Internship Stipend Withheld for Laptop Damage Without Written Policy — Legal Options for Interns in India

One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.

Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.

Rohan Gupta was a final-year B.Tech student from Nagpur who had completed a six-month internship at a mid-sized Pune-based tech startup, loosely affiliated with the Infosys ecosystem's vendor network, in early 2025. During the internship, a company-issued laptop suffered accidental damage. Rohan immediately reported it to HR, who verbally assured him that he should get it repaired and that the company would reimburse the cost. Nothing in writing. No damage-recovery clause existed in the only document he had signed, a Confidential Information and Invention Assignment Agreement.

He completed his notice period and waited over a month for his stipend of approximately ₹36,500. On 18 March 2025, the exact day the payment was due, HR called to inform him that ₹33,000 would be deducted toward laptop damage recovery. First mention of any personal liability — on the very day the money was owed. Rohan sent a detailed email to the founders citing the verbal assurance, the absence of any written policy, and the serious financial hardship caused. No reply came.

He'd initially approached a general practitioner in Nagpur, but the advocate was unfamiliar with wage-deduction disputes involving interns and labour tribunal procedures, and the matter stalled. Rohan then approached Advocate Sudhir Rao. A structured legal notice was issued under the Payment of Wages Act and the Indian Contract Act, and a complaint was filed before the appropriate authority. Within weeks, the company released the withheld stipend amount in full. The specialised handling of procedural timelines and evidentiary framing made a material difference to the outcome.

Advice in Such Cases

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 to 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.

Send a formal legal notice immediately: Before approaching any authority, get a properly drafted legal notice sent to the employer — citing the verbal assurance, the absence of written policy, and the unlawful withholding of earned wages. Frankly, this step alone resolves more disputes than people expect. And it creates a critical paper trail if proceedings do become necessary.

Preserve all digital communication: Screenshot every WhatsApp message, email, or chat regarding the HR verbal assurance, the stipend due date, and any deduction communication. Don't delete anything. Courts and labour authorities place significant weight on contemporaneous digital records under the Information Technology Act, 2000.

Engage an advocate with domain-specific experience: Stipend disputes involving unlawful deductions sit at the intersection of labour law, contract law, and wage regulation. A general practitioner may miss procedural and evidentiary angles that someone who regularly handles wage recovery and labour tribunal matters would catch immediately. That difference — in the right forum, the right timing — can save you months and money.

Applicable Sections of Law

Several civil and labour statutes directly apply to a situation where earned stipend is withheld or deducted without written policy authority:

• Section 7 of the Payment of Wages Act, 1936: Strictly limits permissible deductions from wages. Deductions not expressly authorised under this section, such as unilateral equipment damage recovery without a written agreement, are unlawful.
• Section 10, Indian Contract Act, 1872: A verbal promise by an authorised HR representative constitutes a valid oral contract, and the company's failure to honour it amounts to breach of contract.
• Section 19, Indian Contract Act, 1872: Where consent was induced by misrepresentation (verbal assurance of reimbursement that was never honoured), the aggrieved party has the right to seek restitution.
• Section 14, Specific Relief Act, 1963: Recovery of a specific sum of money wrongfully withheld is maintainable as a civil suit, and interim relief can be sought pending final adjudication.

Jurisdiction — Where to File the Case

For a stipend recovery dispute of this nature, the appropriate forums are:

• Labour Commissioner / Payment of Wages Authority: Under Section 15 of the Payment of Wages Act, 1936, a claim can be filed before the Authority for Payment of Wages in the district where the internship was performed (here, Pune). This is the fastest and most cost-effective route.
• Civil Court (District Court): A money recovery suit can be filed before the District Court with pecuniary jurisdiction for amounts up to ₹20 lakh, and before the High Court's original jurisdiction beyond that threshold.
• Consumer Forum: Generally not applicable here as the relationship is employer-intern, not service provider-consumer.

Territorial jurisdiction attaches to the place where the cause of action arose — where the internship was carried out and where the deduction communication was received. Now, before you act, confirm which district that is, because filing in the wrong place wastes time and money.

Limitation Period

Don't sleep on this.

Under the Limitation Act, 1963, a suit for recovery of money based on breach of contract carries a limitation period of three years from the date the breach occurred (Article 113, Limitation Act). Here, the clock begins from 18 March 2025, the date the wrongful deduction was communicated and the stipend was withheld. Missing this window is fatal to a civil claim. Under Section 15 of the Payment of Wages Act, 1936, claims must be filed within twelve months of the date the deduction was made. Condonation of delay may be sought under Section 5 of the Limitation Act in genuine hardship cases, but courts apply this sparingly.

Interim Reliefs Available

In civil proceedings for recovery of withheld wages, interim reliefs are available and should be sought at the earliest stage:

• Attachment before judgment (Order 38 Rule 5, CPC): Where there is a reasonable apprehension that the employer may dispose of assets to defeat any eventual decree, the court can order attachment of the employer's assets pending final hearing.
• Temporary injunction (Order 39 Rule 1 and 2, CPC): A stay order can be sought to prevent the employer from issuing false experience certificates or references that might harm the intern's future prospects while the dispute is pending.
• Status quo orders: Courts may pass status quo orders preserving the employment record and stipend accounts during pendency of the suit.

