Tapas Kanti Mandal vs Cosmo Films Ltd

....... Mr. R.N.Dhorde, Sr. Advocate i/b Mr. P.S.Dighe, Adv for petitioner Mr. A. D. Kasliwal, Advocate for the respondent .......

[CORAM : SUNIL P. DESHMUKH, J.]

DATE : 16th AUGUST, 2018

JUDGMENT :

1. Rule. Rule made returnable forthwith and heard finally with

consent of learned advocates for the parties.

2. Petitioner is before this court aggrieved by order dated 17 th

February, 2018 passed by Joint Civil Judge, Junior Division,

Gangapur whereunder application at Exhibit-5 in Regular Civil

Suit No. 16 of 2018 seeking temporary injunction under Order

XXXIX, Rules 1 and 2 of Civil Procedure Code, 1908 has been {2} wp2875-18

granted.

3. Parties hereto would be referred to by their status in

Regular Civil Suit No. 16 of 2018, Cosmo Films Limited V/s Tapas

Kanti Mandal, petitioner as 'defendant' and respondent as

'plaintiff'.

4. Plaintiff has instituted Regular Civil Suit No. 16 of 2018

seeking perpetual injunction against the defendant restraining

him from rendering service in Asia, directly or indirectly through

collaborator, employee, consultant or any other manner in line

with business which competes with the whole or part of the

business of the plaintiff, for a period of three years from the date

of resignation, which is 27th December, 2017.

5. Succinctly stated, it is the case of the plaintiff that;

It is a multinational company having global manufacturing

facilities and is supplier of BOPP, thermal laminating films,

lacquer quoted films, CPP films and synthetic paper. Defendant

had applied for a post of manager with the plaintiff and the

plaintiff on the request had decided to employ him as a manager

in its Research and Development Department. The defendant

had been appointed in May, 2003 on the terms and conditions as

referred to in appointment order and in the agreement. The {3} wp2875-18

defendant had agreed to the same and had joined services with

the plaintiff with effect from 5th May, 2003. Agreement contains

non-compete clause, according to which, the defendant is

obligated not to directly or indirectly engage himself in business

or profession as consultant or advisor to any competitor or

company manufacturing BOPP films etc. or subsidiaries,

associated companies, holding companies for a period of three

years from the date of cessation of his employment. There is a

clause in the agreement that default in observance of the terms

would entitle plaintiff company to initiate action in law, of civil or

criminal nature.

The defendant had gone through all the terms and

conditions and had solemnly signed the same after taking into

account pros and cons and consequences flowing therefrom. The

defendant, by virtue of his employment had acquired in-depth

knowledge of current products of the company. He had also come

in possession of confidential process and knowledge of

manufacture of its product. He had also been in knowledge of

various projects of the company, formulae, patterns, complexion,

programmes, devices, methods, techniques and processes of the

plaintiff company. Future plans of the plaintiff company have

been known to him. He had also been aware of unique ideas,

discoveries and inventions of the plaintiff company and also {4} wp2875-18

about its future plans and product. Such knowledge as well as

trade secrets, unique ideas, discoveries, inventions, processes,

projects are intellectual property of the plaintiff and by virtue of

his position in employment, the defendant had come across the

same and had been in possession of the same and he is under

obligation not to divulge the same to any other person,

partnership, company, corporation as per the contractual

obligations incurred by him.

After serving for about fifteen years, abruptly, on 27 th

December, 2017 the defendant purported to communicate that

he intends to resign from services with the plaintiff and

requested to accept his resignation and to relieve him before 26 th

January, 2018. The plaintiff company had not relieved the

defendant from the post of Deputy Manager of Research and

Development, a promoted post which he had been holding since

April, 2012, as his unilateral resignation was in contravention of

terms and conditions of agreement and had put the interest of

the plaintiff in peril of suffering injury, which would be irreparable

and irreversible. Apart from above, the abrupt truncation of

employment had been prejudicial to the interest of the plaintiff.

Sudden flurry of activities at the end of the defendant

entailed an action in law to safeguard and secure plaintiff's {5} wp2875-18

interest. The plaintiff has expressed grave concern and

apprehension that the defendant in all likelihood would engage

himself in similar business as that of the plaintiff and in all

probability would disclose knowledge and intellectual knowhow

gained by him during his service with the plaintiff.

6. The plaintiff, along with plaint, had also filed application

Exhibit-5 seeking temporary injunction referred to above. It

appears that an ex parte ad interim relief had been granted by

the trial court against the defendant on 16th January, 2018,

restraining the defendant from taking up employment elsewhere.

While the matter had been before the trial court on 29 th January,

2018, the plaintiff had filed an application Exhibit-11 seeking

continuation of ad interim order and according to the defendant

despite his appearance, without calling upon his response,

Exhibit-11 had been allowed and ad interim order had been

continued till 5th February, 2018. Said order of continuation of

interim relief had been subjected to challenge by the defendant

under writ petition bearing No. 1217 of 2018, which came to be

disposed of by the high court on 31st January, 2018 directing the

trial court to hear the parties on 5th February, 2018 and to decide

the temporary injunction application Exhibit-5 by 17 th February,

2018 by a reasoned order, considering all the contentions of the

parties.

