Recovery of Company Assets in a Hybrid Working Model

Hybrid Work Model


With the advent of the Covid-19 pandemic, many companies have adopted a Hybrid Working Model, an operating model and culture wherein employees have the flexibility to work from home or from the office, on certain days of a week or month. This flexibility has enabled organizations to more so retain the workforce[1].

To enable employees to work from home, companies have provided necessary permissions along with company assets such as high-end laptops containing confidential business information, desktops, monitors, modems, and laptop bags (“Assets”) to their employees, to ensure that they can work seamlessly without any hassles. Some companies have also gone beyond this and provided employees with ergonomic chairs, working table or desk, etc. 

A majority of employees over the last couple of years have been onboarded and offboarded virtually [2]. As part of these processes, the company sends and collects its assets through courier services to remote working locations and hence has less control over delivery and receipt of the said assets. When an employee decides to terminate his/her employment either by resignation or abandonment of service or is terminated by the company, it causes a huge challenge to the employers to recover the assets, especially when the employee refuses to hand over the assets back to the company and in several cases, inaccessible [3].

In such cases, companies must understand the laws governing the recovery of company assets and the mitigating measures that they can undertake to ensure employees return them in good working condition, upon the termination of their employment.


  • Indian Contract Act, 1872: One of the fundamental laws that govern the relationship between an employer and employee is the Indian Contract Act, 1872 which also includes handing over and return of company assets through an employment contract/agreement. When the employment contract satisfies all conditions, such as offer, acceptance, legal relationship, lawful objects and consideration, competency of parties, competency, performance, etc., the same is said to be a valid contract [4].
  • Section 452 of the Companies Act, 2013: This provision states that if an employee wrongfully withholds the company’s property, he/she shall on a complaint of the company be punished with a fine. The fine can be a minimum of Rs. 1,00,000/- (Rupees One Lakh only) or may extend up to Rs. 5,00,000/- (Rupees Five Lakhs only). However, this provision is not applicable if the court is of the view that the company has failed to the employee towards the following:

                     – Provident fund

                     – Pension fund

                     – Gratuity fund

                     – Any other fund for the welfare fund

                   – Compensation or liability for the same under the Workmen’s Compensation Act, 1923 in                          respect of death or disablement.[5]

In the case of Amogh Surendra Dalvi vs M/s. West Coast Ventures [6], the Honourable High Court of Karnataka dismissed a petition filed to quash the proceedings initiated against the petitioner under Section 452 of the Companies Act, 2013. The court observed that the bank statement showed an amount deducted from the company’s account and the petitioner was still working as the director during that period. In the said case, the petitioner had purchased a car from the company’s funds and was not ready to return the same post his resignation.

  • Section 405 & 406 of the Indian Penal Code, 1860: As per this penal code, an employee commits an act of criminal breach when he

              – Dishonestly misappropriates the entrusted asset/property of the employer

              – Converts to own use of that property

             – Uses, or disposes of such property in violation of any legal contract, express or implied (i.e.,                    employment contract)

Such an act is punishable with imprisonment for a term that may extend to three years, a fine, or both [7].

In Shivnarayan Laxminarayan Joshi and Ors.[8]the Honourable Apex court held that a director was clearly in the position of a trustee and is a trustee of the assets which have come into his hand on which he had dominion and control. The High Court has given a clear finding to this effect on page 33 of the judgment, where the court has observed as follows:

“The property being an actionable claim against Rekhchand Gopaldas, accused No. 1 as the Managing Director was entrusted with complete dominion over the right to recover the same under the said articles and as such, he was capable of committing dishonest misappropriation or conversion of that actionable claim. The finding of the learned trial Judge on the point of entrustment, therefore, has to be upheld, and we confirm the same”.

  • Section 7 of the Payment of Wages Act, 1936: As per the said provision [9], an employer can deduct up to 50% of the wage payable to an employee when he fails to return the company assets on grounds of damage or loss of goods expressly entrusted to the employed person for custody. However, the said provision applies to employees whose gross salary is below ₹24,000/-. In case of employees whose gross salary is above the said limit, the company can deduct the full amount.

