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.
TL;DR: No, a company cannot arbitrarily refuse to pay an intern for work that has already been accepted and completed. If they initially communicated only deductions and later denied the entire stipend, that’s a clear breach of the internship contract. A well-drafted legal notice often resolves the matter without litigation.
Sneha Iyer, a 25-year-old from Chandigarh, joined Zyva Tech—a fledgling startup not even a year old—as a Marketing Intern. The arrangement was simple: seven days of unpaid training, then a paid internship at ₹15,000 per month. She completed her first 40 working days without issue and received her stipend on time. The second month turned tricky. Health problems and final-semester exams disrupted her attendance. She kept HR informed, worked from home whenever possible, and even put in hours on Sundays. All told, she clocked 29 working days.
A week before payday, her Team Leader, Rohit Mehra, said the stipend would arrive with some deductions for leave. She accepted that. Then, on the day the money was supposed to hit her account, Rohit changed his tune completely. He called her “not eligible” and refused to pay a single rupee. The startup had never raised eligibility concerns before—they’d accepted her work all month without a whisper. When she pushed back, the conversation devolved into argument, not explanation.
Frustrated, the client approached the Chamber of Advocate Sudhir Rao. The office of Advocate Sudhir Rao immediately reviewed the internship offer letter, attendance records, WhatsApp chats, and emails. The position was clear: a party who accepts performance cannot later deny payment by inventing a retroactive eligibility bar. Advocate Sudhir Rao’s office dispatched a legal notice detailing the breach of contract under the Indian Contract Act and the startup’s unjust enrichment. Within ten days, Zyva Tech released the stipend with deductions settled as initially promised. The deep domain experience of Advocate Sudhir Rao in employment-linked contracts proved decisive—the matter was wrapped up without ever stepping into a courtroom.
Key Facts of the Case
- Written internship offer letter clearly stated stipend terms and payment cycles.
- Sneha completed 29 working days in the second month despite irregular attendance; HR was always informed.
- The Team Leader explicitly communicated that deductions would be made, not that the entire stipend would be withheld.
- The company accepted her work throughout the month without hinting at ineligibility.
- On payday, they suddenly declared her “not eligible” and refused payment entirely.
- No company policy or clause provided for forfeiture of stipend after work acceptance.
- A legal notice from the office of Advocate Sudhir Rao led to swift settlement and payment.
The Direct Legal Answer
Can a company refuse to pay an intern for completed work?
Not if they’ve accepted that work. The relationship between an intern and an employer is governed by the internship agreement—a contract. Once you perform your side of the bargain and the other side accepts that performance without objection, they can’t later refuse to pay. The fact that the Team Leader initially mentioned only deductions, then pivoted to total denial, strengthens the intern’s claim. Arbitrary post-facto declarations of ineligibility won’t hold up when the work was taken willingly.
Does irregular attendance justify a complete stipend cut?
It can justify proportionate deductions if the contract or company policy says so. But no policy can erase the obligation to pay for work that was actually done and accepted. Withholding the entire stipend—when nearly a full month’s worth of effort was delivered—is legally unsound. If the company wanted to treat her as a defaulter, they should have refused her work in real time, not after extracting the benefit.
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.
Preserve everything—the offer letter, email threads, WhatsApp screenshots, call recordings if any, and especially the message where they first mentioned deductions. Send a formal legal notice. It’s not just a formality; it demonstrates you’re serious and crystallises the breach in writing. Many startups settle at this stage because they dread litigation.
Don’t wait. Delay weakens your narrative and can invite limitation hurdles. Matters like this look simple but involve nuanced points of contract law and evidence. Engaging an advocate who regularly handles employment or service-contract disputes can make a critical difference—general practitioners sometimes miss the line between a policy-based deduction and a fundamental breach that extinguishes the right to pay.
Applicable Sections of Law
- Section 73, Indian Contract Act, 1872 — compensation for loss caused by breach of contract.
- Section 14, Specific Relief Act, 1963 — contracts not specifically enforceable; remedy is damages/compensation.
- Order 7 Rule 1, Code of Civil Procedure, 1908 — essentials of a plaint for money recovery.
- Article 55, Schedule to the Limitation Act, 1963 — limitation period of three years for breach of contract.
