Introduction

In the Indian legal system, every judgment of the Supreme Court carries the weight of precedent, guiding lower courts and influencing the future course of law. However, there are instances when a court decision fails to consider relevant statutes or binding precedents. Such judgments are labeled “per incuriam” - a Latin term meaning “through lack of care.” The concept, while rooted in common law, plays a crucial role in maintaining judicial discipline and coherence in India’s legal framework.

At the same time, another important area of legal evolution involves employment bonds - contractual agreements where an employee commits to serving an employer for a fixed period, failing which they must pay a stipulated sum. These agreements have raised important questions about freedom of employment, fairness in contracts, and the extent to which employers can restrict employee mobility.

The Meaning and Evolution of Per Incuriam

The term per incuriam literally translates to “through inadvertence.” In legal terms, it refers to a decision rendered without considering a binding authority or statutory provision that ought to have been applied. Such a decision, therefore, lacks precedential value and need not be followed in subsequent cases.

The doctrine serves a corrective function - ensuring that the principle of stare decisis (to stand by things decided) does not perpetuate errors. If a court decision disregards relevant law or precedent, it can be treated as per incuriam, preventing the spread of judicial mistakes.

One of the earliest articulations of this concept in India came in State of U.P. v. Synthetics and Chemicals Ltd. (1991), where the Supreme Court clarified that judgments passed per incuriam do not have binding authority. The Court observed that when a decision is rendered in ignorance of a statutory provision or another binding judgment, it ceases to be a precedent.

Thus, the doctrine of per incuriam functions as a safeguard - protecting the integrity of the legal system by ensuring that errors are not institutionalized through blind adherence to flawed precedents.

Judicial Precedent and the Role of Per Incuriam

The Indian Constitution, under Article 141, declares that “the law declared by the Supreme Court shall be binding on all courts within the territory of India.” However, this binding force applies only to law declared, not to erroneous findings or observations made per incuriam.

For instance, in Central Board of Dawoodi Bohra Community v. State of Maharashtra (2005), the Supreme Court reiterated that a coordinate bench cannot overrule another bench of equal strength. If it does so without reference to a larger bench or ignoring relevant precedent, such a judgment would be treated as per incuriam.

The same principle is echoed in Union of India v. Raghubir Singh (1989), where the Court held that judicial discipline demands consistency - but consistency must not come at the cost of correctness. Thus, while the doctrine of precedent ensures stability, the doctrine of per incuriam ensures accountability.

The Context of Employment Bonds in India

Employment bonds are widely used across industries to ensure that employees serve a company for a minimum period, especially when significant training or resources are invested in their onboarding. These bonds typically require the employee to pay a pre-decided sum if they leave before completing the agreed term.

However, such arrangements must comply with Indian contract law principles, particularly Sections 23 and 27 of the Indian Contract Act, 1872. Section 23 prohibits agreements that are opposed to public policy, while Section 27 declares agreements in restraint of trade as void.

The legal question that arises is whether an employment bond - which restricts an employee from leaving a job - constitutes a restraint of trade. The judiciary has grappled with this question in multiple Supreme Court judgments on employment bond and High Court rulings, developing a nuanced framework that balances employer interests with employee rights.

Key Judicial Principles Governing Employment Bonds

The enforceability of employment bonds in India hinges on three major principles:

Reasonableness of Restriction:

The restriction imposed by the bond - both in duration and monetary compensation - must be reasonable. A long-term or disproportionately high penalty would be viewed as an unfair restraint on trade.

Compensation for Actual Loss:

Employers can only claim compensation for actual losses incurred due to early termination, as per Section 74 of the Indian Contract Act. Courts disfavor speculative or punitive damages.

Freedom of Employment:

The right to choose one’s profession or employment is a constitutional right under Article 19(1)(g). Any contractual clause that substantially curtails this freedom is subject to judicial scrutiny.

A notable case illustrating these principles is Satyam Computer Services Ltd. v. Leela Ravichander (2008), where the Andhra Pradesh High Court held that an employment bond could be valid only if it seeks reimbursement of actual training costs and does not amount to coercion.

Similarly, in Subir Ghosh v. Indian Iron & Steel Co. (1991), the Calcutta High Court emphasized that while employers have a legitimate interest in protecting investments made in employee training, such interest cannot extend to creating servitude-like conditions.

