Private Employers May Designate Specific Courts For Job Disputes: Supreme Court

In a landmark ruling, the Supreme Court of India has upheld the validity of clauses in private employment contracts that specify the jurisdiction for resolving employment-related disputes. The judgment, delivered by a bench comprising Justices Dipankar Datta and Manmohan, confirms that employment contracts are binding and can validly designate a particular court for legal proceedings.

 

The Court clarified that such jurisdictional clauses do not deprive employees of their right to seek legal remedies but simply limit the choice of forum to a specific judicial territory. “The right to legal adjudication cannot be taken away by contract, but it can be confined to certain courts for the convenience of the parties,” the bench noted.

 

This ruling arose from appeals filed by two former bank employees—one from HDFC Bank in Patna and another from Lord Krishna Bank in Delhi—who had challenged their dismissals in local courts, despite having signed appointment letters that designated Mumbai courts as the forum for dispute resolution. The respective high courts in Patna and Delhi had initially ruled in favour of the employees, allowing them to proceed locally.

 

However, the Supreme Court overturned these decisions, distinguishing between public and private sector employment. The bench emphasized that government employees cannot be contractually bound to a particular court for dispute resolution due to constitutional safeguards. “A government servant cannot be compelled by their employer to restrict legal adjudication to a specific court,” the Court observed, underlining the unique legal status of public employment.

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