1. Employment contracts containing exclusive jurisdiction clauses — Termination of service — Civil suits filed in courts other than the agreed forum — Challenge to territorial jurisdiction. (Para 3 , 4 )
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2025 Supreme(SC) 618
SUPREME COURT OF INDIA
DIPANKAR DATTA, MANMOHAN, JJ.
Rakesh Kumar Verma – Appellant
Versus
HDFC Bank Ltd. – Respondent
Civil Appeal No. 2282 of 2025
With
HDFC Bank – Appellant
Versus
Deepti Bhatia – Respondent
Civil Appeal No. 2286 of 2025
Decided On : 08-04-2025
Important Points
IMPORTANT POINTS
(1) Territorial jurisdiction of Court – Court not having jurisdiction as per statutory regime cannot be bestowed jurisdiction by means of contract.
(2) As long as an employment contract does not offend provisions of any applicable legislation, such as Contract Act or CPC, ordinarily, there should be no reason to interfere.
(3) Right to legal adjudication cannot be taken away from any party through contract but can be relegated to a set of Courts for ease of parties.
(1) Territorial jurisdiction of Court – Court not having jurisdiction as per statutory regime cannot be bestowed jurisdiction by means of contract.
(2) As long as an employment contract does not offend provisions of any applicable legislation, such as Contract Act or CPC, ordinarily, there should be no reason to interfere.
(3) Right to legal adjudication cannot be taken away from any party through contract but can be relegated to a set of Courts for ease of parties.
Subject
Civil Law - Contract Law
Act Referred
Headnote
(A) Civil Procedure Code, 1908 – Order VII, Rule 11 read with Section 20 – Contract Act, 1872 – Section 28 – Rejection of plaint – Territorial jurisdiction of Court – Civil suit for ad-interim injunction as well as reversal of order of termination from service – For an exclusive jurisdiction clause to be valid, it should be in consonance with Section 28 of Contract Act – Court not having jurisdiction as per statutory regime cannot be bestowed jurisdiction by means of contract – Parties must either impliedly or explicitly confer jurisdiction on a specific set of Courts – Legal position of a government servant is more one of status than that of contract – 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. (Paras 18 and 21)
(B) Civil Procedure Code, 1908 – Order VII, Rule 11 read with Section 20 – Contract Act, 1872 – Section 28 – Rejection of plaint – Territorial jurisdiction of Court – Civil suit for ad-interim injunction as well as reversal of order of termination from service – As long as an employment contract does not offend provisions of any applicable legislation, such as Contract Act or CPC, ordinarily, there should be no reason to interfere – Scope of interference in such matters is quite narrow – Law treats all contracts with equal respect and unless a contract is proved to suffer from any of vitiating factors, terms and conditions have to be enforced regardless of relative strengths and weakness of parties – Section 28 of Contract Act does not bar exclusive jurisdiction clauses – What has been barred is absolute restriction of any party from approaching a legal forum – Right to legal adjudication cannot be taken away from any party through contract but can be relegated to a set of Courts for ease of parties – In present dispute, clause does not take away right of employee to pursue a legal claim but only restricts employee to pursue those claims before courts in Mumbai alone – Bank is justified in its claim that suits ought to have been instituted in an appropriate Court in Mumbai – Appellant given liberty to present such plaint in the competent court in Mumbai. (Paras 23, 26, 29, 32 and 33)
Facts of the case:
Pure question of law arising for decision on these appeals is, whether the civil suits could have been instituted in courts in Patna and Delhi by parties, respectively, in view of specific clause(s) in appointment letter/employment agreement that courts in Mumbai would have exclusive jurisdiction to decide disputes by and between contracting parties?
Findings of Court:
Since courts in Mumbai have jurisdiction to decide the dispute raised by Rakesh and his plaint is not otherwise liable to rejection on attraction of any of the clauses of Rule 11, proper course for Patna High Court would have been to direct return of plaint by trial court under Order VII, Rule 10 of the CPC to Rakesh for its presentation before the competent court in Mumbai.
Result : Lead appeal dismissed and connected appeal allowed.
Judgement Key Points
Ratio Decidendi:
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Validity of exclusive jurisdiction clauses: For an exclusive jurisdiction clause to be valid, it must (i) be in consonance with Section 28 of the Contract Act (not absolutely restricting enforcement of rights); (ii) pertain to a court that already possesses statutory jurisdiction under Section 20 CPC (a contract cannot confer jurisdiction on a court lacking it); and (iii) explicitly or impliedly confer jurisdiction on specific courts by the parties. (!) (!) (!) (!)
