BENCH AT JAIPUR v. Union Of India, Through General Manager, North Western

Judgment

3. Union Of India, Through General Manager, North Western Railway, Jaipur. The Divisional Railway Manager Administration), North Western Railway, Ajmer Division, Ajmer. Division, Ajmer. Senior Divisional Operating Manager, Ajmer. ----Respondents For Petitioner(s) : Mr. Siddharth Lamror For Respondent(s) : Mr. P.C. Sharma HON'BLE MR. JUSTICE INDERJEET SINGH HON'BLE MR. JUSTICE RAVI CHIRANIA Order 06/01/2026

1. The present writ petition is preferred before this Court challenging the impugned order dated 19.04.2023 passed by the learned Central Administrative Tribunal, Jaipur Bench, Jaipur (hereinafter referred to as ‘learned Tribunal’ for short), whereby the Original Application bearing No.342/2015 filed by the petitioner was dismissed.

Learned Counsel for the petitioner-applicant (hereinafter referred to as ‘petitioner’ for short) submits that the petitioner was appointed to the post of Traffic Khallasi in the respondent-Railway in the pay scale of 5200-20200/- + GP-Rs.1800/- under the sports quota. The respondent Railway issued an appointment letter dated 31.03.2014, pursuant to which the petitioner joined his duties on 08.09.2014 after completing 29 days’ training as was imparted to him by the respondent. He further submits that prior to joining the Railway service, the petitioner had also applied for the post of Assistant in Reserve Bank of India (RBI) under the sports quota for which he received a call for interview from the RBI, however, he was directed to submit his No Objection Certificate (NOC) from the respondent- Railway. He further submits that after obtaining a No Objection Certificate from the respondent Railway, the petitioner appeared in the interview, cleared the same and thereafter, was issued an appointment letter by the RBI for the aforesaid post vide letter dated 10.12.2014.

3. On receiving the appointment order from the RBI, the petitioner tendered his technical resignation before the Divisional Railway Manager (DRM), Ajmer; however, the same was not issued rather denied on the ground that the petitioner had not submitted his service bond as required under the terms and conditions of his appointment in the Railway. It is further submitted that although he joined the post of Traffic Khallasi in the respondent-Railway on 08.09.2014, no service bond was obtained from him by the respondent Railway at the time of joining. It was only when he tendered his technical resignation, he was directed to first submit the bond in order to get the resignation accepted by the Railway. It is further submitted that under duress and coercion, the petitioner submitted his service bond on 15.12.2014 which, as evident from the record, contains even several blank columns.

4. He further submits that the petitioner worked for only three months, for which he received the respective salary and completed 29 days’ training as imparted to him. However, in terms of the service bond, the petitioner was made to deposit a sum of Rs.10,19,978/- which includes the pay and all other allowances of five years including one month’s salary, on account of his resignation in terms of the service bond.

5. After acceptance of the technical resignation by the respondent, the petitioner joined the services of the RBI. Thereafter, he submitted a representation dated 11.02.2015 to the respondent-Railway seeking refund of the aforesaid amount, however, the same was neither considered fairly nor reasonably and was consequently rejected by the impugned letter dated 20.03.2015. Aggrieved thereby, the petitioner challenged the said rejection by filing an Original Application before the learned Tribunal. He further submits that the Original Application was filed with the following prayer: “(1) By an appropriate order this Hon'ble Tribunal may be pleased to quash and set aside the order dated 22.12.2014 (Annexure-A/7) demanding dema the amount of bond money/penalty of Rs. 10,19,798/- as well as order dated 23.03.2015 (Annexure-A/11) by which the representation for refund filed by the applicant has been rejected. (ii) By an appropriate order this Hon'ble Tribunal may be pleased to direct the respondents to refund the amount of Rs. 10,19,798/- charged as bond money/penalty with interest @ 18 per annum. (iii) Any other order which this Hon'ble Tribunal may deem fit in the facts and circumstances of the present case may kindly be passed in favour of the applicant.”

6. Learned counsel further submits that the respondent Railway filed its reply to the original application contrary to its own Master Circular No. 44 and the law as settled by the Divisioin Bench of the Calcutta High Court in the case of Medha Moitra versus Union of India & Ors. reported in 2019 SCC Online Cal 5748, wherein a similar controversy was examined and decided which is squarely applicable to the facts of the present case. He further submits that respondent- Railway vehemently opposed the original application before the learned Tribunal by submitting that their action was in accordance with law and they have rightly recovered the above mentioned amount on account of breach of condition of the service bond.

