If you are stuck in such a situation, here is what to do.

Mr. Rohan Mehra, a young professional from the city of Avantipur, found himself in a difficult position. In early August, he received and accepted a job offer from a prominent IT firm, “Digital Horizon Pvt. Ltd.” His joining date was set for August 10th. He even attended a mandatory online induction session before his start date. However, due to unforeseen and urgent personal circumstances, Mr. Mehra realized he could not proceed with the new role. On his scheduled joining day, he promptly informed the company’s HR department via email and text message that he would be unable to join.

Despite his timely communication, Digital Horizon began sending him formal letters, which he replied to, reiterating his inability to join. The company’s correspondence, however, alleged that he had failed to contact them. A few weeks later, the situation escalated when Mr. Mehra received an email titled “Final Settlement Recovery.” The company demanded he pay ₹50,000, citing a notice period clause in the offer letter. The email concluded with a threat of legal action if the amount was not paid. This left Mr. Mehra confused and stressed, as he had never officially commenced his employment with the company.

Advice in such cases

Navigating such a demand from a potential employer can be intimidating. Here is some general advice:

• Review the Offer Letter: Carefully read all the terms and conditions of the offer letter you signed. Pay close attention to clauses related to breach, notice period, and recovery of expenses.
• Maintain Written Records: Keep a record of all communication with the company, including emails, letters, and text messages. This documentation is crucial evidence of your attempts to inform them.
• Do Not Pay Under Pressure: A demand from a company is not a court order. You are not obligated to pay any amount immediately, especially when the claim is contestable.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

Applicable Sections of Law

This issue is governed primarily by the Indian Contract Act, 1872.

• Section 73 & 74 of the Indian Contract Act, 1872: These sections deal with compensation for loss or damage caused by a breach of contract. A key principle is that the party claiming damages must prove they suffered an actual loss. A company cannot claim a random penalty. They must demonstrate the actual financial loss incurred due to your non-joining, such as specific recruitment costs for your replacement. An arbitrary amount equivalent to a notice period salary is often considered a penalty and may not be enforceable by a court.
• Specific Relief Act, 1963: Courts in India generally do not enforce contracts of personal service. This means a company cannot force you to work for them. Their only remedy is to sue for monetary damages, which, as mentioned, must be proven.

If you are the complainant

If you are the company in this scenario and an employee has not joined after accepting an offer, here are the steps you can take:

• Send a Formal Legal Notice: The first step is to send a legal notice through a lawyer, clearly stating the breach of the agreement and the specific damages incurred.
• Calculate Actual Damages: You must be able to prove the actual, quantifiable loss. This could include the cost of the recruitment drive, advertisement expenses, and other direct costs wasted. A claim for a notice period salary without the person having worked is legally weak.
• Attempt to Mediate: Before proceeding to court, it is often advisable to attempt to settle the matter amicably.
• File a Civil Suit: If mediation fails, your remedy is to file a civil suit for recovery of damages in a court of appropriate jurisdiction.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

If you are the victim

If you are the individual receiving such a demand, here is how you should proceed:

• Do Not Panic: These notices are often intended to intimidate. Understand that the burden of proof lies with the company.
• Respond Professionally: It is crucial to respond to their notice or email. The best course of action is to have a lawyer draft a formal reply.
• State Your Position Clearly: In your reply, clearly state that the contract of employment never commenced as you did not join on the start date. Therefore, the clauses applicable to an “employee,” such as the notice period, do not apply.
• Challenge the Claim: Politely ask the company to provide a detailed breakdown of the alleged losses they have suffered due to your non-joining.
• Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.

How the police behave in such cases

The police have no role in such matters. This is a purely civil dispute arising from a breach of contract. It is not a criminal offense. If either party approaches the police, they will be directed to resolve the matter through the civil courts. No FIR can be registered in such cases.

FAQs people normally have

• Can a company legally sue me for not joining?
  Yes, a company can file a civil suit for damages for breach of the agreement to join. However, they must prove to the court that they suffered a specific financial loss because of your action. Winning such a suit is often difficult for the company.
• Is the notice period clause applicable if I never even worked for one day?
  Generally, no. The notice period is a condition of an active employment contract. If you never commenced employment, a strong legal argument can be made that the employment contract itself never came into effect, and thus its exit formalities are not applicable.
• Do I have to pay the amount the company is demanding?
  You are not legally obligated to pay anything unless a court of law orders you to do so after a proper trial. The company’s demand is merely a claim, not a legally enforceable debt.

What evidence is required?

For the individual, the required evidence includes the offer letter, all email and message correspondence showing your intent not to join, and any proof of the personal reasons for the decision, if you choose to disclose them. For the company, they would need the signed offer letter, proof of their communications, and, most importantly, concrete evidence of the financial losses they are claiming (e.g., invoices for recruitment agencies, advertisement costs).

How long will the investigation take?

There is no “investigation” in the criminal sense. This is a civil dispute. If the company decides to file a civil suit, the legal process can be lengthy. A typical civil suit for recovery in India can take several years to be fully resolved, passing through stages of filing, summons, written statements, evidence, arguments, and finally, a judgment.

Advocate Sudhir Rao, Supreme Court of India