IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID TUESDAY, THE 9TH MARCH 2010 / 18TH PHALGUNA 1931 AS.No. 755 of 1995 (D) -------------------- AGAINST THE JUDGMENT AND DECREE DATED 30.7.1994 IN OS.261/1992 of PRINCIPAL SUB COURT,PARAVUR .................... APPELLANTS/DEFENDANTS: ----------------------------- 1. ABRAHAM JOHN, S/O.PAILY YOHANNAN, KIZHAKKETHOTTIYANEL SOUTH MARADY P.O MUVATTUPUZHA VIA, ERNAKULAM DISTRICT. 2. PAILY YOHANNAN, S/O.PAILY PAILY, -DO- -DO- -DO- -DO- BY ADV. MR.K.N.NARAYANA PILLAI, MR.DINESH R.SHENOY MR.S.VIDYA SAGAR RESPONDENT/PLAINTIFF: ---------------------------- MASONEILAN (INDIA) LTD, HOSPITAL JUNCTION, ALUVA 983 101 REPRESENTED BY THE COMPANY SECRETARY. ADV. MR.U.K.RAMAKRISHNAN, MR.E.K.MADHAVAN, MR.P.V.LOHITHAKSHAN, MR.K.ANANTHAKRISHNA NAVADA THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 09/03/2010, ALONG WITH CROSS OBJECTION, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: AS.No. 755 of 1995 (D) ORDER ON C.M.P.NO.3217/1996 IN A.S.NO.755/1995 DISMISSED. 9.3.2010 SD/- HARUN-UL-RASHID, JUDGE. // TRUE COPY // P.A TO JUDGE. HARUN-UL-RASHID, J. ----------------------------------- A.S.No.755 of 1995 - D and Cross Appeal --------------------------------- Dated this the 9th day of March, 2010 J U D G M E N T The defendants in O.S.No.261 of 1992 on the file of the Sub Court, North Paravoor are the appellants. The suit is for recovery of money. The trial court decreed the suit in part allowing the plaintiff to recover a sum of Rs.60,000/- with future interest at the rate of 12% per annum with proportionate costs. Aggrieved by the decree and judgment, the defendants have preferred the appeal. The parties are hereinafter referred to as the plaintiff and defendants as arrayed in the suit. 2. The first defendant was appointed as a management trainee as per the letter of appointment dated 30.7.1986. The first defendant accepted the offer of appointment on 4.8.1986. The period of training was for two years with stipend. Ext.A1 is the appointment order dated 30.7.1986. Clause 11 of Ext.A1 stipulates that the first defendant shall serve the company for a minimum period of five years including training period, failing which the employee will be liable to pay the company a penalty A.S.No.755 of 1995 2 equal to three months’ stipend/basic salary and monthly allowances (last drawn). Ext.A2 is the letter of acceptance issued by the first defendant in favour of the company informing the company that he would like to join duty from 4.8.1986. First defendant completed the two year training period. After completion of the training period, the company vide order dated 8.8.1988, confirmed the first defendant in management cadre Grade V with effect from 4.8.1988. It is the plaintiff’s case that considering the qualifications and aptitude of the first defendant, the plaintiff company decided to send the first defendant for acquiring more skills and knowledge by getting trained with plaintiff’s collaborators, Masoneilan at France for a period of 25 days during May, 1989. The first defendant agreed to serve the company for a minimum period of three years after the completion of the training period. Ext.A7 is the agreement executed between the plaintiff company and the first defendant. Ext.A7 is dated 2.5.1989. The second defendant is the father of the first defendant. On the same day, the defendants jointly executed a bond in favour of the plaintiff company binding themselves jointly and severally to pay the plaintiff on demand a sum of Rs.25,000/- together with interest thereon in the event of A.S.No.755 of 1995 3 the first defendant's failure to serve the plaintiff company for a period of three years after returning from the foreign country on completion of the training. Ext.A6 is the bond executed by the defendants in favour of the plaintiff company. Several conditions are stipulated in Ext.A6 bond. The defendants also agreed that in case of any breach of the conditions stipulated in Ext.A6 bond the training will be liable to termination and the defendant shall forthwith refund to the company on demand expenses incurred by the plaintiff for the training abroad not exceeding a sum of Rs.60,000/- together with interest. 