The Honourable High Court of Karnataka in the case of Spun Silk Mills vs Parthasarathy and Ors (wherein our Chairman, Mr. B.C Prabhakar, had appeared for the employer) held that the employee’s request to the management to grant advances for hire-purchase of TV sets and agreeing to deductions from his monthly salary as valid, as the same being recovery of advances as per Section 7(2)(f) of the Payment of Wages, Act 1936.

  • Section 18 of the proposed Codes on Wages, 2019: As per the said provision [10] an employer can deduct up to 50% of the wage payable across all its employees upon their failure to return the company assets.

Mitigating Measures

Though an employee on termination of employment is morally and legally bound to return the company assets, an employer must take necessary steps to mitigate any risks in this regard. One of the best ways is to take precautionary measures at the very inception of the employment and see to it that that employee is bound to return the assets before he leaves the organisation. Further, the employer can also educate the stakeholders including employees of the organization, on the measures to prevent and consequences of failing to return company properties. Despite the preventive measures, if an employee fails to return the properties, the company may finally proceed to initiate necessary civil and criminal action against the employee as per the above-stated provisions towards the recovery of its assets or compensation in lieu of the same.

-K.G. Devaiah, Advocate & Principal Associate
-Jahnvi Bijlani, Advocate & Junior Associate

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2 thoughts on “Recovery of Company Assets in a Hybrid Working Model”

  1. B.Chanddashekhara Shetty

    Very interesting article which makes the employers to be more careful with WFH system.
    When it is termed and referred as an “Asset”, naturally one should also think of its depreciated value due to wear, tear and absolescece of immovables which is commercally recognised to value at a particular period.
    This shall required properly assessed and valued by the employer reflected in the record. This also needs periodical inventory and certification by the counting personnel as like any assets of the Company. Obtaining of surety in a appropriate form for the value of the assets provided or refundable deposits etc., from such workers though it may little diffcult to implement by the employer but save him from unnecessary recovery excercise and lengthy precedure.
    As we know, generally when discharging the employee, notice period is to be given as agreed to in the cotract of service and there will be sufficient time to the employer where th chek list shall passes through all the department to furnish ‘no due’ certificate before issue of relief orders. Unless employee clears all the dues including assets at his position is returned in good condiion the RO is not issued. This system also gives relief to certain extet to the employer istead of involving in cumbersome procedures.
    Due to natural calamity, such as present situation of rain- floods etc., damages may be caused beyong the control of the employee as employer providing only ‘assets’ and not the accommodaton. In such case how we makes the employee is accountable is also a question.
    According to me even provisions of the Payment of Wages Act is made appliable without any wage limit( in the proposed wage code), the maximum limit of deduction of 50% is taking in to consideratiion of all the items prescribed under section 7(2) and not for the deduction exclusively for loss or damagaes directly attriutable to employees negligent or default. According to provision (3), the total amount of deductions which may be made under section(2) in the wage period shall not exceed 50% and in case of payment paid to recognised Co-operative society may go up to 75% ( this is not found in the Wage Code)
    As stated in the article, PWA also states that ‘Nothing contained in this section shall be construed
    procluding the employer to recover from wages under any law for the time being in force. Even under the provisions of the IPC provides for breah of criminal breach on th part of employer, any of the grounds out of three therein will have to be proved.
    Accoring to me, even when the employer receives the Court order Attaching the salary of his employee, deducting it exceeding 50% is not possible and the employer has to submit to the court the position on his inability to faithfully obey the orders due to the provisions under the provisions of the PWA. The service rules also recognises the subsistence allowance required for the livelyhood of the person and hence whatever the extent misappopriation or damanges is caused, 50% of the salary shall be paid even employee is not on duty. In the legal process, the question of issue of notice, providing of due opportunity and heard etc. makes the issue very time consuming. Then what a suitable and apprriaate remedy we can suggest is the task before us?
    The authors’ effort and presetation deserves compliments!

    -B. Chandrashekhara Shety

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B. Chandrashekar Shetty - Advocate

Mr. Chandrashekar Shetty is a Senior Labour Law Compliance Auditor at BCP Associates and has audited multiple client companies across India. He is also a member of our senior legal advisory practice. Previously he has worked as Deputy Controller, Manager-Industrial Relations and Industrial Relations Officer in KPTCL, Bangalore for more than 30 years. Prior to this, he has dealt with Legal, Personnel and IR matters including Wage Settlements, Grievance Machinery, Manpower Study and Social Security Compliances for about 10 years. He is a Faculty member of Labour Law, HRD Centre, KPTCL Bangalore.