7. Learned counsel further submits that before the learned Tribunal, the Master Circular No.44, as issued by the respondent-Railway itself, was not placed on record. Rather concealed which declares that the impugned order is clearly contrary to the said circular. Therefore, the action of the respondent is highly arbitrary and illegal. Consequently, the impugned order dated 19.04.2023 passed by the learned Tribunal deserves to be quashed and set aside and the respondent needs to be directed to refund the amount recovered from the petitioner under duress and coercion, along with interest at the rate of 18% per annum, by allowing this writ petition.

8. Per contra, learned counsel for the respondent-Railway, Mr. P.C. Sharma, strongly opposed the writ petition by submitting that the petitioner has raised new grounds before this Court which were not urged before the learned Tribunal. He further submits that the petitioner has relied upon certain policies and documents which he had not placed before the learned Tribunal and therefore, in the absence of such documents, the learned Tribunal has not committed any error in dismissing the original application vide order dated 19.04.2023. He further submits that all employees who join the service in the Railway are mandatorily required to submit a service bond. In case an employee leaves the service in breach of the conditions of the service bond, he is liable to pay the entire amount, including salary and allowances etc. for the bond period, which is five years in the present case.

9. In support of his submissions, learned counsel Mr. P.C. Sharma placed reliance upon the judgment passed by Hon’ble Apex Court in the case of Association of Medical Super Speciality Aspirants and Residents & Ors. v. Union of India & Ors. Reported in 2019 Vol. 8 SCC Page 607. Learned counsel specifically referred to Para No.39 of the said judgment, wherein the Hon’ble Apex Court, while setting aside the judgment passed by the High Court, held that the requirement of furnishing a service bond is not in violation of law. Para 39 of the judgment is reproduced as under:- “The argument advanced on behalf of the Appellants that compulsory bonds placed a restraint on their profession and thus, would be contrary to section 27 of the Indian Contract Act, 1872. The High Court of Calcutta repelled this submission by holding that the compulsory bond does not amount to any restraint on the professional activity of the Appellants. The High Court observed that the Appellants are offered the job of Medical Officer in the State of West Bengal and that the covenant in the compulsory bond operates only during the period of such employment. Relying upon the dictum of Lord Morris in Esso Petroleum v. Harper's Garage (Stourport) Ltd., 1967 (1) All ER 699 that "if A made a contract under which he willingly agreed to serve B on reasonable terms for a few years and to give his whole working time to B, it would be surprising indeed, if it were sought to describe the contract as being in restraint of trade; in fact, such a contract would very likely be for the advancement of trade', the High Court concluded that a contract entered into by Appellants to serve the government for a few years under reasonable terms cannot be described as one in restraint of trade. We are in agreement with the findings recorded by the High Court of Calcutta. Therefore, we are of the considered opinion that the conditions compulsory bonds for admission to post-graduate and super-Speciality courses in government medical colleges are not in violation of section 27 of the Indian Contract Act, 1872.”

10. On the basis of the above arguments, learned counsel prayed that the present writ petition being devoid of merits, deserves to be dismissed.

11. In rejoinder, learned counsel for the petitioner submits that the entire action of the respondent, as already argued, is per se illegal and arbitrary. He submits that no service bond was either signed/taken from the petitioner at the time of his joining the service, and it was only when the petitioner tendered his technical resignation then he was forced to first sign the service bond as a condition for acceptance of technical resignation despite the fact that technical resignation had already been tendered by him. Therefore, the conditions of service bond cannot be made applicable to the petitioner.

12. He further submits that the judgment as cited by learned counsel for the respondent-Railway is not applicable to the facts of the present case. Rather, the judgment passed by the Division Bench of the Calcutta High Court in the case of Medha Moitra (supra) is applicable, wherein Master Circular No.44, as applicable to similar controversy, was examined at length while framing specific questions with regard to signing of service bond.

