Karnataka High Court Hears Appeal Against Single Judge's Order Quashing Compulsory Service Bonds of ESIC Medical Students; Questions Validity Under ESI Act and Constitution

Writ appeal filed under Section 4 of the Karnataka High Court Act challenging the single judge's order that quashed the compulsory service bonds of MBBS students and declared them unenforceable.

Appellants sought to set aside the order dated 14.02.2020 passed by the single judge and to dismiss the writ petitions with costs.

The single judge allowed the writ petitions and quashed the posting orders, restrained ESIC from enforcing the five-year compulsory service bond, and directed ESIC to unconditionally relieve the petitioners from the obligation of compulsory service.

The single judge of the Karnataka High Court in W.P. Nos.30406-411/2018 and other linked petitions passed a common judgment on 14.02.2020 allowing the petitions and quashing the service bonds.

ESIC is not competent to prescribe any condition for personal service under the ESI Act. The College does not have any power to enter into a contract providing for a service bond. The requirement of rendering compulsory services violates the right to carry on a profession under Article 19(1)(g) of the Constitution. It violates Article 23 of the Constitution as it amounts to Bonded Labour. The service bond is void under Section 27 of the Indian Contract Act, 1872. The bond is void for lack of free consent because the condition was not made known prior to admission and the petitioners were compelled to execute it.

ESIC and the College contended that they have the necessary powers to enter into contracts and that the service bond was intended to ensure medical services for ESIC subscribers, falling within their statutory functions. The appellants argued that the service bond was voluntarily executed and the petitioners are bound by it. The appellants also challenged the petitioners' conduct in raising objections after completion of the course.

The dispute essentially concerns the legality and enforceability of the service bond furnished by the petitioners. In terms of the bonds furnished by the petitioners, they are required to serve five years at any of the ESIC hospitals across the country and on failure to do so, are liable to pay an amount Rs.7,50,000/-. A bond to serve the scheme at least for a period of 5 years will be executed by each student at the time of admission. The cost of the entire course will be recovered if one ceases to be in corporation service before completion of Bond period. The petitioners challenged the legality of the service bonds on several fronts. First, they contended that ESIC is not competent to prescribe any condition for personal service as it is beyond the powers conferred under the Employees' State Insurance Act, 1948.

The petitioners filed W.P. Nos.30406-411/2018 challenging the compulsory service bonds. The single judge allowed the writ petitions by order dated 14.02.2020. The present writ appeal was filed under Section 4 of the Karnataka High Court Act against that order. The appeal was heard and reserved for judgment. On 06.04.2026, the judgment was pronounced.

• Employees' State Insurance Act, 1948:
• Constitution of India: Article 19(1)(g), Article 23
• Indian Contract Act, 1872: Section 27
• Karnataka High Court Act: Section 4
• Karnataka Selection of Candidates for Admission to Government Seats in Professional Educational Institutions Rules, 2006: Rule 11