Employment Bond Not Restraint of Trade: Supreme Court Clarifies

Employment Bond Not Restraint of Trade: Supreme Court Clarifies

Employment Bond Not Restraint of Trade: Supreme Court Clarifies

In a significant ruling, the Supreme Court in Vijaya Bank vs. Prashant B. Narnaware, 2025 INSC 691, decided on May 14, 2025 reaffirmed the enforceability of employment bonds and held that a penalty of Rs. 2,00,000 imposed on an employee for resigning prematurely was valid and did not contravene Section 27 of the Indian Contract Act, 1872 (hereinafter referred to as “the Act”). BACKGROUND OF THE CASE Prashant B. Narnaware (hereinafter referred to as “the Respondent”) joined...

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