New Delhi: In an important ruling for the private sector, Supreme Court Tuesday said private employers can validly include a clause in appointment letters restricting employees to a court in a particular city/town for raising any legal dispute relating to employment, reports Dhananjay Mahapatra.
Differentiating between govt and private employees, a bench of Justices Dipankar Datta and Manmohan said appointments in private companies were essentially contracts involving offer and acceptance and once a person accepted the contract along with the conditions, he/she could not challenge its validity.
The question arose in case of two employees – one in HDFC Bank appointed in Patna and the other in Lord Krishna Bank in Delhi. The appointment letters issued by both banks had specified that any dispute between the parties leading to legal action must be resolved before a competent court in Mumbai.
When they were terminated in 2016 and 2017 respectively, they challenged their terminations before courts in Patna and Delhi. HCs concerned gave rulings holding that the employees could challenge their terminations before the court where they were posted prior to severance of service.
Writing the judgment, Justice Datta said, “…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. In the present dispute, the clause does not take away the right of the employee to pursue a legal claim but only restricts the employee to pursue those claims before the courts in Mumbai alone.”