3. It is not disputed that the first defendant underwent training abroad. After training the first defendant rejoined duty. On 1.4.1990 the plaintiff company promoted the first defendant to management cadre Grade IV. The first defendant continued to serve the company till February 1991. The first defendant applied for leave travel assistance on 29.1.1991 which was sanctioned by the plaintiff company on 30.1.1991 and payment was also made on 18.2.1991. The company granted leave travel assistance from 25.21991 to 2.3.1991 which the first defendant availed. Thereafter the first defendant did not report for duty in spite of the expiry of the grant of leave period. In spite of A.S.No.755 of 1995 4 notices issued directing him to report for duty the first defendant did not report for duty. At last, by letter dated 24.5.1991 the plaintiff wrote to the first defendant that the plaintiff had treated the first defendant has abandoned the employment and therefore the first defendant had ceased to be an employee of the plaintiff. On 18.11.1991 the plaintiff issued another notice to the defendants pointing out the relevant clauses in Exts.A6 bond and A7 agreement and claimed liquidated damages for the reminder of the period of three years service after the training abroad and for reimbursement of the amount disbursed to the 1st defendant towards leave travel assistance. The plaintiff company demanded a sum of Rs.1,06,966/- with interest. 4. The plaintiff claimed amount under the following two heads: 1) Rs.46,100/- towards the amount of salary and allowances for the reminder period claimed as per agreement and bond dated 2.5.1989 (from March 1991 to June 1992). 2) Rs.60,866/- towards the amount spent by the plaintiff for the training of the first defendant. A.S.No.755 of 1995 5 (Total amount claimed under item Nos. 1 & 2 is Rs.1,06,966/- plus interest at the rate of 18% from 18.11.1991 till the date of suit Rs.8,022/-). Thus the total plaint claim is Rs.1,14,988/-. 5. The defendants in their joint written statement denied the claim of the plaintiff and contended that the plaintiff is not entitled to realise any amount referred to the clauses in Exts.A6 bond and A7 agreement. According to them no loss of any kind was caused to the plaintiff on account of the first defendant not serving his full term as stated in the agreement. The learned counsel for the appellants contended that the plaintiff has not established that any damage was caused to the plaintiff on account of the first defendant having left the service of the plaintiff before expiry of three years after he returned from France, successfully completing the training. Since no damages were suffered by the plaintiff, the plaintiff is not entitled to recover any amount from the defendants. It was also contended that the plaintiff is entitled to claim only the amount stipulated in Ext.A6 bond for violation of the terms of Exts.A6 bond and A7 agreement, subject to proof. 6. An officer of the company was examined on behalf of the plaintiff company. Plaintiff produced documents which are A.S.No.755 of 1995 6 marked as Exts.A1 to A25. On the side of the defendants, testimony of DW1 is recorded and Ext.B1 was marked. 7. The issue is as to whether the first defendant had voluntarily abandoned the employment of the plaintiff was examined by the court below. The court below held that the first defendant had voluntarily abandoned the employment of the plaintiff. The said findings are not disputed by the appellants. I have already referred to Ext.A1 appointment order and Ext.A2 acceptance. The first defendant joined the service of the plaintiff company on 4.8.1986. The period of training as per the service conditions was two years with stipend. The first defendant completed the training period. The first defendant is required to serve the company for a minimum period of five years including the training period. In fact, after the successful completion of the training period, he was confirmed in management cadre Grade V with effect from 19.8.1988. As stated earlier during May, 1989 the company decided to send the first defendant for training with plaintiff’s collaborators, Masoneilan at France for a period of 25 days. Admittedly, the first defendant went for training and he successfully completed the training period and came back and joined duty. Before he left for training at France Ext.A6 bond and A.S.No.755 of 1995 7 Ext.A7 agreement were executed by the defendants in favour of the plaintiff company. Both documents are executed on the same day, namely, 2.5.1989. Ext.A6 is the bond referred above. Clause (a) to (k) are the conditions stipulated in Ext.A6 bond. The relevant clauses are clauses (e) to (k). As per clause (e) first defendant is bound to serve the company for a minimum period of three years after the date of return from the foreign country after completion of the training. As per clause (k) first defendant shall maintain a suitable standard of living and a