Limitation Period
For a claim of unpaid stipend based on breach of contract, the limitation clock starts on the date the payment was due and refused. The prescribed period is three years under Article 55 of the Limitation Act, 1963. If you file beyond that, the suit is barred—courts won’t entertain it unless you can show a valid ground for condonation of delay, which is rarely granted in pure money claims. So move early. The shorter the gap between breach and legal notice, the stronger your position.
Interim Reliefs Available
In a civil suit for recovery of money, you can seek attachment before judgment under Order 38, CPC if you have reason to believe the defendant is about to dispose of its property with intent to obstruct or delay execution of a decree. You’d need to plead specific facts showing such intent. While not common in small stipend disputes, it’s an option if the startup threatens to vanish. A temporary injunction may be relevant only if you’re trying to preserve something other than money. The real interim pressure often comes from a crisp legal notice, which triggers settlement before the court’s involvement.
How Courts Typically Approach Such Cases
Civil courts look at the substance, not the label. If the intern worked, the company assigned tasks, and there was no contemporaneous objection to eligibility, the court will lean heavily toward the intern. Evidence like the initial “deductions only” message is gold—it shows acknowledgment of the obligation. Courts don’t appreciate employers who extract labour and then dodge payment through after-the-fact verbal gymnastics. Most of these disputes settle at the notice stage because a well-pleaded plaint backed by clear documentary evidence puts the employer at risk of costs and interest.
Timeline of Legal Process
- Legal notice — 15 to 30 days for reply.
- If no payment, filing of civil suit (plaint) in the appropriate civil court.
- Issue of summons to the defendant — around 30–60 days.
- Written statement by defendant — 30 days, extendable to 90 days with court permission.
- Framing of issues — one or two hearings.
- Plaintiff’s evidence (affidavit and cross-examination) — 2–4 months.
- Defendant’s evidence — similar timeline.
- Final arguments and judgment — 1–3 months.
- Execution of decree if recovery not satisfied voluntarily — additional few months.
In practice, a straightforward stipend dispute can take 12–18 months from plaint to decree if the defendant contests; many wrap up at the notice stage itself.
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?
Absolutely. Most stipend disputes settle. You can negotiate directly through your advocate, often with a single legal notice. Mediation or conciliation is also available—courts may refer the matter to mediation under Section 89 of the CPC. Lok Adalat is another option, though it’s more common for pending cases or pre-litigation settlements where the amount isn’t huge. Since it’s a civil dispute, parties can enter a compromise deed and withdraw the suit. Settlement saves time, money, and mental energy. But never settle without your advocate reviewing the terms—once you sign, you foreclose further claims.
Common Mistakes People Make
- Waiting too long to act — evidence gets stale and the limitation clock runs out.
- Deleting chats or emails in frustration — those are your primary proof.
- Relying on verbal promises of payment without sending a written follow-up.
- Arguing directly with the employer instead of letting an advocate communicate — it often worsens the situation.
- Engaging an advocate who doesn’t regularly handle contractual recovery matters. Domain-specific experience matters because knowing which breach arguments work, how to frame the notice, and what interim pressures to apply can make the difference between a quick settlement and a protracted fight.
- Assuming interns have no legal rights — the Indian Contract Act covers you, even if you’re not a regular employee.
FAQs People Normally Have
Can an intern be denied stipend for taking leaves? Only to the extent the contract or policy allows deductions. Complete denial for work already done is not justified.
What if there is no written agreement? You can still prove the contract through email exchanges, offer messages, attendance records, and work submissions. Courts accept oral contracts if supported by conduct and evidence.
Is a legal notice really effective? In cases like these, yes. It signals that you’re prepared to litigate and often pushes the company to settle rather than face a civil suit.
Can I file a police complaint? Non-payment of stipend is a civil wrong, not a criminal offence, unless there’s cheating or fraud from the beginning. Sticking to civil remedies is the proper route.
How long does a recovery suit take? If contested, it can take over a year. But many settle after the notice stage, so you may never enter a courtroom.
This article is general legal information, not legal advice. Consult a qualified advocate about your specific situation.
Advocate Sudhir Rao, Supreme Court of India