Rajesh .Potnuru v. State of Telangana

Order

The short question for consideration is whether "minimum service bond" signed in an employer & empioyee relationship is valid as per the mandate of the Constitution of India or not- In the present writ petition, petitioner challenges 2. the inaction of Respondent No. 1 - Commissioner of Labour, Telangana through Respondent No 3 - Joint Commissioner of Labour, RR District against Respondent No' 4 - Algonox i'e' petitioner's employer, who had made him sign an "employment bond" and extorted Rs-5,90,O00/- (Rupees five lakh ninety \ 2 .ry cm the job mployment :nd" q7[j6[ : bond one thousand) from petitioner, by not relieving him ; unless he makes such payment and citing the ,, they made him sign under duress (i.e. issuing tli month after employment and ,,in total issuing r bonds three times to the petitioner) and harassing : immense mental trauma and financial distress to pet 3. petitioner states that he had joined Res: 4 as an intern during June to August 2O19 and nz full time employment offer in letter dated O 1.09.2019 and employlr:nt under Employee ID: 1792, on 01.O9.2019. petitioner was n:i cle to sign employment bond viz."surety agreement,, for minimur L duration of employment by Respondent No. 4 as follows: 2079 tl I :ugh offer joined the September, rndent No. s issued a tioner. nd causing l ii. l]- P."9, Ocrober 2019, tor 24 mo I trs 2nd Bond, June 2021 ,lor 12 monlh: 3rd Bond, April 2022, for 26 monrhs According to petitioner, 2019 and 2O2I sr -ety bond coples were not given to him.

3.1. petitioner states that making an employr:, Employment Bond' after one month of employmenr, s clearly abuse of' their dominance position, under which 1 etting a slgnature from the employee, who is in a weaker p t sition is stgn an I araaaa7 "4-effF*riB '_ ]. , &7 .// I J easy, thus violating the principle of 'Free Consent'under Section 16 (undue influence) and 14 (Free Consent) of the Indian Contract Act, 1872 (1872 Act\ as such, the contract being one- sided, the said "Employment Bonds" are void in nature. Further, petitioner states that, every time he wanted to resign from the services due to the hostile work culture, illegal iabour policies, abusive work allocation (i.e. making him to work for 12-15 hours a day); petitioner cited the 'Bond and asked to stay arrd then later hiked salary nominally- Yet, under some or the other pretext, petitioner was asked not to resign. Being vexed with the bonded labour culture, petitioner had finally decided to resign and submitted his resignation on 11.Oa.2O23 uia e rr:.a1l to Respondent No.4, who, in turn, refused uia e rrrall on n.Oa.2023 to accept his resignation and cited that to break the "Employment Bond" (the 3O% bond), petitioner has to pay a total of Rs.5.9 lacs INR to them, a-nd only then, they will accept his resignation. Petitioner further states that after receiving refi-rsal

3.2. to accept his resignation from respondent No.4, he hled a representation with Respondent Nos. 2 ar'd 3 on 1O.1O.2O23, after which a joint meeting was called uide notice dated 17 .1O.2O23, (meeting dated 20. 1O.2O23) to solve the issue \ 'i I I I I I ?t l i i I 4 : \-; amicably. Yet, while the discussions were i.r progress, the employer was adamant on NOT accepting his r esignation and threatened petitioner that he would face dire co : ;equences if he does not pay Rs.5.9 lacs INR for bond breakir ;t: and that he wouid lose employment opportunities if courl I ,roceedings are initiated needlessly and they would ensure rl at they would prolong the matter as much as possible to tr use maximum harm to petitioner. It is further stated, petitioni r rrvas not given salary for August, September and October. Oa.lt.2o23, respondent No. 4 withheld his s 2023 and till llary for three months in lieu of Employment Bond payment e r cl asked him to pay the remaining with laok GST. A<ll tionally, leave encashment was also withheld and the same \,r Ls also outlined in the legal notice issued to Respondent No. 4. t nder the threat of losing employment opportunities, petitioner i? as helpless but to pay an additionai amount of Rs. 1,34,853 (i rpees one lakh thirty four thousand eight hundred and ilty three) on 2I.11.2023, to make up for the total Rs.5.9 Ie :s INR, so that petitioner could exit the company and itart his new empioyment. Respondent No. 4 also made h im sign a self- declaration on 21.71.2023 t.e. after making prr 'ment of Rs.5.9 lac INR in total, stating that petitioner would r< I take any legal ry ' /,1 5 action against them post-relieving from the job. This practice alone shows the malice on their part, as to how they expect the employees to relinquish their right to legal remedy under Article 21 of the Constitution of India and also against Section 28 of 1872 Act Bonded or Forced Labour.

3.3. According to petitioner, the Constitution of India, Article 23 (1) prohibits any form of forced labour and Article 23 (2) recognizes imposition of compulsory services only in "Public services", as such, employment bonds" that Respondent No 4 is indulging in, stands contrary to the Constitution of India and thus void. Further, the Bonded l,abour System (Abolition] Act, 1976 also prohibits any kind of bonded labour system, even in the case of workman, as carried a maximum of three years imprisonment under Section 16 for employers who make the employees sign any contract undcr Section 5 of the 1976 Act' Also, atl such contracts/ agreements under Section 5 are void' Section 2 (g) (v) (1) and (explanation paragraph) of 1976 Act, states as follows; (g) "bonded labour system" means the system of forced, or partly forced, labour under which a debtor enters, or has, or is presumed to have, into an agreement with the creditor to the effect that - €ntered, (11 render, by himself or through any member of his family; or any person dependent on him, labour or service to the creditor, or for the _--.,-.-r-- 6 -rlF t rspecilied beneht of the creditor, for a specihed period or for an period, either without wages or for nominal wages, or Explanation- -For the removal of doubts, it is hereby declare I that any system of forced, or partly forced labour under which anl workman being contract labour as dehned in clause (b) of subsection (l o[ section 2 of the Contract tabour (Regulation and Abotition) Act, | 70 (37 of 1970), or an inter-State migrant workman as dehned in (1 use (e) of sub-section (1) of section 2 of the Inter State Migran I Workmen (Regulation of Employment and Conditions of Service) Act' I )79 (30 of 1979), is required to render labour or service in circumst'i ces of the nature mentioned in sub-ctause (1) of this clause or is subje': rd to all or any of the disabilities referred to in sub-clauses (2) to (rl) s "bonded labour system' within the meaning of this clause;l

