Karnataka High Court imposes ₹50,000 costs on Wipro for ‘abusing process of law’ and denying legitimate payment to ex-employee

The High Court of Karnataka has imposed costs of ₹50,000 on Wipro Enterprises Pvt. Ltd., for “abusing the process of law” in its appeal filed against the Bengaluru city civil court’s order to the company to pay the promised ex-gratia amount of ₹6.32 lakh along with 10% interest to a former employee.

“The 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,” the court said, while stating that the appeal “reflects a vexatious and unjustified resistance to an admitted liability”.

Justice Sachin Shankar Magadum passed the order while rejecting Wipro’s appeal against the civil court’s July 23, 2024, judgment and decree passed on a suit, filed in 2019 by 51-year-old Ratnesh Pandey, a former regional manager of the company.

Three conditions

Mr. Pandey, who worked for the company between 2005 and 2017 in various positions, was offered an ex-gratia amount of ₹6.32 lakh, in recognition of his employment record, which was payable in 18 months after his resignation in August 2017. The payment was subject to three conditions- he should not solicit or influence employees of Wipro, disclose details if any employee approached him on their own; and not join the specified competing companies, Philips India Ltd., or Bajaj Electricals Ltd., for a period of 18 months.

The company did not pay the proposed ex-gratia amount stating that he had not accepted the letter of offer of ex-gratia amount dated September 18, 2017.

Civil court’s finding

The civil court found that there was no deadline to accept offer letter and the company’s representative had acknowledged receipt of his acceptance letter on March 22, 2019. Noticing that the company had not complained that he had breached any of the three conditions imposed in the letter, the civil court ordered payment of promised ex-gratia with 10% interest from February 19, 2019, when 18 months period ended.

The company, in its appeal, argued before the High Court that the letter of offer of ex-gratia amount “stood revoked for its non-acceptance as per the provisions of the Indian Contract (IC) Act, 1872”, while contending that acceptance of it after 18 months from the date of issuance cannot be construed as acceptance within a reasonable time.

HC’s views

Rejecting appeal, the High Court said, “The contractual scheme underlying the letter clearly indicates that the right of the employee to receive ex-gratia amount is contingent not upon formal communication of acceptance, but upon faithful adherence to the three conditions stipulated.”

The company has placed undue emphasis on the concluding line in the letter, which stated, “Please sign on a copy of this agreement in token of your acceptance of the terms above and return to us for records”, Justice Magadum said, while observing that this line in the letter “cannot be elevated to a mandatory or substantive condition precedent for crystallisation of rights under the offer”.

Even in the absence of an express written acceptance, acceptance can clearly be inferred from the conduct of the employee as he had not breached any of the three condition, the High Court said.

The company has “sought to defeat a legitimate contractual claim by raising hyper-technical objections relating to non-communication of acceptance and such a defence not runs contrary to Sections 7 and 8 of the IC Act and verdicts of the apex court”, the High Court observed.