- 1 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF JANUARY, 2026 BEFORE THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM REGULAR FIRST APPEAL NO. 1659 OF 2023 (MON) BETWEEN: 1. THE NEW INDIA ASSURANCE CO. LTD. REGIONAL OFFICE, NO.2-B UNITY BUILDING ANNEX MISSION ROAD BANGALORE - 560027. REPRESENTED BY ITS MANAGER. …APPELLANT (BY SRI. RAVISHANKAR .C.R, ADVOCATE) AND: 1. MS. KRITHIKA R .KALYANPUR AGED MAJOR D/O SRI. RAJARAM GURUNATH KALYANPUR R/AT NO. 29 NEW NO. 89 5TH CROSS BETWEEN 4TH AND 5TH MAIN ROAD MALLESWARAM BANGALORE- 560003. 2. MS. ARUNDATI S. SHIRALI AGED MAJOR W/D/O NOT KNOWN TO APPELLANT R.AT NO. 29, NEW NO. 89 5TH CROSS BETWEEN 4TH AND 5TH MAIN ROAD Digitally signed by CHAITHRA A Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 MALLESWARAM BANGALORE- 560003. 3. MR. AMAR ANAND KOWSHIK AGED MAJOR S/O NOT KNOWN TO APPELLANT R/AT NO.B-28 ANANDASHRAM CO-OPERATIVE SOCIETY 10TH MAIN ROAD 13TH CROSS MALLESWARAM BANGALORE - 560 003. …RESPONDENTS (BY SRI. CHANABASAPPA .S.N, ADVOCATE FOR R1 TO R3) THIS RFA IS FILED UNDER SEC.96 R/W ORDER 41 RULE 1 OF CPC., AGAINST THE JUDGMENT AND DECREE DATED 14.02.2023 PASSED IN OS NO.1641/2018 ON THE FILE OF XXXVII ADDITIONAL CITY CIVIL AND SESSIONS JUDGE, (CCH- 38), BANGALORE , DISMISSING THE SUIT FOR RECOVERY OF MONEY. THIS APPEAL, COMING ON FOR DICTATING JUDGMENT, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM - 3 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 ORAL JUDGMENT The captioned appeal is by the plaintiff/Insurance company assailing the judgment and decree dated 14.02.2023 passed in O.S.No.1641/2018, whereby trial Court has dismissed suit for recovery of money. 2. For the sake of brevity, the parties are referred to as per their rank before the trial Court. 3. Facts leading to the case are as under: The plaintiff instituted the suit seeking recovery of a sum of Rs.4,71,484/- together with current and future interest at the rate of 18% per annum, contending that defendant No.1 committed breach of the service agreement dated 26.03.2014, evidenced at Ex.P-2, by resigning from service within the stipulated bond period. It was the specific case of the plaintiff that defendant No.1, having voluntarily executed the service agreement and having accepted the terms and conditions contained therein, prematurely resigned from service, thereby - 4 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 committing breach of the contractual obligations. On the said premise, the plaintiff sought recovery of Rs.4,71,484/- along with interest. 4. Upon service of summons, the defendants entered appearance and filed their written statement denying the plaint averments in toto. Defendant No.1, while admitting execution of the service agreement, set up a defence that her consent was vitiated by coercion and undue influence. It was contended that though she was assured appointment to the post of Administrative Officer, she was in fact compelled to discharge multifarious duties, including cashier work, and was subjected to excessive workload. She further alleged that she was made to work late hours, that the accommodation provided was situated far away from the workplace, and that she was required to commute at odd hours. On these premises, defendant No.1 asserted that the terms of the service bond were unjust, arbitrary, unreasonable and unenforceable, and - 5 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 that she was constrained to resign after rendering service for about eleven months. 5. The parties, in support of their respective claims, adduced oral and documentary evidence. Upon appreciation of the material on record, the trial Court dismissed the suit holding that the plaintiff had failed to justify the claim for recovery. The trial Court further held that the conditions incorporated in the service agreement were arbitrary and unconscionable, and placing reliance on the judgment of the Hon’ble Supreme Court in Central Inland Water Transport Corporation Ltd. vs. Brojo Nath Ganguly1, concluded that the service conditions imposed by the plaintiff-Insurance Company, being in a dominant position vis-à-vis a weaker employee, could not be enforced against defendant No.1 merely on account of her premature resignation. On the aforesaid reasoning, Issue Nos.1 and 2 were answered in the negative and the suit came to be dismissed. 1 (1986) 3 SCC 156 - 6 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 6. Heard learned counsel appearing for the plaintiff–Insurance Company and learned counsel appearing for the defendants. This Court has independently re-appreciated the pleadings, oral and documentary evidence on record, with particular reference to the terms and conditions contained in the service agreement dated 26.03.2014 marked at Ex.P-2. In the light of the rival contentions urged and the material placed on record, the following points arise for consideration: i) Whether the finding recorded by the trial Court that the plaintiff failed to establish breach of the terms and conditions of the appointment letter and service agreement dated 26.03.2014 suffers from perversity or patent illegality warranting interference in appeal? ii) Whether the conditions incorporated in the service agreement can be held to be arbitrary, unreasonable or vitiated by coercion and undue influence, as alleged by defendant No.1? - 7 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 iii) What order? Finding on Point Nos.i and ii: 7. The following material and foundational facts are not in dispute between the parties. Defendant No.1 was selected by the plaintiff–Insurance Company through a process of campus recruitment conducted at the National Insurance Academy. Pursuant thereto, defendant No.1 was offered appointment to the post of Administrative Officer (Scale-I) and, upon acceptance of the said offer, she joined the services of the plaintiff. In furtherance of the appointment and as an integral part of the