5. Agreement, custom, etc., to be void. - On the commenc€r ent of this Act, any custom or tradition or any contract, agreemer . or other instrument (whether entered into or executed before ot after the commencement of this Act), by virtue of which any pers 'n' or any member of the family or dependant of such person, is requir € 1 to do any u,ork or render any service as a bonded labourer, shall t : void and inoperative Petitioner further states that as per Sec:

3.4. Telangana State Shops & Establishments Act, 19811 an employee may voluntarily resign from employm': notice of at least 15 days. Yet, Respondent No' 4 - notice for voluntary resignation coupled with a "Bor clause to harass empioyees and extorting mon: employees who want to resign and move awirl' company. This 90 days' notice clause in the offer I )n 47 (21 of (1988 Act), rt by giving rs 90 days' led labour" r from the from such )rter is. also 7 // against Section 23 (unlawful agreement) of 1872 Act which reads as under: " An employee who has compteted the age of sixty years or who is physically or mentatly unfit having been so declared by a Registered Medical Practitioner or who wants to retire on medical grounds or to resiSn his service may give up his employment after giving to his emPloyer notice of at least frfteen days and where no such notice is given, the service compensation payable to him shall be forfeited to he extent of fifteen days in lieu of the notice' Section 66 of 1988 Act makes any contract 3.5. contrary to the provisions of the said Act null and void' petitioner also states that the Industrial Employment (Standing Orders) Act,1946 (Central kgislation) through which Industrial Employment (Standing Order) Central Rules, 1946 were issued' mandates under Schedule 1, Rule 15 as follows: " Certifrcate on termination of service--Every permanent workman shalt be entitled to a sewice certiltcate at the time of his dismissal, discharge or retirement from service"- Petitioner states that iegal validity of "Employment

3.6 Bond" in the private sector of employment has not been decided till date, by any Constitutional Court in India' and only compensatory element has been decided under Section 74 of trr,e Indian Contra ct Act, 1872. The offer letter of Respondent No 4 also does NOT mention basic elements like weekly maximum hours, Overtime policy, leave policy, paid leave workinq 8 t-tttllutal \ \l \ :.:1.fi1''.. l encashment policy, break time poliry; which ;hows the malicious intent and blatant disregard to laws rr the land, which the employer is using against petitioner a r I all such other employees to extort money from them. Furthcl , petitioner requested Respondents 2 or 3 to conlirm if "Employir ent Bonds" are 1egal in the State or not, so as to conduct these ,roceedings accordingly in the interest of justice and greater I ood of the State. The lack of any definite communication or sl rnd in this regard has been affecting millions of Information Te: rnolory (IT) sector in Telangana State, which is portrayed as IT JUB in the country and ruining its image through slavery bast r policies of companies. Petitioner also stated his Iirst repres :ntation to Respondents 2 and 3 on 1O.1O.2O23 and t re second representation uia e rnail dated 1 1.O3.2024 through heir ofhcial e mail address, to follow the mandate of Section 66 rf 1988 Act and other such relevant Acts and to help recover : re wages of petitioner. He had also stated the legal notice tc, e :nployer on I I .O3.2024 . Therefore, petitioner seeks a directior against the violations committed by Respondent No.4 whict :rre totally brushed aside by Respondents 2 and 3 even I ough were brought to their notice by petitioner, as stated suprrr t l I t I I /,, 9

4. In the counter filed on behalf of Respondents 1 to 3, it is stated, in response to the representation submitted by petitioner, a Joint Meeting was fixed on 26.10.2023 and on subsequent dates. The issue of experience letter, relieving letter, clearance letter, Ceased Salary and issue of relevant pay slips discussed during the course of joint meetings and created awareness and explained the statutory provision of the Act to

both the parties and requested the management representative to implement the enLitlement of earned leaves under Section 3O of the 1988 Act and settle all the dues as per law and issued experience and relieving certihcate as requested by Petitioner at the time of settlement. Subsequently, both the parties did not attend the further meetings before the Joint Commissioner of l,abour, Rangareddy Zone, Hyderabad.

