Refusal to Accept a Resignation (Especially of a Statutory Company Secretary) Can Amount to Bonded Labour Under Article 23

These connected writ petitions arose from the refusal of a State Public Sector Undertaking, Traco Cable Company Limited (“TRACO”), to accept the resignation of its Company Secretary, the petitioner (Greevas Job Panakkal), and from subsequent disciplinary-style memories/show-cause communications issued to compel his return to duty.

The petitioner joined TRACO on 07.05.2012 as Company Secretary. From October 2022 onward, TRACO admittedly defaulted in salary disbursement. In March 2024, citing prolonged non-payment of salary and pressing family circumstances (including care for an ailing mother), the petitioner tendered resignation and requested to be relieved. TRACO’s Board rejected the resignation, stating that the organisation was in critical financial condition and that there was no suitable substitute.

Core issues before the Court included:

• Whether an employer can refuse to accept an employee’s resignation merely because the employee is “essential” and the employer is in financial distress.
• Whether coercive measures (memos threatening disciplinary action) can be used to force continuation of service.
• How the statutory nature of a Company Secretary’s appointment under the Companies Act, 2013 affects the right to resign and mobility to alternate employment.
• Whether the post-filing show-cause memo (laptop retention allegation) was sustainable.

The High Court allowed both writ petitions. It set aside:

• Exts.P4, P5 and P7 (communications rejecting resignation and directing the petitioner to resume duties with threat of disciplinary action) in W.P.(C) No.5132/2025; and
• Ext.P9 (show-cause memo alleging unauthorised retention of the company laptop) in W.P.(C) No.33223/2025.

The Court directed TRACO to:

• accept the petitioner’s resignation (Ext.P2) and relieve him within two months; and
• pay arrears of salary, leave surrender benefits, and terminal benefits “as expeditiously as possible” (noting payment would be “subject to the financial position of the Company”).

The Judgment does not cite or rely upon any reported precedent by name. The Court instead articulates principles it treats as settled in service jurisprudence and constitutional law—particularly the general rule that resignation should ordinarily be accepted and the constitutional limitation under Article 23 against compulsion to labour.

How this matters: Even without named citations, the reasoning operates as a clear precedential statement from the High Court on:

• the employer’s limited grounds to reject resignation; and
• the constitutional characterisation of compelled continuation of service as potentially falling within Article 23’s prohibition.

The Court’s reasoning proceeds in a structured way:

(a) Resignation is ordinarily a unilateral exit subject to limited constraints

The Court held that when an employee submits a resignation, the employer has a duty to accept and relieve the employee, subject to:

• Contractual conditions (e.g., notice period or resignation procedure in the employment contract);
• “Heat of the moment” resignations, where an employer may briefly delay acceptance to allow reconsideration; and
• Contemplated disciplinary proceedings for grave misconduct or monetary loss, where acceptance may be legitimately withheld.

Importantly, TRACO’s principal justification—its financial crunch and the petitioner’s “pivotal” role—does not fall within these recognised exceptions.

(b) Financial distress cannot convert essentiality into compulsion

TRACO argued that it faced severe liabilities and that no other qualified Company Secretary was available; therefore, the Board rejected the resignation. The Court rejected this as legally insufficient: a company’s financial emergency cannot be used to force a professional to continue work “against his will and without his consent”.

(c) Statutory role of Company Secretary heightens the coercive effect of refusal

A central, case-specific insight is the Court’s recognition of the Company Secretary as a statutory position under the Companies Act, 2013, and as Key Managerial Personnel with compliance responsibilities and potential liability for defaults. The Court noted that:

• the petitioner’s Company Secretaryship is “tied up” with the company in official records; and
• until the company forwards necessary filings (the Judgment references Form DIR-12), the petitioner remains shown as linked to TRACO, impairing his ability to take up other employment as Company Secretary.

Thus, refusal to relieve a statutory officer has effects beyond ordinary employment: it can function as a regulatory and professional lock-in.

