Supreme Court of India Upholds Exclusive Jurisdiction Clauses in Private Employment Contracts

In the case of Rakesh Kumar Verma v. HDFC Bank Ltd., decided on April 8, 2025, the Supreme Court of India affirmed the enforceability of exclusive jurisdiction clauses contained in private employment agreements. The matter arose following the termination of two employees of HDFC Bank Ltd., namely Rakesh Kumar Verma and Deepti Sharma, whose employment contracts stipulated exclusive jurisdiction of courts in Mumbai.

Despite these clauses, Rakesh Kumar Verma instituted a civil suit in Patna, while Deepti Sharma initiated proceedings in Delhi. HDFC Bank subsequently filed applications seeking dismissal of the suits on the ground of lack of jurisdiction. The Supreme Court held that exclusive jurisdiction clauses are valid and enforceable provided they are clearly and unequivocally drafted, do not contravene Section 28 of the Indian Contract Act, 1872 or Section 20 of the Civil Procedure Code, 1908, and designate a court that possesses inherent jurisdiction.

The Court articulated a three-pronged test for the validity of such clauses: (a) they must not preclude access to legal remedies altogether; (b) they must select a court competent to exercise jurisdiction under law; and (c) they must expressly exclude jurisdiction of other courts.

The judgment further distinguished private employment contracts—governed primarily by contract law—from public employment, which involves constitutional and statutory safeguards. It emphasized that parties to private contracts are bound by their mutually agreed terms, including jurisdiction clauses. The Court also rejected arguments concerning unequal bargaining power in private employment contracts, underscoring the presumption of contract validity absent legal infirmities.