Prashant B. Narnaware, who joined Vijaya Bank in 1999 as a Probationary Assistant Manager, later applied for the post of Senior Manager–Cost Accountant under a 2006 recruitment notification. The notification required selected candidates to sign an indemnity bond of ₹2 lakhs, mandating a minimum service period of three years, with a penalty of ₹2 lakhs as liquidated damages for early resignation. Narnaware accepted the terms and signed the appointment letter containing Clause 11(k), which outlined this condition. However, in 2009, before completing the required three years, he resigned to join IDBI Bank and paid the ₹2 lakhs under protest. He subsequently filed a writ petition challenging the validity of the clause. The Supreme Court upheld the validity of Clause 11(k) and allowed the bank’s appeal, ruling that the clause did not amount to a restraint of trade or violate public policy. The Court highlighted that in the post-liberalization era, it is reasonable for public sector entities to adopt such measures to retain skilled employees and remain competitive.