13. He further submits that objection as raised by the counsel for the respondent Railway regarding raising of new issue first time before this Court is baseless, as the issue raised pertains to the respondent- Railway’s own Master Circular No.44 and documents as issued by respondent themselves in respect of a similarly situated employee who was permitted to execute a fresh bond with the RBI for a balance period of service. He further submits that the action of the respondent is discriminatory, as different yardsticks are being applied to employees by the respondent–Railway in respect of similar issues.

14. He further submits that along with the writ petition, the petitioner has placed on record Annexure-8 and Annexure-9, which are personnel policies issued by the Government of India in relation to service matters, governing the enforcement and transfer of service bonds in respect of employees of public enterprises who leave the services of one undertaking to join another undertaking.

15. By referring to the Annexure 8, counsel further submits that the subsequent employer can realize the proportionate bond amount from the employee and refund the same to the first organization with whom the bond was originally executed. He further submits that respondent issued Annexure 9 in respect of an employee who was appointed as Judicial Clerk-cum-Typist in respondent- Railway and who, after tendering his technical resignation, joined the services of the RBI, whereupon he was asked to execute a fresh bond with the new employer for the remaining period of the original bond.

16. He further submits that if a similar order was issued in the present case, the petitioner would also submit the same though this would now be futile as he has been serving in the RBI for more than 11 years. He further submits that in the reply as filed before this Court to the writ petition, with regard to Annexure-8 and Annexure-9, the respondents have merely submitted that the same were not filed before the learned Tribunal, however no specific response has been filed with respect of Annexure-9. In view of the above submission, learned counsel prayed that the present writ petition be allowed and order of learned Tribunal be quashed.

17. Heard learned counsel for the parties.

18. This Court after hearing the respective counsel, noted that the controversy involved in the present case revolves around the execution of a service bond by the petitioner and the delay as made in alleged breach of its condition. The petitioner, while being an employee of the respondent-Railway, was compelled to execute the service bond after he had tendered his technical resignation, which was not accepted in the absence of such service bond. It was only upon submission of the service bond by the petitioner, his technical resignation was accepted and he was permitted to join the services of the RBI. It is a common practice in the various Central services to get executed a service bond from the employee to serve the employer for a specific period, and in the event of breach thereof, the employee is required to deposit either the stipulated amount or the salary, allowances etc. for the bond period.

19. In the present case, the petitioner was appointed to the post of Traffic Khallasi and joined service on 08.09.2014 after completing 29 days’ training, however prior to his joining on 08.09.2014, no service bond was obtained from him. This clearly indicates a lapse on the part of the respondent Railway, as joining is permitted only upon submission of service bond.

20. As noted from the arguments and the pleadings of the case, while serving in respondent-Railway, the petitioner, for the post of Assistant in the RBI under sports quota, for which he received an interview call within a month of joining the respondent-Railway. The respondent-Railway issued an NOC to enable the petitioner to appear in the interview before the RBI without verifying whether any service bond had been executed by him or not. It was only when the petitioner received the appointment letter dated 10.12.2014 from the RBI and tendered his technical resignation on 15.12.2014 to Divisional Railway Manager, Ajmer but the same was not accepted on the ground that no service bond was available in the record of the Railway.

21. Noticing a serious lapse on their own part, the respondent compelled the petitioner to first submit the service bond dated

15.12.2014 and it was only thereafter his technical resignation was accepted on deposit of a sum of Rs.10,19,798/- which included pay and all other allowances of five years including one month’s salary in lieu of resignation.

22. A similar controversy was examined by the Division Bench of the Calcutta High Court in the case of Medha Moitra (supra), wherein the Division Bench framed the following issues as recorded in Para no. 16 of the judgment. “Court's View:

16. Upon considering the rival contentions of the parties, the following questions arise for adjudication- (i) Whether the respondent authorities were justified in laying a demand of Rs.9,60,891 as the precondition for accepting the resignation of the petitioner on the plea of infringement/violation of the conditions of service bond which she had to furnish at the time of joining the post of Accounts Clerk? (ii) what is the extent of expenditure incurred by the respondent authorities for the training of the petitioner for the period while she was in service under the South Eastern Railway? And (iii) in the event this Court comes to a finding that the demand for depositing Rs.9,60,891/- or any part of the said amount is unjustified, whether the petitioner is entitled to refund along with interest thereon?”

