Disputes between employer and employee; which Court to have jurisdiction and the issue of Stigmatic relieving letters.

In Vishal Gupta V/s L & T Finance Limited, two questions arose before the Hon’ble High Court at Delhi for its consideration;

Firstly, in view of the facts of the particular case, was the ouster clause in the employment agreement, in terms of which, only the courts in Greater Mumbai had jurisdiction in case of disputes, at par with public policy, especially when the registered office of the employer was in Mumbai and the appointment letter issued to the employee was also from Bandra, Mumbai yet the employee worked mainly out of Delhi?

Second, in view of the facts of the particular case, was withholding the employee’s relieving letter or agreeing to issue the same with stigma, warranted?

In the present matter, the Plaintiff employee, Mr. Vishal Gupta was appointed by the Defendant Financial Company as an Assistant Manager in its office in Delhi sometime in 2006. The registered office of the Company, as mentioned earlier, was in Mumbai and the appointment letter was also issued from the office of the Company located in Mumbai. The employee, subsequently in 2008, submitted his resignation citing personal reasons. He had got an offer from Axis Bank and wanted to move. Citing reasons of pending enquiries against the employee in the matter of 15 persons whom the employee had recommended for loan and who had defaulted in payment, the employee was refused his relieving letter, pending disposal of the enquiries. Owing to this, the employee could not avail his job offer with Axis Bank. Meanwhile, the Defendant Bank refused the employee’s request to rejoin services with them, even though the former had accepted a cheque of Rs 2,20,318/- from the employee as two month’s salary in lieu of notice and enchased it.

When a Civil matter was initiated against the Defendant and a relief of interlocutory mandatory injunction was sought, the above questions arose before the Hon’ble Delhi High Court.

With regard to the first question, the Court held as follows;

The Court observed that in the present case, the letter of employment no doubt stated that it was a transferable job. Still, the plaintiff was to work primarily for the Delhi office of the Defendant. He, in fact, rendered services only in Delhi office. He submitted his resignation at Delhi. For an employee no longer in service to be asked to go to Mumbai for instituting and pursuing litigation would render the remedy expensive and inefficacious for such employee. It would work harshly against the employee. Moreover, in a situation like the present one where the prayer was essentially for a direction to the Defendant to issue a relieving letter, to direct the employee to go to a different city only because of the ouster clause, seemed to be unfair and unjust to the Court. The Court observed that, although in commercial contracts, it has been held that such an ouster clause would not be opposed to public policy, in a contract of employment such a clause could well be held to be opposed to public policy. Therefore, it was held that it was wrong for the Defendant Company to seek dispute to be initiated in Mumbai Courts.

With regard to the second question, the Court held as follows;

The Hon’ble Court observed that the rule, that a Court cannot grant an interim relief that would amount to grant of the final relief at the interlocutory stage is not an inflexible one. It would depend on the facts of every case. In the present matter the Court held that if, for the relieving letter, the plaintiff had to wait for the conclusion of the trial, the whole purpose of the plaintiff coming to the Court would be defeated. The denial of a relieving letter by the Defendant in the instant case had already prevented the plaintiff from accepting any other offer of employment. Further, the Defendant Company would neither have him back nor issue him a relieving letter, which was not tenable in law. Therefore, the Court observed that all that the Defendant was required to do was to issue the plaintiff a letter stating that he was no longer in their service. Any other qualification to such statement might render the cessation of the services of the plaintiff stigmatic. Therefore, a case was made out for issuing an interim mandatory injunction to the Defendant to issue to the plaintiff a simple relieving letter stating that he is no longer in their service.

The matter has great relevance in the context of IT employees and commercial establishments. Find out here about laws applicable to IT & ITES employees.

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