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Applicability to employment contracts: Exclusive jurisdiction clauses in private employment contracts are enforceable like any other contract, provided they do not violate applicable laws (e.g., Contract Act or CPC). No special interference is warranted due to perceived unequal bargaining power between employer and employee; all contracts are treated equally absent vitiating factors. Legal position of private employees differs from government servants (status vs. contract). (!) (!) (!) (!) (!) (!)
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Effect of Section 28, Contract Act: Does not invalidate exclusive jurisdiction clauses, which merely designate specific courts for adjudication without barring access to legal forums entirely. (!) (!) (!) (!)
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Jurisdiction determination: Courts in Mumbai had jurisdiction here, as employment decisions (appointment, termination) originated and were dispatched from Mumbai (per Explanation to Section 20 CPC). Suits filed in Patna/Delhi courts lacked jurisdiction due to explicit "exclusive" clause. (!) (!)
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Proper procedural remedy: Where plaint discloses lack of territorial jurisdiction due to valid exclusive clause but is not otherwise barred under Order VII Rule 11 CPC clauses, plaint must be returned under Order VII Rule 10 CPC for presentation in competent court (not rejected). Liberty granted to amend plaint or claim limitation exemption under Order VII Rule 6 CPC if refiled. (!) (!) (!) (!) (!)
Legal Category Hierarchy
- practice and procedure
- contract law
Advocates appeared:
For the Appellant(s) : Mr. Sonal Jain, AOR Mr. Narender Hooda, Sr. Adv. Mr. Rishab Raj Jain, Adv. Ms. Kajal Sharma, Adv. Mr. Grijesh Kumar, Adv. Mr. Sandeep S Deshmukh, Adv. Mr. Vatsalya Vigya, AOR
For the Respondent(s): Mr. G. S. Chaturvedi, Adv. Mr. Shantanu Chatuervedi, Adv. Ms. Priyanka Tyagi, Adv. Mr. Surya Kant, AOR Mr. Sonal Jain, AOR Mr. Narender Hooda, Sr. Adv. Mr. Rishab Raj Jain, Adv. Ms. Kajal Sharma, Adv. Mr. Grijesh Kumar, Adv.
For the Appellant(s) : Mr. Sonal Jain, AOR Mr. Narender Hooda, Sr. Adv. Mr. Rishab Raj Jain, Adv. Ms. Kajal Sharma, Adv. Mr. Grijesh Kumar, Adv. Mr. Sandeep S Deshmukh, Adv. Mr. Vatsalya Vigya, AOR
For the Respondent(s): Mr. G. S. Chaturvedi, Adv. Mr. Shantanu Chatuervedi, Adv. Ms. Priyanka Tyagi, Adv. Mr. Surya Kant, AOR Mr. Sonal Jain, AOR Mr. Narender Hooda, Sr. Adv. Mr. Rishab Raj Jain, Adv. Ms. Kajal Sharma, Adv. Mr. Grijesh Kumar, Adv.
Table of Contents
2. Validity of exclusive jurisdiction clauses in employment contracts — Contention that unequal bargaining power between employer and employee should permit suits in the employee's place of residence. (Para 20 )
3. Employment contracts are governed by contractual principles regardless of relative bargaining power — Exclusive jurisdiction clauses are valid if the chosen court possesses inherent statutory jurisdiction. (Para 18 , 21 , 22 , 24 , 25 , 26 , 29 , 30 , 31 )
4. Exclusive jurisdiction clauses are valid if they do not absolutely restrict legal proceedings, the chosen court has inherent jurisdiction, and the parties explicitly conferred such jurisdiction. (Para 18 )
5. Appeals decided in favor of the employer — Plaints returned for presentation before the competent court in the agreed exclusive jurisdiction forum. (Para 32 , 33 , 35 , 38 )
6. When is an exclusive jurisdiction clause in a contract legally valid?
A clause is valid if it does not absolutely restrict a party from initiating legal proceedings, the specified court is competent to have jurisdiction under the statutory regime, and the parties have impliedly or explicitly conferred jurisdiction on that specific court. (Para 18 , 29 , 30 , 31 )
7. Does unequal bargaining power between an employer and employee invalidate an exclusive jurisdiction clause in an employment contract?
