Resignation refusal is bonded labour: Kerala High Court orders firm to free Company Secretary kept ‘against his will’

What was the case?

• The petitioner joined the respondent-company as company secretary in 2012.
• The petitioner alleged that the company started defaulting in payment of salary for a long period.
• Therefore, the petitioner submitted resignation in March 2024 and requested the company to relieve him from service.
• His resignation was rejected stating that it was unfair for the petitioner to leave the organisation considering its present critical financial position without a proper substitute. The petitioner was directed to resume duties immediately.
• The petitioner approached the management and requested to accept his resignation following which he was asked to give explanation in writing as to why disciplinary action should not be taken against him.
• The petitioner submitted and requested to relieve him so that he can go in search of better opportunities and take care of his ailing mother.
• The petitioner was again served with a memo directing him to report for duty, following which he approached the high court.
• The company in its written statement argued that the delay in salary disbursal occurred due to the financial issues.

Court’s observations

• 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.
• In the absence of violation of any notice conditions or conditions in the contract of employment, an employer cannot desist from accepting a resignation.
• 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 resignation of an employee, it would amount to bonded labour prohibited under Article 23 of the Constitution of India.
• Due to the provisions of the Companies Act, if any company secretary is attached to any corporate body, the company has to register the engagement with the Registrar of Companies.
• Unless the employer sends a statutory request, the name of a Company Secretary will always remain linked to the employer-company which may cause difficulty for a Company Secretary from seeking appointment elsewhere as Company Secretary.
• Respondents 1 and 2 have been defaulting in payment of salary to the petitioner since October, 2022.
• More than 20 months have lapsed since submission of resignation.
• Respondents 1 and 2 have refused to accept the resignation of the petitioner and relieve him from service on the ground that the petitioner’s service cannot be dispensed with due to the financial position of the company.
• 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.
• Financial issues or financial emergency cannot be a reason to force a company secretary to work for a company against his will and without his consent.

Court’s directions

• Respondents 1 and 2 are directed to accept the resignation letter submitted by the petitioner and relieve him from his services as expeditiously as possible and at any rate within a period of two months.
• The petitioner shall also be paid arrears of salary, leave surrender benefits and terminal benefits, to which he is legally entitled to as expeditiously as possible subject to the financial position of the Company