4.1. It was further stated, the Joint Commissioner of Labour, Rangareddy Znne, Hyderabad was not notified and appointed as authority to clear and decide claims relating to wages, etcetera of employees in the establishment under Section 50 of the 1988 Act. In fact, Petitioner has to file Application prescribed under law before the Assistant Commissioner of Labour, Rangareddy who is notified Authority for claims, if any arising out of deduction of'*ige" or delay in Payment of Wages l0 r.:spondent etcetera. Both the Petitioner and Management of No.4 have not attended joint meetlngs before Commissioner o[ Labour, Rangareddy Zone' the parties settled thc issues and arrived at a conselr x-ls outside the purview of this office' Hyde' bad. Both the Joint [t was also further stated that joint m<:tings were 4.2. conducted on the representation submitted to this office' petitioner and management attended oo 26'10'20) I and other three meetings and thereafter, both the parties dic not appear beforethisoffice.Assuch,thematterwaslc'<gedasnot pressed. While so, the management submitted stl us report of full and ltnal settlement on agreement between bo- L the parties' Thereafter,respondenthadstoppedproceedingstl.thelrleas the parties not prcssed' After receiving counter rff-ldavit' this offrce addressed a letter through e mail dated l) 06 '2024 ar.d asked the management to submit the status r :port on this issue. On 19.06 2024, the management submi -. 3d the status report and reported that matters were settled krilateraily on different dates between Oa'll 2023 and 06' 12 :2() l3 Respondent No'4 Company filed ii 'unter stating 5. that the purported prayer of the Writ itself is c t liberately mis- represented as it could be seen from the prayer lortion' all the :--7 1t reliefs (which are untenable under law) are sought against Respondent No.4 - which is not a'STATE'under any parlances, but not against the Official Respondents. According to Respondent No.4, the present petition is a pure civil suit, seeking recovery of money, declaration of invalidity of contract entered by petitioner with Respondent No.4 and to impose punitive damages against them for such alleged violations of the provisions of statutes and Constitution of India, despite the fact that no such proceeding / representation I petition - could be seen pending before ofhcial Respondents, seeking such reliefs, even as per the documents hled by Petitioner in this Writ Petition. Hence submitted that the present writ is bundle of untenable civil claims against respondent no.4, mischievously frled in the guise of Writ under Article 226, io sheer abuse of process of law.

5. 1. Further, it is stated, petitioner joined Respondent No.4 company as an intern with effect frolr:r 19.72.20 18 for a period of 90 days initially, but due to his below mediocre capabilities, he could not cope up with the requirements of internship and at his persistent requests, Respondent No'4 extended pelitioner's internships further, and he was inducted into regular employment with effect from O I O9'2O 19 as a |.L Trainee Engtneer' Thereafter, Petitioner was furtl:r imParted advancedtrainingontheemergingandhighlySought-after areas o[ technology (by expending huge amor.lrt s' time and energies) and was deployed with reputed entities or delivering servicesutilizingtheknowtedgeandskillsimpartll'ttohim,and pertinent to state that petitioner was compensat.r accordingly' at par with industrial standards' though the rt quired skills' knowledge and experience were imparted to him ir the expenses and risk of Respondent No'4 As and when "etitioner was trained furthcr on more advanced and latest te < hnologies and skills from time to time, Respondent No'4 used -' have detaiied deliberations beforehand with him and u'i - L such other employees regarding new skills & knowledge to t e expanded (at the cost of Respondent No'4)' position to be rromoted' new responsibiiities to be deployed and the tune o[ c rmpensation to be hiked from employer's end' along with cor rmitment to be sought from the employees in return' As sur;lr everything has been pre-negotiated bilaterally from time rr l-ime' mutually agreed afresh, documented and implemented a< :ordingly ln the respondent herein gave thrct promotions and an astonishing hike of 45O'7 within a Short years nine months of emllJc '/ment' believing four hikes with sarne manner, span of Lhree .., l3 petitioner's representations about commitment on mlnlmum tenure of service, and accordingly trained him with latest skills and knowledge in emerging technologies from time to time, expending huge amounts ald risking the reputation, future and revenues of Respondent No.4 company.

5.2. Further, it was stated that the agreement for minimum period of service was devised to prevent this sort of attritions and such key roles are offered only to ttrose employees voluntarily concede to commit such minimum period of service. Such voluntarily conceding employees are profoundly compensated with a leap in their salaries, which are mutually- agreed after due deliberations. After arriving at such consensus, the conceded minimum period of commitment gets documented with such a mutually-agreed amount of settlement in case of breach of commitment, which is intended to be a deterrent for attrition in the middle of ongoing key projects with clients, only thereafter, the negotiated hike and promotion would be formally communicated (usually with retrospective effect) and such promoted employee would be imparted with high value and highly sought after training on happening technologies and related service deliveries, expending huge amounts of money, time and ener5,r, risking the future of the Company and all its l4 \ employees on the credulity of such key role enulovees. The same process was foliowed for Petitioner as we I as detailed supra. The transparent negotiation culture prcr r iling in the Company of Respondent No.4 is evident from the :ntire set of communications and documents including furthe.r trke given to petitioner to Rs.8,O0,000/- instead of Rs.7,5O,t( 0/- as was initially communicated on 14.O6.2021. petitioner rr Ls given lead role and respon sibilities as he committed for 26 rr < nths and he was offered the unique opportunity and training t,r enhance his skills, grow and excel in his career, apart from ver, decent hike in his salary. Petitioner maliciously took the senrcr role to learn and got exponential hike by deceitfully committir 1 to work for 26 months. Respondent No.4 herein invol,, :d him in international projects of very reputed custor, rs, in very important roles, knowing that Respondent No.4 car not pull him out in the middte of the project, at the time of yea- 7 appraisals, Petitioner unreasonably demanded hike from Rs. I ,5O,OOO/- to Rs. 20,00,000/-per annum. However, while the rru rket average increment is less than 5% that year, Respondent IJ r.4 gave l6yo increment to Petitioner and hiked his corr 1 ensation to petitioner r :r:eived the Rs. 14,5O,0OO I per annum. communication of his last hike on O9.Og.2024 rv 1 -r effect from # 15 I O1.O7.2O23 and accordingiy, received his hiked / updated salary and a previous variable component of Rs.SO,OOO/- on I1.08.2023 and immediately within couple of hours, tendered his resignation through e rnanl, purportedly 'due to personal reasons. Pertinent to submit that during this period, Petitioner was actively involved in key project deliverables and his abrupt resignation was enorrnously detrimental and disruptive for the team work under progress as well as for the enforceable commitments with the clients of Respondent herein.

