Delhi District Court
M/S Koenig Solutions Limited vs Mr. Kuldeep Singh on 16 September, 2014
IN THE COURT OF SHRI SUKHDEV SINGH: ADDITIONAL
DISTRICT JUDGE: WEST DISTRICT: TEES HAZARI COURTS:
DELHI.
CS No. 38/13/13
M/s Koenig Solutions Limited
KLJ Complex-II, Flat No. A-55,
Plot No.70, Shivaji Marg
Najafgarh Road, Moti Nagar
New Delhi.
....Plaintiff
Vs.
Mr. Kuldeep Singh
415, Satti Wala Mohalla
Village Bharthal, Near Karandeep
Public School, Dwarka Sector-26
New Delhi-122001 ...Defendant.
Date of Institution : 31.01.2013
Judgment Reserved for : 16.09.2014
Judgment Passed on : 16.09.2014
JUDGMENT
The plaintiff company has filed the suit for permanent injunction and recovery of damages of Rs. 4,00,000/- ( Rupees Four Lakhs) against the defendant.
2 The facts in brief are that the plaintiff was a limited company duly incorporated under the provisions of the Companies Act, 1956, having its registered office at 20-A, 2nd Floor, Shivaji Marg, Moti Nagar, New Delhi-110015. The suit has CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 1/18 been filed through Mr. Joachim Pinto, who has been authorised by the Board of Directors through Resolution of dated 15.1.2013. The company was in the business of offshore IT training and certification. The defendant was appointed by the plaintiff as Miscrosoft Dynamics & .NET Corporate Trainer at its Delhi office vide appointment letter dated 20.9.2010. The defendant signed the said appointment letter after reading and understanding its terms and conditions and also executed employment bond on the same day. As per the terms and conditions of the appointment letter, the defendant was to work with the plaintiff for a minimum term of 24 months from the date of execution of the employment bond.
The plaintiff imparted training for skill sets and technical know-how during the course of employment and the defendant agreed to indemnify the plaintiff company for all loss and damages which may arise on account of any breach of the terms and conditions of the appointment letter and employment bond dated 20.9.2010. The plaintiff made substantial investment on defendant's training and skill enhancement and other training cost of Rs.2,00,000/-.
It is alleged that the defendant in violation of terms and conditions of the appointment letter and employment bond dated 20.9.2010, started absenting himself unauthorisedly from duty CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 2/18 after 17.5.2012. Due to unauthorised absence of the defendant, the plaintiff company suffered financial loss and even goodwill of the plaintiff company was also tarnished. The defendant was well aware that he could not have left the services of the plaintiff without resigning and thereafter serving 30 days notice after the bond period. The defendant was also under the obligation not to disclose or divulge or make public any information or document related to any aspect of the company or its customer. The defendant was also liable to be restrained from joining any other company during his employment with plaintiff company. It is alleged that the defendant tried to allure the clients and vendors of the plaintiff company with ulterior motives.
The plaintiff company also sent a legal notice dated 19.9.2012 demanding compensation of Rs. 4,00,000/- from the defendant on account of financial losses and harm done to the goodwill of the company which was duly served upon the defendant. It is prayed that since the defendant has violated the terms and conditions of the appointment letter and caused financial loss to the plaintiff, he was liable to pay a sum of Rs. 4,00,000/- ( Rupees Four Lakhs) with interest pendent-lite and future @ 9% per annum.
3 In the Written Statement, the defendant has stated CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 3/18 that he sent his resignation on 10.4.2012 which was duly accepted by the Manager of the plaintiff. The defendant denied that he absented himself from duty. The defendant also denied that the plaintiff incurred expenses on technical know how costs program specific training course and skill set enhancement during the course of employment. The defendant has further denied of having executed any employment bond dated 20.9.2010 or that he was under obligation to serve the plaintiff for a minimum period of term of 24 months or that he agreed to abide by terms and conditions contained in the agreement dated 20.9.2010. Other pleas of the plaintiff have been denied parawise and it was reiterated that no amount was spent by the plaintiff on the training of the plaintiff. Dismissal of the suit has been prayed for.
