Forcing Employee to Continue Service Violates Article 23, Kerala High Court Rules it As Bonder Labour

The Kerala High Court has held that an employer cannot refuse to accept an employee’s resignation merely because the company is facing financial difficulties. The Court observed that forcing an employee to continue working against his will may amount to bonded labour, which is prohibited under Article 23 of the Constitution of India.

Justice N Nagaresh made this observation while deciding the case of Greevas Job Panakkal v Traco Cable Company Limited & Ors. The Court clarified that once an employee submits a resignation in accordance with the terms of employment, the employer is generally bound to accept it.

The judge explained that resignation can be refused only in limited situations. For example, if the employee has not completed the required notice period, if the resignation was given in the “heat of the moment” and later withdrawn, or if serious disciplinary proceedings involving major misconduct or financial loss are pending.

However, in this case, none of these conditions existed.

Background of the Case

The petitioner, Greevas Job Panakkal, was working as a Company Secretary at Traco Cable Company Limited, a State Public Sector Undertaking. He informed the Court that his salary had been irregular since October 2022. Due to financial stress and the need to take care of his ailing mother, he decided to resign in March 2024 and requested to be relieved from service.

The company’s Board rejected his resignation, stating that he was essential to the organisation and that the company was going through a severe financial crisis. The management also issued memos directing him to resume duties and warned him of disciplinary action.

Challenging these actions, Panakkal approached the High Court seeking cancellation of the memos and a direction to the company to accept his resignation.

Court’s Observations

The Court noted that under the Companies Act, 2013, the appointment of a Company Secretary must be registered with the Registrar of Companies. Unless the employer files the required statutory forms, the Company Secretary cannot take up employment elsewhere.

This means that if the employer refuses to accept the resignation, the employee may be prevented from securing another job. The Court found that such a situation would unfairly restrict the employee’s right to livelihood.

The Court also observed that the company had not paid the petitioner’s salary for a long time and had initiated disciplinary proceedings against him, including allegations about retaining a company laptop. The judge found these actions legally unsustainable and viewed the disciplinary proceedings as an attempt to prevent him from leaving the job.

Importantly, the Court held that financial crisis cannot be a valid reason to compel a person to work against his will. Such compulsion would amount to bonded labour, which is strictly prohibited under Article 23 of the Constitution.

Final Directions

The High Court set aside the memos rejecting the resignation and the disciplinary notices issued to the petitioner. It directed the company to formally accept his resignation within two months.

The Court also ordered the company to settle his salary arrears, leave surrender benefits, and other terminal dues as early as possible, depending on the company’s financial position.