Refusal to accept resignation amounts to bonded labour, rules Kerala HC
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The Kerala High Court has ruled that an employer cannot refuse an employee’s resignation except under limited circumstances, observing that forcing an employee to continue working against their will amounts to “bonded labour,” prohibited under Article 23 of the Constitution. The court directed Ernakulam-based Traco Cable Company Limited to accept the resignation of a company secretary who had been kept on the payroll against his will.
A bench led by Justice N. Nagaresh heard the plea filed by the company secretary, who alleged that the company had refused to accept his resignation citing financial difficulties.
“Financial issues or emergencies cannot justify forcing a Company Secretary to work against his will and without consent. The disciplinary proceedings contemplated against the petitioner appear to be an attempt to violate his right to resign,” the court observed in its order dated February 13.
The petitioner, who joined the company as a company secretary in 2012, alleged that the company had been defaulting on salary payments for a prolonged period. He submitted his resignation in March 2024, requesting to be relieved from service. The company rejected the resignation, stating it would be unfair for him to leave the organisation during its critical financial position and directed him to resume duties immediately.
Despite repeated requests to the management, the petitioner was asked to provide a written explanation as to why disciplinary action should not be taken against him. He explained his reasons, citing the need to pursue better opportunities and care for his ailing mother. Nevertheless, he was again served with a memo directing him to report for duty, prompting him to approach the high court.
In its written statement, the company argued that delays in salary payments were due to financial constraints.
The court clarified that an employer has a duty to accept an employee’s resignation and relieve them from duties, subject only to contractual obligations such as notice periods. Resignations can only be delayed if they do not follow the prescribed procedure or if disciplinary action is pending for serious misconduct or monetary loss to the company. Outside these circumstances, refusal to accept a resignation constitutes bonded labour.
The court also noted that under the Companies Act, a company secretary’s engagement must be registered with the Registrar of Companies. Until the employer sends a statutory request, the employee’s name remains linked to the company, which can prevent them from taking up appointments elsewhere.
The bench observed that the company had defaulted on salary payments since October 2022, over 20 months before the resignation was submitted. Refusal to accept the resignation on financial grounds and the threat of disciplinary action were seen as violations of the petitioner’s rights.
The court directed Traco Cable Company Limited to accept the resignation and relieve the petitioner within two months. The company was also ordered to pay all arrears of salary, leave surrender benefits, and other terminal benefits to which the petitioner is legally entitled, taking into account the company’s financial position.
