incorporated Company against his will and without his consent. The disciplinary proceedings contemplated against the petitioner in the circumstances can only be seen as an attempt by the respondents to violate the right of the petitioner to resign from service”.
“When an employee submits his resignation, the employer has a duty to accept the same and relieve the employee from his duties. This duty of the employer is subject only to any conditions that may be stipulated in the contract of employment, including any stipulation as regards notice period. A resignation can be rejected if resignation does not follow procedure if any, outlined in the employment contract. In case of “Heat of the moment” resignations, the employer may be justified in delaying its acceptance, giving the employee a chance to rescind it… Another instance where the employer can refuse to accept resignation, is when disciplinary proceedings are contemplated against the employee for grave misconduct or for causing monetary loss to the establishment.”, the bench further noted.
Advocate D. Sreekanth appeared for the petitioner and Princy Xavier, Senior Government Pleader appeared for the respondent.
As per the facts, the petitioner had approached the High Court contending that the refusal was arbitrary and that the disciplinary proceedings allegedly contemplated against him were merely a device to prevent him from leaving the organisation.
The Court observed that financial issues or financial emergency cannot be a ground to compel a Company Secretary, or any employee, to continue working for an incorporated company without consent. It clarified that an employer may legitimately refuse to accept a resignation only where disciplinary proceedings are contemplated for grave misconduct or for causing monetary loss to the establishment.
The Court found that the contemplated disciplinary action could not justify indefinite denial of the petitioner’s right to resign.
The Court also noted the statutory implications under the Companies Act, 2013, pointing out that the engagement of a Company Secretary must be registered with the Registrar of Companies. Unless the employer sends the necessary statutory intimation, the employee’s name continues to remain linked with the company, thereby affecting future employment opportunities.
Therefore, holding that the employer’s financial distress cannot override the employee’s fundamental and statutory rights, the Court granted relief to the petitioner and upheld his right to be relieved from service.
Cause Title: Greevas Job Panakkal v. Traco Cable Company Limited [Neutral Citation: 2026:KER:12335]
Appearances:
Petitioner: D. Sreekanth, Aswin Kumar M J, Albin George, Jeevadas H., James Jose, Advocates.
Respondent: Abel Tom Benny, Standing Counsel, D. Prem Kamath, Tom Thomas, Aaron Zacharias Benny, Alan J Yogyaveedu, Clint Jude Lewis, Mathew Angelo Davis, Jyothika Krishna, Princy Xavier, Sr. Government Pleader, Advocates.