SC: Private Employers Can Specify Jurisdiction for Legal Disputes in Appointment Letters
A bench comprising Justices Dipankar Datta and Manmohan said a contract was a legally binding agreement, regardless of the parties involved or their strengths.
New Delhi: The Supreme Court has ruled that private employers can include clauses in appointment letters specifying that any employment-related disputes must be resolved in a particular court or jurisdiction. A bench of Justices Dipankar Datta and Manmohan stated that while the right to legal recourse cannot be denied, it can be limited to specific courts for the convenience of the parties involved.
The ruling came while hearing appeals by two former bank employees — one from HDFC Bank in Patna and another from Lord Krishna Bank in Delhi — who were terminated over allegations of fraud and misconduct. Both had challenged their dismissals in local courts, despite their appointment letters stating that disputes must be adjudicated in courts located in Mumbai.
The respective High Courts had allowed the employees to proceed in their local jurisdictions, but the apex court overturned these decisions. It clarified that service in the private sector is governed by employment contracts, which can specify a jurisdiction for legal disputes.
“There is a vast difference between public service and private employment,” the court noted. “While government servants acquire a legal status governed by statutory rules, private sector employment remains subject to contractual terms agreed upon by the parties.”
The bench emphasised that such contractual clauses do not violate fundamental rights and are legally binding, provided they do not completely deny access to justice.
