In a Significant ruling, the Kerala High Courtin the case of Greevas Job Panakkal vs. Traco Cable Company Limited (WP(C) NO. 5132 OF 2025) decided on 13.2.26 has held that financial difficulties faced by an employer do not justify forcing an employee to continue in service against their will, and that refusing to accept a resignation under such circumstances may amount to “bonded labour” prohibited under the Constitution.
A Division Bench of the High Court delivered the judgment while hearing a petition filed by a company secretary challenging show-cause notices and memos issued by his employer — a public sector undertaking (PSU) — which had rejected his resignation and directed him to resume duty.
The court observed that neither financial emergency nor an employer’s inability to dispense with services can be a ground to compel an employee to continue working once they have tendered a valid resignation. It emphasised that an employee has a fundamental right to withdraw from employment of their own volition.
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The High Court underscored that an employer may only decline a resignation if it contravenes specific terms contained in the service agreement, such as notice period requirements.
Absent any contractual violation or serious misconduct justifying disciplinary action, refusing acceptance of a resignation can equate to holding a worker in servitude — tantamount to bonded labour, which is prohibited under Article 23 of the Indian Constitution.
The Bench directed the PSU to accept the employee’s resignation and relieve him from service within a maximum period of two months, along with payment of all legally due salary and benefits.
The petitioner had submitted his resignation following personal circumstances, including family health issues. The PSU, citing its precarious financial situation, refused to accept the resignation and issued notices suggesting disciplinary action instead.
Rejecting the PSU’s stance, the High Court held that forced continuance in employment due to financial constraints violates workers’ rights and cannot be justified under any legal guise.
