The Kerala High Court has held that an employer cannot refuse to accept an employee’s resignation when the terms of the employment contract, including the notice period, are complied with, observing that compelling an employee to continue in service against his will would amount to bonded labour prohibited under Article 23 of the Constitution.
Justice N. Nagaresh made the observation while granting relief to a company secretary employed in a public sector undertaking (PSU) whose resignation had been rejected and who was directed to resume duty through show-cause notices and office memoranda.
The petitioner approached the High Court challenging the PSU’s decision to refuse his resignation and the subsequent communications requiring him to report back to work and explain why disciplinary action should not be initiated.
The PSU justified its refusal on the ground that, owing to its financial position, the services of the company secretary could not be dispensed with. It also contemplated disciplinary proceedings against him.
The Court held that resignation by an employee becomes effective once it is tendered in accordance with the conditions of service and the employer cannot refuse to accept it except in limited circumstances, such as when:
- the employee has not complied with the notice period or other contractual conditions, or
- disciplinary proceedings are contemplated for grave misconduct or for causing monetary loss to the establishment.
In all other situations, the Court said, refusal to accept resignation would violate the employee’s fundamental rights.
“In any other circumstance, if the employer refuses to accept the resignation of an employee, it would amount to bonded labour prohibited under Article 23 of the Constitution of India,” the Court observed.
The Court further held that financial difficulties or an administrative emergency cannot be cited as a ground to compel an employee to continue in service without consent.
Justice Nagaresh found that the disciplinary proceedings proposed against the petitioner appeared to be an attempt to prevent him from exercising his right to resign.
The Court also noted that the PSU had defaulted in payment of the petitioner’s salary since October 2022, which further undermined its stand.
The Court took note of the petitioner’s personal situation, observing that he had resigned following the death of his father in 2020 and had to care for his mother, who was suffering from neurological and psychiatric ailments.
It also recorded that the petitioner could not secure alternative employment because the PSU had not initiated the process for de-linking his membership with the Registrar of Companies.
Setting aside the PSU’s actions, the High Court directed it to:
- accept the petitioner’s resignation,
- relieve him from service as expeditiously as possible and within two months, and
- pay arrears of salary, leave surrender benefits, and all terminal benefits legally due.
The Court added that the payments should be made as expeditiously as possible, subject to the PSU’s financial position.
