Delhi High Court
Arvind Medicare Private Limited ... vs Dr. Neeru Mehra on 21 May, 2021
Equivalent citations: AIRONLINE 2021 DEL 868
Author: Rajiv Sahai Endlaw
Bench: Rajiv Sahai Endlaw, Amit Bansal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 21st May, 2021
+ FAO(COMM) NO.12/2021
ARVIND MEDICARE PRIVATE LIMITED ..... Appellant
Through: Mr. Biswajit Das and Ms. Anamika
Sharma, Advs.
Versus
DR. NEERU MEHRA ..... Respondent
Through: Mr. Ashim Vachher, Adv.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
HON'BLE MR. JUSTICE AMIT BANSAL
[VIA VIDEO CONFERENCING]
RAJIV SAHAI ENDLAW, J.
1. This appeal, under Section 13(1A) of the Commercial Courts Act, 2015 read with Order XLIII Rule 1(r) of the Code of Civil Procedure, 1908 (CPC), impugns the order dated 23rd December, 2020 of the Commercial Court-02, Patiala House Court, New Delhi, of dismissal of application of the appellant / plaintiff under Order XXXIX Rules 1 and 2 of the CPC.
2. The appellant / plaintiff instituted the suit, from denial of interim relief wherein this appeal arises, pleading that (i) the appellant / plaintiff was engaged in the business of healthcare and medical facilities of the appellant / plaintiff were located at SCO - 1, 2 and 3, Sector 14, Gurugram and at SCO - 68-69, Sectors 55 and 56, Gurugram; (ii) the respondent / defendant approached the appellant / plaintiff and assured the appellant / plaintiff that she will provide reliable and interrupted professional healthcare and medical service, by serving at the appellant / plaintiff‟s FAO(COMM) No.12/2021 Page 1 of 21 hospitals; (iii) the appellant / plaintiff, vide Service Contract dated 28th July, 2015, appointed / engaged the respondent / defendant, "on case-to-case basis" as a "Visiting Consultant -Obstetrics & Gynaecology", with effect from 17th August, 2015 and till 16th August, 2016; (iv) the Service Contract aforesaid between the parties was extended from time to time, upto 15 th March, 2019; (v) the respondent / defendant approached the appellant / plaintiff to provide a long term and uninterrupted professional healthcare and medical service to the appellant / plaintiff and the appellant / plaintiff, vide Service Contract dated 9th March, 2019, appointed the respondent / defendant, "on retainership basis", as a "Visiting Consultant - Obstetrics & Gynaecology" at the hospitals of the appellant / plaintiff, with effect from 16th March, 2019 till 31st March, 2022; (vi) it was unconditionally undertaken by the respondent / defendant, that if the respondent / defendant, for any reason whatsoever chose to terminate the Service Contract prior to the expiry of term thereof, she will not serve at any facility/clinic/hospital within a radius of 5 kms. of the appellant / plaintiff‟s facilities aforesaid at Gurugram, for a period of one year from the date of termination; (vii) the appellant / plaintiff performed all its obligations under the Service Contract dated 9th March, 2019; (viii) the respondent / defendant, suddenly and abruptly sent an e-mail dated 29th October, 2020 showing her desire to resign with effect from 30th October, 2020 and requested the appellant / plaintiff to accept her resignation; (ix) the appellant / plaintiff rejected the resignation of the respondent / defendant and reminded the respondent / defendant of her contractual obligations under the Service Contract dated 9th March, 2019; (x) the respondent / defendant however stopped coming to the hospitals of the appellant / FAO(COMM) No.12/2021 Page 2 of 21 plaintiff; (xi) the respondent / defendant, inspite of rejection of her resignation, did not terminate the Service Contract; (xii) thus, the Service Contract dated 9th March, 2019 between the parties is subsisting; (xiii) as per the said Service Contract, the respondent / defendant, upto 31st March, 2022 was required to perform her obligations thereunder and was not entitled to do any private practice anywhere, except at her residence-cum- clinic at Gurugram and was not entitled to undertake any employment, full- time or part-time, or to engage herself in any trade or business; and, (xiv) due to the respondent / defendant, with effect from 30th October, 2020 having stopped performing her obligations under the Service Contract dated 9th March, 2019, the appellant / plaintiff was suffering irreparable loss and injury and loss of face owing to being unable to serve the patients visiting its hospitals. The appellant / plaintiff, thus in the suit from which this appeal arises, sought (a) a decree for permanent injunction restraining the respondent / defendant from undertaking any private practice anywhere except at her residence-cum-clinic in Gurugram and from undertaking any employment or engagement in any trade or business, till 31 st March, 2022 and alternatively from practicing at any facility/clinic/hospital within a radius of 5 Kms. of the hospitals of the appellant / plaintiff, for a period of one year; and, (b) of recovery of damages in the sum of Rs.61,75,000/- with interest.