23. The above questions were decided by the Division Bench of the Calcutta High Court after considering the Master Circular No.44, issued by the respondent-Railway in respect of its employees. In the said judgment, the Master Circular, which has also been placed before this Court, was considered and examined. Para 20 & 21 of the judgment are reproduced as under: “20. During the course of hearing, paragraph 11.3 of Master Circular No. 44 applicable to Railway employees was brought to our notice. Paragraph 11.3 of the said master circular-reads infra:- "11.3 In the case of Railway employees who have received induction training and who leave Railway service with prior proper permission of the competent authority to join another Central Government department, State Governments, Public Sector undertakings wholly owned or partially owned by the Central/State Governments, or an autonomous body wholly or substantially owned/financed/controlled by the Central Government or State Government, but before the expiry of the bond period, they should execute a fresh bond with the new employer to the effect that they would serve their new employer to the extent of unexpired portion of the bond period and that in the event of their failure to serve the balance bond period with their new employer, the bond money will be recovered from them by their new employer and credited to the Railways before they are allowed to quit their service." Said paragraph 11.3 of the Master Circular No. 44 provides opportunity to the Railway employees after receiving apprentice/initial/probationary training from various Railway/outside institutions in the country to leave/resign from Railway service in spite of furnishing bond for serving the Railway authority for a specified period to join another Central Government Department, State Governments, Public Sector Undertakings wholly owned or partially owned by the Central/State Government or an Autonomous Body wholly or partially owned/financed/controlled by the Central Government or the State Government before the expiry of the bond period on the condition to execute a fresh bond with the new employer for the remaining period of bond thereby facilitating those employees to serve the new employer and at the same time the conditions of the bond can be fulfilled without deduction or recovery of bond money from the salary of those trained employees.

21. Paragraph 11.3 of Master Circular No. 44 sounds reasonable and convincing, which does not place the employee of the Railway into any disadvantage due to execution of the service bond. To obviate the rigor of the bond condition as per Annexure-IV appended to the Government instructions dated December 31, 2010 which the petitioner had to furnish while joining the post of Accounts Clerk in the South Eastern Railway, the first covenant of the said service bond applicable to the petitioner(recruited against sports quota) warrants liberal interpretation upon taking note of paragraph 11.3 of Master Circular No. 44, which is applicable to Railway staff who are provided training likewise the petitioner upon being recruited against sports quota, or else she would be subjected to gross injustice albeit till date, upon tendering resignation, she has been serving the Central Government as a Tax Assistant in the Income Tax Department. The interpretation of the first covenant of the service bond as per Annexure-IV read with paragraph 8.4 of the instructions contained in Government order dated December 31, 2010 as made by the respondent authorities in the case of the petitioner led to their asking the petitioner to deposit Rs. 9,60,891/-by issuing the impugned order dated April 26, 2010, which offends the right guaranteed to the citizens of India under Article 14 and Article 16 of the Constitution of India.”

24. The Division Bench while answering the above mentioned questions, declared the action of the respondent-Railway to be illegal and quashed the demand of the amount alleged due on account of breach of the conditions of service bond. In doing so, the Division Bench relied upon judgment passed by the Hon’ble Apex Court in the case of Central Inland Water Transport Corporation Limited & Ors. vs. Brojo Nath Ganguly & Anr. Reported in 1986 (3) SCC 156. The relevant paras of the said judgment are reproduced here as under: “101. It was, however, submitted on behalf of the appellants that this was a contract entered into by the corporation like any other contract entered into by it in the course of its trading activities and the court, therefore, ought not to interfere with it. It is not possible for us to equate employees with goods which can be bought and sold. It is equally not possible for us to equate a contract of employment with a mercantile transaction between two businessmen and much less to do so when the contract of employment is between a powerful employer and a weak employee.

