Karnataka High Court imposes cost on Wipro over prolonged feud with ex-staffer

Bengaluru: The Karnataka high court has imposed a cost of Rs 50,000 upon Wipro Enterprises Private Limited for compelling one of its former employees to undergo prolonged litigation to secure an amount contractually promised.

Justice Sachin Shankar Magadum passed the order while dismissing the appeal filed by the company challenging the judgement and decree by Additional City Civil and Session, Bengaluru, holding that its former employee Ratnesh Pandey is entitled to an ex-gratia lump sum amount.

A resident of Faridabad, Haryana, Ratnesh Pandey had resigned from his position in the Wipro on August 6, 2017, after serving for 12 years. On September 18, 2017, while accepting the resignation, the company offered an ex-gratia lump sum amount of Rs 6,32,000. The letter further stated that the amount would be payable subject to the condition that Ratnesh would not join competing companies - Philips India Limited or Bajaj Electricals Ltd – for a period of 18 months from the date of cessation of employment.

Ratnesh instituted a suit for recovery when the company failed to release the ex-gratia amount as promised. On July 23, 2024, the city court ruled in favour of Pandey. Challenging this order, the company contended that the cessation letter of September 18, 2017, was revoked under section 6(2) of the Indian Contract Act, for want of acceptance from Pandey. On the other hand, Pandey submitted that the company never alleged breach of contract before the civil court.

After perusing the statute and the letter issued by the company, Justice Magadum noted that the conditions are acts to be performed over a period and not promises requiring contemporaneous communication of acceptance. 

“The plaintiff (Pandey), by adhering to the stipulated conditions throughout the non-solicitation period, has discharged his contractual obligations in both letter and spirit. In such circumstances, insistence on formal communication of acceptance is wholly misconceived. The present case squarely falls within the category contemplated under Section 8 of the Act, wherein performance of the conditions constitutes valid acceptance. Consequently, non-communication of acceptance has no bearing on the plaintiff’s entitlement to the ex-gratia amount,” Justice Magadum said.

The court further said, “The defendant company, being a corporate entity, was expected to act fairly and responsibly and not compel the plaintiff to undergo prolonged litigation to secure an amount contractually promised. This Court is therefore of the view that the stand taken by defendant-company in written statement constitutes an abuse of the process of law and warrants imposition of exemplary costs.”