4 In the replication, the plaintiff has controverted the pleas of the defendant and reasserted its own pleas. 5 On the pleadings of the parties, the following issues were framed:
1. Whether the plaintiff is entitled for a decree of permanent injunction ? OPP
2. Whether the plaintiff is entitled for damages CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 4/18 amounting to Rs. 4 lacs ? OPP
3. Relief.
6 To prove its case, the plaintiff company has examined Shri Shekhar Upadhyay, Assistant Manager ( Accounts), PW.1. He has deposed on affiavit Ex.PW.1/A and reiterated the pleas taken by the plaintiff company in the plaint and relied upon documents Ex.PW.1/1 to Ex.PW.1/8 i.e certificate of incorporation, board resolution, brochure of the company, appointment letter dated 20.9.2010, employment bond dated 20.9.2010, demand notice, receipt thereof and copy of delivery information from internet respectively.
In defence, the defendant has examined himself as DW.1 and deposed on affidavit Ex.DW.1/A. He reiterated the pleas taken by him in his written statement. 7 I have heard Ld. Counsels for the parties and have perused the material placed on record. My findings on the above issues are as follows:
ISSUE No.1
8 The onus to prove this issue lies upon the plaintiff. During the course of arguments, Ld. Counsel for the plaintiff CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 5/18 company has stated that they do not want to press this issue. Since this issue has not been pressed, the same stands decided as non-pressed.
ISSUE No.2.
9 The onus to prove this issues lies upon the plaintiff. In support of this, the plaintiff company has examined Shri Shekhar Upadhyay, Assistant Manager, as PW.1. This witness has deposed on affidavit Ex.PW.1/A. He has stated in his testimony that the defendant was appointed by the company in the capacity of Microsoft Dynamics & .NET Corporate Trainer at Delhi office, vide appointment letter dated 20.9.2010. The defendant signed the appointment letter after reading and understanding the same. He has got exhibited the appointment letter as Ex.PW.1/4. He has further stated that the defendant executed employment bond Ex.PW.1/5 on the same date. He has further deposed that as per the appointment letter, the defendant was under the obligation of serving the company for a period of 24 months from the date of appointment letter. The plaintiff company made substantial investment on the training of the defendant which included expenditure relating to technical know-how cost, program specific training cost and skills enhancement and an amount of Rs.2,00,000/- ( Rupees Two Lakhs CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 6/18 only) has been spent on the said training.
He has further deposed that in clear violation of the terms and conditions of appointment letter and employment bond dated 20.9.2010, the defendant started absenting himself from duty w.e.f 17.5.2012. Due to absence of the defendant, the company work was adversely affected and the jobs assigned to him had to be transferred to new persons which caused inconvenience and financial loss of Rs.2,00,000/- to the plaintiff company. He further stated that the plaintiff got issued legal notice dated 19.9.2012 calling him upon to pay damages/compensation amounting to Rs. 4,00,000/- (Four Lakhs only). He has got exhibited legal notice as Ex.PW.1/6 and postal receipt as Ex.PW.1/7 and Ex.PW.1/8.
10 In defence, the defendant examined himself as DW.1 and deposed on affidavit Ex.DW.1/A. He has stated in his testimony that he was appointed by the plaintiff company vide appointment letter dated 20.9.2010 and executed an employment bond on the same day. Under the terms and conditions of the appointment letter, he had to work with the company for a minimum period of 24 months. He has denied that he absented himself from duty w.e.f 17.5.2012 or that the plaintiff company invested any amount on his training. CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 7/18
He has further deposed that he tendered his resignation and sent the same to the plaintiff company on 10.4.2012 which was accepted by them on 23.4.2012. He continued to guide/help the employee of the plaintiff even after resignation. He has got marked e-mails mark B and C to this effect.
