The Supreme Court has said that private employers can include a clause in appointment letters specifying that any employment-related disputes must be resolved in a particular court or jurisdiction
Supreme Court. File Pic
The Supreme Court has upheld that private employers are within their rights to include clauses in appointment letters mandating that employment-related disputes be resolved in a specific court or jurisdiction.
A bench of Justices Dipankar Datta and Manmohan emphasised that a contract remains a legally enforceable agreement, irrespective of the parties’ identities or relative bargaining power.
"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 agreement stated, reported PTI.
In the dispute, the court observed, the clause did not take away the right of the employee to pursue a legal claim but only restricted them to pursue the claims before the courts in Mumbai alone.
The Supreme Court was hearing appeals involving two former employees—one from HDFC Bank appointed in Patna and another from Lord Krishna Bank appointed in Delhi. Both banks had included a clause in their appointment letters specifying that any legal disputes must be brought before a competent court in Mumbai.
Following their termination over allegations of fraud and misconduct, both employees contested the decisions in the courts of Patna and Delhi, respectively. However, the high courts in both jurisdictions ruled that the employees had the right to challenge their dismissals in the courts where they were last posted before termination.
The top court, however, pointed out there was a gulf of difference between a public service and a service contract with a private employer.
"The origin of government service is contractual. There is an offer and acceptance in every case. But once appointed to his post or office, the government servant acquires a status and his rights and obligations are no longer determined by the consent of both the parties, but by the statute or statutory rules as framed." The legal position of a government servant is more one of status than that of contract, the bench further explained, reported PTI.
"A government servant may not be tied down by his employer to a court at a particular place, should a dispute arise for adjudication by a law court. Articles 14, 16 and 21 could stand in the way," the bench added.
On the other hand, the bench said, service in the private sector was governed by the terms of the employment contract entered into by and between the parties inter-se.
(With PTI inputs)
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