3. Needless to state, the suit aforesaid was accompanied with an application under Order XXXIX Rules 1 and 2 of the CPC, to restrain the respondent / defendant, during the pendency of the suit, from joining any FAO(COMM) No.12/2021 Page 3 of 21 facility/clinic/hospital within a radius of 5 Kms. from the hospitals of the appellant / plaintiff and from providing service therein.
4. The need to detail the defence of the respondent / defendant is not felt.
5. The Commercial Court, vide impugned order dated 23 rd December, 2020, has dismissed the application of the appellant / plaintiff under Order XXXIX Rules 1 and 2 of the CPC, reasoning that (i) the Service Contract dated 9th March, 2019 was determinable by nature, as borne out from Clauses 8, 9 and 10 thereof; (ii) granting any interim injunction to the appellant / plaintiff would amount to restraining the respondent / defendant from doing what she has been doing for the last 28 years and what she best knows to do and has skill to do; (iii) restraining the respondent / defendant from practicing medicine till 31st March, 2022 will amount to killing the goodwill acquired by the respondent / defendant in the earlier 28 years in the profession and which loss could not be monetarily compensated to the respondent / defendant in the event of it being ultimately found that the appellant / plaintiff was not entitled to permanent injunction to the said effect; (iv) on the contrary, in the event of the appellant / plaintiff ultimately succeeding in the suit, the appellant / plaintiff could always be compensated monetarily for the loss if any suffered; (v) the clause of the Service Contract dated 9th March, 2019 vide which the respondent / defendant had agreed to be so restrained, was void in terms of Section 27 of the Indian Contract Act, 1872 (Contract Act); (vi) the appellant / plaintiff had not paid the agreed minimum retainership fee of Rs.2,25,000/- per month to the respondent / defendant for the months of April and May, 2020 and had paid at the rate of FAO(COMM) No.12/2021 Page 4 of 21 Rs.1,57,500/- per month for the months of June, July and August, 2020 and it was the case of the respondent / defendant that the respondent / defendant had no option but to accept the same in full and final settlement; if it was so, the appellant / plaintiff could not be said to have complied with its obligations under the Service Contract; (vii) the entire claim of the appellant / plaintiff was on the premise of the Service Contract being in force and the respondent / defendant while continuing to be in the employment of the appellant / plaintiff being not entitled to serve anywhere else; (viii) however it was yet to be determined whether the respondent / defendant, by tendering resignation, had determined the Service Contract; (ix) the respondent / defendant could not be compelled to render services to the appellant / plaintiff; (x) benching a professional for as long as more than 15 months could be devastating, capable of inflicting permanent damage, affecting mental and physical health and future prospects of a professional;
(xi) the appellant / plaintiff thus did not have prima facie case in its favour; and, (xii) the ingredients of irreparable loss and injury and balance of convenience were also not in favour of the appellant / plaintiff.