(d) Constitutional limit: refusal may amount to bonded labour under Article 23

The Court gave the dispute constitutional dimension: if an employer refuses resignation outside the limited recognised grounds, it would amount to “bonded labour” prohibited by Article 23. The reasoning is that coercive continuation of service—especially when the employee is blocked from alternative employment due to statutory filings—can become a form of forced labour.

(e) Disciplinary threats viewed as coercive in the factual context

TRACO issued memos calling upon the petitioner to resume duty and threatened disciplinary action. On these facts—prolonged salary default since October 2022, resignation pending for about 20 months, and the stated reason for refusal being the company’s need—the Court treated the threatened proceedings as an attempt to violate the right to resign rather than a bona fide disciplinary response.

(f) The laptop show-cause memo was set aside

The Court also set aside Ext.P9 (issued during pendency of the first writ petition). While the respondents alleged data deletion and retention, the Court’s order indicates it viewed the memo as unsustainable in the circumstances (and the petitioner alleged it was an afterthought meant to interfere with justice). The practical effect is that employer counter-measures adopted mid-litigation to pressure an exiting employee may attract close scrutiny.

(a) On resignation jurisprudence in Kerala

• The Judgment reinforces a default rule of acceptance of resignation and narrows the grounds on which rejection is permissible.
• It adds a constitutional backstop: refusal to accept resignation can cross into Article 23 territory when it effectively compels labour.

(b) On PSUs and financially stressed employers

• Financial distress is expressly held to be not a legal justification to compel a key employee to continue.
• Boards and managements must address staffing gaps through recruitment/contracting solutions rather than refusal to relieve.

(c) On statutory/KMP roles under corporate law

• The Court highlights the “lock-in” risk created by statutory corporate filings. Employers may now face stronger judicial direction to complete regulatory updates promptly when a statutory officer resigns.
• For Company Secretaries, the Judgment affirms mobility and protection against being trapped in a non-paying or dysfunctional workplace due to filings.

(d) On employer use of disciplinary processes

• Disciplinary action can justify non-acceptance only when it is genuinely contemplated for grave misconduct or monetary loss, not as leverage to force continuity of service.
• Post-resignation/pending-litigation memos may be seen as coercive if not grounded in a demonstrable and timely disciplinary basis.

• Article 23 (Constitution of India): Prohibits “traffic in human beings” and “begar” and other forms of forced labour. The Court’s point is that compelling someone to continue working against their will—by refusing to relieve them without lawful basis—can resemble forced labour.
• Bonded labour (in this context): Not necessarily traditional debt bondage; the Court uses the term to describe a situation where a person is effectively tied to an employer and cannot freely exit.
• Company Secretary as a statutory position / KMP: Under the Companies Act, certain companies must have a Company Secretary; the role is central to compliance and corporate governance, and can carry legal accountability.
• ROC filings / Form DIR-12 (as referenced by the Court): Corporate filings used to update the Registrar of Companies about appointments/cessations of officers. If the company does not file cessation/changes, the individual may remain officially shown as attached to the company, hindering future employment.
• “Heat of the moment” resignation: A resignation tendered impulsively (e.g., during a conflict). An employer may delay acceptance briefly to allow the employee to reconsider—this is an exception, not the norm.
• Disciplinary proceedings “contemplated”: The employer must have a bona fide, serious basis for initiating proceedings for grave misconduct/financial loss; it cannot be a pretext to block resignation.

In GREEVAS JOB PANAKKAL v. TRACO CABLE COMPANY LIMITED (2026 KER 12335), the Kerala High Court decisively held that an employer cannot refuse to accept resignation merely because the employee is indispensable or because the employer is in financial distress. The Court recognised limited exceptions (contractual non-compliance, “heat of the moment” situations, and bona fide contemplated disciplinary proceedings for grave misconduct/monetary loss), but found TRACO’s refusal outside those bounds.

The Judgment’s distinctive contribution is its constitutional framing: unjustified refusal to relieve an employee—especially a statutory Company Secretary whose professional mobility is constrained by corporate filings—may amount to bonded/forced labour prohibited by Article 23. The decision is likely to influence future disputes involving resignation, statutory corporate roles, and coercive HR practices, particularly in PSUs and financially stressed organisations.