The Hon’ble Supreme Court of India, in two connected civil appeals (Rakesh Kumar Verma v. HDFC Bank Ltd. & HDFC Bank Ltd. v. Deepti Bhatia – 2025 INSC 473) decided on April 8, 2025, upheld the enforceability of exclusive jurisdiction clauses in private employment contracts. The Court ruled that where multiple courts have jurisdiction under law, parties are free to agree that disputes will be adjudicated in one specific court. This judgment brings important clarity to jurisdictional disputes in employment-related litigation and reinforces the binding nature of contractual terms.

Case Background

The judgment arose from two cases involving former HDFC Bank employees—Rakesh Kumar Verma and Deepti Bhatia. Both were terminated from service on allegations of misconduct and filed civil suits in Patna and Delhi, respectively, challenging their terminations and seeking reinstatement. However, their employment contracts contained exclusive jurisdiction clauses specifying that disputes would be subject only to the courts in Mumbai.

HDFC Bank objected to the jurisdiction of the local courts. While the Patna High Court upheld the jurisdiction clause, the Delhi High Court allowed the suit to proceed in Delhi. These conflicting outcomes led to appeals before the Supreme Court.

Legal Issue Before the Supreme Court

Can an employee institute a civil suit in a location other than the one agreed in an exclusive jurisdiction clause of their employment contract?

Supreme Court’s Key Observations

Exclusive jurisdiction clauses are legally valid

• Parties can agree to restrict litigation to one of several competent forums under Section 20 CPC.
• This does not violate Section 28 of the Contract Act, as access to legal remedy remains available.

Employment contracts are not exempt

• Employment agreements are commercial contracts, and must be interpreted like any other private agreement.
• Power imbalance between employer and employee is not a ground to invalidate clearly worded jurisdiction clauses.

Parties are bound by accepted contractual terms

• Both employees had voluntarily accepted the jurisdiction clause and acted on their contracts.
• Courts cannot disregard such terms absent fraud, coercion, or statutory violation.

Relief Granted by the Supreme Court

• In Rakesh’s case, the Court upheld the Patna High Court’s decision but directed that his plaint be returned under Order VII Rule 10 CPC, not rejected.
• In Deepti’s case, the Delhi High Court’s order was set aside, and her plaint must also be filed in Mumbai.
• Both were given liberty to:
  • Amend their plaints if refiled,
  • Plead exemption from limitation if applicable.

Key Takeaways

• Exclusive jurisdiction clauses in employment contracts are enforceable, so long as:
  • The chosen court has jurisdiction under law,
  • The clause is unambiguous and mutually agreed upon.

For an exclusive jurisdiction clause to be legally valid, the following three conditions must be met:

• No absolute restriction on legal recourse:

The clause must not completely bar either party from initiating legal proceedings. It should only specify the forum, not eliminate the right to sue.

• Competent court must be chosen:

The court granted exclusive jurisdiction must already have jurisdiction under the law. Parties cannot confer jurisdiction on a court that lacks it.

• Clear intent to confer jurisdiction:

The clause must either explicitly or implicitly show that the parties intended to restrict disputes to a specific court or set of courts.

Conclusion

This judgment is a significant reaffirmation of party autonomy in contracts, particularly in employment law. It ensures that employers and employees alike respect agreed terms regarding legal forums, and prevents forum shopping in employment disputes. Legal teams are advised to review employment contracts to ensure clear jurisdictional language is included and properly communicated.