Mr. Shetty holds a B.Com. and L.L.B. degree, Post-Graduate Diploma in Business Administration, Diploma in Public Relations from Bangalore University and PG Diploma in Industrial Relations & Personnel Management from Bharatiya Vidya Bhawan. He is enrolled as Advocate in Karnataka Bar Council and is a Govt. Arbitrator of Chit Funds in Karnataka.

S Venugopal Rao

S Venugopal Rao is an experienced labour law and service matters expert and is a member of the senior advisory team at BCP Associates. Having joined the chambers of Mr. B C Prabhakar in 2012, he is knowledgeable and well versed in multiple employment and labour law topics.

S Venugopal Rao holds a Bachelor’s degree in Science from Karnataka University, Dharwar and Bachelor of Law from Bangalore University. He enrolled as advocate in Karantaka State Bar Council in 1976. He joined the chamber of Sri. Kolachalam Srinivasa Rao a leading civil advocate. After practicing for 6 years at Ballari, he joined Orient Paper Mills, Orissa (of G P Birla Group). He was designated as Manager (Law) under the Factories Act in 1995. In 1999, he joined Andhra Pradesh Paper Mills Rajahmundry as Manager Legal and was subsequently elevated as Dy. General Manager (Legal). As Factory Manager & Legal Head, he oversaw compliance of Factories Act and Rules there under towards safety, health and welfare, including compliance under Pollutions and Environmental laws and Explosives Act, etc. Additionally, he is well acquainted with Environment Management System ISO 14001: 2004, Occupations, Health and Safety Series 18000:1999. As Legal head in APPM he has briefed and appeared along with Senior Advocate before Appellate Authority constituted under Water (Prevention & Control of Pollution) Act. He retired from the services of Andhra Pradesh Paper Mills in 2011.

As legal head he has handled important cases both in Labour and Civil and has experience in drafting and vetting Contracts, Agreements, Lease Agreement, Conveyance Deeds, , Affidavits and scrutiny of several legal and other documents, Preparing and settling Petitions, Appeals, Plaints, Written Statements, Rejoinders, Affidavits and Written Arguments etc. for submission/pleadings for various legal proceedings.

C K Devappa Gowda - Advocate

C.K. Devappa Gowda (CKD) is an Advocate and Labour Law expert. He holds a Bachelor’s Degree in Science from the University of Mysore and a Degree in Bachelor of Law from Bengaluru respectively. He also holds a Diploma in Social Service Administration from the National Institute of Social Science, Bengaluru. After completing his studies, he had enrolled as a Advocate and initially practiced in the Civil Code attached to the office of BCP. He then worked as Personnel Officer in Chemicals and Textile Manufacturing Industries for 5 years. Thereafter took up employment in one of the largest Public Sector Bank. He has worked in different parts of the country and has extensive experience in the cross country IR domain. The significant part of his service was at corporate level overseeing and implementing HR policies and practices and management of IR. He has been a member of personnel committee of Indian Bank Association.

After retirement from service, Mr. Gowda has been working with Mr. BC Prabhakar’s firm for the last 12 years. He has expertise in all areas of people management, drafting of documents relating to service matter including the settlements under the ID Act. He has dealt with all employment laws including appearance before the Courts, Tribunal and Authorities under the different Labour Laws. Mr. Gowda is one of the senior Labour Law experts at BCP Associates.

Srijatha Ghosh - POSH Specialist & Advocate

Srijata Ghosh serves as external member on the Internal Committee of several Companies across various sectors. She handles all kinds of POSH related matters including investigations and inquiries. She provides Training on Sexual Harassment across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members on the legislation (The Sexual Harassment of Women at Workplace Prevention, Prohibition and Redressal Act, 2013). She also formulates Policies for Prevention of Sexual Harassment at Workplace (“POSH”) and advises Companies on setting up of their Internal Committees. Srijata is involved in providing Legal Advisory services on POSH and other labour law matters for various clients.