6. This appeal came up first before this Bench on 1st February, 2021, when it was the contention of the counsel for the appellant / plaintiff, that on the amendment of the Specific Relief Act, 1963 with effect from 1st October, 2018, the law of specific performance of contract has totally changed and under the new law, the appellant / plaintiff is entitled to a decree for specific performance; it was asserted, that the appellant / plaintiff was not seeking to enforce a negative covenant in the contract with the FAO(COMM) No.12/2021 Page 5 of 21 respondent / defendant but seeking the relief in view of amendment in the law.
7. Attention of the counsel for the appellant / plaintiff, on 1st February, 2021, was however drawn to Section 14(c) of the Specific Relief Act as amended, and which still provides that a contract which is so dependent on the personal qualifications of the parties that the Court cannot enforce specific performance of its material terms, cannot be specifically enforced. It was enquired from the counsel for the appellant / plaintiff, whether not rendering the duties as a doctor would amount to a contract dependent on the personal qualification of the respondent / defendant. Attention of the counsel for the appellant / plaintiff was also drawn to Arvinder Singh Vs. Lal Pathlabs Pvt. Ltd. 2015 SCC OnLine Del 8337 and to Modicare Ltd. Vs. Gautam Bali 2019 SCC OnLine Del 10511.
8. The counsel for the appellant / plaintiff, on 1st February, 2021 contended, that the performance by the respondent / defendant of her duties under the Service Contract with the appellant / plaintiff was to be controlled, not by the appellant / plaintiff but by the Medical Council of the State or of India and thus Section 14(c) of the Specific Relief Act did not disentitle the appellant / plaintiff from the relief of specific performance.
9. To make sure that the payments, which the appellant / plaintiff had agreed to make to the respondent / defendant will be received by the respondent / defendant, on 1st February, 2021, it was enquired, whether the appellant / plaintiff was willing to perform its part of the contract, by depositing in this Court, subject to further orders, the entire amount of FAO(COMM) No.12/2021 Page 6 of 21 Rs.2,25,000/- per month for the period 16th March, 2019 to 31st March, 2022, less the amount already paid to the respondent / defendant.
10. The counsel for the appellant / plaintiff stated that the appellant / plaintiff would deposit the said amount within three days. Accordingly, the appeal was adjourned to 5th February, 2021.
11. On 5th February, 2021, the counsel for the respondent / defendant informed that the appellant / defendant had deposited Rs.38,79,000/- in this Court. Accordingly, notice of the appeal was issued to the respondent / defendant.
12. The counsel for the respondent / defendant however, under instructions from the respondent / defendant, states that the respondent / defendant, for reasons already stated in the written statement, is not willing to continue with the appellant / plaintiff, even if assured of payments in terms of the Service Contract, from the amounts deposited by the appellant / plaintiff in this Court. We have thus proceeded to hear the counsels.
13. Before recording the contentions of the counsels, it is apposite to detail the Service Contract between the parties, in the form of a letter dated 9th March, 2019 from the appellant / plaintiff to the respondent / defendant and the terms and conditions contained wherein were accepted by the respondent / defendant and in pursuance whereto the respondent / defendant joined the appellant on 16th March, 2019. Vide the said letter, (a) the appellant / plaintiff appointed the respondent / defendant as a "Visiting Consultant - Obstetrics & Gynaecology", at its facilities at Sector 14 and Sectors 55 and 56, Gurugram and the respondent / defendant agreed to FAO(COMM) No.12/2021 Page 7 of 21 provide the said consultancy, between specified times and on specified days and to oversee and monitor all obstetrics and gynaecology related tests and procedures being conducted at the said facilities of the appellant / plaintiff;
(b) the consultancy charges of the respondent / defendant and the ratio in which the same were to be shared between the appellant / plaintiff on the one hand and the respondent / defendant on the other hand, were agreed and specified; and, (c) the appellant / plaintiff agreed to pay to the respondent / defendant, retainership of Rs.2,25,000/- per month or the respondent / defendant‟s share of consultancy charges, whichever was higher, with adjustments every month. Clauses 8, 9 and 10 of the said Service Contract and which are relevant for adjudication of the present controversy, are as under:
"8. In case you are found absent for seven consecutive days, without any lawful permission or authorization, it shall be deemed that you have terminated the contract and provisions of clause 10 shall apply.