Applying for interim relief early, before the other side mobilises, often determines the practical trajectory of the entire dispute. Make no mistake, a well-timed interim application can shift the power balance overnight.

If You Are the Victim

• Document the verbal assurance in writing as soon as possible — send an email to HR referencing the conversation, even after the fact, to create a contemporaneous record.
• Write a formal complaint email to the founders or senior management, clearly stating the facts, the absence of any written policy, and that you hold the company liable for breach of the oral assurance given.
• File a claim before the Payment of Wages Authority in the relevant district. The process is relatively quick and does not require extensive court proceedings.
• If the company is registered, file a complaint with the Registrar of Companies or the Ministry of Labour and Employment's Shram Suvidha portal, recording the unlawful deduction for regulatory purposes.
• Do not sign any settlement document or "no dues" certificate under pressure without having it reviewed by your advocate first.

Documents You Must Keep Ready

• Aadhaar card and PAN card (identity proof)
• Offer letter / internship appointment letter
• The Confidential Information and Invention Assignment Agreement or any other document signed at joining
• Salary or stipend slips (if any were issued)
• Email correspondence with HR and founders regarding the deduction and verbal assurance
• Bank statements showing non-credit or partial credit of stipend
• Screenshots of WhatsApp or any messaging platform communication with HR
• Repair bills or invoices for the laptop (if you paid for repairs yourself)

What Evidence Is Required?

• Emails from HR confirming or referencing the verbal reimbursement assurance — even indirect references count as secondary evidence under the Indian Evidence Act, 1872.
• WhatsApp or chat messages with HR or management about the laptop incident and repair — admissible as electronic records under Section 65B of the Indian Evidence Act, 1872.
• The signed agreement (Confidential Information and Invention Assignment Agreement) to establish that no damage recovery policy was ever disclosed or agreed to.
• Bank statements showing the expected stipend was not credited in full, establishing financial prejudice.
• Repair invoice or service receipt to show the actual cost of the laptop repair and verify the deduction amount claimed by the company.
• Witness statements from co-interns or colleagues who may have been present during conversations with HR (oral evidence supporting the verbal assurance).

How Courts Typically Approach Such Cases

Courts aren't sympathetic to ambush deductions.

The Payment of Wages Authority and civil courts approach stipend-deduction disputes with a focus on documentary evidence. Where the employer can't produce a signed written policy authorising the specific deduction, the burden shifts firmly onto the employer to justify the withholding. Courts have consistently held, as in Bharatiya Kamgar Sena v. Abdulbhai Faizullabhai, (1976) 3 SCC 832, that wage deductions not expressly sanctioned by law are impermissible. And here's the thing: the absence of a written policy isn't merely a procedural gap for the employer — it's substantive evidence in your favour. Courts take a dim view of employers who raise deduction claims only on the day wages are due, because that timing suggests bad faith and courts know it.

Timeline of Legal Process

• Week 1-2: Formal legal notice sent to employer by advocate — allows 15-30 days for response.
• Week 3-4: If no satisfactory response, file claim before Payment of Wages Authority or civil suit in District Court.
• Month 1-2: Court issues summons to employer; employer files written statement / reply.
• Month 2-4: Framing of issues; interim relief applications heard and decided.
• Month 4-8: Evidence stage — both parties file documents and examine witnesses.
• Month 8-12: Final arguments heard before the Payment of Wages Authority or trial court.
• Month 12-18: Judgment and order for recovery, if successful.
• Post-judgment: Execution proceedings if employer does not comply voluntarily — typically 2-4 additional months.
• Appeal: Either party may appeal to the High Court if aggrieved by the order, adding 12-24 months.

Understanding the Costs

The total cost of a matter like this varies significantly from one case to the next — it depends on the complexity of the dispute, the forum involved, the number of hearings, and the specific facts of your situation. There is no single fixed figure that applies to everyone.

A professional advocate can give you an accurate estimate only after reviewing all your facts and documents in a consultation.

Can the Matter Be Settled Out of Court?

Yes, and in many cases it should be attempted first. A well-drafted legal notice alone often prompts employers, particularly small startups, to settle rather than face regulatory scrutiny. Options include:

• Direct negotiation through advocate: The employer may agree to pay the full amount in exchange for a written no-dispute confirmation.
• Lok Adalat: Pre-litigation and pending matters can be referred to Lok Adalat under the Legal Services Authorities Act, 1987. Awards passed by Lok Adalat are final and binding with the force of a civil court decree, and no court fees are payable.
• Section 89 CPC reference: If a civil suit is already filed, the court may refer the matter to mediation or conciliation at any stage before final hearing.

Settlement is usually advisable here given the relatively small claim amount and the cost-benefit of protracted litigation. But don't settle without ensuring the full amount is recovered. Not a rupee less.

Advocate Sudhir Rao,