The Kerala High Court resignation ruling has clarified that an employer cannot compel an employee to continue in service merely because the company is facing financial hardship. The Court held that forcing an employee to work against their will amounts to “bonded labour” under Article 23 of the Constitution of India.
The judgment was delivered in Greevas Job Panakkal v. Traco Cable Company Limited & Ors.
Justice N. Nagaresh observed that once an employee submits resignation in accordance with the terms of employment, the employer is duty-bound to accept it unless there is non-compliance with contractual conditions.
Resignation Can Be Refused Only in Limited Circumstances
The Court clarified that resignation may be refused only in specific situations, such as:
- Failure to comply with the required notice period
- Resignations submitted in the “heat of the moment,” which may be withdrawn
- Pending disciplinary proceedings involving serious misconduct
- Cases involving major financial loss to the organisation
However, none of these circumstances were present in the case at hand.
Financial Crisis Not a Ground to Deny Resignation
The petitioner, Greevas Job Panakkal, served as Company Secretary at Traco Cable Company Limited, a State Public Sector Undertaking. He resigned in March 2024 after alleging irregular salary payments since October 2022, which left him unable to sustain himself or provide medical care for his ailing mother.
The company’s Board rejected his resignation, claiming his role was indispensable and that the company was facing a severe financial crisis. The management also issued memos directing him to resume duties and warning of disciplinary action.
The Court found this stance legally unsustainable.
“Financial issues or financial emergency cannot be a reason to force a Company Secretary to work for an incorporated Company against his will and without his consent.”
Justice Nagaresh further observed that the disciplinary proceedings initiated against the petitioner appeared to be an attempt to violate his right to resign., the institution aims to facilitate engagement between young advocates, senior members of the Bar, and former judges of the Supreme Court and High Courts.CLT ordered liquidation under Section 33 of the IBC, triggering a fresh moratorium under Section 33(5).
Refusal to Accept Resignation Amounts to ‘Bonded Labour’
Significantly, the Court held that refusal to accept resignation in such circumstances would amount to “bonded labour,” which is prohibited under Article 23 of the Constitution of India.
The Court also noted that under the Companies Act, 2013, the appointment of a Company Secretary is registered with the Registrar of Companies. Without filing the required statutory forms acknowledging cessation, the petitioner would be unable to secure alternative employment — effectively restricting his professional freedom.
Additionally, the Court took note of:
- Prolonged non-payment of salary
- Initiation of disciplinary proceedings
- Allegations regarding retention of a company laptop
These actions, the Court held, could not justify denial of the petitioner’s resignation.
Court’s Directions
The Kerala High Court:
- Set aside the memos rejecting the resignation
- Quashed the disciplinary proceedings
- Directed the company to formally accept the resignation within two months
- Ordered settlement of salary arrears, leave surrender benefits, and other terminal dues at the earliest, subject to the company’s financial position
Legal Representation
The petitioner was represented by advocates D. Sreekanth, Aswin Kumar MJ, Albin George, Jeevadas H, and James Jose.
Traco Cable Company Limited was represented by standing counsel Abel Tom Benny along with advocates D. Prem Kamath, Tom Thomas (Kakkuzhiyil), Aaron Zacharias Benny, Ananditha Rajeev, Clint Jude Lewis, Mathew Angelo Davis, and Tessa Rose.
Senior Government Pleader Princy Xavier appeared for the State.
