Allowed

The Mathrubhumi Printing & Publishing v. Sri.Benny Thomas

Kerala HC6 Jan 2010AS/703/1999

Case brief

AI extract

What is this about?

The High Court allowed appeals against lower court decisions dismissing suits. It held that an employee bond agreeing to pay damages for early resignation was not opposed to public policy. The court set aside the decrees and allowed the plaintiff to recover the bond amount plus interest.

What did the court decide?

Judgment and decree of lower court set aside. Plaintiff allowed to realize Rs.50,000 with interest. Appeals allowed.

The Mathrubhumi Printing & Publishing Vs… — Contract and Commercial Disputes | Kerala HC (2010)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT :

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THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID

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WEDNESDAY, THE 6TH JANUARY 2010 / 16TH POUSHA 1931

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AS.No. 703 of 1999(A)

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--------------------OS.5/1996 of SUB COURT, PALA

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APPELLANT(S):

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--------------

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THE MATHRUBHUMI PRINTING AND PUBLISHING COMPANY LTD., MATHRUBHUMI BUILDINGS, K.P. KESAVAMENON ROAD, KOZHIKODE - REPRESENTED BY THE MANAGING DIRECTOR.

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BY ADV. SRI.U.K.RAMAKRISHNAN, SENIOR ADVOCATE SMT.P.VIJAYAMMA SRI.P.J.ANILKUMAR

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RESPONDENT(S):

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--------------1. SRI. BENNY THOMAS,

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S/O. MATHAI THOMAS,

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PAMPACKAL HOUSE, MARY LAND P.O

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MELUKAVUMATTOM, KOTTAYAM.

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2. SRI. BABY THOMAS,

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PAMPACKAL HOUSE, MARY LAND P.O

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MELUKAVUMATTOM, KOTTAYAM.

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ADV. SRI.C.P.UDAYABHANU SMT.O.M.SHALINA SRI.S.AJITH KUMAR SRI.JOHNSON MANAYANI FOR R1 SRI.GEORGE KURUVILLA(ALAPPUZHA) FOR R1

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THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 05/01/2010, ALONG WITH AS NO. 479 OF 1998 THE COURT ON 06/01/2010 DELIVERED THE FOLLOWING:

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HARUN-UL-RASHID, J.

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---------------------------------------A.S.No.703 of 1999 & A.S.No.479 of 1998

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Dated this the 6^th day of January, 2010

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JUDGMENT

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The plaintiffs in O.S. No.5/1996 and O.S. No.823/1995

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on the file of the Sub Court, Pala and Sub Court, Kozhikode are the appellants in the above appeals respectively. The suits are filed for realization of Rs.50,000/- with interest. The Trial Court dismissed the suits. Hence these appeals. The plaint claims in both these cases are of the same nature and the issues raised for consideration are more or less the same. Hence both appeals are heard jointly. The parties hereinafter are referred to as the plaintiffs and defendants as arrayed in the suits. The facts in O.S. No.5/1996 are stated below:

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The plaintiff is a company carrying on the business of printers and publishers of malayalam daily, by name Mathrubhumi and other malayalam periodicals. On 2^nd September, 1992 as per the proceedings of the Managing Director of the plaintiff company, the first defendant was appointed as a Marketing Executive w.e.f. 21.9.1992. As per the

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A.S.No.703 of 1999&A.S.No.479 of 1998

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terms of the appointment, the first defendant shall complete the probation period before confirmation. Another condition attached to the appointment order was that the first defendant shall execute a bond in favour of the plaintiff undertaking to serve the plaintiff for a minimum period of five years from the date of confirmation in the service. It is stipulated in the bond that if the first defendant decides to leave the service of the company during the pendency of the bond, he should pay an amount of Rs.50,000/- to the company in lieu of liquidated damages to the company. The plaintiff's case is that the defendants agreeing to all these conditions and stipulations in the appointment order joined duty in the establishment on 25.2.1993. The first defendant and the second defendant surety executed a bond for Rs.50,000/- in favour of the plaintiff inter alia agreeing to complete the probation period of six months agreeing with the terms and conditions of the appointment order dated 2.9.1992 and further offered to serve the plaintiff company for a minimum period of five years.

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The first defendant completed the period of probation

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and he was confirmed in service of the plaintiff company w.e.f.

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A.S.No.703 of 1999&A.S.No.479 of 1998 -3-

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21.3.1993 as Marketing Executive. Subsequently, his post was re designated as Assistant Circulation Manager. On 13.07.1995 the 1^st defendant submitted his resignation and requested the plaintiff company to relieve him on or before 13^th August, 1995. The reason for the resignation is on personal grounds. The plaintiff sent intimations demanding Rs.50,000/-. Since the amount was not paid the suit was filed.

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The first defendant is the employee of the plaintiff company. The second defendant is the surety. They filed a joint written statement. The fact of joining in the service of the plaintiff's company, submitting the resignation on 13.07.1995 and relieving the service from 30.08.1995 are admitted. The execution of the bond as alleged in the plaint is denied.