No. Employment contracts are legally binding agreements. The relative strength or influence of the parties does not justify making exceptions to contractual principles unless the contract suffers from vitiating factors. (Para 24 , 25 , 26 )
8. How does the legal status of a government servant differ from a private employee regarding jurisdiction clauses?
Government service is more a matter of status than contract, where rights are determined by statute or rules, potentially overriding jurisdiction clauses. Private sector service is governed by the terms of the employment contract. (Para 21 )
9. What is the correct procedural remedy when a court lacks jurisdiction due to an exclusive jurisdiction clause?
The court should return the plaint under Order VII, Rule 10 of the CPC for presentation before the competent court, rather than rejecting the plaint under Order VII, Rule 11. (Para 33 )
JUDGMENT
DIPANKAR DATTA, J.
THE CHALLENGE
1. In the lead appeal1[Civil Appeal No. 2282/2025], Rakesh has called in question the judgment and order of the High Court of Judicature at Patna2[Patna High Court, hereafter] dated 25th January, 2022, allowing a civil revisional application3[Civil Revision No. 23 of 2020] filed by HDFC Bank.
2. In the connected appeal4[Civil Appeal No. 2286/2025], HDFC Bank has taken exception to the judgment and order of the High Court of Delhi5[Delhi High Court, hereafter] dated 12th November, 2011, dismissing its civil revisional application6[Civil Revision Petition No. 79/2021].
THE FACTS
3. The lead appeal rests on a simple set of facts, which are as follows:
I. Vide letter dated 24th July, 2002, HDFC Bank appointed Rakesh on the post of Executive, Transaction Banking Group (Operation), in the Wholesale Banking Operations. Pursuant thereto, Rakesh joined his service at Wholesale Banking Operations at Exhibition Road, Patna.
II. The appointment letter of Rakesh had an exclusive jurisdiction clause, reading as under:
“The terms and conditions set out in this letter of appointment constitute service conditions applicable to your employment in the Bank and with regard to any dispute thereof, the Bombay Courts will have exclusive jurisdiction.”
III. Service of Rakesh was terminated on 28th August, 2016 due to allegations of fraud and misconduct.
IV. Aggrieved thereby, Rakesh instituted a civil suit7[Title Suit No. 212 of 2017] in the court of the Sub-Judge-1, Patna, seeking the following relief:
“a) Declaration that termination letter dated 28.06.2016 being annexure – C hereto is illegal, arbitrary, unreasonable, unwarranted, unconstitutional, mala fide, bad in law as well as without jurisdiction, violative of … illegible … on facts, principles of natural justice and the same may be adjudged null and void and cancelled.
b) Ad-interim injunction restraining the defendants from giving any effect to the termination letter dated 28.06.2016 and further directing the defendants to forthwith reinstate the plaintiff in service with all consequential benefits.
c) Direction to the defendants to reinstate forthwith the plaintiff in service with all consequential benefits including the arrears of salary with 18% interest per annum.”
V. On receipt of summons, HDFC Bank filed a petition under Order VII, Rule 11 of the Code of Civil Procedure, 19088[CPC] for rejection of the plaint on the ground that it is the courts in Mumbai which have jurisdiction and not the court where the suit was instituted.
VI. The petition filed by HDFC Bank came to be dismissed by the trial court, vide order dated 14th December, 2018.
VII. Dissatisfied with the dismissal of the said petition, HDFC Bank filed the revisional application before the Patna High Court, which has since succeeded.
4. The connected appeal too rests on similar set of facts, which are as follows:
I. Deepti was appointed as “Clerk” in Lord Krishna Bank, which was merged with HDFC Bank in 2009. Vide Employment Agreement dated 23rd March, 2009, Deepti was appointed as an officer in the Retail Banking Branch at Janak Puri, Delhi. This agreement also included a similar exclusive jurisdiction clause as the one in the case of Rakesh. In terms thereof, any dispute between the parties leading to legal action had to be thrashed out in the competent court in Mumbai.
II. Service of Deepti was terminated on 31st May, 2017, also due to allegations of fraud and misconduct.
III. Aggrieved thereby, Deepti instituted a civil suit9[Civil Suit No. 1164 of 2017] in the court of the Senior Civil Judge, Rohini Courts, Delhi, seeking inter alia the following relief:
“a) Declare the termination letter dated 31.05.2017 as null and void since the same is illegal and quash the same;
b) Direct the Defendant to reinstate the Plaintiff in service with all consequential benefits including back wages and continuity of services.”
IV. HDFC Bank filed its written statement stating that the cause of action arose wholly in M
