Employer Must Accept Resignation Unless Contract Violated Or Disciplinary Proceedings Pending: Kerala High Court
The High Court held that an employer is duty-bound to accept an employee’s resignation subject only to contractual & other conditions, and refusal without lawful justification may violate Article 23 of the Constitution.
The Kerala High Court held that once an employee resigns in accordance with the terms of employment, the employer has a legal duty to accept it and relieve the employee from service.
The Court clarified that this obligation can be refused only if the resignation violates contractual conditions or if disciplinary proceedings for grave misconduct are pending.
The Court was hearing writ petitions filed by a Company Secretary employed with a State Public Sector Undertaking, challenging the refusal of his resignation and subsequent disciplinary communications issued by the employer.
A Bench of Justice N. Nagareesh, while stating that “when an employee submits his resignation, the employer has a duty to accept the same and relieve the employee from his duties”, observed that “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.”
The Bench further held that “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, …In any other event, if the employer refuses to accept the resignation of an employee, it would amount to bonded labour prohibited under Article 23 of the Constitution of India”.
Background
The petitioner had been serving as Company Secretary of the respondent company since May 2012 and had rendered over thirteen years of service.
He stated that the company defaulted in payment of salary from October 2022 onwards, leaving him without regular income.
Due to financial hardship and personal circumstances, including responsibility to care for his ailing mother suffering from neurological and psychiatric conditions, he submitted his resignation on 18 March 2024, requesting to be relieved.
Instead of accepting the resignation, the company informed him that its Board had rejected it because his services were essential in view of the company’s financial crisis and absence of a suitable substitute. He was directed to resume duties immediately.
Subsequently, show-cause notices and memos were issued requiring him to explain why disciplinary action should not be taken and directing him to report for duty. The petitioner challenged these actions and sought directions for the acceptance of his resignation.
The employer defended its decision by asserting that the petitioner occupied a crucial statutory role, that the company had liabilities exceeding ₹257 crore, and that his continued presence was essential for organisational functioning.
Court’s Observation
The Court first examined the governing legal principles relating to resignation. It was observed that submission of resignation creates a corresponding duty on the employer to accept it and relieve the employee, subject only to contractual stipulations such as notice periods or prescribed procedures.
It clarified that an employer may reject a resignation if it does not comply with procedural requirements specified in the employment contract or if it is tendered impulsively in the “heat of the moment,” in which case the employer may legitimately delay acceptance to allow reconsideration.
The Bench emphasised that, apart from contractual non-compliance, refusal to accept resignation is permissible only in exceptional circumstances, such as when disciplinary proceedings are contemplated for grave misconduct or for causing financial loss to the establishment.
Outside these narrowly defined situations, the Court held, an employer cannot lawfully refuse to accept resignation while stating that compelling an employee to continue working against his will, without a contractual or legal basis, would violate fundamental rights.
Applying these principles, the Court found that the petitioner’s resignation complied with all applicable requirements and that no disciplinary proceedings were pending when it was submitted. The employer’s sole justification was that the company was in financial difficulty and required his services.
The Court held that a financial crisis cannot be a lawful ground to force an employee to remain in service against his will. It further observed that subsequent disciplinary notices issued after the filing of the writ petition appeared to be attempts to prevent him from leaving employment.
The Bench also noted that under the Companies Act framework, a Company Secretary’s appointment remains linked to the employer until statutory filings are made with the Registrar of Companies. Failure to process a resignation could therefore prevent the employee from securing alternative employment.
Conclusion
The High Court held that the refusal to accept the petitioner’s resignation was unjustified and contrary to law. It set aside the communications rejecting the resignation and the disciplinary memos, directed the employer to accept the resignation and relieve him within two months, and ordered payment of arrears of salary and terminal benefits subject to the company’s financial position.
Cause Title: Greevas Job Panakkal v. Traco Cable Company Limited & Ors. (Neutral Citation: 2026:KER:12335)
Appearances
Petitioner: D. Sreekanth; Aswin Kumar M. J.; Albin George; Jeevadas H.; James Jose, Advocates.
Respondents: Abel Tom Benny (Standing Counsel); D. Prem Kamath; Tom Thomas (Kakkuzhiyil); Aaron Zacharias Benny; Alan J. Yogyaveedu; Clint Jude Lewis; Mathew Angelo Davis; Jyothika Krishna; Princy Xavier, Senior Government Pleader.