conduct while abroad, considered reasonable by the company. Clause (k) further stipulates that in case the first part of clause (k) is violated the training will be liable to termination and the bounden and surety are bound to refund to the company all money paid to the bounden or expended on his account in respect of the pay and allowance, leave, salary, cost of fees, travelling and other expenses on account of his having been selected for training abroad, not exceeding Rs.60,000/- together with interest thereon from the date of demand at the lending rates of the nationalised banks in India. The above referred clauses are independent of each other. Under clause (e) the first defendant is bound to serve the company for a period of three years after the date of A.S.No.755 of 1995 8 return from the foreign country after completion of the training. Admittedly, the first defendant failed to serve the company for the requisite period. It is not disputed that he served the company only till February, 1991. Thereafter, he had availed leave travel assistance from 25.9.1992 to 2.3.1992. Admittedly, he did not report for duty after availing the leave travel assistance. Therefore, it is clear that clause (e) of Ext.A6 is attracted. In Ext.A6 bond for violation of any of the conditions stated as clauses (a) to (k) the bounden and surety are liable to pay Rs.25,000/- on demand together with interest thereof. Ext.A6 stipulates in the event of bounden refusing to serve the company for a minimum period of three years, after training, which is one of the conditions in Ext.A6 or violation of any other conditions the bounden and surety are liable to pay Rs.25,000/-. 8. In fact clause (k) of Ext.A6 stands on a different footing. Clause (k) refers to the satisfactory completion of the training period at France. In clause (k) it is stated in case the first defendant did not maintain a suitable standard of living and a conduct while abroad, considered reasonable by the company the training will be liable to termination. In the event of termination the bounden and the surely shall refund to the A.S.No.755 of 1995 9 company on demand all money paid to the bounden or expended in respect of his pay, allowances, leave salary and travelling expenses on account of his having been selected for training abroad not exceeding Rs,60,000/- with interest from the date of demand. On a plain reading of clause (k), it is clear that the said clause is attracted only in case the bounden (first defendant) violated the conditions set out in clause (k) while on training. It means that if he failed to complete the training period to the satisfaction of the company he is liable to pay all the expenses incurred by the company in respect of pay, allowances, leave salary, cost of fees of training and other expenses having been selected for training. The above said expenses are incurred by the company in connection with his training. The plaintiff has no case that the first defendant did not complete the training to the satisfaction of the company. Instead the case of the plaintiff is that the first defendant completed the training period, returned to India and continued to serve the company for the remaining period but, not completed the agreed reminder service period. The liability to reimburse the fixed amount stipulated in clause (k) namely, Rs.60,000/- together with interest is applicable only in a case where the conditions mentioned in first part of clause A.S.No.755 of 1995 10 (k) is violated and consequent termination of the training at France. So, the plaintiff company has no case that the first defendant failed to complete the training. Therefore, the plaintiff cannot claim Rs.60,000/- fixed as damages. 9. The plaintiff is also not entitled to realise Rs.46,100/- towards the amount equal to salary and allowances for the period. The claim is based on clause (viii) of Ext.A7 agreement. Ext.A7 agreement and A6 bond are executed in the context that the plaintiff decided to depute the first defendant for training at France. Clause (viii) of Ext.A7 is as follows: “The Company shall have the right to claim and recover from the employee any damages which the Company may suffer or may have to pay to its Collaborators associate and/or any other Company by reason of divulgence of information, knowhow, drawings, designs, documents or instruments or trade or process secrets all attained or procured by the employee from Masoneilan, France and/or any other collaborators or consultants of the company or by reasons any act or neglect on the part of the employee amounting to infringement of any patent right belonging to Masoneilan International and Masoneilan (India) Limited and/or any other Company and loss and damages suffered or caused to the company by reason of having to train or hire any A.S.No.755 of 1995 11 other persons to fill up the vacancy caused by the employee leaving, abandoning or resigning from the service of the Company.” 