SC Holds That Employment Bonds, Prohibiting Premature Resignation And For Payment Of Liquidated Damages In Case Of Breach, Are Not Violative Of Section 27 Of Contract Act
AZB & Partners is one of India's premier law firms with 500+ lawyers and offices across the country. The firm was founded in 2004 with a clear purpose to provide reliable, practical and full–service advice to clients, across all sectors. Having grown steadily since its inception, AZB & Partners now has offices across Mumbai, Delhi, Bangalore, Pune and Chennai. We are recognized by most international publications for our legal expertise.
The SC in Vijaya Bank & Another v. Prashant B. Narnaware, held that a contractual clause imposing a restriction on an employee's option to resign by subjecting the employee to pay liquidated damages...
The SC in Vijaya Bank &
Another v. Prashant B.
Narnaware,1 held that a contractual clause
imposing a restriction on an employee's option to resign by
subjecting the employee to pay liquidated damages in the event of
premature resignation was not violative of Section 27 of the Indian
Contract Act, 1872 ('Contract Act'). The
SC further held that a restrictive covenant prescribing a minimum
tenure is not unconscionable, unfair or unreasonable, and not
opposed to public policy.
Footnote
1. Vijaya Bank &
Another v. Prashant B. Narnaware, 2025 SCC
OnLine SC 1107.
Originally published 29 July 2025.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