9. Other Employment / Businesses: During the tenure of your Contract with the Company, you will not do any Private Practice anywhere, except at your residence-clinic in Gurgaon. You will not undertake any employment - full time or part time and not be engaged in any trade or business during the tenure of your Contract with us. Any violation of this clause shall mean that you have terminated the contract and provisions of clause 10 shall apply.
10. Tenure & Cessation of your Contract:FAO(COMM) No.12/2021 Page 8 of 21
a) Your contract is valid from 16.03.2019 till 31.03.2022.
For cession before the above period, a notice period of three months (or remuneration for three months in lieu thereof) shall be required from either side.
b) In case the contract is terminated before 31.03.2022, you shall not practice at any facility / clinic / hospital within a radius of 5 K.M. of our above facility for a period of one year from the date of termination of contract."
14. The counsel for the appellant / plaintiff argued, that (i) Section 27 of the Contract Act, relying inter alia whereon the Commercial Court has declined interim injunction to the appellant / plaintiff, was enacted by the foreign merchant regulators then ruling India, to benefit their own interest of free trade within the Indian colony, without factoring the choice, interests and rights of the natives of India; (ii) in the Partnership Act enacted subsequently in the year 1932, in Section 54, an exception to Section 27 of the Contract Act was carved out; (iii) post shift of sovereignty from the British Monarch to the Indian citizens, the Constitution of India also restricted the State‟s legislative power to placing only reasonable restriction qua right and freedom of the citizens of India to practice any trade or profession and not beyond the public interest; (iv) Section 27 of the Contract Act, upon coming into force of the Constitution of India, got moderated to mean that "every agreement by which parties other than the parties to the agreement were restrained from lawful profession, trade or business, is to that extent void"; (v) Section 27 of the Contract Act, if read as absolutely banning from exercising a lawful profession, trade or FAO(COMM) No.12/2021 Page 9 of 21 business, will become void under Article 13(1) of the Constitution of India;
(vi) under the Service Contract aforesaid, there is no restraint on the respondent / defendant‟s profession, trade or business and thus Section 27 of the Contract Act is not applicable; (vii) the respondent / defendant, under the subject Service Contract, is entitled to practice medicine at any place beyond 5 Kms. and also at her own residence / clinic; (viii) the relationship of the parties was of an employer-employee and the respondent / defendant cannot be permitted to exploit the appellant / plaintiff‟s resources / opportunities in the nature of goodwill; (ix) the respondent / defendant is duty bound under Section 37 of the Contract Act to perform her promise under Clause 10(b) of the Service Contract; (x) the restraint of the nature imposed on the respondent / defendant was imposed by the respondent / defendant on her own self, in exercise of her fundamental right; (xi) the respondent / defendant cannot chose to use her fundamental right as per her own convenience and in breach of the appellant / plaintiff‟s fundamental right; (xii) the respondent / defendant is taking the plea of fundamental right, to enrich herself at the cost / exclusion of the appellant / plaintiff;
(xiii) the respondent / defendant having enjoyed her fundamental right of practicing her profession under the appellant / plaintiff, is bound to perform her duties under Clause 10(b) of the Service Contract, as a measure of pay- back and consideration; (xiv) no law can be used to make one‟s act immoral against the other; (xv) the act of the respondent / defendant, of practicing medicine within prohibited distance from the appellant / plaintiff‟s hospitals is an immoral act; (xvi) the Law Commission, in its 13th Report dated 26th September, 1958, had opined that Section 27 of the Contract Act was enacted at a time when trade was under-developed and the object FAO(COMM) No.12/2021 Page 10 of 21 underlying Section 27 of the Contract Act was to protect trade from restraints; but today, trade in India does not lag far behind that in England and USA and there is no reason why a more liberal attitude should not be adopted by acknowledging such restraints as are reasonable not only between the parties to the agreement but also as regards general public, and had recommended for amendment of Section 27 of the Contract Act, by substituting the words "is to that extent void, except insofar as the restraint is reasonable having regard to interest of the parties to the agreement and of the public" in lieu of words, "is to that extent void"; (xvii) post the amendment with effect from the year 2018 of the Specific Relief Act, (a) specific performance of the contract has to be enforced by the Court, subject only to Section 11(2), 14 and 16 thereof; (b) compensation, as a relief can be in addition to and not in substitution of specific performance of contract;
(c) the discretion earlier vested in the Court whether to enforce specific performance or not has been taken away and contract has been given primacy; (d) State interference in private disputes, where the State has no stake, has been fully removed; (e) ease of doing business has been introduced; (xviii) the respondent / defendant, under Section 37 of the Contract Act, is obliged to perform her obligations under Clause 10(b) of the Service Contract; (xix) Clause 9 of the Service Contract contains a negative covenant and as per the dicta in Niranjan Shankar Golikari Vs. Century Spinning and Manufacturing Co. Ltd. AIR 1967 SC 1098, Clause 10(b) cannot be hit by Section 27, during the tenure of one year spread over 5 Kms.; (xx) the State is not empowered to encroach into private / personal choices and on the contrary is mandated to enforce private choice as part of its duty to secure justice and can only impose reasonable restriction in FAO(COMM) No.12/2021 Page 11 of 21 enjoyment of people‟s right; (xxi) the respondent / defendant, by successively entering into contracts with the appellant / plaintiff in the years 2015 and 2016 for one year at a time, in the year 2017 for two years at a time and in the year 2019 for three years and nine months, very well understood her arrangement with the appellant / plaintiff; (xxii) the respondent / defendant, in her e-mail dated 29th October, 2020 of resignation, did not give any reason whatsoever; (xxiii) the respondent / defendant, in the five and a half years she worked with the appellant / plaintiff, was sharing the fee received from the patients and had bound herself with the terms and conditions of the Service Contract; (xxiv) the appellant / plaintiff has spent large sums of money in marketing its services and the appellant / plaintiff maintains a full marketing team and the respondent / defendant cannot be permitted to, after availing the benefit of such marketing including to her benefit, breach her Service Contract with the appellant / plaintiff; and, (xxv) once the terms of the Service Contract between the parties are enforced, it is the Medical Council which will govern the performance of the respondent / defendant and no supervision by the Court in this respect will be required.
15. To test the claim of the appellant/plaintiff, that the respondent/defendant had benefited from the services of the marketing team of the appellant/plaintiff, we enquired from the counsel for the appellant/plaintiff, whether the appellant/plaintiff was entitled to so market its services and drew the attention of the counsel for the appellant / plaintiff to Regulation 6.1 of the Indian Medical Council (Professional Conduct, FAO(COMM) No.12/2021 Page 12 of 21 Etiquette and Ethics) Regulations, 2002, which prohibits a physician from advertising.
16. The counsel for the appellant / plaintiff, faced therewith, immediately withdrew the argument to the aforesaid extent and which though made vociferously during the hearing, is not part of the written note of arguments of the counsel for the appellant / plaintiff.
