Supreme Court Clarifies Legality of Employment Bonds: Vijaya Bank & Anr. v. Prashant B Narnaware
The Supreme Court of India, in the case of Vijaya Bank & Anr. v. Prashant B Narnaware (Civil Appeal No. 11708 of 2016, judgment dated 14 May 2025), addressed the enforceability of an employment bond that required an employee to pay liquidated damages if they resigned before completing a stipulated minimum service period. The respondent, who initially joined Vijaya Bank as a Probationary Assistant Manager in 1999 and was later promoted, applied for and was appointed to the post of Senior Manager—Cost Accountant in 2007. The appointment was subject to a condition, as stated in Clause 11(k) of the appointment letter, that mandated a minimum service of three years, failing which the employee was required to pay an indemnity of ₹2 lakhs. The respondent accepted the condition, executed the required bond, and joined the new post. However, before completing three years, he resigned to join another bank and, under protest, paid the stipulated amount to Vijaya Bank. Subsequently, the respond...