In her previous experience, she has extensively dealt with End-to-End Contract Management, Due Diligence, POSH Compliances, Legal Advisory, etc. Srijata worked with Companies like Accenture India Private Limited, Quess Corp., Capgemini Business Services (India) Limited and Pramata Knowledge Solutions Private Limited. Srijata has handled varied legal issues including drafting, vetting and negotiation of contracts, drafting policies of various organizations. She has resolved issues relating to employment laws and has worked closely with the HR teams. She has provided legal advisory services to senior management. She was also associated with Kolkata High Court in counselling clients with legal matters such as Property, Due Diligence etc. Srijata has worked in an LPO Service Firm, Manthan Legal Services Private Limited for Legal Research, depositions, medical summaries, demand drafting etc.

Srijata completed her B.A.LL.B from M. S. Ramaiah College of Law, Bangalore University in 2009. Srijata is a member of the Karnataka Bar Council since 2010. She is also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Caroline Lobo - POSH Specialist & Advocate

Caroline Lobo has been with BCP Associates for the past 2+ years. She has been handling matters and Inquiries related to the POSH Act including conducting inquiries and trainings/awareness programmes for Senior Management, employees as well as members of the Internal Committee on the POSH Legislation (The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“Act”) to address Workplace Harassment of Women. She is a member of the Internal Committee for many varied companies and organisations and has reviewed and scrutinized numerous hearings and inquiries on matters relating to sexual harassment at workplace.

She has also handled matters relating to employer-employee related Enquiries, wherein she has reviewed and conducted hearings and enquired into the matters and has guided the Internal Committee and provided guidance in providing recommendations to the management. She is also a Member of the Gender Sensitivity Sub-committee of Karnataka Employer Association (KEA).

Prior to joining BCP Associates, Caroline has has a wide range of experience in corporate, commercial and contract law, mergers and acquisition and has undertaken drafting, vetting, negotiating and finalizing legal and commercial transactions. She started her career in litigation then moved onto the Corporate sector. In the span of 13 years, she has worked at Chambers of Advocate Jayashree Murali, Krishnamurthy and Co. Legal Consultants, Colt Technology Services and Oracle India Pvt. Ltd. She always had a keen interest in Women and Child related issues. She has worked with Child Welfare Committee and NGOS’s. In addition, she has worked with Swasthi Health Resource and Centre, where she was the External member to the Internal Committee (IC). She worked closely with the committee in strategizing, planning, reviewing and implementing the assigned tasks, which included building material to raise awareness against sexual harassment at workplace. Further, she has been involved in conducting inquiries into matters related to sexual harassment at workplace.

Caroline earned her Law degree from University Law College, Bangalore, from where she graduated in the year 2005.

Manoj Kumar – Senior Associate

At BCP Associates, Manoj Kumar is involved in managing and conducting labour law compliance audits of principal employer and contractors. He is also involved in client co-ordination and conducting labour law training programs for vendors. He has conducted on-ground labour law audit for factories. Manoj also provides support in advising vendor clients on labour law queries. He completed B.A., LL.B. from BMS College of Law, Bangalore in 2016

Rashmitha Venkatachalam Das - POSH Specialist & Advocate

Rashmitha Venkatachalam Das is the External Member of the Internal Committee of several reputed Organizations across various sectors. Handling complex inquiries has been her forte and she is extremely passionate about it. She is actively involved in providing Training on Sexual Harassment (Prevention, Prohibition and Redressal) Act, 2013 across all verticals for Managers and Senior Management, General Awareness for all employees and Internal Committee members. Rashmitha possesses capabilities in delivering sessions in Hindi and Kannada, in addition to English. She has formulated Policies for Prevention of Sexual Harassment at Workplace (“POSH”), advised companies on setting up of their Committee. Rashmitha is involved in providing Legal Advisory services on POSH for various clients spread across diverse sectors. She has also been handling domestic enquiries for various clients. 

