Karnataka High Court Lets Vijaya Bank Retain ₹3 Lakh Indemnity Recovered From Employee Who Left Before Completing Mandatory Service Period
The Karnataka High Court has set aside a single judge order directing Vijaya Bank to refund the indemnity bond amount collected from a former employee, who left its services before completing mandatory service period of three years and preferred employment with SAIL.A division bench of Chief Justice N V Anjaria and Justice K V Aravind noted that a clause in the employee's joining letter issued...
The Karnataka High Court has set aside a single judge order directing Vijaya Bank to refund the indemnity bond amount collected from a former employee, who left its services before completing mandatory service period of three years and preferred employment with SAIL.
A division bench of Chief Justice N V Anjaria and Justice K V Aravind noted that a clause in the employee's joining letter issued by the bank required him to execute an indemnity bond for Rs.3,00,000/- and it was stipulated that the amount will have to be paid, if he leaves the service before the stipulated period.
The employee had joined the bank on 02.11.2011 and put in his papers on on 05.04.2012, i.e. after 5 months. As such, his request to waive of indemnity bond was declined and he was given a relieving letter after making the payment.
A single judge of the High Court had ordered the Bank to refund this amount, stating that Department of Public Enterprise Guidelines (DPE Guidelines) permit the transfer of the amount as well as the period of the Bond when an employee of the public sector entity joins the services of the Central Government, State Government and autonomous body.
In bank's appeal, the division bench observed that the Department of Public Enterprises Guidelines would not apply to the bank since public sector banks are guided by the instructions issued by the parent Ministry which is the Department of Finances and Services and Department of Economic Affairs (Banking Division), Ministry of Finance.
"The guidelines by the Department of Public Enterprises/Bureau of Public Enterprises, Ministry of Heavy Industries and Public Enterprises are not applicable to public sector Banks. They are applicable only to the public sector enterprises which have different service conditions, packages and lateral movement of public officials. The bank is not the department of Government nor is a public sector enterprise in that sense to which the aforementioned Public Sector Guidelines aforementioned may apply,” it reasoned.
The Court also observed that having agreed to and accepted the conditions of bank employment, it was not open for the employee to resile therefrom.
Accordingly, Court allowed bank's appeal.
Appearance: Advocate S.R Kamalacharan for Advocate Pradeep S Sawkar for Appellant.
Advocate Bharmal Shirin Shabbirbhai for Respondent.
Citation No: 2025 LiveLaw (Kar) 86
Case Title: Vijaya Bank & AND AND Abhimanyu Kumar
Case No: WRIT APPEAL NO.138 OF 2024