In a landmark judgment, the Supreme Court of India has upheld the legality of private employers specifying courts for resolving employment-related disputes in their appointment letters. This decision came from a bench led by Justices Dipankar Datta and Manmohan, affirming that employment contracts are binding agreements that can designate the jurisdiction for legal disputes.
The court clarified that such clauses do not strip employees of their right to seek legal redress but merely confine them to a specific judicial territory. “The right to legal adjudication cannot be taken away from any party through contract but can be relegated to a set of courts for the ease of the parties,” the bench stated.
The ruling addressed appeals from two former bank employees, one from HDFC Bank in Patna and another from Lord Krishna Bank in Delhi, whose terminations were challenged in their respective local courts. Both banks had clauses in their appointment letters stating that any disputes must be resolved in Mumbai courts. Initially, local high courts in Patna and Delhi sided with the employees, allowing them to contest their dismissals locally.
However, the Supreme Court differentiated between public and private sector employment, noting significant legal distinctions. “A government servant may not be tied down by his employer to a court at a particular place for adjudication by a law court,” the bench observed, pointing to constitutional protections that prevent such restrictions for government employees.