How Per Incuriam Affects Employment Bond Jurisprudence

In many employment bond cases, conflicting judgments from different benches or courts have led to confusion over what constitutes a valid restraint. The doctrine of per incuriam plays a vital role in resolving such inconsistencies.

For instance, certain earlier decisions upholding blanket employment bond restrictions without assessing reasonableness were later deemed per incuriam, as they ignored the binding precedent set under Section 27 of the Indian Contract Act.

Courts have invoked per incuriam to clarify that any decision that fails to consider constitutional freedoms or established principles of contract law cannot form a valid precedent. This ensures that employee rights remain protected, even as employers seek to safeguard their commercial interests.

Case Studies: Application of Per Incuriam in Employment Bond Cases

Vijaya Bank & Anr. v. Prashant B. Narnaware (2022)

In this recent Supreme Court judgment on employment bond, the Court reaffirmed that employment bonds are enforceable only when they are reasonable and proportionate. The Court held that compelling an employee to serve against their will or imposing exorbitant penalties violates both contract law and constitutional principles.

The judgment clarified that earlier contrary rulings that did not apply Section 27 of the Indian Contract Act were per incuriam. The Court emphasized that freedom of employment cannot be curtailed under the guise of contractual obligation.

Niranjan Golikari v. The Century Spinning and Manufacturing Co. Ltd. (1967)

This landmark case remains foundational in employment bond jurisprudence. The Supreme Court upheld the validity of a bond restricting an employee from joining a competitor during the subsistence of the contract, noting that such a restriction was reasonable and aimed at protecting trade secrets.

However, subsequent misapplications of Golikari by lower courts - extending its logic to post-employment restraints - were declared per incuriam. The Supreme Court later clarified that Golikari applied only to restrictions during employment, not after termination.

Superintendence Company of India v. Krishan Murgai (1981)

In this case, the Supreme Court struck down a post-employment restriction as void under Section 27, reiterating that contracts cannot unreasonably limit professional mobility. The Court also noted that reliance on Golikari to justify post-employment restrictions was misplaced - making such reliance per incuriam.

The Broader Implications of Per Incuriam

The doctrine of per incuriam ensures that the judiciary remains internally consistent and that justice is not sacrificed for the sake of formalism. In the context of employment bonds, it ensures that contractual enforcement does not overstep the boundaries of fairness and freedom.

Moreover, by identifying and isolating per incuriam judgments, the Supreme Court preserves the coherence of its jurisprudence. This process strengthens the rule of law and reaffirms the supremacy of constitutional and statutory principles over erroneous interpretations.

The evolution of case law in employment bond disputes also illustrates how per incuriam serves as a corrective tool, preventing outdated or incorrect decisions from undermining labor rights in modern India.

Contemporary Challenges and Judicial Trends

In the rapidly changing landscape of employment - especially with remote work, contractual engagements, and gig economies - the question of enforceability of employment bonds continues to evolve. Courts increasingly emphasize fairness, voluntariness, and proportionality.

Recent High Court rulings, guided by Supreme Court judgments on employment bond, stress that while companies may recover training expenses or notice pay, they cannot impose arbitrary penalties that deter employees from pursuing better opportunities.

Further, as India aims to align its labor and employment laws with global standards, the judiciary’s reliance on doctrines like per incuriam ensures that outdated precedents do not hinder progressive interpretations of labor freedom.

Conclusion

The doctrine of per incuriam stands as a cornerstone of judicial integrity - ensuring that the law evolves on a foundation of accuracy, not error. In employment bond cases, its application has helped weed out inconsistent rulings and reinforce the primacy of reasonableness, fairness, and constitutional rights.



Through a series of Supreme Court judgments on employment bond, Indian jurisprudence now recognizes that while employers have the right to protect their legitimate business interests, this right cannot override the individual’s freedom to seek better employment or professional growth.

Ultimately, per incuriam ensures that justice remains dynamic, rational, and aligned with constitutional morality. By striking down judgments passed in ignorance of established law, it ensures that the balance between employer prerogative and employee liberty remains just - a testament to the resilience and fairness of the Indian judicial system.