Rashmitha possesses experience both at Law Firms and Corporates in various capacities. She started her career at Krishnamurthy and Co, Legal Consultants and then moved on to work as an In- House Legal Counsel with Companies such as Biocon Limited, Columbia Asia Hospitals Private Limited, Adecco India Private Limited. With a long stint in the Corporate side, Rashmitha decided to pursue further education in Law with a specialization in Labour and Employment Laws. She has rich experience in drafting, vetting and negotiation of various types of contracts, providing legal opinions and has driven the team in formulating process and procedures and their implementation. She has drafted several employment related policies in Corporates. Rashmitha has been a part of various key committees in Organizations and assisted committees in scrutiny of documents pertaining to human organ transplant as well as clinical trials.

Rashmitha holds an LL.M. in Labour and Employment Laws from University Law College, Bangalore, which she completed in the year 2018 with Two Gold Medals. She is also a Rank Holder at the University. She has completed BA, LL.B. from Bangalore Institute of Legal Studies, Bangalore University in the year 2009. Rashmitha is a member of the Karnataka Bar Council since 2009 and also a member of the Gender Sensitivity Sub Committee of Karnataka Employer Association (KEA).

Manisha Vidyadhar – Senior Associate

At BCP Associates, Manisha Vidyadhar is involved in managing and conducting labour law compliance audits of principal employer and contractors. She is also involved in client co-ordination and conducting labour law training programs for vendors. She has conducted on-ground labour law audit for factories. Manisha also provides support in advising vendor clients on labour law queries.  She completed B.A., LL.B. from BMS College of Law, Bangalore in 2016.

Amrutha Ananth – Principal Associate

At BCP Associates, Amrutha is a part of the Legal Advisory practice, Legal Audit practice and Labour Code Alignment Programme (LCAP). Amrutha specialises in Labour and Employment Laws and compliance having advised some of India’s leading companies for some of their most complex labour law matters.

Amrutha has more than seven years of experience in labour and employment law and has conducted several audits for both, principal employer and contractor for various leading IT/ITES companies, manufacturing sectors like pharma, automobile, construction and start-ups.

She is actively involved in drafting and reviewing employment contracts, HR policies, Employee Handbook, show cause notice, etc. for various organizations spread across diverse sectors. As a part of the Labour Code Alignment Program, she assists companies in review and alignment of their existing wage and employment policy with the provisions of the Labour Codes.

Sunil Arya – Principle Associate

At BCP Associates, Sunil Arya is part of the labour and employment law advisory and HR Policy practice and is actively involved in drafting and reviewing of employment contracts, opinions, HR policies, employee handbook, show cause notice, etc. for various clients spread across diverse sectors. He conducts training on labour and employment laws. Sunil is also involved in labour law compliance audits of principal employer and contractors and has conducted on-ground labour law audit for factories. In addition, he is engaged in knowledge creation and management of the firm and keenly writes on developments in labour and employment laws.

Prior to joining BCP Associates, Sunil has 10 years of post-qualification experience in diversified portfolios of advisory, drafting, policy analysis and dispute in the domains of contracts, general civil matters, employment law, competition law and construction arbitration matters. Sunil started his career as a Law Researcher in Delhi High Court. He moved on to be part of regulatory analysis team of CIRC, a unit of CUTS International. In addition, Sunil has been part of legal team of Jindal India Thermal Power Limited. He has also taught competition law, tax law and investment law at VIPS, Delhi.

Sunil holds LL.M. from The Indian Law Institute, Delhi. He is First Rank Holder in his thesis. He completed B.A, L.L.B. (Hons.) from I.P. University, Delhi. He also holds First Rank in P.G. Diploma in Competition Policy and Laws from The National Law University, Delhi.

Chandrakala K A – Principle Associate

At BCP Associates, Chandrakala has 12+ years of experience in conducting and managing labour law compliance audits of principal employer and contractors. She is also involved in co-ordination with many clients. She has conducted on-ground labour law audit for factories. She also provides support in advising vendors on labour law queries. Chandrakala is actively involved in research and providing valuable inputs to the firm pertaining to updation in labour law audit function.

Chandrakala started her career in litigation in chamber of Sri. Ashok where she was involved in drafting, pleading and appearance before Karnataka High Courts and lower courts on the criminal side.

Chandrakala completed B.A in Arts from Kuvempu University, Shimoga in 2003 and LL.B. from Mangalore University in 2006.