Introduction:

In a landmark ruling, the Delhi High Court has held that an employer cannot deny a candidate an appointed position once they have successfully passed the selection process and have been relieved by their previous employer. The decision was delivered by a single-judge bench led by Justice Jyoti Singh in the case of Matthew Johnson Dara v. Hindustan Urvarak and Rasayan Ltd. The case revolved around an employee who, after being selected for the position of Vice President (Finance) at Hindustan Urvarak and Rasayan Ltd. (respondent), faced revocation of his appointment due to delays from his previous employer, Brahmaputra Valley Fertilizer Corporation Limited (BVFCL), in processing his resignation and providing a relieving letter.

The employee argued that after BVFCL eventually issued a relieving order, there should be no obstacles in resuming his new role. The court concluded that once the previous employer issues a relieving letter, the new employer is bound by the contractual selection process and cannot rescind the offer of appointment based solely on the delayed submission of the relieving letter. This case sheds light on the obligations of employers under employment law, especially in situations where administrative hurdles from a previous employer interfere with a new employment opportunity.

Background Facts:

Matthew Johnson Dara, the employee, previously held the position of General Manager (Finance) at Brahmaputra Valley Fertilizer Corporation Limited (BVFCL). In early 2024, he applied for the role of Vice President (Finance) at Hindustan Urvarak and Rasayan Ltd. following an open vacancy posted by the company. After passing the selection process, the respondent issued an offer of appointment on June 7, 2024, requiring him to commence his duties by July 5, 2024.

On receiving the offer, Dara promptly submitted his resignation at BVFCL, asking to be relieved within 15 days due to his probationary status, believing this would exempt him from a mandatory notice period. However, BVFCL did not respond promptly and subsequently issued a memorandum on June 15, 2024, retroactively confirming his service. This administrative delay effectively stalled Dara’s efforts to leave BVFCL and honour his joining date with Hindustan Urvarak and Rasayan Ltd.

Undeterred, Dara joined his new role on July 8, 2024, and submitted an undertaking to the respondent that he would provide the necessary relief letter within 30 days. However, on July 12, 2024, BVFCL issued a show-cause notice to Dara, challenging his departure and initiating disciplinary proceedings. Dara turned to the Gauhati High Court, which took BVFCL’s disciplinary actions and directed the organization to process his resignation.

Despite these legal proceedings and the eventual issuance of a relieving letter by BVFCL on October 3, 2024, Hindustan Urvarak and Rasayan Ltd. decided to revoke Dara’s appointment on August 19, 2024, citing his failure to submit the relieving letter within the initial 30-day period. Aggrieved by this revocation, Dara approached the Delhi High Court, seeking relief and challenging the respondent’s decision to rescind his appointment.

Arguments of the Petitioner (Employee):

• Relieving Letter Issued by BVFCL:

Dara’s counsel argued that the Gauhati High Court had intervened on July 12, 2024, issuing an order to stay BVFCL’s disciplinary proceedings and urging the corporation to process the employee’s resignation. Subsequently, BVFCL issued a formal relieving letter on October 3, 2024, which fulfilled the prerequisite set by the respondent. The employee maintained that with the letter now available, there should not impede his appointment as Vice President (Finance) at Hindustan Urvarak and Rasayan Ltd.

• Unfair and Arbitrary Revocation:

The petitioner contended that the respondent’s decision to revoke his appointment was unfair and arbitrary, as it disregarded the steps he had taken to obtain the relieving letter within the initial 30-day period. He argued that external delays caused by BVFCL were beyond his control and that he had acted in good faith by promptly notifying the respondent and taking legal measures to expedite the process.

• Vacancy and Selection Process Integrity:

Dara emphasized that the respondent had not disputed his qualifications or performance during the selection process, which he had completed. His counsel submitted that the vacancy for Vice President (Finance) remained unfilled, and revoking the appointment solely based on an administrative delay would undermine the selection process and penalize the candidate without fault.

Arguments of the Respondent (Employer):

• Failure to Submit Relieving Letter on Time:

The respondent’s counsel acknowledged Dara’s successful selection but emphasized that the employment offer explicitly required him to submit a relieving letter from BVFCL within 30 days. They argued that Dara’s inability to meet this condition warranted the revocation of his appointment, as the clause was a binding term in the employment contract.

• Impact of BVFCL’s Delays Irrelevant to the Contract:

Hindustan Urvarak and Rasayan Ltd. argued that while BVFCL’s delays were unfortunate, they did not absolve the petitioner from his contractual obligation to submit the relieving letter. The respondent maintained that contractual terms must be respected, and they could not indefinitely hold the position open without certainty regarding Dara’s availability and compliance with onboarding requirements.

• Vacancy Status and Implications:

The respondent confirmed that the Vice President (Finance) position was vacant and emphasized that the revocation did not reflect Dara’s professional abilities or qualifications. They argued that the revocation was a procedural decision based on the breach of a stipulated condition, rather than an assessment of the candidate’s merit.

Court’s Findings and Judgment:

Justice Jyoti Singh, while deciding on the writ petition, thoroughly examined the facts and arguments presented by both parties. In the judgment, the court addressed key considerations related to employment conditions, the responsibility of new employers, and the reasonableness of the actions taken by Hindustan Urvarak and Rasayan Ltd.

• Condition of Relieving Letter and Delays by Previous Employer:

The court observed that the only reason for revoking the petitioner’s appointment was his inability to provide the relieving letter from BVFCL within the required timeframe. However, Justice Singh noted that BVFCL had ultimately processed Dara’s resignation and issued a relieving letter on October 3, 2024. The court held that, given the issuance of the letter, the basis for revoking the appointment no longer existed. The court reasoned that, as Dara had taken all reasonable steps to comply with the requirements, he should not be penalized due to administrative delays beyond his control.

• Vacancy Status and Selection Process Integrity:

Justice Singh further emphasized that since the respondent had not initiated a new recruitment process for the position, the role of Vice President (Finance) remained vacant. The court highlighted that rescinding an appointment based on conditions beyond the candidate’s control could undermine the selection process’s integrity and impose an unfair burden on employees who genuinely seek to comply with procedural requirements.

• Quashing of Revocation Order:

The court quashed the respondent’s revocation order dated August 19, 2024. Justice Singh held that the respondent must allow Dara to join the position of Vice President (Finance) within one week, with all consequential benefits applicable from his original joining date.

• Binding Nature of Employment Contracts:

The court clarified that while employment contracts include specific obligations, they should be interpreted fairly and reasonably. The court underscored that contractual terms regarding documents such as relieving letters should not unduly penalize employees, especially when administrative delays arise from the previous employer’s end.