{6} wp2875-18

7. The defendant had filed his say at Exhibit-10 and his

defence was to the effect that;

The trial court does not have jurisdiction to try and

entertain the suit in view of the term under the service bond and

secrecy agreement, whereunder according to the defendant,

jurisdiction had been restricted exclusively to the court in

Aurangabad city and no other. According to the defendant the

words "exclusively" and "none else" are used. Without reference

to the same, the suit has been instituted at Gangapur and, as

such, the same is suppressed. The plaint has been devoid of

requirements for seeking restraint on the defendant and had

been deficient of material for grant of injunction under section 38

of the Specific Relief Act. The defendant had objected to the

maintainability, tenability and sustainability of the suit.

The suit is not maintainable as it is covered by section 41

of the Specific Relief Act. It is referred to that pursuant to section

42 of the Act, in order to have relief of injunction, the plaintiff is

under obligation to perform its part. While agreement provides

for liquidated damages, in no case, injunction would issue. It is

stated that pursuant to the terms of agreement, employee can

sever ties forthwith and with the resignation dated 27 th

December, 2017, the defendant ceases to be employee of the {7} wp2875-18

plaintiff and had accordingly requested the plaintiff to relieve him

under communications dated 29th December, 2017 and 17th

January, 2018 with effect from 26th January, 2018 by adjusting

privilege leave of 77 days towards period of notice. It is

contended that in view of section 27 of the Contract Act, every

restraint on carrying on lawful profession or trade or business of

any kind is void. Conditions in the agreement with respect to

space and time have been void right from the beginning and

unreasonable, unfair, onerous, against public policy and offend

the fundamental rights of the defendant. Employer cannot

prevent a person from taking up employment elsewhere on

cessation of his employment with the employer. It is submitted

that all the information which has come across during his service

would not be confidential or a trade secret. The plaintiff cannot

claim itself to be an exclusive manufacturer or a trader. A person

cannot be permanently tied down with employer. Enforcement of

contract of personal service after cessation of relationship is

abhorred by law. Resignation is unilateral act and does not

require any further action of acceptance. It has been denied that

defendant had failed to return all the information, material,

documents, computer programme provided by plaintiff to him.

The allegations have been termed by him to be vague and

baseless. All the information of the plaintiff is in its office. The {8} wp2875-18

defendant is not holding any property of the plaintiff and / or

misusing the same for benefit of competitor. It is contended by

the defendant that injunction, if granted, would defeat his

fundamental right to earn livelihood. The service bond cannot be

specifically enforced being replete with onerous conditions. The

defendant, as such, requested rejection of application for

temporary injunction with costs of Rs. 5,00,000/-

8. Trial court had framed usual points for determination about

prima facie case, balance of convenience and irreparable loss to

the plaintiff. Trial court, to quite some extent, has dwelt upon the

question of jurisdiction, albeit points for determination did not

contain any issue in respect of the same and has considered that

there was no force and substance in the contention of the

defendant in respect of ouster of jurisdiction of the court at

Gangapur. Trial court went on to consider that the plaintiff

company is situated within the jurisdiction of the court and the

judgments cited on behalf of the defendant have been decisions

in different contexts. Trial court, in paragraph No. 25 of the order

impugned, has referred to citations relied on, on behalf of the

defendant and has referred to that facts in the citations and the

case before it had been different and as such, considered that

the ratio thereunder may not hold the present case.

{9} wp2875-18

9. Trial court has further referred to citation relied upon on

behalf of the plaintiff in the case of "Niranjan Shankar Golikari V/s

Century Spinning and Manufacturing Co. Ltd.," reported in AIR 1967, SC

1098, and reproducing an excerpt from the same, has considered

that facts in the present case and the facts in the cited case to

quite large extent were identical and considered that employee

can be restrained from doing similar business or seeking similar

employment. It had, thus, considered that restraint on the

defendant from getting engaged in any trade or business in

competitor company would be a reasonable restriction imposed.

10. Trial court has also referred to citation relied upon on

behalf of the plaintiff in the case of "M/s Kuoni Travel ((I) Pvt. Ltd. V/s

Mr. Ashish Kishore" reported in 2007 (6) ALL MR 808 and taken and

quoted excerpt therefrom and considered that a trade secret

agreement can be enforced even after service period. Trial court

has considered clause 7 of the appointment letter referring to

that it was the term wherein defendant had undertaken not to

engage himself in competing employment or business for a

period of three years from cessation of his employment with the

plaintiff.

11. Trial court has refused to buy line of the defendant about

period had been agreed upon only for five years from the date of {10} wp2875-18

joining service i.e. 5th May, 2003 to 4th May, 2008 and has

considered that service bond and secrecy agreement cannot be

read in isolation, while a part imposes a condition of five years

minimum service, it does not refer to as to what should be the

whole period of service. Besides, there is a retirement clause in

the same and age of retirement is mentioned to be 58 years. If

the service period had been for five years, then it ought not to

have referred to retirement age. As such, it was considered,

intention of the parties appears to be different. In addition to

aforesaid, there were certain terms in respect of probation and

confirmation, superannuation, provident fund and gratuity. As

such, it was considered that it cannot be said that the agreement

had been only for five years.

