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The Legitimacy of the Bond/Service Agreement, On the Company’s Letterhead, According to the Indian Stamp Act

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Hello everyone, I am a Chartered Accountant who recently joined a private limited IT company as a Finance Executive. At the time of joining, an agreement was signed on the company’s letterhead stating that if I leave the organization within one year, I will be liable to pay Rs.50k incurred on training. I would like to know if this agreement is valid as per the Indian Stamp Act. Shouldn’t it be on Judicial or non-judicial Stamp paper? Can the company recover this amount from me, even though I haven’t been given any training? Additionally, I was not informed of the scope of my duties at the time of joining, and after joining I found out that I had to clear the backlog for four months. I am feeling immense pressure as I cannot handle the backlog as well as the daily routine work. If I resign, can I argue that the company should adjust the Rs.50k and two months’ notice pay against the extra work I have done (which was outside my scope and not informed to me)? Can I revoke the agreement saying it is not legally valid as it is not on Stamp paper? I would be grateful for any guidance on this issue. Thank you in advance.

  1. Hello everyone, Is a company letterhead with the company seal valid for an agreement? Thank you

  2. , Without changing the meaning, the text can be rephrased as: In accordance with the Indian Stamp Act, an agreement that is not stamped is liable to be impounded by the government and may not be accepted as evidence in court. However, it can still be valid and binding if it is entered into without any coercion. With regards to the payment of 50K for training, since no formal training was provided, you can mention this in your notice to the company and state that since no training was provided, you are not liable to pay 50K. You can also mention that the job profile is different from what was agreed, and that the conditions have forced you to take such an unwilling and drastic action.

  3. Dear Sir, According to Indian law, bonded labor is not allowed, so your employer cannot reclaim any money from you. If they attempt to do so, they may be subject to legal action.

  4. In India, bonded labor is prohibited by law. According to Article 19 of the Indian Constitution, the right to work is a fundamental right and cannot be waived by any person. Furthermore, the Indian Contract Act states that any contract which is one-sided or causes harm to the person it is enforced upon is null and void. Section 368 of the Indian Penal Code states that any person or institution that holds back documents or threatens legal action in order to force someone to do something against their will is guilty of extortion and can be punished with a minimum of two years in prison. The Supreme Court of India has also ruled that no employee can be forced to work against their will, even if they have signed a contract with the employer. Additionally, the court has stated that the employer cannot withhold any personal documents belonging to the employee. If any complaints are made against the company, the directors and managing directors of the company can be held liable, as the company is a legal entity and the management are its representatives. Bonds are applicable only if the company has invested in the personal growth and development of the employee, and not just for training that helps the employee perform better.

  5. If the company has not provided you with training, it is not valid and could potentially result in legal repercussions for the directors. If the company has incurred costs in training you, they may be able to sign a reasonable bond. It is advisable to discuss the situation with the HR director and try to resolve the issue, or simply leave if the company is not suitable. If you have not been with the company for more than six months, no notice period is required. However, if you have been with the company for more than six months, a notice period of one month or salary in lieu thereof is valid. Your leave can be adjusted to cover the notice period.

  6. I have been employed for two years in an engineering LTD. CO. Is it possible to break the bond in order to pursue further studies? Does Indian Law provide any grounds to support my higher education? The bond was written on RS. 10 stamp paper and the value is 5 Lakhs. Could you please provide assistance?

  7. Dear Guides, I recently went abroad for a month due to an urgent assignment from my company. They made me sign a bond on a stamp paper that stated I had to stay for 18 months, even though I was not willing to do so. I served for 15 months unwillingly, and then I became absent for 15 days. The company sent me advisory letters with cut-off dates, but when I went to the company, they were not willing to let me rejoin and even asked me to sign a bond for three years. I refused and came back home. The advisory letters continued for two months, and then the company sent me a letter of self-voluntary leaving and asked me to settle accounts. This was three months later, and I still have not resigned from the company. They have issued a self-voluntary leaving service, so how can I resign? After four months, they sent me a notice through an advocate, claiming I had to pay a bond money of one lakh rupees with reference to the fraud resignation letter dated from when I was absent, while the advisory letters were sent up to three months. Can they take legal action? Please guide me.

  8. Hello, First and foremost, you all signed the bonds without giving it much thought or were under some pressure. If this turns out to be a mistake, who should be responsible for it? It is not to say that the company is correct, but you gave them the opportunity to do what they did. You joined the job of your own free will and were aware of the bond. Now, you are looking for ways to get out of it. Who asked you to apply for GATE when you were already in a bond? If you were so concerned about your M Tech, you should have asked the company before writing GATE. By asking for suggestions on this forum, are you expecting others to be part of your action? It is because of people like you that the bond culture exists. You have to face the consequences of your actions and not put them on someone else. Bonds on letterheads are not valid in courts. The company may argue that they trusted you and did not get the bond on a stamp paper. Also, the exact scope of duties cannot be defined by any company at the time of joining. It looks like you are unable to take the pressure and are looking for ways to get out of it. If you really thought they were putting pressure, you could have foregone the chance. You used the company for your own benefit and now you want to jump the gun. Think before you take any action.

  9. This is a tricky situation. It’s important to remember that when signing a bond, there is always a risk involved. It’s important to be aware of the terms of the agreement and to make sure that the company has provided the necessary training and resources to support the work. If not, it’s important to keep records of any training or resources that were not provided. It’s also important to keep the company informed of any issues that arise. It’s important to remember that the law does not generally support such agreements, so it’s important to be aware of the risks before signing. Finally, it’s important to think before signing any agreement, as it may not be legally binding.

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