5.3. In the given circumstalces, Petitioner's decision to resign and his ensuing actions were disruptive to the business operations of Respondent No.4 and it became evident that petitioner intenlionally orchestrated several actions against Respondent No.4. Petitioner refused to adhere to the key employee contract and made false statements in an attempt to expedite his relieving process. Despite the efforts of Respondent to uphold the agreed terms, petitioner declined to cooperate and approached Respondent No.3 in October, 2023, seeking help in getting exit formalities. Respondent No.3 comprehended the situation and guided petitioner and Respondent herein through amicable settlement process. Respondent No.3 suggested this Respondent to pay leave encashment to petitioner and though t6 that is highly debatable in the given circumstancer; respondent herein accepted the same for the sake of amicaL I I settlement and paid the same. Further, the amicable settlolr:nt between petitioner and Respondent No'4 happened out of tl e Court' but under the guidance, monitoring and mediation o. Respondent No.3 only. Petitioner insisted for final settlement r nd return of company's properties to happen in the office of Res rondent No 3 and the same had taken place accordingly on i 09 2023' as petitioner insisted. Therefore, the earlier represent Lrion given by petitioner to Respondent No'3 in October' 2o2il tands settled for all purposes; assuming but not admitting lL' t the same is not yet disposed technically, even then the sarrtt s infructuous and shall be deemed to be non-est' Further' pet tioner' having completedallhisexitformalitieswiththisFrspondent,got reiieved on 21 .O9 .2023 and joined another comp I 1y' While so, apparently as an afterthr'r ght' petitioner 5.4. caused a 1ega1 noticc to respondent No'4' wilt all untenable claims and contentions; and subsequently filed '1e present writ petition with all false claims and allegations ll :spondent No'4 caused appropriate reply to the said legal n' tice issued on behalf of the petitioner. Except the represt r tation given to Respondent No.3 in October, 2023 - which u't': already settled t i I I ; I : l i I I l I I I I i t7 and resolved amicably and implemented already, as mentioned supra, petitioner did not iniliate any proceeding what so ever before any of the ofhcial Respondents against Respondent No.4. Therefore in the light of the above submissions, all the material allegations and claims of petitioner are totally denied as false, fabricated, concocted, distorted and invented for the purpose of creating this iitigation. The allegations that the commitment agreements were given one month after employment and that copies of the same were not given to petitioner are categorically denied. Also the allegations about the work culture at respondent No.4 company and petitioner's attempts to resign etcetera are categorically denied as false, fabricated and concocted accordingly. Further the claim that petitioner lost employment opportunity because of Respondent No.4 is categorically denied. The document being relied by petitioner is reasonably apprehended to be a fake and fabricated one, and even as per that, petitioner did not lose any opportunity as he was relieved on 21.11.2023 while the joining date was purportediy given before 25.11.2023. Further, all the claims and allegations about different payments are denied to be totally false and distorted, and in any case, the same was already resolved out of Court and effected at the instance and guidance 18 of Respondent No.3, to the satisfaction of petitione: '{s such' in the light of the above submissions, it was stated tl at petitioner is not entitled for any relief, much less the reliefs as prayed for' Petitioner filed reply to the counter rr1 lespondents 6. 1 to 3 stating that counter submitted by the Res'r rndent No 3 (lCL RRD) is vague and not addressing the moct point i'e to conhrm if the "Employment Bond" is legal in Telarr Iana State or NOT. The statement that JCL RRD requested Re ; xrndent No 4 to comply with the laws, shows that JCL-RRD i ; not directing the laws to be rmplemented through the powers v'r ;ted in him' It is the hrst time that the respected ICL-RRD s citing that recovery of rvages related concem could be l1:<l bcfore the "Assistant Commissioner of Labour, Ranga Redd " before whom the petition has to be hled. Petitioner had been t ld this during the third week of Jtrre 2024, i.e. very recentil rnd petitioner had already moved a petition for wages recoveF r trnder Section 50 of the 1988 Act and the said proceedings will 'I'ogress as per the law. Further, petitioner in reply submits -hat in page 3, 6. 1. last para of the counter by the Respondent N I 3 ('lCL RRD), they have conhrmed that the matter before tlrr: n pertaining to the representation submitted to them, by the p rtitioner, dated ( _.,"' .:t 19

10. 10.2023 was not solved, as after the four meetings, the parties did not turn up to the meetings, hence the matter was NOT solved in their presence.

7. Further in so far as the counter of Respondent No.4 is concerned, at page 5, it is admitted that they indulge in "minimum period of service to prevent attritions,,. Signing of bonds or any minimum period service is illegal under Section 5 of the 1976 Act and thus, void under Section 23 of the l8T2 Act. Respondent No 4 did not produce any evidence to show that they provided training and invested in the skills of petitioner. Petitioner denies such claims and states that after joining of any company, in whatever capacit5z, all employees go through administrative training to know how to use tools (websites, software, etc.) of the company, which cannot be termed as the claim of company that they are improving the skills of petitioner. Respondent No 4 made malicious a-llegations ald petitioner did not make actions to disrupt the business of Respondent 4. As admitted by Respondent No.3, the matter was not solved in the ofhce of the JCURRD, as petitioner was threatened with prolonged legal actions by Respondent No. 4 in case the amount of Rs.5,90,OOO/-is not paid, to which petitioner agreed as he (naturally being in a position to be deprived of his 20 experience letter, without which securing next empr( vment ls difhcult) and paid the remaining arnount to Responrl rut No' 4 tihcate of the leave :ably and i.e.additionalamountofRs'1,35'911/-asadmitteda.pagelS of the counter of the Respondent No' 4' Not paying arr employee their salary by 5fr day of the subsequent month is illt gal under Section38ofthelgS8Act,thusmakingtheactionof withholding sa1ary by Respondent No' 4 an illegal act Further, the issue was never solved anr 7.1. only through coercive tactics i'e' by withholding encashment of 6O days, by not granling the "Crr service" of the petitioner, depriving him of his Statt t thus committing grave violations of law' As such ' cannot be termed as an amicable settlement' It was contention of petitioner that the inaction of Respon'i in implementing the laws (Central and State lavs ) was put to hardship and his Fundamental Rights t I 2 1 ( 1) was harmed as he was made to sign an : Bond, despite the law prohibiting it and the State c any dehnitive action against it' despite nine rr < 10.10.2023 (date of representation)' When department, responsible to implement the laws' Private Companies faiied, as evident from the recorl rry rights, the same .he further :nts 1 to 3 r-rployment petitioner der Article id not take nths since the State lgainst the ;, petitioner -7 2l has no other remedy than to approach this Court to implement the prohibition of "Bonded Labour" provisions in the State since it is in larger interest that this practice be declared unconstitutional and direct Respondent No' I to take necessary steps in this regard. Petitioner in his reply to inspection report, stated 8. that inspection report of Respondent No' 3 dated 26'10'2024' found multiple other employees who also were made to execute Employment Bonds and who are required to pay the amount from Rs.3 to 8 lakh rupees + GST as follows: Sl.No Name Employment Bond Amount 1 n 3 Veerapaneni l,ohitha 2 years 5 tacs Bhavirisetty GoPi Teja Kusuma Sree VidYa 2 years 8 iacs + GST 3 Lacs Petitioner states that no report has clear details

8. 1. that respondent No.4 is a habitual offender and had made multiple employees sign employment agreements, despite prohibition under Section 5 read with Section 23 of th,e 1976 Act and also contrary to Section 66 of the 1988 Act which makes any agreement contrary to the 1988 Act "void"' It is also 22 to be taken into consideration that the actual empl< yment offer issued to threc employees mentioned above is r r t produced before this Court or the employment bond agreenl llt also not produced by the authority concerned and onL' a written statement to that effect is submitted' When the lav'prohibits an employment bonds, the question of parties agree r g to it does not arise. withholding of the salary of petitiorL r' for three months is violation of Section 38 of the 198! Act, which the emPlov< r before the mandates establishments to PaY expiration of the 5d day after each wage period' He :ce' violating one law or thc other, to achieve what they want d is evident' Further, the notice period clause is also conl'i' ned to be in violation o[ Section 47 of t]ne 1988 Act' Petitioner I tates that the 1872 Actis a pre-independence legislation and ltrr rs attracts the "Doctrine of Eclipse" and the Constitution of India is the in u'h i :l-r Article 23 supreme tegislation for this Country, The pr'r rte comPanies prohibits anv forccd labour in any form bon<lr; after initial making r:mPloYees sign emPloYment employment contract was signed (usually after ( 0 days gap) is clearly an act "undue influence" and exploitint' the position of dominance that the employer is in' The mirt:num duration clause is not in the employment contract, : -rt only as an / l i I I 23 additional annexure is issued to the employees, who are in helpless situation after entering the employment contract, but only as an additional annexure is issued to the employees, who are in helpless situation after entering the employment contract. Further petitioner states that an agreement that has unlawful objects, is void under Section 24 of Indian Contract Act 7822 and also "Free Consent" is to be obtained only if they are not in violation of SecLion 16 of the Indian Contract Act, 1872.

9. Heard Sri R.Vijay Gopal, learned counsel for Petitioner, learned Government Pleader for Labour ald Sri B. Pratap, learned counsel for Respondent No.4

10. Before delving with the issue on hand, it is germane to note that Section 27 of tLre Contract Act provides every agreement which restrains a person from exercising a lawful profession, trade or business of any kind is to that extent void. A sole exception is carved out in the proviso with regard to sale of goodwill of a business, in which case the seller may be restrained from carrying on similar business within a reasonable loca,l limit. Though the Contract Act does not profess to be a complete code, Act is exhaustive with regard to the subject matter contained therein. That is to say, validity of a restrictivdtovenant in an agreement including an employment agreement in regard to restraint in exercise of lalr'{ t- I profession, trade or business has to be tested on the touchst<r Ie of Section 27 ol L}].e Contract Act. L 1. Whether Section 27 operates as z bar to a restrictive covenant during the subsistence of arL contract fell for decision it Niranian Shankar Century Spinning dnd Manufacturlng Cc. illuminating discussion on the subject, the I}:: employment Golikori v. : After an Lch made a distinction between restrictive covenants operatilr I during the subsistence of an employment contract and thc se operating after its termination. The Bench held as follows:- "

12. The result of the above discussion is that . against restrictive covenants are different in cases v/here 1 is to apply during the period after the termination of th€ those in cases rvhere it is to operate during the period cf Negative covenants operative during the period of t1 ( emptoyment when the employee is bound to serve exclusively are generalll' not regarded as restraint of trad(l do not [a11 under Section 27 of the Contract Act. A ne€ that the emplol'ee q,ould not engage himsetf irl a trade l would not get himself employed by any other master for ri perform similar or substantially similar duties is n,r restraint of trade unless the contract as aforesaid is uncc excessively harsh or unreasonable or one-sided.." )rlsiderations re restriction ontract than the contract. contract of ris employer rnd therefore .irre covenant business or om he would therefore a rscionable or I 1967 SCC On Line SC 72 € 25 t2 This view was reiterated in Superintendence Compang (P) Ltd a. Krlshzn Murgqi2. Endorsing the ratio in Golikari (supra) with regard to validity of restrictive covenants during the subsistence of a contract, A.P. Sen, J. held:- " 18- Agreements of service, containing a negative covenant preventing the employee from working elsewhere during the term covered by the agreement, are not void under Section 27 of the Contract Act, on the ground that they are in restraint of trade. Such agreements are enforceable. The reason is obvious. The doctrine of restraint of trade never applies during the continuance of a contract of employment; it appties only when the contract comes to an end. While during the period of employment, the courts undoubtedly would not grant any specihc performance of a contract of personal. sewice, nevertheless Section 57 of the Specific Retief Act clearly provides for the grant of an injunction to restrain the breach of such a covenant, as it is not in restraint of, but in furtherance of trade.