12. The court had appreciated that an exception has been

created and commercial or business agreement may fall under

such exception, considering explanation under section 27 of the

Indian Contract Act, which refers to that in sale of goodwill of

business one may agree with buyer to refrain from carrying on

specific business within specified local limits if it appears to the

court reasonable, regard being had to the nature of business.

Trial court has considered that the defendant had been holding a

key post in the plaintiff company, had come across various

confidential secrets and knowhow of the company, the company {11} wp2875-18

had spent huge amounts on the defendant. It has considered

that the plaintiff had been seeking only three year's restraint and

restriction of three years has been found to be reasonable and

necessary for protection of interest of the plaintiff. The plaintiff

has been a multinational company, if such a condition is not

imposed on its employee, it will suffer irreparable loss.

13. The trial court, thus, allowed the application and passed an

order confirming ad interim injunction for a period of three years

with effect from 26th January, 2018 to 25th January, 2021 or till

disposal of the suit, whichever is earlier. It is against this decision

of the trial court, defendant is before this court.

14. At the outset, Mr. R. N. Dhorde, learned senior advocate for

the petitioner - defendant vehemently submits that impugned

order is wholly misconceived on facts as well as in law.

15. Mr. Dhorde further submits that decisions cited on behalf of

the defendant have been made short work of, by cursorily

discarding them as being different on facts and context. He

submits that order does not depict as to how said authorities

could be said to be distinguishable, so far as ratio thereunder is

concerned. Ratio under said authorities had not only been

relevant, but would be applicable to the present set of facts and

circumstances. He submits that impugned order falls short of {12} wp2875-18

showing application of mind to the vital aspects involved in the

matter.

16. He submits that appointment letter and agreement, as

annexed to the petition, would show that beyond the period of

initial five years, no specific period of contract had been agreed

upon. Learned judge of the trial court has adverted to the

appointment letter and to a few terms appearing therein about

provident fund, superannuation, gratuity as per law, but has

missed out on a term appearing therein about notice period at

item No. 5, which speaks of service being terminable by notice.

According to him, clause 7, captioned 'secrecy agreement',

though refers to a hiatus to be had from engaging in any

profession or employment in any capacity for a period of three

years after cessation or termination of service, there is no

corresponding provision for any remuneration / compensation to

be payable to employee during such period. He submits that in

present case, it cannot be gainsaid that no period after expiry of

initial period agreed upon had been specifically agreed upon. The

negative covenant does not provide for and does not take care of

the remuneration / compensation to the employee. Post service

restrictive convent in the circumstances is all the more not only

void but also is illegal. He submits that reliance on judgment in

the case of "Niranjan Shankar Golikari V/s The Century Spinning and Mfg.

{13} wp2875-18

Co. Ltd.," reported in AIR 1967 SC 1098, which clarifies position that

a negative covenant of the agreement can be enforced during

the period of contract, is wholly misplaced and the same would

not hold at all after termination / cessation of employment.

17. He goes on to refer to series of decisions, "Bhavesh J. Bhatt V.s

Cyrus N. Baxter" reported in 1991 Mh.L.J. 231; "American Express Bank Ltd.

V/s Ms.Priya Puri" reported in (2006) 3 LLN 217; "F.L.Smidth Pvt. Ltd., V/s

Secan Invescast (India) Pvt. Ltd." reported in 2013 (1) CTC 886 = 2012 (2)

MWN (Civil) 815 in support of his submission that a post

employment period restraint term under the garb of protecting

proprietary interest, by which employer compels the employee to

serve the employer or leads the employee to remain idle or

starve would not be in public interest and cannot be binding. He

submits that aforesaid legal position in India has been settled

and post service period restriction in negation is void under

section 27 of the Indian Contract Act and the same is a unlawful

restriction. He submits that catena of decisions and even a

recent decision of this court delivered on 16 th February, 2016 in

the case of "Satyam Patel V/s Human Factors International Pvt. Ltd." in

Company Petition No. 733 of 2015 not only reiterate, but also

reassert aforesaid position. He submits that the position is

holding field from long time. Delhi High Court has even quite

recently in its decision dated 17th May, 2017 has followed said {14} wp2875-18

dictum. He submits that for many other reasons and rationale,

such a covenant would not be specifically enforceable.

18. Mr. Dhorde submits that learned judge of the trial court has

failed to appreciate and draw distinction in enforceability of

restrictive negative covenant during course of employment and

after cessation of employment. He submits that the court has

been in oblivion of that restriction after cessation of employment

in this particular case is inequitable and does not take care of the

compensation to the employee for a period under restriction. He,

therefore, urges to grant the writ petition.

