Liquidated damages for resignation before prescribed period – Indemnity Bond
The respondent was appointed as Probationary Assistant Manager in 1999 and confirmed in 2001. He was promoted to the Middle Management Scale-II in 2006. Clause 9(w) of the Recruitment Notification provided for indemnity bond of Rs.2 lakhs for leaving service before completion of 3 years.
On 7.8.2007, the respondent was issued an appointment letter. Clause 11(k) provided for service for a minimum period of 3 years and indemnity bond of Rs.2 lakhs.
On 28.9.2007, the respondent resigned from an earlier post and joined new post.
On 17.7.2009, the respondent resigned from new post and joined another Bank.
Thereafter, the respondent filed a writ petition challenging the said conditions in both appointment letters.
HELD that the stance of the appellant Bank is neither unjust nor unreasonable. The Bank is a public sector undertaking, it cannot resort to private or adhoc appointments through private contracts and an untimely resignation would require the Bank to undertake a prolix and expensive recruitment process of advertisement, fair competitive procedure less the appointment falls foul of the constitutional mandate under Articles 14 and 16. Keeping these exigencies in mind, the Bank had incorporated the liquidated damages clause in the appointment contract.
Judgment dated 14.5.2025 of the Supreme Court of India in Civil Appeal No.11708 of 2016 of Vijaya Bank and another Vs. Prashant B. Narnaware with connected matter.