19. In Niranjan Shankar Golikari case this Court drew a distinction between a restriction in a contract of employment q,hich is operative during the period of employment and one which is to operate after the termination of employment. After referring to certain English cases where such distinction had been drawn, the Court obs€rved; "A similar distinction has also been drawn by courts in lndia and a restraint b_v rvhich a person binds himself during the term of his agreement directly or indirectly not to take service with any other employer or be engaged by a third party has been held not to be void and not against Section 27 of the Contract Act."

13. What is to be noted in this case is, the continuous employment bond being executed by Respondent No.4 with petitioner for three times. Admittedly, petitioner had joined (r98 r) 2 SCC 246 26 Respondent No. 4 as an intern during June to Auq: ;t, 2019 and was issued a full time employment offer in Sept.rnber, 2019 through offer letter dared O1.09.2019 and .joined the employment under trmployee ID: 1182, on the sz j I date itself. Petitioner u,as made to sign employment bor r viz."Surety agreement" for minimum duration of em I oyment by Respondent No. 4, as such after joining in S:r 2019, the following bonds were signed with duration as follo., r, ;; l. ii. 1", Bond, October 2019, for 24 i ronths 2"d Bond, June 2021, for 12 m,r ths 3.d Bond, Apil2O22, for 26 m I Llhs It is imperative to examine whether he action of respondent No.4 in executing the employment t,r nd for three

14. times would oppose to public policy. It was vehe I ently argued on behalf of petitioner that Annexure V is parr r I a standard form contract and his client was compelled to s,i 4n on dotted lines. If he did not do so, he would have to i rsake career advancement. The terms of the contract were irr 1 osed on him through an unequal bargaining mechanism. Anrr rure V being an unreasonable, onerous and ex-proportion rte measure resulting in unjust enrichment for respondent N I 4 is opposed to public policy. At the time of his resignation, rr: pondent was compelled to comply with the i egal condition anc had done so I J 27 under protest. In these circumstances, he calnot be precluded from chaiienging the condition as violative of fundamental rights and public policy.

15. It is to be noted that in Central Inland Water Transport Corporatlon Ltd. a. Brojo Nath Gangulgs, the Hontrle Apex Court dealt with interpretation of standard form employment contracts in the backdrop of unequal bargaining power of employees. The Bench opined, if such contracts are unconscionable, unfair, unreasonable and injurious to public interest, they shall be deemed void in law being opposed to public policy. The Supreme Court held as under: " 9 1 . . . -, - - - . . . ,. . . . . - the majority of such contracts are in a standard or prescribed form or consist of a set of rules. They are not contracts between individuals containing terms meant for those individuals alone. Contracts in prescribed or stardard forms or which embody a set ol rules as part of the contract are entered into by the party with superior bargaining power with a large number of persons who have far less bargaining power or no bargaining power at all. Such contracts which affect a large number of persons or a group or groups of persons, if thcy are unconscionable, unfair arld unreasonable, are injurious to the pubtic interest. To say that such a contract is only voidable would be to compel each person with whom the party with superior bargaining power had contracted to go to court to have the contract adjudged voidable. This would only result in multiplicity of litigation which no court should encourage ald would also not be in the public interest. Such a contract or such a clause in a contract ought, therefore, to be adjudged void. While the law of contracts in England is ' (19\86) 3 SCC 156 ) 28 mostly judge-made, the law of contracts in tndia is enact(ic n a statute' namely, the lndran Contract Act, 187'2 In order that sur:) a contract should be void, it must fall under one of the relevant s(( rons of the Indial Contract Act. The only relevant provision in the In I rn Contract Act which can apply is Section 23 when it states that "The r rnsideration or object of an agreement is lawful, unless the court rtE rrds it as opposed to public PolicY." " In Supertntendence Compang (P) Ltd u' I(rish,alt

16. Murgai4 thc Hon'ble Apex Court at Para 59 also he r<l as under: 59 It is well settled that employee covena'r s should be carefully scrutinized because there is inequality of b:lrg tLning power between the parties; iudeed no bargaining po\trer ma)' occI because the emptoyee is presented with a standard form of contril(t lo accept or reject- At the time o[ the agreement, the employee mal' I z ve gven little thought to the restriction because of his eagemess f'r' a job; such contracts "lemPt improvident persons, for the sake of Jr rsent gain' to deprive themselves of the power to make future acquisilrt't s, ard expose them to imposition and oppression". 17 . ln Broio ltoLth (suPra), the expressiorr !:ublic policy' under the Contract Act was explained in detail 15. the Hon'ble Apex Court and the same is extracted hereunder: "

92. The Indian Contract Act does not dehn': "public policy" or "opposed to public policy". From th' things, thc expressions "public poticy", "opposed to pL "contrarJr to pubtic policy' are incapable of precise r t policy, horvever, is not the policy of a particular goverrrrl some matter which concerns the pubtic good and thr The concept of what is for the public good or in the lrl what would be injurious or harmful to the public go r Jre expression very nature of rLic policy", or inition. Public nt. It connotes rublic interest. blic interest or I or the public 1 (l98r.y scc 246 I 29 interest has varied from time to time. As new concepts take the place of old, transactions which were once considered against public policy are now being upheld by the courts ard similarly where there has been a well recognized head of public policy, the courts have not shirked from extending it to new transactions and changed circumstances and have at times not even flinched from inventing a new head of public poticy.

18. In Gollkcri (supra), the Hon'ble Apex Court noted the evolving nature of public policy in following words "

12.......The attitude of the courts as regards public policy however has not been inflexible. Decisions on public policy have been subject to change and development with the change in trade and in economic thought and the general principle once applicable to agreements in restraints of trade have been considerably modified by later decisions. The rule now is that restraints whether general or partial may be good if they are reasonable. A restraint upon freedom of contract must be shown to be reasonably necessary for the purpose of freedom of trade. A restraint reasonably necessary for the protection of the covenantee must prevail unless some specific ground of public policy can be clearly established against it."

