Employer Can't Reject Resignation Citing Financial Constraint, Forcing Employee To Continue Amounts To Bonded Labour: Kerala High Court

The Kerala High Court has held that an employer cannot refuse to accept an employee's resignation citing financial constraint and that compelling an employee to continue in service against his will would amount to bonded labour prohibited under Article 23 of the Constitution.Justice N Nagareesh delivered the judgment in two writ petitions filed by the Company Secretary of Traco Cable Company Limited, a State Public Sector Undertaking.When the salary of the petitioner was not paid for a long period, the petitioner tendered his resignation. The company however rejected the resignation citing its financial position and the pivotal role played by him as Company Secretary. The Board of Directors resolved not to relieve him, stating that no other qualified personnel was available and that his presence was essential for the company's revival plan.The company had also issued memos threatening disciplinary proceedings. During the pendency of the writ petition, a show-cause notice was issued alleging unauthorised retention of a company laptop.The petitioner challenged the rejection of his resignation and the subsequent disciplinary actions.The Court noted that Company Secretaryship is a statutory position under the Companies Act which is responsible for ensuring compliance with the Companies Act 2013.It further noted that the petitioner will not be able to join any other organisation unless the Company forwards necessary form to the Registrar of Companies and otherwise the petitioner's Company Secretary membership will be tied up with the respondent company. The Court observed that when an employee submits his resignation, the employer has a duty to accept the same and relieve the employee from his duties. It added that the duty is subject only to any conditions that may be stipulated in the contract of the employment including a stipulation of notice period. The Court held that in the absence of violation of any notice conditions or conditions in the contract of employment, an employer cannot desist from accepting a resignation. It further held that refusal to accept resignation of an employee without any reason would amount to bonded labour under Article 23 of the Constitution of India. The Court has also held that financial distress or administrative inconvenience is not a valid ground to compel an employee to continue in service.“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.” Court observedThe Court found that the disciplinary proceedings initiated after the filing of the writ petition appeared to be an attempt to pressurise the petitioner. With these observations the Court allowed the writ petition and set aside the memo. The Court directed the respondent to accept the resignation letter submitted by the petitioner and relieve him from his services expeditiously. Case Title: Greevas Job Panakkal v Traco Cable Company Ltd. and Ors. Case No: WP(C) 5132/ 2025 and connected case Citation: 2026 LiveLaw (Ker) 108Counsel for Petitioner: D Sreekanth, Aswin Kumar M J, Albin George, Jeevadas H, James JoseCounsel for Respondents: Abel Tom Benny, D Prem Kamath, Tom Thomas, Aaron Zacharias Benny, Alan J Yogyaveedu, Clint Jude Lewis, Mathew Angelo Davis, Jyothika Krishna, Princy Xavier (Sr. GP), Ananditha Rajeev, Tess RoseClick Here To Read/ Download Judgment

Employer Can't Reject Resignation Citing Financial Constraint, Forcing Employee To Continue Amounts To Bonded Labour: Kerala High Court

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