17. The counsel for the respondent / defendant argued, that (i) the interim relief has been denied to the appellant, owing to the clause in the Service Contract, in enforcement of which interim relief was claimed, having been found to be prima facie void under Section 27 of the Contract Act; (ii) the Commercial Court has also found the Service Contract between the parties to be a contract which by its very nature was determinable and Section 14 of the Specific Relief Act, even post amendment of the year 2018, provides that such contracts are not specifically enforceable; and, (iii) the matter in controversy is fully covered by Arvinder Singh (DB) supra, Independent News Service Pvt. Ltd. Vs. Sucherita Kukreti 257 (2019) DLT 426, Superintendence Company of India (P) Ltd. Vs. Krishan Murgai (1981) 2 SCC 246, Percept D'Mark (India) (P) Ltd. Vs. Zaheer Khan (2006) 4 SCC 227 and Indian Oil Corporation Ltd. Vs. Amritsar Gas Service (1991) 1 SCC 533.
18. The counsel for the appellant / plaintiff, in rejoinder, referred again to Clauses 8 and 10(b) of the Service Contract and contended, that (i) in none of the judgments aforesaid, the amendment of the Specific Relief Act has been considered; (ii) the appellant / plaintiff is not seeking specific performance of a contract, the performance of which involves the FAO(COMM) No.12/2021 Page 13 of 21 performance of a continuous duty, which the Court cannot supervise or a contract which is so dependent on personal qualification that the Court cannot enforce specific performance of its material terms inasmuch as the said part will be enforced by the Medical Council; (iii) such contracts are the contracts as of an artist engaged to perform; and, (iv) the respondent / defendant would not be sitting idle and can either continue to work with the appellant / plaintiff or can work beyond 5 Kms.; within 5 Kms. also, she is free to work at her clinic-cum-residence.
19. Though notice of the appeal was issued on the contention that on amendment with effect from the year 2018 of the Specific Relief Act, the Service Contract of the appellant / plaintiff with the respondent / defendant, which as per the judgments of prior thereto was not enforceable, had become enforceable, but on further consideration it is found that the question for adjudication is not of enforceability of the restraint clause contained in the said Service Contract but of validity of the said restraint clause, whereunder the respondent / defendant agreed with the appellant / plaintiff not to practice medicine in any facility/clinic/hospital within a radius of 5 Kms. of the facilities / hospitals of the appellant / plaintiff, for a period of one year from the date of premature termination of the Service Contract.
20. What falls for determination is, whether Clause 10(b) aforesaid of the Service Contract, whereunder the respondent / defendant agreed not to practice medicine for a period of one year at any facility/clinic/hospital within a radius of 5 Km. of the appellant / plaintiff‟s hospital in the event of FAO(COMM) No.12/2021 Page 14 of 21 termination of the Service Contract prior to 31 st March, 2022, is void under Section 27 of the Contract Act.
21. The said question is no longer res integra. One of us (Rajiv Sahai Endlaw, J.) sitting singly, in Dr. Lal Pathlabs Pvt. Ltd. Vs. Dr. Arvinder Singh 2014 SCC OnLine Del 2033, granted an interim injunction restraining the defendants therein from carrying on business/profession/practice as a Pathologist / Radiologist in the city in which they were earlier carrying on the said vocation and for the period for which they had agreed with plaintiff therein, invoking the exception to Section 27 of the Contract Act. However the Division Bench, while allowing the appeal vide Arvinder Singh supra relied by the counsel for the respondent / defendant, held that injunction restraining the defendants therein from carrying on their profession as Pathologist / Radiologist, would be contrary to Section 27 of the Contract Act.
22. We have no reason to take a different view from that taken by the Co- ordinate Bench in the said judgment.
23. Once it is so, the amendment of the Specific Relief Act of the year 2018, is of no avail. Pursuant to the said amendment, only an agreement which is valid, can be specifically enforced and not an agreement which, by virtue of Section 27 of the Contract Act, is void in law. What is void in law cannot be specifically enforced. The Clause in the Service Contract whereunder the respondent / defendant agreed not to practice medicine within a radius of 5 Kms. of the hospitals of the appellant / plaintiff for a period of one year from the date of premature termination of the Service FAO(COMM) No.12/2021 Page 15 of 21 Contract, is found to be in the teeth of Section 27 of the Contract Act and void and is thus unenforceable. It matters not, whether it is by way of affirmative agreement or by way of negative agreement. What is void in law, remains void and non-existent, whether stated positively or by way of a negative covenant.
