The Bhutanese Leading the way.
The former BBS CEO, Kaka Tshering, appealed to the High Court on 8th July against the District Court upholding his termination from BBS.
The District Court held that the termination was found to be procedurally valid.
The District Court had said the employment contract signed on 1st October 2023 was valid under the Contract Act and Evidence Act of Bhutan. It ruled that Clause 18 of the contract, Clause 3.18.2 of the BBSCL Service Rules, and Section 82 of the Labour and Employment Act 2007 lawfully permitted either party to terminate the contract by providing one month’s written notice, noting that the Defendant had complied with the termination provisions under the law and contract.
The Court observed that, in practice, a clause allowing termination with notice only, can disproportionately affect employees, especially when vague or arbitrary reasons are given, potentially harming their professional reputation and future prospects.
However, the Court found that in this case, there was already an employment agreement executed between the parties, where a notice of 30 days prior to termination was the only requirement for terminating the contract.
The Court said Kaka was fully aware of the termination clause at the time of signing the contract and although he had the opportunity to object to the clause within 10 days as per the Evidence Act, he did not do so. Thus, the Kaka was ‘estopped’ (legal doctrine that prevents a party from taking a position inconsistent with their previous conduct or a legal finding) from challenging the validity or fairness of the clause as per the CCPC, 2001. Accordingly, his request for reinstatement was denied.
The main appeal reason by Kaka Tshering is that the lower court erred in its interpretation of the contract, particularly regarding the one-month notice provision.
He wrote that the Court’s decision to uphold the validity of the termination of contract solely on the basis of section 18 of the Contract that a one-month notice was served overlooks the broader legal context.
He has argued that the one-month notice period merely specifies the timeframe for notice, and should not be construed as the exclusive ground for termination.
His contention is that that termination of the contract must also comply with the applicable Rules, the principles of natural justice, and relevant Constitutional provisions. Therefore, the notice period alone cannot justify termination without adherence to these overarching legal requirements.
Background
Kaka Tshering was appointed as the CEO of the BBSCL for a three-year term. After completing his first term, he was reappointed for a second term on 5th October 2023 through a formal reappointment order (BBSC/Board/2023/517), and an employment agreement was signed on 1st October 2023.
On 16th January 2025, Kaka received a termination notice from the BBS Board informing him that his contract would end in one month’s time.
The termination notice from the BBS Board said his termination was ‘Based on significant grounds, broadly: The CEO’s involvement in an inappropriate incident of online flirtation with a female employee which has adversely affected the reputation and image of the corporation and undermined moral authority of his position and the CEO’s diminished effectiveness in leading the organization as evidenced by the Board members of the organization, observations of government agencies like the Anti-Corruption Commission and the Ministry of Finance, reports from an OCI conducted between May and August 2024 and an OD exercise carried out from July to September 2014, and the views of media professionals.”
The ‘online flirtation’ of the former CEO consisted of messages to a junior female BBS staff of a sexual nature including inviting her to his office repeatedly. The messages were even uploaded on social media for a while where it went viral.
Kaka Tshering challenged this termination in the District Court as unjustified and arbitrary.
Kaka contended that the reasons stated in the termination notice, amounted to a disciplinary matter, and therefore, he should have been subject to a formal disciplinary process under Chapter 15 of the BBSCL’s Internal Service Rules 2020.
The BBSCL, in Court, maintained that Kaka was not terminated for disciplinary reasons but rather through “termination of contract” as provided in Chapter 10 of the BBSCL Service Rules 2020 (Section 10.8.1), which allows either party to end the contract by giving notice.
BBSCL stated that they exercised their contractual right under Clause 18 of the employment agreement and Clause 3.18.2 of the BBSCL Service Rules, both of which are in line with Section 82 of the Labour and Employment Act 2007. This section permits either party to terminate an employment contract at any time by providing written notice only.
While they emphasized that the law does not require reasons to be stated, BBSCL nonetheless clarified that the plaintiff’s termination was not based on the previous allegation itself, but on the resulting loss of authority and effectiveness in his leadership role. They further referred to Section 124.5 of the Corporate Governance Guidelines, which permits removal of a CEO if their “conduct is found to be detrimental to the organization”.
They added that Kaka Tshering had been informed of the termination matter both informally, and in his capacity as a Board member, and that he had even submitted a letter requesting the Board not to proceed with the termination.
