Wipro’s stand on dispute over ex gratia with ex-staffer abuse of law, says Karnataka HC; imposes costs

BENGALURU: The high court has imposed Rs 50,000 in costs on Wipro Enterprises Private Limited, terming its stand in an ex gratia payment dispute an abuse of the process of law.

The cost is payable to the employee who was the plaintiff before the civil court.


The dispute concerned the non-payment of an ex gratia amount promised to Ratnesh Pandey, a resident of Faridabad in Haryana, who resigned from the company in Sept 2017 after working for nearly 12 years in various posts, starting from territory manager.

Pandey resigned on Aug 6, 2017, and it was accepted on Sept 18, 2017. In recognition of his contribution, he was offered an ex gratia lump sum amount of Rs 6,32,000, payable after 18 months from the date of cessation of employment. This was subject to the condition that from the date of cessation he would not join competing companies, namely Philips India Limited or Bajaj Electricals Ltd.

As the ex gratia amount was not paid even after 18 months and repeated correspondence, Pandey approached the civil court seeking payment of the amount along with 18% interest.

Wipro disputed the claim, contending that Pandey hadn't accepted the terms and conditions of the cessation letter and, therefore, was not entitled to payment of the ex gratia amount.

On July 23, 2024, the 20th additional city civil judge, Bengaluru, ruled in favour of Pandey. Wipro appealed, arguing that the cessation letter dated Sept 18, 2017, for want of acceptance from Pandey, stood revoked under Section 6(2) of Indian Contract Act-1872, and that belated acceptance after 18 months was unacceptable.

Pandey submitted that Wipro never alleged breach of contract conditions before the civil court.

In his recent ruling, Justice Sachin Shankar Magadum noted that Aug 19, 2017, was Pandey's last working day and rejected the company's claim that signing and returning the letter was a mandatory condition, holding that the phrase "return to us for records" could not be treated as a condition precedent.

The court held that the company had acted upon the cessation letter and, having failed to prove any breach by Pandey, could not deny payment on hyper-technical grounds. Such a defence violated Sections 7 and 8 of Indian Contract Act and amounted to "vexatious resistance to an admitted liability".