19. Mr. A. D. Kasliwal, learned advocate for respondent -

plaintiff vehemently submits that as a matter of fact order of

temporary injunction is an appealable order pursuant to Order

XLIII, Rule 1 (r) of the Civil Procedure Code. He submits that it

cannot be gainsaid that an appeal is provided and while an

appeal is available, writ petition would seldom be entertained. He

emphatically submits that series of decisions by the Supreme

Court would show that high court should not meddle with an

order, which is amenable to challenge in appeal.

20. Learned advocate for the plaintiff purports to put up stiff

resistance to maintainability of the writ petition in the face of

appellate remedy as is available pursuant to Order XXXXIII, Rule {15} wp2875-18

1 (r) of the Civil Procedure Code. He submits, order impugned

has been passed in exercise of powers under Order XXXIX, Rules

1 and 2 of the Code of Civil Procedure. According to him, while a

stronger remedy has been under an appeal, a direct resort to

extra ordinary powers of this court, would not be possible and

such an attempt will have to be stamped down.

21. He submits, it may have other facet that in case of decision

going adverse to the interest of any party, a forum locally and

conveniently available would stand taken away or for that matter

wiped out. He submits that it is not such an extraordinary

situation wherein alternate remedy could not have been resorted

to by the defendant and underlying intention appears to pre-

empt remedy available locally to the original plaintiff.

22. Mr. Kasliwal goes on to submit that one has to take into

account that temporary injunction application has been preferred

by the plaintiff under Order XXXIX, Rules 1 and 2 of the Civil

Procedure Code, while resisting the same the defendant had

purportedly raised question of jurisdiction and forced the court to

decide the same. He submits that even in such a case, the

application filed by the plaintiff continues, without depleting its

basic character to be an application under Order XXXIX, Rules 1

and 2 of the Code of Civil Procedure. As such, upon decision {16} wp2875-18

therein, a resort necessarily, pursuant to the legal procedural

requirements, will have to be in an appeal and not otherwise. He

submits that if statute has prescribed a remedy against an order,

the same will have to be invoked first.

23. In order to buttress his aforesaid submissions, he refers to

a decision of the Supreme Court in the case of "Miss Maneck

Custodji Surajaji V/s Sarafazali Nawabali Mirza" reported in 1976 ALL MR

On Line 174 (SC).

In aforesaid case the Supreme Court had rendered the

decision in the circumstances, wherein appellant before it had

been a tenant of a flat in city of Mumbai. The respondent had

advertised for accommodation as a paying guest and in response

thereto, the appellant who had been tenant of the premises, had

entered into an agreement and respondent had been allowed to

occupy part of the premises as paying guest. The respondent,

trying to take advantage of amendment to Bombay Rents, Hotel

and Lodging House Rates Control Act, 1947, instituted a suit in

the Court of Small Causes praying that standard rent be fixed

and an ex parte order against appellant restraining her from

taking possession without due process of law had been passed.

As such, litigation ensued before City Civil Court at the {17} wp2875-18

instance of appellant and notice of motion for injunction had

been taken out and ex parte injunction was granted for removing

lock in respect of flat, save portion allowed to be occupied as

paying guest to the respondent and accordingly possession was

taken by the appellant of portion of premises excluding part

given to respondent as paying guest.

An attempt by respondent before city civil court to have

stay to the suit under section 10 had been made, contending

earlier suit being pending raising same issue, however, that did

not succeed before city civil court and the high court.

City civil court decreed the suit deciding that respondent

had not been entitled to continue to occupy, however, had

stayed operation of said decree for three months in order to

enable the respondent to file appeal. Respondent, in the

circumstances, instead of preferring appeal, had filed special civil

application before High Court for quashing and setting aside final

decree of the city civil court. The special civil application, against

final decree of the court was entertained by high court directing

that execution of decree be stayed until other suit had been

decided.

It is in that context the Supreme Court considered that it is

very difficult to appreciate reasoning behind order of the high {18} wp2875-18

court. The respondent had legal remedy by way of an appeal

against the decree and the same is more comprehensive than an

application under Article 227 of the Constitution of India.

24. He further refers to a recent decision of the Supreme Court

in the case of "Hameed Kunju V/s Nazim" reported in 2017 ALL SCR

2178, wherein as well the Supreme Court had been considering

case of eviction. It is in the facts and circumstances of that case,

the court considered that all the four orders were amenable for

challenge before appellate authority and writ petition, in the

circumstances, would not have been a proper remedy. The court

had considered that the high court ought to have declined to

entertain writ petition on the ground of availability of alternate

remedy.

25. He also refers to a decision of the Supreme Court in the

case of "A. Venkatsubiah Naidu V/s S. Chellappan and Others" reported in

2001 (1) ALL MR 247, referring to paragraphs No. 11 and 20 thereof

reading, thus-

" 11. It cannot be contended that the power to pass interim ex parte orders of injunction does not emanate from the said Rule. In fact, the said rule is the repository of the power to grant orders of temporary injunction with or without notice, interim or temporary, or till further orders or till the disposal of the suit. Hence, any orders passed in exercise of the aforesaid powers in Rule 1 would be appealable as indicated in Order 43 Rule 1 of the Code. The choice is for the party {19} wp2875-18

affected by the order either to move the appellate Court or to approach the same Court which passed the ex parte order for any relief.