19. From the above decisions, what is emanating is that in general, public policy relates to matters involving public good and public interest. What is ,just, fair and reasonable' in the eyes of society varies with time. Civilizational advancements, growth of knowledge and evolving standards of human rights arrd dignity alter the contours of public good and policy. From the prism of employer-employee relationship, technological advancements \ 30 impacting nature and character of work, re-s.< lting and preservation of scarce specialized workforce in a lr:e market are emerging heads in the public policy domain rvhi.h need to be factored when terms of an employment contra. is l.ested on the anvil of public policy. Ensuring retention of : n cfficient and experienced staff contributing to managerial skills was one of the tools inalienable to the interes - of such undertakings including Respondent No.4 a softw:Lr€ oompany. This prompted Respondent No.4 to incorporatt rninimum service tenure for employees, to reduce attrition a r cl improve efficiency. Viewed from this perspective, the restrictive covenant prescribing a minimum term cannot trc said to be unconscionable, unfair or unreasonable and l-rerebv in contravention of public policy. 20- There is no controversy with the abor,: r:nunciation of law but, unfortunately, what is troubling rt is Court is whether such conditions as prescribed in Annr:>:r Lre V of the contract can be allowed to continue for indehnite 1> riod. In the instant case, petitioner joined on 01.O9.2019 by the r.ime he was asked to execute employment bond; on 22.O4.2A,2, petitioner already completed almost three years and ,)..t:cuted two employment bonds earlier; one in October,2Olg lc: 24 months )/ / f I I I I i 3l and the other in June,2027 for 12 months. This is nothing but the clever attempt of Respondent No.4 in escaping from the scope and ambit of penal provisions which attract Respondent No.4.

21. In Brojo Nath Gangulg\ case, the Hon'ble Apex Court held that an unconscionable bargain or contract is one which is irreconcilable with what is right or reasonable or the terms of which are so unfair and unreasonable that they shock the conscience of the Court. trquiry, however, interfered in many cases of harsh or unconscionable bargains. This Court is of the considered opinion that the clever act of Respondent No.4 in restricting its employees in empioyment bond for indehnite period i.e., by way of executing employment bonds consecutively clearly tantamount to harsh and unconscionable bargain on the part of Respondent No.4 and the inaction on the part of Respondents 1 to 3 when complained about the same cannot be countenanced for the reason that the latter are duty-bound to see that these private organizations are adhering to or complying with the provisions of the statutory laws applicable to them more particularly the provisions of Bonded Labour System (Abolition) Act, 1976 and the Telangana State Shops & Establishments Act, 1988 besides the fundamental rights =-r \ 32 guaranteed to petitioner under Articles 14, 19 an' . 23 of the Constitution of India. This Court feels it is apposite to r,:

22. principles relating to interpretation of stail employment contracts which were summarized ; er to legal lard form . the Apex Court in the recent decision rn Vijaga Bank v. Prashdn B Naranauares. At Para 21, it is held as under: " 2l.The legal principles relating to interpretatio r cf standard form employment contracts may be summarized as follou,s: (i) Standard form employment contracts prima lE ( e evidence unequal bargaining power. (ii) Whenever the weaker party to such a contract l,l influence/ coercion or alleges that the contract or any ter opposed to public policy, the Court shall examine such p1,:, mind the unequal status of the parties and the contexr i contractual obligations were created. 'ads undue r thereof is keeping in which the (iii) The onus to prove that a restrictive covenant in ar contract is not in restraint of lawful employment or is rx.l public policy, is on the covenantee i.e- the employer an i rmployment opposed to not on the employee."

23. This Court is conscious of the fact that the Hon'ble Apex Court held that employment bonds are generrr lv valid and enforceabie, as established by the Hontrle Suprer Lr: Court in Vijaga Bank a. Prashant B. Nornanaare, which co ifirmed that minimum service period and penalty clauses do n ) . violate the t 2o2s Iltsc 69t J) Indian Contract Act. However, it is settled principle of law that Employment Bonds are void if they impose unreasonable restrictions, are coercive, or are against public policy, making them unenforceable. At the cost of repetition, it is stated that the clever act of Respondent No.4 in restricting its employees in employment bond for indefinite period i.e., by way of executing employment bonds consecutively clearly tantamount to 'harsh and unconscionable bargain' on their part and the inaction on the part of Respondents 1 to 3 when complained about the same by petitioner cannot be countenanced in any manner.

24. Therefore, in view of the above discussion, this Court is of the opinion that Respondents 1 to 3 have utterly failed in addressing the specific complaint raised by petitioner in regard to harsh and unconscionable bargain on the part of respondent No.4, as stated supra, including imposition of liquidated damages to the tune of Rs.5 Lakhs in the event of resignation. Admittedly, neither the 4tr' respondent nor Respondents 1 to 3 countered with respect to the proportionatity of the liquidated damages to the tune of Rs.S Lakhs in the event of rtlsignation. Therefore, without going into the said issue, this Court directs Respondents 1 to 3 to deal with the espect of liquidated damages as to whether it would 34 { amount to hnconscionable bargain' in view of t re aforesaid discussion or not.

25. Before parting with this case, this Corlt would like to record that, during the course of hearing, wh lr interacting with the learned counsel, this Court engaged ir a series o[ queries to understand the realities of emplol r rent in the software sector. Upon conclusion of the argumenls and having reflected upon the submissions made in ope I Court, the lollowing obsewations emerged, which in the con: i lerecl view of this Court warrant serious deliberation by the Legrs ature.

