The Kerala High Court held that employers cannot force continued service merely due to financial hardship, reaffirming employee autonomy employment relationships. Justice N Nagaresh clarified that resignations submitted must be accepted unless contractual conditions remain unfulfilled, ensuring legal certainty.
KERALA: The Kerala High Court recently ruled that an employer cannot compel an employee to remain in service due to financial difficulties when there are no breaches of contractual obligations.
Justice N Nagaresh emphasized that once an employee resigns in accordance with their employment terms, the employer is required to accept the resignation unless contractual conditions are unmet.
The judge clarified that a resignation may be declined only under specific circumstances, such as a lack of notice period, resignations made in “the heat of the moment” that can be retracted, or serious ongoing disciplinary actions concerning major misconduct or significant financial losses to the organization.
In this case, however, the Court found that none of these circumstances applied, deeming the company’s refusal to accept its company secretary’s resignation due to a financial crisis legally untenable.
The Court stated,
“Financial issues or financial emergency cannot be a reason to force a Company Secretary to work for an incorporated Company against his will and without his consent,”
The Court further remarked that any disciplinary proceedings against the petitioner appeared to be an attempt to infringe upon his right to resign. It made it clear that refusing to accept a resignation would constitute “bonded labour,” which is prohibited under Article 23 of the Indian Constitution.
The ruling stemmed from a case involving a Company Secretary who sought to resign from Traco Cable Company Limited, a state public sector undertaking.
ALSO READ: Employee Can’t Demand Return After Joining Transfer Post, Rules Chhattisgarh High Court
Greevas Job Panakkal, the petitioner, claimed that his salary had been irregular since October 2022, making it difficult for him to support himself and care for his ailing mother, who required ongoing medical attention. He submitted his resignation in March 2024, asking to be relieved from his position. However, the company’s Board rejected his resignation, citing that Panakkal’s role was crucial and the company was experiencing a severe financial crisis.
The management repeatedly directed him to resume his responsibilities and issued memos warning of potential disciplinary action.
Challenging these developments, Panakkal approached the Court to annul the memos against him and compel the company to accept his resignation.
After reviewing the facts and arguments, the Court noted that a company secretary’s appointment is registered with the Registrar of Companies as per the Companies Act, 2013. Unless the employer files the necessary statutory forms, a company secretary cannot pursue similar employment elsewhere, effectively hindering the petitioner from finding another job.
The Court also remarked on the company’s failure to pay the petitioner’s salary for an extended duration and its initiation of disciplinary proceedings for allegedly retaining a company laptop.
The Court determined that such actions were not legally justifiable, as the petitioner was being denied his right to resign without valid grounds.
Consequently, the Court annulled the memos that rejected Panakkal’s resignation and the notices for disciplinary action. It ordered the company to formally accept the resignation and relieve the petitioner within two months, along with settling his outstanding salary, leave benefits, and other terminal dues as soon as possible, depending on the company’s financial situation.
The petitioner was represented by advocates D Sreekanth, Aswin Kumar MJ, Albin George, Jeevadas H, and James Jose. Traco Cable Company Limited was represented by its standing counsel, Abel Tom Benny, along with advocates D Prem Kamath, Tom Thomas (Kakkuzhiyil), Aaron Zacharias Benny, Ananditha Rajeev, Clint Jude Lewis, Mathew Angelo Davis, and Tessa Rose. Senior government pleader Princy Xavier appeared for the state.
Case Title: Greevas Job Panakkal v Traco Cable Company Limited & Ors.
Read Attachment: