Vijaya Bank vs Prashant B Narnaware

The Supreme Court examined the validity of a clause in the appointment letter requiring an employee to pay liquidated damages if they leave employment before three years. The High Court had quashed this clause, and the bank challenged this order. The Court analyzed whether such contractual clauses are enforceable under Indian contract law, emphasizing the importance of reasonableness and public policy considerations. The Court upheld the validity of the clause, affirming that liquidated damages clauses in employment contracts are enforceable if they are not punitive and are a genuine pre-estimate of loss.