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It is stated in the written statement that the first defendant is not in need of a job and therefore he was compelled to sign certain papers at the direction of the company. According to the first defendant, the resignation did not cause any loss, dislocation or interruption of the work in the plaintiff company, therefore plaintiff has no right to claim damages. It is also contended that Rs.50,000/- mentioned in the bond is a

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A.S.No.703 of 1999&A.S.No.479 of 1998 -4-

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penalty which is not enforceable in law.

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The evidence consists of the oral testimonies of PW1,

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DW1, and documents were marked as Exts.A1to A13 and Exts.B1 to B8. Ext.A1 is the appointment order dated 2.9.1992. Ext.A2 is the joining report and Ext.A3 dated 25.2.1993 is the bond executed by the defendants in favour of the plaintiff. By Ext.A1 proceedings of the Managing Director of the plaintiff company dated 2.9.1992, the first defendant was appointed as Marketing Executive on probation for a period of six months from the date of joining duty. Further in Ext.A1, it is stipulated that Ext.A1 proceedings was issued subject to the condition that, the incumbent will execute a bond agreeing to continue in service for a period of five years from the date of confirmation in the service of the company and that if, by any chance, he decided to leave the company during the pendency of the bond, he will pay an amount of Rs.50,000/- to the company in lieu of the breach of the terms of bond executed. It is further stipulated that the incumbent shall provide his father or guardian as the surety of the bond which shall be duly executed within fifteen days after reporting for duty.

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A.S.No.703 of 1999&A.S.No.479 of 1998

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-5-

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The first defendant joined duty pursuant to Ext.A1 appointment order. Ext.A1 appointment order itself contains the conditions of service which the first defendant accepted with open eyes. He accepted the offer of appointment and joined duty. The joining report is produced as Ext.A2 dated 21.9.1992. The first defendant continued in the service of the plaintiff company. He was confirmed in service w.e.f. 21.03.1993 as Marketing Executive and continued in service till his resignation on 13.7.1995. Ext.A3 is the bond executed by the defendants in terms of Ext.A1 proceedings. In Ext.A3 Bond, the defendants jointly agreed to pay to the plaintiff company on demand a sum of Rs.50,000/- together with interest thereon from the date of demand at the lending interest rate prescribed by the Reserve Bank of India for the time being in force. As per clause(e) in Ext.A3, the first defendant has to serve the employer for a minimum period of five years from the date of confirmation in the service of the company. Ext.A4 is the draft bond filled up by the first defendant. The first defendant sent Ext.A6 letter requesting the plaintiff company to accept his brother as the surety in the bond vide Ext.A6 communication. The request was

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A.S.No.703 of 1999&A.S.No.479 of 1998

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accepted and the brother, who is the second defendant herein signed in the bond as surety.

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It has come out in evidence that the first defendant left the service of the plaintiff company for better prospects. He joined in Indian Express Daily and thereafter in Deepika Daily. Ext.A10 is the copy of the notice issued by the plaintiff company on 14.07.1995 calling upon the first defendant to pay Rs.50,000/in terms of Ext.A1 bond. Subsequently, the plaintiff company issued a letter demanding the payment of Rs.50,000/- Ext. A12 is the Advocate notice send on 28.07.1995. It has come out in evidence that after the date of resignation, the plaintiff appointed a substitute and the plaintiff has given training to him.

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The learned counsel for the plaintiff company submitted that the appointment of the first defendant is preceded by publication in daily newspapers inviting interested candidates to apply for the post. PW1 when examined, has stated that the advertisements were published in the Mathrubhumi and Indian Express. Rs.25,000/- each was paid to the newspaper companies. PW1 however deposed that the first defendant was

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A.S.No.703 of 1999&A.S.No.479 of 1998 -7-

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given TA and DA and he was also given training during the service period. The question is whether there is any loss to the plaintiff company due to the 1^st defendant's leaving from the service and as to whether the plaintiff realise the bond amount. The case of the plaintiff is that the defendants are jointly and severally liable to pay the amount agreed and stipulated in Ext.A3 bond. The contention of the 1^st defendant that he was compelled to execute Ext.A3 bond cannot be sustained for a moment. All details regarding the execution of bond and the liability covered by the bond etc. are stated in detail in Ext.A1 appointment order. So the defendant cannot be heard to say that under the circumstances stated in the written statement he was compelled to execute the bond.

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A.S.No.479/1998 challenging the decree and judgment in O.S.No.823/95, the suit filed by the same plaintiff for the very same relief. The defendant was appointed vide Ext.A1 proceedings of the Managing Director dated 02.09.1992 as Marketing Executive. Ext.A2 is the bond executed by the 1^st defendant dated 25.02.1993 agreeing to serve the company for a minimum period of five years and further stipulated that in case

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A.S.No.703 of 1999&A.S.No.479 of 1998 -8-

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failure to serve the company for a minimum period of five years, the defendant shall pay to the plaintiff a sum of Rs.50,000/- plus interest. The defendant was confirmed in service w.e.f. 28.03.1993. He submitted resignation vide resignation letter dated 14.03.1995 marked as Ext.A4. The contentions of the plaintiff and defendant in this suit is more or less the same that of the connected case referred earlier.