20. Now what remains is the question whether the High Court should have entertained the petition under Article 227 of the Constitution when the party had two other alternative remedies. Though no hurdle can be put against the exercise of the constitutional powers of the High Court it is a well recognized principle which gained judicial recognition that the High Court should direct the party to avail himself of such remedies one or the other before he resorts to a constitutional remedy. Learned single judge need not have entertained the revision petition at all and the party affected by the interim ex parte order should have been directed to resort to one of the other remedies. Be that as it may, now it is idle to embark on that aspect as the High Court had chosen to entertain the revision petition. "

26. He submits that in the face of such situation, writ petition

ought not to be considered and the defendant be directed to

avail of alternate remedy.

27. Learned advocate for the plaintiff Mr. A. D. Kasliwal,

countering arguments of learned senior advocate on behalf of

the defendant, refers to clause 7 of the agreement reading as

under :

" 7. Secrecy Agreement:

a) During the employee's service with the company, he / she shall come across various business / trade Secrets, confidential data or details. Information relating to the technology and processes, Methods and Systems used by the company and it's market details, which are exclusive {20} wp2875-18

and vital and which should not be divulged out. For the employee's functional development with the company, the company would have trained him / her in it's exclusive business areas, systems, methods and technology by incurring considerable expenses and spending management's time. Accordingly, the company's image, expertise, business areas, systems trade secrets and the related goodwill shall be in the trust with the employee to that extent during the period of his / her employment / service with the company. Hence in the event of cessation of employment with the company for any reason whatsoever, he / she shall not directly and / or indirectly engage himself / herself in any business, profession and / or employment including engaging himself / herself as Consultant / Advisor to any competitor and / or any company manufacturing BOPP Films, It's subsidiaries, associated companies, holding companies for a period of THREE years from the cessation of his / her employment.

In case the employee fails to abide by this convenant while in employment or otherwise, the company shall be entitled to take action against the employee under civil and criminal laws inclusive of damages as deem fit and proper.

b) Any process, discovery, invention or patent promoted or made by you in the course of your employment with us shall belong to the company and / or it's management. If required, company may execute a secrecy agreement with you. "

28. Learned advocate for plaintiff, submits that in the present

case, the employee had entered into a solemn agreement {21} wp2875-18

putting his signature under the same, binding himself with

confidentiality term and not only had joined but has continued

with employment. The term 7, captioned as "Secrecy

Agreement", reproduced hereinabove, refers to that properties

referred to therein are in trust with the employee and on

cessation of employment for a specific period of three years, he

is obligated not to render service to others. It had been agreed

upon by the defendant that post cessation of employment, he

would be bound under the term for a period of three years not to

get engaged or employed in any capacity. He submits that such a

term is necessary to be incorporated for protection of proprietary

interest in the knowledge, technology, know-how, trade secret,

business relations, etc., lest years of efforts, labour, money and

hard work and time would be under peril and threat of getting

ruined and the benefit may be made readily available to others /

person himself without any expense. He, therefore, submits that

the restriction cannot be termed as unreasonable or irrational or

in the present case to be void under section 27 of the Contract

Act.

29. Mr. Kasliwal submits that though the learned senior

advocate had referred to various decisions contending that

prevailing legal position is as submitted by him, yet, in present

peculiar facts and circumstances, as also, so far as this high {22} wp2875-18

court is concerned, position appears to be distinguishable. For

said purpose he refers to and relies on a decision of this court in

the case of "M/s Kouni Travel (I) Pvt. Ltd V/s Mr. Ashish Kishore" reported

in 2007 (6) ALL MR 808. It was a case dealing with a non compete

and garden leave clause giving right to employer requiring

employee to remain away from employment directly or indirectly

in any capacity and in any way with any competitive business for

a period of three months after termination / resignation of

service and non compete clause provided for that the employee

shall be bound not to take similar employment.

30. Mr. Kasliwal, learned advocate supports the decision relying

on the case of "Niranjan Golikari" (supra). He further refers to that

aforesaid judgment and the case of "Kouni Travel" (supra) have

been referred to and relied on in impugned order.

31. He submits that the defendant is an educated person and

had been working on a key post with the employer and has

entered into a service contract, bond and secrecy agreement. He

submits that although it is argued that there is no specific period

agreed upon, the trial court has adverted to that the agreed

period would have to be gathered from the terms appearing in

appointment letter and / or agreement. The appointment letter

and the agreement have to be harmoniously read, which put {23} wp2875-18

restraint on the defendant on cessation of employment. The trial

court has rightly considered that clause 7 of the appointment

letter obligates the defendant to refrain from directly or indirectly

engaging himself in similar business of the plaintiff for a period of

three years after cessation of employment with the plaintiff. Trial

court has rightly appreciated that intention underlying the

agreement shall receive its due.