11 Two fold arguments have been advanced on behalf of the defendant to escape the liability. Firstly, that no amount was spent on the training of the defendant and secondly, the bond executed was not a bond in the eyes of law. In support of his arguments, Ld. Counsel for the defendant has placed reliance on judgments in Bhismat Pandey Vs. Phoola etc AIR, 2010 M.P. 147, where distinction between the bond and agreement has been described; Ikbal Ahmed Vs. Girdharilal, AIR 2011 M.P 9, where distinction between a receipt and a bond has been explained and in the matter of Hamdard Dawakhana Vs. Wakf, AIR 1968 Delhi I, where again the distinction between the bond and the agreement has been made. All these judgments have been under the Stamp Act. The plea on behalf of the defendant has been that bond has not been attested by two witnesses as per the requirement.
CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 8/18 12 To ascertain the liability of the defendant, if any, a look has to be made to the appointment letter Ex.PW.1/4 and employment bond Ex.PW.1/5. It would not be out of place to set out the terms and conditions stipulated in the appointment letter Ex.PW.1/4 as well as employment bond Ex.PW.1/5 which have bearing on the case. Firstly, the terms of appointment letter Ex.PW.1/4 are reproduced:
NOTICE PERIOD- : (After the expiry of the bond) - This contract of employment is terminable by either party giving 30 (thirty) days notice without giving reasons for the same. You are expected to serve complete notice period. Under any circumstance if you will fail to serve notice, you will be liable to pay 75 days salary to company. In case of any leave/absenteeism during this period, the notice period shall be extended by equal number of days of leave/absenteeism.
Secondly, the relevant terms and conditions of employment bond Ex.PW.1/5 are as under:
ARTICLE -I TERMS OF EMPLOYMENT 1.1 Minimum Term- In accordance with the term and conditions of the Appointment Letter, the employee agrees that he/she shall serve Koenig for a period 24 months from the date of execution of the Appointment Letter (the "Minimum Term") and shall CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 9/18 not terminate his/her services with Koenig during the Minimum Term.
ARTICLE II TERMS OF THE BOND 2.1 Koenig Investment- The employee acknowledges that by executing the Appointment Letter and providing him/her with employment, Koenig has made a substantial investment including expenditure relating to (i) Technical know how costs program specific training costs; and (ii) skill set enhancement and other training costs; during the course of employment, amounting to approximately Rs.2,00,000/-.
2.2 Employee Bond- In the event the Employee commits a Material Breach ( as defined below in Section 4.1) of this Bond, the Employee agrees to indemnify Koenig for all Damages ( as defined below in Section 4.2) suffered on account of such breach and which have been quantified at a sum of Rs. 2,00,000/-. Subject to the date on which the Employee commits a Material Breach, the Employee shall pay Koenig a bond amount of the Damages, in accordance with the terms of this Bond.
2.3 Indemnifier's Bond- In the event the employee commits a Material Breach ( as defined below in Section 4.1) of this Bond, the indemnifier agrees to guarantee the payment of the Damages by the employee and agrees to indemnify Koenig for any failure on the part of the Employee to pay Koenig and CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 10/18 Damages which have been quantified at a sum of Rs. 2,00,000/-. Subject to the date of which the employee commits Material Breach, the Indemnifier shall pay Koenig a bond amount of the Damages in accordance with the term of this agreement. ARTICLE-III COVENANTS 3.1. Termination of Appointment Letter- The employee agrees that in consideration of the various benefits that have you accrued to him/her, in terms of enhancement of the skill set and technical know how during the course of employment and in consideration of the significant investment made by Koenig in employing her/him during the Minimum Term and the employee shall:
a) Serve Koenig during the Minimum Term and shall not terminate the Appointment Letter, for any reasons whatsoever;
b) Not obtain any employment by whatever named called or work in any capacity or under any designation with any other person, company, undertaking, trade or firm, in the territory of India or elsewhere for consideration, reward or not, during the Minimum Term.
