The Supreme Court has said private employers can include a clause in appointment letters specifying that any employment-related disputes must be resolved in a particular court or jurisdiction.
A bench comprising Justices Dipankar Datta and Manmohan said a contract was a legally binding agreement, regardless of the parties involved or their strengths.
“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,” it said.
In the dispute at hand, 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 apex court was hearing appeals filed by two employees of HDFC Bank appointed in Patna and Lord Krishna Bank in Delhi, respectively.
The banks in both cases had mentioned in their appointment letters that any dispute between the parties leading to legal action must be resolved before a competent court in Mumbai.
When the services of both employees were terminated due to allegations of fraud and misconduct, they challenged their terminations before respective courts in Patna and Delhi.
The high courts in these places held that the employees could challenge their terminations before the court where they were posted prior to severance of service.
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.
“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,” it 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. (Agencies)
