What is the right way of Android View Binding in the RecyclerView adapter class?

What you need to do is pass the generated binding class object to the holder class constructor. In your example, You have common_circle_image XML file for RecyclerView item and the generated class is CommonCircleImageBinding so like this you use the onCreateViewHolder to pass the generated binding class to the ViewHolder class

@NonNull
@Override
public CategoryAdapter.MyViewHolder onCreateViewHolder(@NonNull ViewGroup parent, int viewType) {
    CommonCircleImageBinding itemBinding = CommonCircleImageBinding .inflate(LayoutInflater.from(parent.getContext()), parent, false);
    return new MyViewHolder(itemBinding);
}

and use the holder class like this so you can use these fields in onBindViewHolder

static class MyViewHolder extends RecyclerView.ViewHolder {
    private TextView txt;
    private ImageView img; 

    MyViewHolder(CommonCircleImageBinding itemBinding) {
        super(itemBinding.getRoot());
        img = itemBinding.img ;
        txt = itemBinding.txt ;
    }
}

Here is full recycler view adapter class in java :

public class NotesAdapter extends RecyclerView.Adapter<NotesAdapter.MyViewHolder> {

    private List<Note> notes;
    private ItemNotesBinding notesBinding;

    public NotesAdapter(List<Note> notes) {
        this.notes = notes;
    }

    @NonNull
    @Override
    public MyViewHolder onCreateViewHolder(@NonNull ViewGroup parent, int viewType) {
    
        notesBinding = ItemNotesBinding.inflate(LayoutInflater.from(parent.getContext()), parent, false);
        return new MyViewHolder(notesBinding);
    }

    @Override
    public void onBindViewHolder(@NonNull MyViewHolder holder, int position) {

        Note note = notes.get(position);
        notesBinding.tvTitle.setText(note.getNote());
    }

    @Override
    public int getItemCount() {
        return notes.size();
    }

    public static class MyViewHolder extends RecyclerView.ViewHolder {

        ItemNotesBinding notesBinding;

        public MyViewHolder(@NonNull ItemNotesBinding binding) {
            super(binding.getRoot());
            notesBinding = binding;
        }
    }
}

For the folks looking for a solution in Kotlin, here it is:

It's a minimal example, where the adapter gets an array of Strings and displays each of the them in a layout called recyclerview_item in a TextView called itemTextView.

It's based on @SomeshKumar's answer and answers @Vijay Villiers question on how to get rid of the private TextView txt;

Edit: New Version: I noticed the generated ...Binding has a .bind() function, so let's use it. (I guess it might be less resource-heavy?)

class SampleAdapter(private val context: Context, private val content: Array<String>) :
        RecyclerView.Adapter<SampleAdapter.CustomViewHolder>()
{
    class CustomViewHolder(view: View) : RecyclerView.ViewHolder(view)

    override fun onCreateViewHolder(viewGroup: ViewGroup, viewType: Int) =
            CustomViewHolder(
                    // Alternatively inflate like usual, if you don't need binding
                    RecyclerviewItemBinding
                            .inflate(LayoutInflater.from(context), viewGroup, false)
                            .root
            )

    override fun getItemCount() = content.size

    override fun onBindViewHolder(viewHolder: CustomViewHolder, position: Int)
    {
        RecyclerviewItemBinding.bind(viewHolder.itemView).apply{
            itemTextView.text = content[position]
            
        }
    }
} 

Edit: Old Version:

class SampleAdapter(private val context: Context, private val content: Array<String>) :
        RecyclerView.Adapter<SampleAdapter.CustomViewHolder>()
{
    class CustomViewHolder(var viewBinding: RecyclerviewItemBinding) :
            RecyclerView.ViewHolder(viewBinding.root)

    override fun onCreateViewHolder(viewGroup: ViewGroup, viewType: Int) =
            CustomViewHolder(
                    RecyclerviewItemBinding
                            .inflate(LayoutInflater.from(context), viewGroup, false)
            )

    override fun getItemCount() = content.size

    override fun onBindViewHolder(viewHolder: CustomViewHolder, position: Int)
    {
        viewHolder.viewBinding.apply {
            itemTextView.text = content[position]
        }
    }
}

Here is full view binding recycler view code in java, you can do as like:

package com.jbws.myviewbindingdemo.adapter;

import android.view.LayoutInflater;
import android.view.View;
import android.view.ViewGroup;

import androidx.annotation.NonNull;
import androidx.recyclerview.widget.RecyclerView;

import com.jbws.myviewbindingdemo.databinding.RowXmlViewBinding;
import com.jbws.myviewbindingdemo.pojo.ModelObject;

import java.util.ArrayList;

public class RecyclerViewListAdapter extends RecyclerView.Adapter<RecyclerViewListAdapter.ViewHolder> {
    public ArrayList<ModelObject> modelObjectArrayList;

    public RecyclerViewListAdapter(ArrayList<ModelObject> modelObjectArrayList) {
        this.modelObjectArrayList = modelObjectArrayList;
    }

    @NonNull
    @Override
    public RecyclerViewListAdapter.ViewHolder onCreateViewHolder(@NonNull ViewGroup parent, int viewType) {
        return new ViewHolder(RowXmlViewBinding.inflate(LayoutInflater.from(parent.getContext()),
                parent, false));
    }

    @Override
    public void onBindViewHolder(@NonNull RecyclerViewListAdapter.ViewHolder holder, final int position) {
        ModelObject modelObject = modelObjectArrayList.get(position);
        holder.rowXmlViewBinding.txtObjectName.setText(modelObject.getFullName());
        holder.rowXmlViewBinding.btnUpdateName.setOnClickListener(view -> {
         Log.i("LOG_TAG", "Full Name: " + modelObject.getFullName);
        });
    }

    @Override
    public int getItemCount() {
        return modelObjectArrayList == null ? 0 :
                modelObjectArrayList.size();
    }

    public static class ViewHolder extends RecyclerView.ViewHolder {
        private RowXmlViewBinding rowXmlViewBinding;

        public ViewHolder(RowXmlViewBinding rowXmlViewBinding) {
            super(rowXmlViewBinding.getRoot());
            this.rowXmlViewBinding = rowXmlViewBinding;
        }
    }
}