VIJAYA BANK & ANR. versus PRASHANT B NARNAWARE

VIJAYA BANK & ANR. versus PRASHANT B NARNAWARE

Clause 11(k), imposing a minimum three-year service term with a Rs.2 lakh liquidated damages obligation during the subsistence of the employment contract, was held not to amount to a restraint of trade under Section 27 and not to be opposed to public policy under Section 23 or Articles 14/19, because the restriction was in furtherance of the employment contract, justified by legitimate employer interests (retention, recruitment costs and managerial continuity) and was not unconscionable or disproportionate in the factual matrix; accordingly the High Court's quashing of the clause was set aside and the appeal allowed.

Parties
Appellant: Vijaya Bank & Anr.; Respondent: Prashant B Narnaware
Jurisdiction
India
Judgment Date
13 May 2025
Procedural Posture
Civil Appeal / Appeal to the Supreme Court (final Judgment)
Outcome
Civil Appeal No. 11708 of 2016: allowed and High Court judgment dated 20.08.2014 set aside; Civil Appeal No. 11499 of 2016: dismissed.
Legal Topics
Restrictive Covenant, Restraint of Trade, Public Policy, Liquidated Damages, Standard Form Contract, Appointment Letter
Contract Law Constitutional Law Employment Law Restrictive Covenant Restraint of Trade Public Policy Liquidated Damages Standard Form Contract +1 more

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Legal principles 5 Authorities cited 9 Party arguments 2 Amounts and remedies 2
Sign in to unlock

Parties

Vijaya Bank & Anr.

Appellant

Prashant B Narnaware

Respondent

Procedural Posture

Civil Appeal / Appeal to the Supreme Court (final Judgment)

Legal Issues

  1. 1 Whether clause 11(k) of the appointment letter amounts to restraint of trade under Section 27 of the Indian Contract Act, 1872
  2. 2 Whether clause 11(k) is opposed to public policy and thereby contrary to Section 23 of the Indian Contract Act and violative of Articles 14 and 19(1)(g) of the Constitution of India

Ratio Decidendi

Clause 11(k), imposing a minimum three-year service term with a Rs.2 lakh liquidated damages obligation during the subsistence of the employment contract, was held not to amount to a restraint of trade under Section 27 and not to be opposed to public policy under Section 23 or Articles 14/19, because the restriction was in furtherance of the employment contract, justified by legitimate employer interests (retention, recruitment costs and managerial continuity) and was not unconscionable or disproportionate in the factual matrix; accordingly the High Court's quashing of the clause was set aside and the appeal allowed.

Court Disposition

Civil Appeal No. 11708 of 2016: allowed and High Court judgment dated 20.08.2014 set aside; Civil Appeal No. 11499 of 2016: dismissed.

Orders

  • Impugned judgment and order of the High Court dated 20.08.2014 quashing clause 11(k) set aside in Civil Appeal No. 11708 of 2016.
  • Civil Appeal No. 11499 of 2016 dismissed.