terms governing her employment, defendant No.1 voluntarily executed a service agreement dated 26.03.2014 at Bengaluru, which is produced and marked in evidence as Ex.P-2. The execution of the said service agreement, the designation to which defendant No.1 was appointed, and the factum of her joining service under the plaintiff are all admitted and stand conclusively established on record. In this backdrop, and since the controversy in the present - 8 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 appeal substantially turns on the interpretation and enforceability of the conditions incorporated in the service agreement, this Court deems it apposite to extract the relevant clauses thereof, which read as under: "3. The said Ms. Kritika Rajaram Kalyanpur agrees to serve the company for a minimum period of four years including probationary period. In the event of said Ms. Kritika Rajaram Kalyanpur resigning from the Company before the expiry of the bond period, the said Ms. Kritika Rajaram Kalyanpur will be liable to pay liquidated damages equivalent to one year's gross salary paid during the year of probation which will be proportionately reduced depending on the length of service rendered. The said Ms. Kritika Rajaram Kalyanpur resigning from the Company during the probationary period shall be liable to pay the salary received during the entire service in the company in addition to an amount of Rs.25,000/- (Rupees twenty Five Thousand Only) towards partial cost of training. During the period of probation or the extended period of probation, the said Ms. Kritika Rajaram Kalyanpur shall be liable to be discharged from the service without any notice or reasons therefore. In case of such discharge or if said Ms. Kritika Rajaram Kalyanpur resigns during the aforesaid period, he shall - 9 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 be liable to refund to the Company forthwith, the liquidated damages as mentioned above." (Emphasis Supplied) 8. On a plain reading of the aforesaid clause, it is manifest that defendant No.1 was contractually obligated to serve the plaintiff–Insurance Company for a minimum period of four years, inclusive of the probationary period. The records further disclose that, as part of the service benefits, defendant No.1 was provided with residential accommodation by the plaintiff on payment of a subsidised monthly rent of Rs.9,000/-. It is also an admitted and undisputed fact that defendant No.1 rendered service only for a period of about eleven months and tendered her resignation on 12.03.2015, admittedly during the probationary period. The resignation tendered by defendant No.1 was accepted by the plaintiff, expressly subject to recovery of amounts in terms of Clause-3 of the service agreement. - 10 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 9. In the backdrop of these admitted facts, the central issue that arises for consideration is whether the plaintiff–Insurance Company is entitled to recover the liquidated damages and other amounts stipulated under Clause-3 of the service agreement. Clause-3 of Ex.P-2, which has been extracted hereinabove, unequivocally stipulates that defendant No.1 agreed to serve the company for a minimum tenure of four years, including probation, and that in the event of resignation during the probationary period, she would be liable to refund the entire salary received during the period of service and further pay a sum of Rs.25,000/- towards partial cost of training. 10. On a careful reading of Clause-3, the core question that calls for adjudication is whether the said clause, consciously executed by defendant No.1 at the time of accepting employment, can be characterised as arbitrary, unreasonable or unconscionable, so as to enable defendant No.1 to avoid contractual liability, particularly - 11 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 when the factum of premature resignation and consequent breach is not in dispute. In this context, this Court deems it apposite to advert to the law laid down by the Hon’ble Supreme Court in Vijaya Bank and Another vs. Prashant B. Narnaware2, wherein it has been held that a stipulation prescribing a minimum service tenure, intended to curb attrition and protect employer’s legitimate interests, cannot be termed unconscionable and does not offend Section 27 of the Indian Contract Act. The Hon’ble Supreme Court has further clarified that such conditions are enforceable when they operate during the subsistence of employment. Similar principles have been reiterated in Niranjan Shankar Golikari vs. Century Spinning and Manufacturing Company3, wherein it has been held that negative covenants operative during the period of employment are valid and legally enforceable. 2 2025 SCC Online SC 1107 3 1967 SCC Online SC 72 - 12 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 11. Tested on the anvil of the aforesaid authoritative pronouncements, Clause-3 of the service agreement evidenced at Ex.P-2 squarely passes the test of legality and reasonableness. Admittedly, defendant No.1 was selected through campus recruitment and the pre- appointment conditions governing the post of Administrative Officer were not only disclosed to her but were expressly reduced into writing in the form of a service agreement. A meticulous reading of Clause-3 leaves no manner of doubt that the same constitutes a lawful and reasonable contractual term. Defendant No.1, having voluntarily accepted employment and executed the service agreement, chose to resign prematurely after rendering service for barely eleven months. By producing the service agreement marked at Ex.P-2, the plaintiff has discharged the initial burden and has clearly demonstrated that the stipulations contained therein are reasonable and enforceable. - 13 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 12. Though defendant No.1, in her written statement, alleged coercion, medical issues and excessive workload, she did not choose to enter the witness box to substantiate these pleas, despite the fact that such matters were within her exclusive personal knowledge. Her father, who is admittedly a guarantor to the service agreement and an ex-employee of the plaintiff, could not have discharged the onus that squarely lay upon defendant No.1. 