Supreme Court upholds beachhead for exclusive jurisdiction clauses in private employment contracts, directs suits to be filed in Mumbai courts

A bench of Justices Dipankar Datta and Manmohan heard appeals concerning the validity of exclusive jurisdiction clauses in employment contracts after two employees sued their private employer in local courts despite appointment letters specifying Mumbai courts as the forum. The matters arose from separate suits by Rakesh Kumar Verma and Deepti Bhatia challenging termination for alleged fraud and misconduct, and HDFC Bank challenged trial courts' jurisdictional rulings before the Patna and Delhi High Courts respectively.

The Court held that exclusive jurisdiction clauses in private employment contracts are enforceable provided three mandatory criteria were satisfied: the clause did not absolutely bar access to legal remedies in breach of Section 28 of the Indian Contract Act, the nominated court had jurisdiction under the Code of Civil Procedure, and the clause clearly and explicitly excluded other fora. The Court rejected the premise that service contracts deserved a different rule from ordinary contracts, observing that "a contract – be it commercial, insurance, sales, service, etc. – is after all a contract." The Court, in its reasoning, observed: "For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like 'alone', 'only', 'exclusive' or 'exclusive jurisdiction' have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties—by having Clause 18 in the agreement—is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like Clause 18 in the agreement, the maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner." The Court further noted that "Section 28 of the Contract Act does not bar exclusive jurisdiction clauses. What has been barred is the absolute restriction of any party from approaching a legal forum."

Background

Rakesh joined HDFC Bank in Patna as an Executive in 2002 and alleged wrongful termination in 2016; his appointment letter contained an exclusive jurisdiction clause designating the Bombay courts. He sued in Patna. HDFC Bank filed an Order VII Rule 11 petition to reject the plaint for lack of jurisdiction; the trial court dismissed that petition and the Patna High Court ultimately allowed the bank’s revision, holding Mumbai courts had exclusive locus. Deepti, originally employed by a bank merged into HDFC, had an employment agreement (dated 2009) with an identical Mumbai exclusive jurisdiction clause; she sued in Rohini, Delhi after termination in 2017. The Delhi trial court held the clause did not oust its jurisdiction; the Delhi High Court dismissed HDFC Bank’s revisional petition.

The Supreme Court reviewed authorities including Hakam Singh v. Gammon, Globe Transport, A.B.C. Laminart and the larger Bench decision in Swastik Gases, applying settled principles that parties may select among competent forums but cannot confer jurisdiction on a forum that the statute does not empower. The Court rejected the proposition that private service/employment contracts should be treated differently from other contracts and disapproved the Delhi High Court's reliance on Vishal Gupta. The Court affirmed the Patna High Court's conclusion that Mumbai courts were the proper forum and set aside the Delhi High Court order.

Relief and directions issued included return of the plaints to the trial courts for presentation in competent Mumbai courts under Order VII Rule 10 CPC, or alternatively leave to withdraw and institute fresh suits in Mumbai. The Court granted both employees liberty to amend defective plaints and to plead limitation exemptions if applicable. The merits of the termination disputes remained open and no order as to costs was made.

Case No.: 2025 INSC 473; Civil Appeal Nos. 2282/2025 & 2286/2025 Case Title: Rakesh Kumar Verma v. HDFC Bank Ltd.; HDFC Bank v. Deepti Bhatia Appearances: For the Petitioner(s): Mr. Deshmukh (Advocate for Rakesh Kumar Verma); Mr. Chaturvedi (Advocate for Deepti Bhatia) For the Respondent(s): Counsel for HDFC Bank (names not specified in judgment)