32. He submits that not all the agreements placing restraint on

employment post service period are void under section 27 of the

Contract Act. He submits that the agreement read with

explanation under section 27 of the Contract Act has been

appropriately considered and appreciated by the trial court and

accordingly, having regard to facts and circumstances decision

has been rendered. Trial court has specifically taken into account

employer is a multinational concern and is likely to suffer

irreparable loss on cessation of employment of a key person. The

same would not be open for finding fault with. He, therefore,

considers that the impugned order is not amenable for

interception under the writ jurisdiction of this court.

33. Mr. R. N. Dhorde, learned senior advocate for the

defendant, submits that while jurisdiction of the court had been

questioned with reference to specific clause under the {24} wp2875-18

agreement, which restricts the same to Aurangabad city court,

the same has been decided disregarding underlying intention

and substance of the term agreed upon by the parties solemnly

and also disregarding the legal position that parties can restrict

the same to anyone, in case jurisdiction is with multiple courts.

He submits that the court had drifted away from this imperative

legal position and entertained erroneous concept on erroneous

assumptions. While agreement had been entered into, it had

been agreed upon that Aurangabad city court would be resorted

to and no other. The terms "exclusive" and "none else" must

assume significance and ought to have been considered

accordingly. Even otherwise, according to learned senior

advocate, Aurangabad court would always have jurisdiction,

since the defendant resides at Aurangabad and his address in

title clause would evince the same. Going by provisions of law,

jurisdiction would be with the court, where the defendant would

reside and this aspect has not been even considered while

deciding this issue.

34. Mr. Ajit D. Kasliwal, learned advocate appearing for the

respondent - plaintiff, however, on the other hand, submits that

question of jurisdiction has been raised by the defendant and the

court had to deal with the same and had accordingly been

answered.

{25} wp2875-18

35. He submits that so far as jurisdiction of Gangapur court is

concerned, it is beyond question. Cause of action had arisen

within territorial limits of jurisdiction of Gangapur court. Plaintiff's

manufacturing factory, office and employment of the defendant

had been within the jurisdiction of Gangapur Court. Resignation

had been tendered and communicated by the defendant to the

plaintiff within the jurisdiction of Gangapur court. Major part of

occupation of the defendant had been within the jurisdiction of

Gangapur court. In the circumstances, Gangapur court would

always have jurisdiction to try and entertain the suit. While the

agreement had been entered into, this particular area had been

part of Aurangabad and with subsequent developments has been

falling in Gangapur area. In the circumstances, situation in which

terms and conditions had been entered into, will have to be

looked into and appreciated in that context under which the

clause had been incorporated. With aforesaid developments, the

clause will have to be construed in tune with the same.

36. Over and above this, learned advocate for the plaintiff

refers to an ordinance dated 27th June, 2018 issued by Law and

Judiciary Department of Government of Maharashtra bearing No.

XVIII of 2018. Clause 3 (2) of the ordinance declares that any

proceedings questioning decision in respect of jurisdiction in {26} wp2875-18

favour of court where proceedings are filed, being pending

before a revisional court, shall stand abated, leaving it open to

be considered in appellate proceedings.

37. In the circumstances, learned senior advocate for the

defendant although has submitted that in the present matter, a

writ petition had to be preferred as impugned order gives

decision on the question of jurisdiction, yet, having regard to the

ordinance, such a question would not be amenable now to be

considered.

38. Learned senior advocate Mr. Dhorde, however, has a

different perspective of the matter submitting that indeed,

question of jurisdiction had been raised by the defendant having

regard to the terms in appointment letter and the agreement and

the court had despite the same decided that it has jurisdiction. In

such a case, while the order is a composite order with regard to

jurisdiction and injunction, a resort would be have to such a

forum which would be able to take into account grievance of the

defendant on both the counts. It cannot be gainsaid that

appellate forum, pursuant to Order XXXXIII of the Civil Procedure

Code, in the present matter, would not have been a forum

against order on issue of jurisdiction as it is not an order from

which an appeal is provided. He, therefore, submits that {27} wp2875-18

maintainability of writ petition is beyond question. It indeed

would be maintainable in present circumstances and would even

otherwise be always maintainable, while the court decides to

exercise its extraordinary powers having regard to facts and

circumstances and present matter is precisely one such matter.

He submits that despite series of decisions on the point, the trial

court has wholly misconceived the same. While the law favours

the defendant, trial court has decided the application against the

defendant. He submits that right to carry on avocation and

profession and service is a personal fundamental right and that

in the process has got intercepted under erroneous appreciation

by the trial court. He, therefore, submits that there is no

substance in the argument that a resort necessarily had to be in

an appeal alone, in the given facts and circumstances is

absolutely untenable and deserves non consideration.

39. Learned senior advocate Mr. Dhorde with respect to

alternate remedy, refers to quite a few decisions of the Supreme

Court, particularly the case of "Whirlpool Corporation V/s Registrar of

Trade Marks, Mumbai and Others" reported in AIR 1999 SC 22, wherein

the Supreme Court has considered that an alternate remedy is

not an absolute embargo on invoking powers of high court.

