The employer is entitled for the amount which he has actual spent during training on the employee as per following Supreme Court Law.
While granting liquidated damages under the employment bond, Courts apart from going into the legal injury caused to the employer also take into consideration factors like actual loss suffered by the employer, period of service already completed by the employee under the contract and other conditions, if any, stipulated under the contract. Only after going into these factors, courts determine the loss suffered by the employer to reach a reasonable compensation figure. For instance, in the case of Sicpa India Limited vs Shri Manas Pratim Deb (MANU/DE/6554/2011), the employer incurred expenses, while imparting training to the employee for which an employment bond was executed. According to the bond, the employee was to serve the employer for period of three years or to make payment of rupees two lakhs to the employer. The employee left the employment within two year of signing the bond. To enforce the agreement the employer went to the court, which awarded sum of only Rs 22,532 to the employer as against the compensation amount of Rupess two lakhs stipulated in the contract. While coming to such conclusion, the Court relied upon the law laid down by Supreme Court regarding liquidated damages. The law with respect to liquidated damages have been crystallized by the Supreme Court vide two landmark decisions. First is the decision in case of Sir Chunilal V. Mehta And Sons, Ltd vs The Century Spinning (1962 AIR 1314), wherein it was held that liquidated damages are not in the nature of penalty and can be awarded as mentioned in the contract if loss from the breach of contract cannot be calculated for the remaining period of the contract. Whereas, in the case of Fateh Chand vs. Balkishan Das (AIR 1963 SC 1405), the provision of liquidated damages in the nature of penalty was held to be void, since the actual damages could be calculated and, thus the liquidated damages were held as the upper limit which are to be paid once the actual damages are proved. Since in the present case the damages could be calculated, Court considered the total expenses borne by the employer and the period of service completed by the employee under the contract and thus, divided the total expenses incurred into three parts for three years and awarded the damages for the remaining one year of the employment due to the breach of contract.
Therefore, from the above discussion, it is evident that employment bond stipulating a specified sum as payable by the employee in case of breach of contract is enforceable only if employer has actually spent money on the employee against a promise from the employee that he or she would not leave the employment for the specified duration and has consequently suffered a loss on account of the employee having received the training and leaving the employment before the stipulated period in breach of the employment bond / contract. With the employees in our country free to decide their employment these bonds play an important role to protect the interest of the employer and enable the employer, in appropriate circumstances, to recover the money spent or incurred by the employer in case of an early resignation by the employee.
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