24. As far as the arguments of the counsel for the appellant / plaintiff qua Section 27 of the Contract Act are concerned, (i) the recommendation of the Law Commission remains a recommendation and the fact of the matter is, that Section 27 has not been amended in spite of the said recommendation and thus there is no occasion to interpret Section 27 differently; (ii) wherever the legislature required, that an exception qua the ambit of Section 27 to be carved out, it has so carved out, as in Section 54 of the Partnership Act; (iii) Section 27, though enacted prior to coming into force of the Constitution of India, and being an existing law, is not inconsistent with the provisions of Part-III titled "Fundamental Rights", of the Constitution of India; (iv) rather, Article 19(1)(g) of the Constitution of India confers the status of a fundamental right to the right of the citizens of India to practice any profession or to carry on any occupation, trade or business; (v) Article 19(6) saves from the ambit of Article 19(1)(g) only such existing laws which impose reasonable restrictions on the exercise of the right to practice any profession or to carry on any occupation, trade or business; (vi) owing to Article 19(6), the exception to Section 27 of the Contract Act may be saved and we are unable to understand, how the counsel for the appellant / plaintiff contends that the operation and ambit of Section 27 is restricted;
(vii) rather, one of us (Rajiv Sahai Endlaw, J.) sitting singly, in Modicare FAO(COMM) No.12/2021 Page 16 of 21 Ltd. supra has held, (a) that Section 27 has been enacted as a matter of public policy of India and does not create any personal right, which can be waived; (b) that the question of reasonableness of the restraint is outside the purview of Section 27; (c) that Section 27, though contained in a legislation of the year 1872, on promulgation of the Constitution of India in the year 1950, conferring the right to practice any profession or to carry on any occupation, trade or business, the status of a fundamental right, today has a different connotation; (d) the law of tort, of unreasonable interference in carrying on business, in view of Section 27 of the Contract Act in force since 1872, was not the existing law within the meaning of Article 19(6) of the Constitution of India; (e) that the right saved by Section 27, is a facet of Article 21 of the Constitution of India; (viii) the action of the respondent / defendant in violation / breach of an agreement, which the law declares void, can never be immoral; (ix) the words "..... anyone is restrained...." in Section 27 cannot be read as meaning anyone other than the parties to the agreement inasmuch as who is not a party to the agreement, is not bound thereby; and, (x) even otherwise, the test to be applied by the Courts is of legality and not of immorality, especially when the two are pitted against each other.
25. No merit is found also in the other arguments of the counsel for the appellant / plaintiff. Merely because the restraint undertaken by the respondent / defendant upon herself was from practicing medicine within a radius of 5 Kms. from the hospitals of the appellant / plaintiff and for a period of one year only, would not make the said restraint reasonable and even if makes the same reasonable, Section 27 of the Contract Act as FAO(COMM) No.12/2021 Page 17 of 21 aforesaid, makes all contracts / agreements in restraint of profession, trade or business void and does not permit of restraint of any degree. As far back as in Madhub Chunder Poramanick Vs. Rajcoomar Doss MANU/WB/0020/1874 it was held that the words "restrained from exercising a lawful profession, trade or business" in Section 27 do not mean an absolute restriction, and are intended to apply to a partial restriction, a restriction limited to some particular place. Similarly, though Section 37 of the Contract Act obliges the parties to the contract to perform their obligations thereunder but "unless such performance is dispensed with or excused under the provisions of this Act, or of any other law". Once Section 27 declares the part of the agreement in restraint of profession, trade or business as void, the party which has so agreed, not to practice, profession, trade or business, stands discharged from performing the obligation under that part of the agreement. Though the appellant / plaintiff, at the time of entering into the Service Contract with the respondent / defendant is deemed to be aware of law and accordingly, of Clause 10(b) in the Service Contract being unenforceable, but even otherwise, if the appellant / plaintiff has paid any consideration to the respondent / defendant in consideration of the respondent / defendant having so agreed, the same will still not entitle the appellant / plaintiff to enforce the restraint and will only entitle the appellant / plaintiff to claim compensation and which the appellant / plaintiff has claimed in the suit.
