Service Bond Is Not A Contract Of Employment, Delhi High Court Upholds ESIC's Decision To Reduce Bond Period From Five/Three Years To One Year Post Qualification

The Delhi High Court has dismissed a batch of petitions filed by the Petitioners challenging the common order of the Central Administrative Tribunal (CAT) which upheld the decision of Employees State Insurance Corporation (ESIC) Dental College and Hospital in Rohini, Delhi. ESIC had reduced the service bond period to one year From Five/Three Years after attaining the qualification as per the revised policy.

A Division Judge Bench of Justice Girish Kathpalia and Suresh Kumar Kait observed that as per the Service Bonds, ESIC was well within its powers to reduce the tenure of service from three/five years to a period of one year.

Background:

The Petitioners joined the Bachelor of Dental Surgery course at the Employees State Insurance Corporation (ESIC) Dental College and Hospital in Rohini, Delhi, for the academic years 2014-19, 2015-20, 2016-21, and 2017-22. To cover their educational expenses, they had submitted individual service bonds to ESIC. The Petitioners had agreed to serve ESIC after completing the course for three years or five years as per the instruction or in default to pay Rs. 10,00,000 with 15% interest and Rs. 7,50,000 with 15% interest respectively, if they did not join as per the service bonds.

Meanwhile ESIC revised the bond tenure policy multiple times. Lastly, by communications dated 28.07.2020 and 30.03.2021, ESIC reduced the bond period for serving ESIC to one year. The Petitioners, after completing their BDS course were neither asked to serve by ESIC nor did they approach ESIC for considerable period. Some Petitioners pursued further studies. Much later, on 03.08.2023, ESIC requested the Petitioners to serve for the revised one-year bond period. Although the Petitioners joined, they sought full term of bond period instead of one year as per the revised bond period.

Petitioners / doctors approached the the Central Administrative Tribunal seeking the quashing of communications dated 28.07.2020 and 30.03.2021 which reduced the bond period from five/three years to one year. The Tribunal dismissed the applications, leading the Petitioners to approach the High Court

Contentions of the Petitioners before the High Court

1. The Counsel for the Petitioners contended that the order passed by the CAT dismissing their applications was not sustainable in the eyes of law.
2. Since the Respondents agreed to service bonds for five or three years, they couldn't change the service period to one year on their own.
3. It was contended that the service bonds between the ESIC and the Petitioners were contractual in nature which entitled the Petitioners to be employed in ESIC for five/three years starting from the date of joining.
4. A catena of judgements including Adeeba Asrar vs All India Institute of Medical Sciences, 2022 SCC OnLine Del 1780; Dr. K. Ashwarya vs Union of India, 2020 SCC OnLine Mad 9304; Hemant Kumar Verma & Ors vs Employees State Insurance Corporation & Ors., 2022 SCC OnLine SC 924; and others was relied upon in support of the contentions made by the Petitioners.

Contentions of the Respondents:

The Respondents opposed the stand taken by the Petitioners arguing that the service bonds between ESIC and the Petitioners could not be treated as a contract and ESIC had a right to reduce the tenure of service for five/three years to a period of one year. Moreover, it was argued that the Petitioners joined the service after the revised instructions were issued. The Respondents clarified that the Petitioners joined on different dates while they were aware of the bonds being revised, yet they chose to serve after the offer was extended to them on 05.08.2023.

Findings of the Delhi High Court:

While deciding the question as to whether the service bonds can be read in a manner which creates a right to employment in the Petitioners, the Court examined the Bonds and observed that the service bonds were unilaterally executed by the Petitioners and their sureties. The Dean or Administrative Officer of ESIC Medical College/Dental College only acted as a witness, not as a party involved in the bond. Moreover, the bonds were executed as a condition for ESIC covering the Petitioners' educational expenses.

The court held that the bonds specified financial penalties if the Petitioners failed to serve ESIC as agreed. However, the bonds did not impose any obligation on ESIC to employ or seek services from the Petitioners. Additionally, there were no penalties for ESIC if it chose not to utilize the Petitioners' services.

It was observed that the judgements cited by the Petitioners entailed issues different from the present petitions and could thus not be relied upon. It was held that those judgements mainly decided the questions related to jurisdiction, service conditions, doctrine of estoppel and acquiescence in terms of statutory service rules, scope of the doctrine of promissory estoppel, etc., and no such issue existed in the present petitions.

In terms of Employment Rights and ESIC's Discretion, the Court held that the bonds did not entitle the Petitioners to employment with ESIC and that they had already benefited from ESIC funding their education. However, no additional employment rights were specified in the bonds.

Additionally, the Bench held that the reduction of the service period from five or three years to one year did not entitle the Petitioners to employment for the longer term and ESIC had the discretion to use the services of the Petitioners for any period up to the original bond duration. Moreover, the Petitioners had the option to refuse the one-year service if they believed it to negatively impact their career but they accepted the one-year term with ESI regardless.

The court observed that the judgements cited by the Petitioners entailed issues different from the present petitions and could thus not be relied upon. It was held that those judgements mainly decided the questions related to jurisdiction, service conditions, doctrine of estoppel and acquiescence in terms of statutory service rules, scope of the doctrine of promissory estoppel, etc., and no such issue existed in the present petitions.

Holding that the Petitioners were aware of the bonds not promising employment as they did not seek immediate employment with ESIC after completing their courses, the Court upheld the order of the CAT and dismissed the Writ Petitions.

Case Title: DR ANKIT SHARMA & ORS versus UNION OF INDIA & ORS. and other connected matters

Citation: 2024 LiveLaw (Del) 1031

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