Case Study: Rakesh Kumar Verma v. HDFC Bank Ltd., 2025 INSC 473 – Supreme Court on Exclusive Jurisdiction in Employment Agreements

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In the landmark decision of Rakesh Kumar Verma v. HDFC Bank Ltd., 2025 INSC 473, the Supreme Court of India clarified the legal standing of exclusive jurisdiction clauses in employment contracts. The Court ruled that such clauses are valid and enforceable under Indian law, reaffirming the distinction between absolute restraints (barred under Section 28 of the Indian Contract Act, 1872) and exclusive jurisdiction clauses, which merely limit the forums available for legal recourse.

Drawing from the precedent set in A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, the Court confirmed that when parties agree to refer disputes to a specific court that otherwise holds competent jurisdiction under the Code of Civil Procedure, 1908, such clauses are lawful. The usage of the term “exclusive” serves to bar other courts from entertaining the matter.

The judgment also underscores that such clauses do not deprive either party of legal remedy but rather streamline the adjudication process, especially in disputes arising from employment agreements. The ruling balances the bargaining power between employer and employee by emphasizing that once an agreement is voluntarily entered into, all clauses—regardless of relative strength—must be respected.

Key Takeaways:

• Section 28 does not invalidate exclusive jurisdiction clauses.
• Such clauses are valid if the court designated has jurisdiction under CPC Section 20.
• Efficiency in dispute resolution is enhanced by removing procedural hurdles regarding jurisdiction.

This judgment offers valuable clarity to employers and employees alike, providing legal certainty for forum selection in employment disputes.

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