13. The evidence of DW.1, who is the father and GPA holder of defendant No.1, is admittedly derivative and hearsay insofar as the alleged personal hardships, excessive workload and assignment of multitasking duties are concerned. It is well settled that when a party, despite pleading specific facts, abstains from entering the witness box to prove the same, the Court is entitled to draw an adverse inference under Section 114(g) of the Indian Evidence Act. The trial Court failed to draw such an - 14 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 adverse inference against defendant No.1, which has resulted in serious miscarriage of justice. 14. Defendant No.1 knowingly and consciously accepted the terms of the service agreement and, therefore, this Court has no hesitation in holding that the plaintiff–Insurance Company is entitled to enforce the breach clause contained therein. Clause-3 categorically mandates minimum service of four years, inclusive of probation, and expressly provides for liquidated damages in the event of resignation within the bond period. The contractual liability flowing from such a clause cannot be avoided merely because the employee chose to resign prematurely. 15. A closer scrutiny of the evidence on record, particularly the deposition of DW.1, clearly reveals that defendant No.1 resigned after her marriage and subsequently relocated to London owing to her husband’s employment. While such personal circumstances may - 15 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 explain the reason for resignation, they do not, in law, absolve defendant No.1 of the contractual obligations voluntarily undertaken by her. Equity cannot be invoked to rewrite the terms of a contract or to relieve a party from the consequences of a conscious breach. 16. For the aforesaid reasons, this Court is of the considered view that the trial Court committed a manifest error in treating the probationary status of defendant No.1 as a mitigating circumstance. On the contrary, the contract itself treats resignation during probation as an event attracting stricter consequences. Therefore, resignation during probation does not dilute the contractual liability but rather attracts the full rigour of Clause-3 of the service agreement. 17. The trial Court has clearly misunderstood and misapplied the ratio laid down by the Hon’ble Supreme Court in the judgments relied upon by it. The binding precedents governing enforceability of service bonds and - 16 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 minimum tenure clauses have been completely overlooked. The trial Court further erred in misconstruing the legal effect of probation and in failing to draw adverse inference against defendant No.1 for not stepping into the witness box. Consequently, the findings recorded by the trial Court are contrary to law and evidence on record, rendering the impugned judgment perverse and unsustainable. 18. However, it is equally evident that the plaintiff– Insurance Company has failed to place on record material particulars relating to the exact take-home salary drawn by defendant No.1 after statutory and compulsory deductions. The appointment letter, which would have conclusively reflected the salary structure, has also not been produced by the plaintiff. From the evidence available on record, it can only be safely concluded that defendant No.1 was drawing a monthly Basic salary of Rs.17,240/- and that she rendered service for a period of eleven months. Therefore, on a strict application of - 17 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 Clause-3 of the service agreement, the plaintiff would be entitled to recover a sum of Rs.1,89,640/- towards refund of salary for the period of service rendered. The said amount shall carry interest at an appropriate rate from the date of suit till realisation. 19. The service agreement evidenced at Ex.P-2 governs the rights and liabilities of the parties and constitutes the very foundation of the plaintiff’s claim. Once execution of Ex.P-2 is admitted and defendant No.1 has failed to establish that Clause-3 is arbitrary, unreasonable or unconscionable, the claim of the plaintiff– Insurance Company could not have been rejected. The employer–employee relationship and the terms of service are admittedly not in dispute. Therefore, this Court holds that the findings recorded by the trial Court on Issue Nos.1 and 2 suffer from perversity and warrant interference. Accordingly, Point No.(i) is answered in the affirmative and Point No.(ii) in the negative. - 18 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 Finding on Point No.iii: 20. For the foregoing reasons, this Court proceeds to pass the following: ORDER (i) The appeal is allowed in part; (ii) The judgment and decree dated 14.02.2023 passed in O.S.No.1641/2018 on the file of the XXXVII Additional City Civil and Sessions Judge, Bangalore City (CCH-38) is hereby set aside; (iii) The suit filed by the plaintiff– Insurance Company is decreed in part with cost; (iv) The defendant No.1 is directed to pay to the plaintiff–Insurance Company a sum of Rs.1,89,640/- (Rupees One Lakh Eighty-Nine Thousand Six Hundred and Forty only) being the amount recoverable under Clause-3 of the service agreement dated 26.03.2014; - 19 - HC-KAR NC: 2026:KHC:4762 RFA No. 1659 of 2023 (v) The aforesaid amount shall carry interest at the rate of 6% per annum from the date of suit till the date of realization; (vi) The claim of the plaintiff for recovery of any amount in excess of Rs.1,89,640/- is rejected. SD/- (SACHIN SHANKAR MAGADUM) JUDGE CA List No.: 1 Sl No.: 18