111. The Calcutta High Court was, therefore, right in quashing the impugned orders dated February 26, 1983, terminating the services of the contesting respondents and directing the Corporation to reinstate them and to pay them all arrears of salary. The High Court was, however, not right in declaring clause (i) of Rule 9 in its entirety as ultra vires Article 14 of the Constitution and in striking down as being void the whole of that clause. What the Calcutta High Court overlooked was that Rule 9 also confers upon a permanent employee the right to resign from the service of the Corporation. By entering into a contract of employment a person does not sign a bond of slavery and a permanent employee cannot be deprived of his right to resign. A resignation by an employee would, however, normally require to be accepted by the employer in order to be effective. It can be that in certain circumstances an employer would be justified in refusing to accept the employee's resignation as, for instance, when an employee wants to leave in the middle of a work which is urgent or important and for the completion of which his presence and participation are necessary. An employer can also refuse to accept the resignation when there is a disciplinary inquiry pending against the employee. In such a case, to permit an employee to resign would be to allow him to go away from the service and escape the consequences of an adverse finding against him in such an inquiry. There can also be other grounds on which an employer would be justified in not accepting the resignation of an employee. The Corporation ought to make suitable provisions in that behalf in the said Rules. Therefore, while the judgment of the High Court requires to be confirmed, the declaration given by it requires to be suitably modified.”

25. The Division Bench, while passing the judgment in the case of Medha Moitra (supra) however, permitted the respondent Railway to recover only the amount actually incurred by it on the training of the employee.

26. After considering the above judgment, this Court finds that the issue as involved in the present case is squarely covered by the judgment passed by the Division Bench of the Calcutta High Court, wherein the same controversy was decided. As regards the judgment passed by the Hon’ble Apex Court in the case of Association of Medical (supra) as cited by counsel for the respondent-Railway, this Court noted that the same is not applicable to the facts of this case as the respondents themselves have issued the Master Circular 44 on the same issue which has already been examined by the Division Bench of the Calcutta High Court. For the sake of reference, this Court deems it appropriate to reproduce the Master Circular No.44. The relevant part of the Master Circular dated 44 as under: “11. Railway staff who are provided apprentice/ initial/ probationary training in the various Railway/outside institutions in the country should execute a bond to serve the Railways for a specified period. The standard indemnity Bond should be got executed before the staff is relieved for undergoing training.

11.1 Unless otherwise specifically prescribed by the Railway Board, no bond need be got executed from Railway employees who are provided apprentice/ initial/ probationary training in various Railways/outside institutions in India if the training is for less than 3 months.

11.2 In the case of Railway employees quitting Railway service before serving the Railways for a specific period stipulated in the agreement/bond, the whole cost of training and any other amount, excluding travelling and running allowance should be recovered from them before they are relieved. However, the General Manager have the powers to waive the cost of recovery for the training upto a limit of Rs. 2000/-. The amount waived should, however, be commensurate and proportionate to the service rendered on the Railways. In no case, the waival should be in excess of the proportionate service.

11.3 In the case of Railway employees who have received induction training and who leave Railway service with prior proper permission of the competent authority to join another Central Government department, State Governments, Public Sector Undertakings wholly owned or partially owned by the Central/State Governments, or an autonomous body wholly or substantially owned/financed/controlled by the Central Government or State Government, but before the expiry of the bond period, they should execute a fresh bond with the new employer to the effect that they would serve their new employer to the extent of the un-expired portion of the bond period and that in the event of their failure to serve the balance bond period with their new employer, the bond money will be recovered from them by their new employer and credited to the Railways before they are allowed to quit their service.”

27. After considering the facts of the present case and considering the judgment as passed by the Division Bench of the Calcutta High Court in the case of Medha Moitra (supra) and the Circular No.44, which was also considered in the case of Medha Moitra (supra) and also the fact that the respondent Railway had permitted another employee of the Calcutta Division to submit a fresh bond for the balance period with the RBI by its order dated 21.11.2013 (Annexure- 9) of the writ petition.

28. The action of the respondent-Railway of acting contrary to their own circular No.44 also contrary to law as laid down in the case of Medha Moitra (supra) is illegal & violation of Article 14 of the Constitution of India.

29. In view of the above discussion, the present writ petition is considered to have merits and same is hereby allowed. Consequently, the impugned order dated 19.04.2023 passed by learned Central Administrative Tribunal is quashed and set aside. The respondent- Railway is directed to refund the entire amount of Rs.10,19,798/- to the petitioner, after deducting the amount reasonably incurred on the training for 29 days.

30. The aforesaid exercise shall be completed within a period of three months from the date of this order.

31. There shall be no order as to costs. (RAVI CHIRANIA),J (INDERJEET SINGH),J PAYAL DHAWAN /56