A clause specifying punishment (usually monetary) for breaching the contract. In India, Section 74 of the Indian Contract Act treats penalties and liquidated damages similarly — courts will only award 'reasonable compensation' regardless of what the contract says.
Your employment bond says 'pay ₹5,00,000 if you leave within 2 years.' Even if you signed this, Indian courts routinely strike down such penalties unless the employer proves actual loss of that amount. Most pure penalty clauses are unenforceable.
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