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From the evidence on record, it seen that the plaintiff had spent more than Rs.50,000/- in connection with the appointment of the first defendant in both suits. Even assuming that the plaintiff did not suffer any loss consequent to the appointment of the incumbents, even then the plaintiff is entitled to realise the amount stipulated in the bond. It is the 1^st defendant, who had voluntarily executed bond agreeing to serve the plaintiff company for a minimum period of five years after confirmation. The bond further stipulates that the incumbent failed to serve the employer for a minimum period of five years, the defendants agreed that they are jointly and severally liable to pay a sum of Rs.50,000/- on demand together with interest. The trial court, on an appreciation of the facts and circumstances,

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A.S.No.703 of 1999&A.S.No.479 of 1998 -9-

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observed that there is no proof that the 1^st defendant was compelled to sign Ext.A3 bond, that the 1^st defendant was a business executive in another company before he joined the service of the plaintiff and therefore it is not possible to assume that the 1^st defendant was compelled to sign the document for getting a job. The trial court also held that though he was employed in another company, he joined the plaintiff company for better prospects, that from his conduct it is seen that he is seeking better prospects, that he joined Indian Express company, after the resignation. Thereafter, he joined Deepika Daily. The court below observed that he is jumping from one employment to another.

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The claim of the plaintiff was negatived by the court below stating that no specific claim is alleged by the plaintiff and that there is no proof of the plaintiff sustaining any loss.

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In the preceding paragraphs, I have stated in detail the legal position, the facts and evidence and the circumstances leading to the execution of the bond. The defendants are bound by the terms of the bond and they are jointly and severally liable to pay the amount covered by the bond. The reasons stated by

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A.S.No.703 of 1999&A.S.No.479 of 1998 -10-

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the court below for non suiting the plaintiff in the said circumstances, cannot stand. The trial court also relied on the decision reported in Central Inland Water Transport Corporation Ltd. vs. Brojo Nath AIR 1986 Supreme Court 1571 . That case was between Central Inland Water Transport Corporation Ltd., and one of its employee. Going by paragraph 1 of that judgment, questions decided in the case are whether a Government Company as defined in section 617 of the Companies Act, 1956, is 'the state' within the meaning of Article 12 of the constitution and as to whether an unconsciounable term in a contract is void under section 23 of the Indian Contract Act, 1872 as being opposed to public policy and violative of Article 14 of the Constitution. The questions decided in the said suit has no bearing on the facts of this case. So far as the above cited case is concerned, the terms and conditions of the service is enjoined in the Service Rules. The Apex Court was considering one of the terms of the Service Rules. It is held that the terms are opposed to public policy and therefore void under Section 23 of the Indian Contract Act, 1872. In so far as this case is concerned, Ext.A3 bond was executed by the 1^st

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A.S.No.703 of 1999&A.S.No.479 of 1998 -11-

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defendant in favour of the plaintiff company agreeing to pay the amount stipulated in the bond in case he did not satisfy the conditions stipulated in the appointment order. The condition of executing the bond as stipulated in Ext.A1 appointment order and execution of bond voluntarily accepting the terms of appointment cannot be said to be opposed to public policy and therefore not void under section 23 of the Indian Contract Act. In the above said facts and circumstances, I am constrained to hold that the plaintiff is entitled to the reliefs claimed in the plaint.

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The learned counsel for the respondents submitted that the claim of interest at 18% from 13.08.1995 till the date of filing the suit on 01.01.1996 is not reasonable and therefore requested this Court for modification. The interest agreed to be paid is at the lending interest rate prescribed by the Reserve Bank of India. Taking into consideration the submission of the learned counsel for the respondents and taking a lenient view. I hold that the plaintiff is entitled to claim interest @ 9% from 13.08.1995 till 01.01.1996.

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In the result, the judgment and decree passed by the Court

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A.S.No.703 of 1999&A.S.No.479 of 1998

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below in O.S No.5/96 of the Sub Court, Pala and O.S.No.823/95 on the file of the Sub Court, Kozhikode are set aside. The plaintiff in O.S.No.5/96 is allowed to realise a sum of Rs.50,000/with interest at 9% from 13.08.1995 till the date of decree and future interest @ 6% from the defendants and their assets.

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The plaintiff in O.S.No.823/1995 is allowed to realize a sum of Rs.50,000/- with interest @ 9% from 14.4.1995 till the date of the decree and future interest @6% from the defendant and his assets. A.S.Nos.703/1999 and 479/1998 are allowed. There will be no order as to costs.

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(HARUN-UL-RASHID, JUDGE)

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jma.

The Mathrubhumi Printing & Publishing v. Sri.Benny Thomas

Case brief

What is this about?

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The Mathrubhumi Printing & Publishing v. Sri.Benny Thomas

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