ARTICLE IV BREACH AND CONSEQUENCES THEREOF.
4.1 Material Breach - The parties agree that any breach of the covenants specified in Article III of this bond by the employee would be considered a material breach ( "Material Breach").
4.2 Damages - In the event the employee commits CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 11/18 a Material Breach, the parties agree that the liquidated damages ( "the damages") payable to koenig, is equivalent to all amounts that are expended by Koenig during the course of employment, and any other expenses lawfully incurred by Koenig during the course of employment, all allowances and the cost of replacement of the employee and the other losses suffered by Koenig under this bond and the Appointment Letter, are quantified at a sum of Rs.2,00,000/-
4.3 Consequences of Material Breach- In the event of the employee commits breach of this bond, Koenig shall have right to enforce the terms and conditions of this bond and recover the damages from the employee and the indemnifier, either jointly or severally, in accordance with the terms and conditions of this Bond. It is hereby clarified that Koenig shall have right to enforce the terms and conditions of this bond against Indemnifier without exhausting its remedies against the Employee. 13 Before examining the terms and conditions of the appointment letter Ex.PW.1/4 and the employment bond Ex.PW. 1/5, the first and foremost argument which has been advanced on behalf of defendant that the bond was not legal one is taken up. The reliance has been placed on behalf of defendant on judgments viz; Bishmat Pandey ( supra), Ikbal Ahmed (supra) and in the matter of Hamdard Dawakhana CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 12/18 (supra). It is noticed that all the three judgments have been under the Stamp Act which only explains distinction between the bond and agreement, bond and receipt etc. The fact that all the three judgments on which Ld. Counsel for the defendant has placed reliance only explains the nature of documents and that too under the Stamp Act, all the three judgments are not attracted to the facts of the case as the bond in the case is an employment bond. Therefore, the plea taken on behalf of the defendant that the bond has not been as per the law cannot be accepted. Therefore, this argument goes.
14 Now comes the turn of evidence. If a look is made to the cross-examination of the defendant, it is noticed that he has admitted that he had gone through the appointment letter dated 20.9.2010. He has further admitted that all the terms and conditions in the appointment letter were acceptable to him. He has further admitted that he executed an employment bond in favour of the plaintiff at the time of joining the plaintiff company on 20.9.2010. He further admitted that he had to work with the plaintiff company for a period of 24 months. He has also admitted that he was to work for one month even after tendering resignation. He has also stated that he had to work with the plaintiff company for 24 months after joining, if they were to CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 13/18 invest on his training and technical know-how. He has denied the suggestion that the plaintiff company has spent a sum of Rs. 2,00,000/- on his training. He has also denied the suggestion that he remained absent from duty w.e.f 17,5,2012.
Thus, from his testimony, it comes out that he has accepted the letter of appointment with all the terms and conditions therein and the employment bond at the time of joining the plaintiff company. Further, he was to serve the company for a period of 24 months. He was to serve the plaintiff company for one month even after tendering his resignation. His only plea was that the company has not invested on him. 15 As to whether the plaintiff company has invested on him or not, a look has to be made to the testimony of Shri Shekhar Upadhyay, PW.1. He has stated in his cross- examination that the company had given training to the defendant, but he has not placed any document on record to show the expenses incurred on the said training. He has further failed to say as to whether any professional was engaged to impart the training to the defendant and the expenses incurred on such training. He has denied the suggestion put to him such as work of the company adversely affected; defendant allured other employees of the company after his resignation and no CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 14/18 inconvenience was caused to the plaintiff company on account of resignation of the defendant. Thus, one thing which comes from his testimony is that no document has been placed on record to show that any training was given to the defendant and the amount spent thereon. In the absence of any document on record to show that any training was given to the defendant or any amount was spent on him, it has to be seen as to whether the defendant can be liable for damages or not. 16 The plea taken on behalf of the plaintiff has been that even if the company has not suffered any financial loss, even then the plaintiff company was entitled to damages. In support of this, reliance has been placed on the judgment of Hon'ble Supreme Court in Oil & Natural Gas Corporation Ltd. Vs. Saw Pipes Ltd, 2003 (2) RAJ 1 (SC), where it has been laid down that when a contract has been broken, the party who suffers by such breach is entitled to receive compensation for any loss which naturally arise in the usual course of things from such breach. The person aggrieved by the breach is not required to prove actual loss or damage suffered by him before he can claim a decree, the court is competent to award reasonable compensation in case of breach even if no actual damage is proved to have been suffered in consequences of the breach of a contract.
CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 15/18 17 Thus, from the evidence it is admitted case of the defendant that he accepted the terms and conditions of the appointment letter and executed the bond. Under the bond, he was to serve the company for a period of 24 months. He joined the company on 20.9.2010 as Microsoft Dynamics &.NET Corporate Trainer. He left the company on 17.5.2012. Thus, he served the company for a period of about 19 months, though he was to serve for a period of 24 months as per the employment bond. Thus, the fact remains that by not serving the company for a period of 24 months as per the employment bond, he has breached the terms of employment as stipulated in the letter of appointment as well as employment bond. When he has breached the terms of employment stipulated in the letter of employment and as per employment bond executed by him voluntarily, certainly he was liable for loss incurred to the company. As per the stipulation of employment bond, he was to indemnify the company towards damages which have been quantified as Rs.2,00,000/- ( Rupees Two Lakhs). Though the plea taken on behalf of the defendant has been that company has not suffered any loss nor any amount has been spent on him, but if a look is made to Article ( 2.1), it is noticed that the defendant has acknowledged that the company has made substantial CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 16/18 investment including expenditure relating to (i) Technical know- how costs, program specific training costs and (ii) skill set enhancement and other training costs during the course of employment, amounting to approximately Rs. 2,00,000/- ( Rupees Two Lakhs). It means that the defendant has acknowledged that this amount was spent when he has been issued the letter of employment. In the appointment letter itself, the position which has been given to the defendant has been Microsoft Dynamics &.NET Corporate Trainer. The designation of the defendant itself shows that he has been given a job of responsibility and that too of a Corporate Trainee. Though the defendant has admitted that an amount of Rs. 2 lakhs was spent on his training, even if the plaintiff company has failed to put on record the loss suffered by it, the defendant has been liable for loss which naturally have arisen due to his leaving the company before completion of 24 months, which is the period of bond as has been laid down by the Hon'ble Supreme Court in ONGC Case (Supra). 18 No doubt he has left the company before 4 months of completion of the bond period, he being given a responsible position of Microsoft Dynamics &.NET Corporate Trainer, certainly his leaving the job has led to natural damages. Thus, the defendant was liable for the loss naturally arising for the breach CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 17/18 of employment bond Ex.PW.1/5. Though the liability stands determined, the only question that arises is to the reasonable compensation to be given to the plaintiff company. The amount of bond has been Rs. 2,00,000/- ( Rupees Two Lakhs) and the defendant has worked with the company for a period of about 20 months. He was to serve the company for a period of 4 months more to fulfill the condition of employment bond of 24 months. The fact that the defendant was to serve for a period of 4 months more, the reasonable compensation to which the plaintiff company was entitled is assessed to Rs. 50,000/- ( Rupees Fifty Thousand only).
RELIEF 19 In view of the above, I am of the opinion that the plaintiff company is entitled to a sum of Rs.50,000/- . Therefore, a decree for a sum of Rs. 50,000/- ( Rupees Fifty Thousand) is passed in favour of the plaintiff and against the defendant with interest @ 9 % per annum from the date of filing the suit till realization. Cost of the suit is also allowed. Decree sheet be prepared accordingly. File be consigned to Record Room.
Announced in the open Court (SUKHDEV SINGH) 16.9.2014. Addl. District Judge:05 West District: THC Delhi CS No. 38/13 M/s Koenig Solutions Ltd. Vs. Kuldeep Singh Page 18/18