Case Title:- Vijaya Bank & Anr. vs Prashant B Narnaware
Citation:- 2025 INSC 691
The Hon’ble Supreme Court recently resolved the contentious issue of whether employment bonds are valid and legally enforceable in India.
Key Points:-
- Hon’ble Supreme Court rules that minimum service clauses & financial penalties for early resignation are legally enforceable.
- Such clauses don’t amount to restraint of trade if restrictions as long as restriction is only during job, not after quitting the job.
- PSUs can use bonds to retain skilled staff & cut recruitment costs.
- Clauses must not be unconscionable or unfair, especially in standard contracts.