According to him, it has been considered that existence of

alternate statutory remedy is not a constitutional bar to high {28} wp2875-18

court's jurisdiction. Particularly, alternate remedy would not

operate as a bar in at least three contingencies - (i) where writ

seeks enforcement of fundamental rights; (ii) Where there is

violation of principles of natural justice and (iii) Where the order

or the proceedings are wholly without jurisdiction or vires of the

act is challenged.

40. He submits that right to carry on profession and vocation is

indeed a fundamental right and a covenant imposing post

service period restriction is void under law and is illegal. In

present facts and circumstances, defendant would not be

unnecessarily relegated and forced to file miscellaneous civil

appeal against the impugned order, which is a common order

passed on question of jurisdiction of the court and injunction. He

submits that since the court has determined that it has

jurisdiction, without letting opportunity to lead evidence to the

parties, in the circumstances, defendant had been left with no

option but to invoke jurisdiction of this court under writ petition,

since determination of question of jurisdiction is not amenable to

appeal under the scheme of Civil Procedure Code, including

Bombay Amendment of incorporation of section 9A. He,

therefore, submits that while decision on such a question could

not be amenable to appeal before appellate forum, resultantly,

defendant had no alternative but to challenge the same before {29} wp2875-18

this court. Even otherwise, alternate remedy is not an absolute

embargo on the powers of this court, to invoke its extraordinary

jurisdiction,. He submits that though further developments, may

have been submitted to have seemingly diffused challenge on

the question of jurisdiction involved in present case, in the

circumstances invoking powers of this court is not unjustified at

all. He submits that with the developments and having regard to

passage of time while an individual is pitted against financial

corporate giant, a weaker party may not be driven to appellate

remedy having regard to circumstances in which writ petition

had been preferred.

41. It would be worthwhile to refer to that section 27 of the

Indian Contract Act, which declares an agreement in restraint of

trade is void carving out an exception referred to therein. Section

27 of the Act, reads, thus-

" 27. Agreement in restraint of trade, void - Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.

Explanation 1 - Saving of agreement not to carry on business of which goodwill is sold - One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business. "

{30} wp2875-18

42. While it comes to restrictions on personal service and

employment, decision in the case of "Niranjan Shankar Golikar V/s The

Century Spinning and Mfg. Co. Ltd.," reported in AIR 1967 SC 1098;

observes that a restraint by which a person binds himself during

the period of contract for not taking services with any other

employer is not a restraint on trade and is not hit by section 27

of the Indian Contract Act.

43. Following decisions consistently show that a negative

restrictive covenant to be operative post service period would

not be enforceable at all and this particular position has not been

deviated from during all this period:

"Superintendence Company of India (P) Ltd. V/s Krishan Murgai,

reported in (1981) 2 SCC 246; "M/s High Polymer Labs Pvt. Ltd., V/s R. K.

Mutreja and Another" reported in 1982 SCC Online Del 237; "Taprogge

Gesellschaft MBH V/s IAEC India Ltd" reported in AIR 1988 Bombay 157;

"Bhavesh J. Bhatt V/s Cyrus N. Baxter" reported in 1991 Mh.L.J. 231; "Jet

Airways India Limited V/s Mr. Jan Peter Ravi Karnik" reported in 2000 SCC

Online Bom 241; "Star India Private Limited V/s Laxmiraj Seetharam Nayak

and Another" reported in 2003 SCC Online Bombay 27; "Weiler International

Electronics Private Limited V/s Punita Velu Somasundaram" reported in 2003

SCC Online Bom 1006; "Zaheer Khan V/s Percept D' Mark (India) Private

Limited and Another" reported on AIR 2004 Bombay 362; "R. Babu and {31} wp2875-18

Another V/s TTK LIG Ltd" reported in 2004 SCC Online Mad 1789;

"Ambiance India Private Limited V/s Naveen Jain" reported in 2005 SCC

Online Del 367; "American Express Bank Ltd V/s Priya Puri" reported in

2006 (3) LLN 217; "VFS Global Service Pvt. Ltd., V/s Suprit Roy" reported in

2007 SCC Online Bom 1083; "F. L. Smidth Pvt. Ltd., V/s Secan Invescast (India)

Pvt. Ltd.," reported in 2012 (2) MWN (Civil) 815; "Satyan Patel V/s Human

Factors International Pvt. Ltd." in Company Petition No. 733 of 2015

(Bombay High Court); and "M/s ELI Research India Private Limited V/s

Mr. Deepak Gupta and Another" reported in 2017 SCC Online Del 8403.

Most of the decisions have been given with reference to section

27 of the Indian Contract Act and enforceability of restrictive

covenant post service period has been held in the negative.

44. While the legal position is as aforesaid, a post service

restrictive convent is not enforceable, in the present case,

additionally it will have to be adverted to that in the case of "M/s

Kouni Travel (I) Pvt. Ltd V/s Mr. Ashish Kishore" reported in 2007 (6) ALL

MR 808 28, the court after taking stock of the situation, had found

that in that particular case, the condition had not come free for

the plaintiff. The plaintiff was required to pay full remuneration to

the defendant for the relevant period when garden leave clause

would be in operation and substantial amount was being paid to

the employee. The term under said agreement took care of

payment of compensation / remuneration to the employee during {32} wp2875-18

the period in which restrictive covenant is stated to be operative.