26. We would be however failing in our duty if do not refer to the recent pronouncement in Association of Medical Super Speciality Aspirants and Residents Vs. Union of India (2019) 8 SCC 607, concerned with the FAO(COMM) No.12/2021 Page 18 of 21 validity of the notifications issued by the government imposing condition of execution of compulsory bond at time of admission to post graduate courses and super speciality courses in the field of medicine. It was inter alia the contention of the petitioners that the service bonds got executed from them, fell foul of Section 27 of the Contract Act and were in restraint of lawful profession, trade or business and that the condition imposed for rendering compulsory service in the army was violation of Articles 19(1)(g) and 23(1) read with Section 21 of the Constitution of India. While dismissing the said claim, it was held (i) the compulsory bond executed at the time of admission into post graduate and super speciality courses did not violate the right to carry on profession inasmuch as the said right started on the completion of the course; there is no right to receive higher education; violation of a right guaranteed under Article 19(1)(g) does not arise in a case pertaining to admission to the college; execution of bonds was part of a composite package; (ii) the government was not enforcing the service bonds and the service bonds did not fall foul of Specific Relief Act; and, (iii) a contract to serve the government for a few years under reasonable terms cannot be described as one in restraint of trade. The said judgment however has to be read in the context of public employment. Supreme Court, in State Bank of India Vs. S.N. Goyal (2008) 8 SCC 92 reiterated that there is a clear distinction between public employment governed by statutory rules and private employment governed purely by contract. It was held that while a contract of personal service is not enforceable, where the contract is governed by statutory rules, the same shall prevail.
FAO(COMM) No.12/2021 Page 19 of 2127. From reference by the counsel for the appellant / plaintiff, in his written arguments, to Niranjan Shankar Golikari supra, the argument of the appellant / plaintiff also appears to be, that since the respondent / defendant has not terminated the Service Contract, the Service Contract subsists and the respondent / defendant, during the subsistence thereof is not entitled to serve elsewhere. Though the counsel for the appellant / plaintiff during the hearing has not pressed the said argument, but we may state, that as per Clause 8 of the Service Contract, upon the respondent / defendant absenting without permission or authorization, for seven consecutive days, the respondent / defendant is deemed to have terminated the Service Contract, kicking in the provisions of Clause 10. It is the case of the appellant / plaintiff itself that the respondent / defendant stopped reporting for work / duty and which as aforesaid would amount to termination of the Service Contract by the respondent / defendant. It is thus not open to the appellant / plaintiff to contend that the Service Contract is subsisting.
28. The counsel for the appellant / plaintiff, along with his written arguments has filed copies of a large number of other judgments, but to which no reference was made in the hearing and to which no reference was made in the written note of arguments either. We thus do not deem it necessary to deal therewith.
29. No merit is found in the appeal. The impugned order is found to be in accordance with law and in lawful exercise of discretion vested in the Commercial Court in the matter of grant / non-grant of interim relief.
FAO(COMM) No.12/2021 Page 20 of 2130. Dismissed, with costs of Rs.50,000/- to the respondent / defendant, to be recovered from the amounts deposited by the appellant / plaintiff in this Court.
31. The balance amounts deposited in this Court, together with interest accrued thereon, be refunded to the appellant / plaintiff.
RAJIV SAHAI ENDLAW, J.
AMIT BANSAL, J.
MAY 21, 2021 „gsr‟..
FAO(COMM) No.12/2021 Page 21 of 21