25.1. Contrary to the widely-held perceptior _hat softrl,,are engineers work in posh environments, drawing I igh salaries, enjoying foreign travel, food coupons, and round he-clock cab lacilities, the lived rea-ligr of a substantial sr:11 rent of this workforce is starkly different. Most software servic:; in India are delivered through offshore outsourcing, necess tating work aligned with foreign time-zones. As a result, a la- ft number of employees are compelled to work during night horr s, disruptrng their biological rhythms, forcing irregular eatin ! habits, and fre-Qtrently relying on tea/coffee/stimulants to r r r-rarn awake. These conditions, by all accounts, have undenirr rle long_term implications on health. Studies conducted by AI(i also revealed t 35 f I I i I I about compounding effects on circadian cycles, with women employees particularly reporting issues relating to conception and reproductive health.

25.2. Recently, a Member of the Legislative AssemblY labour la uts aPPlicable to raised Pertinent questions: Are softutare emplogees? Do theg haue a prescibed retirement age? benefits? What tleg entitled to anA Upon retirement, are despite the long are auoilable to tlem, institutional facilities hours, multiple time-zones, and unrelenting pressure to meet d-eliuery sctedules for clients locoted across the globe? SocieLy has witnessed deepiy unfortunate instances wherc employees' unable to withstand sustained stress, have taken extreme steps' The so-called "perks" of a software engineer often 25.3. mask signifrcant personal sacrihces' Many employees lack regular communication with parents, are unable to spend quality time with their children, and seldom experience the stability of a standard day shift Their Iives are adjusted entirely toclient-driventimelines.Thishasledtorisingcasesofsevere healthdisorders----chronicbackproblems,spondytitis'obesiry- related ailments, and even depression and psychological related problems at a surprisingly young age, and reproductive health \ :l!- ! 36 challenges among women employees' Medical con'l tions once associated with individuals in their late sixt i( : are now commonly observed among young software pro[:;sionals A recent study by AIG has revealed alarming trenr'r ' including high prevalence of fatty liver and lifestyle disorrl: s linked to prolonged sedentary work and stress' It is noteworthy that political leaders across the 25.4. spectrum, including prominent voices from th: Left' have acknowledged the importance of this sector' I le softrvare industry is among India's most advanced, global r and economically vital sectors. It has transforme c recognised, the lives of countless middle-ciass families and contributed i nmenseiy to the nation's in ternational standing. 25.5. While the sector offers reltrt i 'ely higher compensation for hard work, it is simultaneor t ly a web of uncertainties- Employees operate under constant lressure, with little assurance o[ job security. Instances were )'ought to the Court's notice. such as the termination of hundrc ls of trainees by a major IT corporation on the ground of 1z 'lure to clear internal assessments. Employees must constant r update skills merely to remain employable, and yet, after y': rs of service' f I I I 37 many face the prospect of sudden unemployment without any social security cushion.

25.6. QuesLions of social protection therefore arise. Employees who have diligently paid income tax for a decade hnd themselves without medical insurance during unexpected periods of unemployment. Representations have been made that the Government should consider extending health insurance coverage-at least for limited periods-to such taxpayers during stretches of involuntary joblessness. Comparisons were drawn to other jurisdictions where taxpayers receive medical insurance support during unemployed phases. It was submitted that while l \ various welfare schemes support the poorest sections of society, an employed middle-class taxpayer-whose labour contributes I I significantly to national income and foreign exchange-receives little to no social security in return.

26. Thus, issues of far-reaching significance emerge: Should software employees not haue basic social sean rity? Should there not be stafirtory lealth protections, norms for uorking hours, or minimum safeguards against arbitrary termination? Should componies not bear certain responsibilities touards long-serving emplogees? These concerns, voiced by a section of society, that substanlially contributes to the nation's \ \ 38 economic growth, merits urgent and comprehensi" attentlon' This Court is of the considered view that the Leg r lature may deem it appropriate to examine these issues ir depth and consider framing suitable laws to ensure the wc { lre, health, and social securi[r of the software-working commLllt ry.

27. IN THE RESULT, the Writ Petition is zrlL' rved in part with the above observations. No costs. Conse<1lt ntly all the miscellaneous applications if any are closed.

28. Consequently, the miscellaneous Ap 1 lications, if any shall stand closed Sl) - T. Srinivasa Reddy ASS STANT REGTSTRAR (:) SECTION OFFICER //TRUE COPY// To, 1 . The Principal Secretary to Government AmbedkarTelangana State Secretariat 500022 Deoartment o -abour, Dr' B.R. Saifabad, Hyc r rabad, Telangana R;;d.' Ne;i Gvi ft'eatrer

2. The Commissioner of Labour, Department of Labour, I \KS Bhavan^RTP X - Hvderabad, 1 --langana' 500020 3. The Joint Commissioner of Labour, Department.of Lak :ur,-,. Rangg BgdOV " oirtrili, tfiS ahitrn. nrC X Roads, Nera Devi The: re' Chikkadpallv' -Chiktiopattv, Hyderabad, Telangana, 500020

4. The Registrar (Judicial-l)High Court for the State of Tr) lngana at Hyderabad 5 The Secretarv to Govt. Leqal Affairs, Legislature Affair and Justice' Law " o""pr",t"ri""f i'ifioor. Di "8.R. Amdedkhar Telangan' I State Secretarial' Hyderabad.

6. One CC to SRI R.VIJAY GOPAL, Advocate [OPUC] 7. Two CCs to GP FOR LABOUR, High Court for the S:i te of Telangana at Hyderabad . [OUT]

8. One CC to SRI B PRATAP, Advocate [OPUC] 9. Two CD Copies PM tJ o fErrer**grcffiff , HIGH COURT DATED:0511212025 , -,c 3I4 16 O\' \ r a r t \ . \T * t z c)\ ORDER WP.No.7904 of 2024 ALLOWING THE WRIT PETITION WITHOUT COSTS bI