It was argued by the Employee that Clause 11 (k) was part of a standard form contract and he was compelled to sign on dotted lines. It was also argued that the terms of the appointment letter were imposed on him through an unequal bargaining mechanism and Clause 11 (k), being an unreasonable, onerous and ex-proportionate measure resulting in unjust enrichment for the Bank, was opposed to public policy. The Supreme Court evaluated whether the restrictive covenant was opposed to public policy by referring to judgment made in Central Inland Water Transport Corporation Ltd. v. Brojo Nath Ganguly, wherein, it was opined that if contracts are unconscionable, unfair, unreasonable and injurious to public interest, they would be deemed void in law, being opposed to public policy. The Contract Act does not define the expression ‘public policy’. This judgment stated that the expression ‘public policy’ is incapable of a precise definition. It simply refers to matters that concern the public good and public interest. Keeping this in mind, it is important to note that the definition of ‘public policy’ will evolve with the times, along with advancements in the knowledge of society and the ever-developing standards of human rights and dignity. The Court held that from the prism of employer-employee relationship, technological advancements impacting the nature and character of work, re-skilling and preservation of scarce specialised workforce in a free market need to be factored in when the terms of an employment contract are tested on the anvil of public policy. The Supreme Court observed that in order for public sector undertakings to compete with efficient private entities in an economy that caters to the free market, such public sector undertakings were forced to update and modify the pre-existing employment policies, with the goal of increasing employee efficiency. It was held that the requirement imposed by the Bank along with the provision of liquidated damages, with the objective of ensuring employee retention, is neither unjust nor unreasonable, and does not fall foul of the constitutional mandate under Articles 14 and 16.