10. From the facts discussed above the company have no case that neither the first defendant had involved in divulgence of information, knowhow, drawings, designs, documents or instruments or trade or process secrets etc. nor did any act of negligence amounting to infringement of any patent right stated above or that the company suffered damages due to filling up of the vacancy caused by abandoning the service. Therefore, the claim of the plaintiff that they have suffered loss to the tune of Rs.46,100/- which is equal to the amount of salary and allowances for the reminder period also cannot stand. The trial court held that the plaintiff has nowhere in the plaint alleged that because of the unauthorized absence of the first defendant the plaintiff had sustained any damages. The trial court also observed that the plaintiff has no case that in the place of the first defendant any other employee has been appointed and for any training expenses has been expended and therefore held that clause (viii) in Ext.A7 is not attracted so that the plaintiff can claim loss for the amount equal to the salary and allowances for A.S.No.755 of 1995 12 the reminder period of service. At the same time the court below placing reliance on clause (k) of Ext.A6 bond held that towards the expenses incurred by the plaintiff for the training of the first defendant the plaintiff is not entitled to get any amount in excess than Rs.60,000/- as agreed under Ext.A6 and passed a decree holding that the plaintiff is entitled to recover Rs.60,000/- towards expenses for the training of the first defendant and to recover the same as damages. I have already found that there is no violation of clause (k) of Ext.A6 and therefore the plaintiff cannot realise the damages stipulated in the said clause. Though the claim of the plaintiff under the two heads is not sustainable on facts and law, yet, in the interest of justice, the court below should have considered the claim of the plaintiff for violation of the bond conditions. Ext.A6 bond stipulates that if any of the conditions namely, clauses (a) to (k), are violated the defendants are obliged to compensate the plaintiff company. Rs.25,000/- was fixed as compensation for violation of any of the conditions mentioned in Ext.A6. One of the conditions I have referred to earlier is clause (e), in the event the first defendant did not serve the company for a minimum period of three years from the date of return from the foreign country after completion of the A.S.No.755 of 1995 13 training. Admittedly, the condition set out in the said clause is not complied with. He did not serve the company for the requisite period but abandoned the service. Therefore, the defendants are bound to pay an amount of Rs.25,000/- together with interest from the date of demand at the lending rate of nationalised banks in India as stated in paragraph 2 of Ext.A6. The plaintiff is entitled to recover Rs.25,000/- plus interest from the date of demand. He applied for leave travel assistance from 25.2.1991 to 2.3.1991 which he availed. Therefore the date of abandonment of the service can be taken as 3.3.1991. On 11.3.1991 the plaintiff send a registered letter directing the first defendant to report for duty from 4.3.1991 and also informed that in case the first defendant did not report for duty on or before 16.3.1991 disciplinary action will be taken against him. Therefore it can be taken that the first defendant failed to report for duty from 4.3.1991 onwards. So the first defendant is bound to pay the bond amount with interest from 4.3.1991. In the result, the appeal is partly allowed and the cross appeal stands dismissed. The decree and judgment passed by the court below is modified, allowing the plaintiff to recover a sum of Rs.25,000/- with interest at the rate of 12% per annum A.S.No.755 of 1995 14 from 4.3.1991 till the date of decree and future interest at the rate of 6% per annum till realisation. Appellant is entitled to proportionate costs. Learned counsel for the appellant submitted that they have paid Rs.11,225/- as directed by this Court in appeal. The appellant is entitled to reduction of the amount deposited with proportionate interest. HARUN-UL-RASHID, JUDGE. bkn/-