It is in that context decision had been rendered. The period of

restraint in that case had been smaller and only for three

months. As such, said case although being cited by learned

advocate for the plaintiff, in support of his contentions, the same

is distinguishable on facts and the terms of agreement. It is not

the case of employer - plaintiff in the present matter that any

such term has been incorporated in the agreement. There is no

corresponding provision in the appointment letter or under

clause 7 in the agreement, taking care of remuneration /

compensation to the employee, which to a quite large extent

gives indication of that the defendant in the circumstances either

will be forced to continue with the plaintiff - employer or would

be required to remain idle.

45. A negative covenant, which oppresses a person either to

perform personal service or to remain idle or starve is considered

inequitable, onerous and oppressive term and tends to obliterate

the object underlying section 27 of the Indian Contract Act

forbidding a compelled servitude. An employee seeking better

employment would not be injuncted on the ground that he has

confidential information and under the garb of confidentialilty

employer cannot be allowed to perpetuate forced employment.

Freedom to change employment is a vital and important right of {33} wp2875-18

an employee, which cannot be curtailed on the ground of

confidentiality and such a restriction will be hit by section 27 of

the Contract Act. As such, injunction would not issue.

46. Taking into account that Bombay High court, subsequent to

decision in "M/s Kouni Travel" (supra) in similar set of facts in the

case of "VFS Global Services" (supra) read with other decisions

in the field has considered that even a garden leave clause would

not be enforceable and would amount to restraint on trade and

would be hit by section 27 of the Contract Act.

47. In the present matter, perusal of the plaint would disclose

that negative restraint has been sought against the defendant

for a period of three years and so is the case of temporary

injunction under the application therefor. Further perusal of the

impugned order, particularly its operative part shows that the

defendant - petitioner has been restrained for a period of three

years, as prayed for in the suit and interim relief application. In

the circumstances, it may have to be adverted to that there is

hardly any distinction between the final relief and the interim

relief. Under interim order court has restrained the defendant for

the whole of the term as claimed in the suit.

48. The Supreme Court in the case of "Dayanand Vedic Vidyalaya

Sanchalak Samiti V/s Education Inspector, Greater Bombay and Another"

{34} wp2875-18

reported in (2007) 15 SCC 192 has considered that an interim relief

in the nature of final one which is not in consonance with

statutory rules, would be refrained from being given. The court

had observed, an interim order which amounts to grant of final

relief should not be granted and such a practice should be

discouraged.

49. One may have to give regard to that an alternate remedy is

not an absolute embargo to exercise powers of this court. Writ

petition has been filed asserting breach of fundamental rights

having regard to the decisions as also the question of jurisdiction

of the court been raised and decided. In the present case, there

are strong circumstances, which warrant invoking of such

jurisdiction while trial court does not appear to have properly

appreciated those. The reported decisions consistently hold and

reaffirm that post service period negative restrictive convent is

not enforceable. One may have to consider that circumstantial

and legal position unmistakably is in favour of the defendant -

employee and his right to carry on profession and avocation is at

stake, since January, 2018.

50. The question of jurisdiction may pale into insignificance

under the recent ordinance issued during pendency of the writ

petition and it is being argued that resort shall be had to an {35} wp2875-18

appeal, as provided under Order XXXXIII of the Civil Procedure

Code. Predominant legal position is that negative restrictive

convent post employment period is not enforceable.

Circumstances like duration consumed hitherto and that the

defendant - employee is pitted against a corporate, financially

able ex-employer and the circumstances in which writ petition

has been preferred would not be ignored. The trial court has

committed error in granting interim injunction restraining the

defendant from seeking employment after termination of

employment with the plaintiff. Facts, circumstances and

exposition of law in the decisions referred to clearly point out the

position that injunction as clamped would not be sustainable.

Since appeal is provided against the impugned order, to relegate

the defendant to such a remedy, in the present facts and

circumstances, would tantamount to a formality to achieve

compliance of procedural requirement and in the process a

person like petitioner - employee would be dragged and hurtled

along, though the circumstances and law are in his favour. It

would not be a case to adopt stickler's approach to the matter

and to pedantically send the petitioner - defendant to appellate

remedy. Such an approach would have to be eschewed in the

given facts and circumstances.

51. Writ petition, therefore, succeeds and is allowed. Rule is {36} wp2875-18

made absolute in terms of clauses "II" and "III". Request under

prayer clause "IV" is not considered and is kept open. Regular

Civil Suit No. 16 of 2018 in the circumstances may be proceeded

with as expeditiously as possible.

[SUNIL P. DESHMUKH, J.]

. At this stage, learned advocate for the respondent makes a

request to stay operation of this order for a period of six weeks.

As such, operation of this order be put on hold for a period of six

weeks.

[SUNIL P. DESHMUKH, J.]

drp/wp2875-18 Digitally signed Dinesh by Dinesh Ramrao Pawar Ramrao Date: 2018.08.16 Pawar 15:28:55 +0530