Madras High Court
Epikindifi Software & Solutions vs Surendar Chitoor Pandarirao on 4 April, 2024
Author: N. Sathish Kumar
Bench: N. Sathish Kumar
1
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved on : 28.03.2024
Pronounced on : 04.04.2024
CORAM
THE HONOURABLE MR. JUSTICE N. SATHISH KUMAR
Arb.O.P.No.39 of 2023
and A.Nos.3275 & 5937 of 2023
EPIKinDiFi Software & Solutions
Pvt. Ltd.,
Rep by its authorised signatory
Karthik
“Karthik Nivas” bearing
Old No.3 and New No.5
Chakrapani Road, Guindy
Chennai – 600 032 ... Petitioner
Versus
Surendar Chitoor Pandarirao .. Respondent
Prayer: Petition filed under Section 34 (2) (a) & (b) of the Arbitration and
Conciliation Act, 1996 as amended by the Arbitration and Conciliation
(Amendment) Act, 2015, praying to set aside the Arbitral Award dated
07.02.2023 pertaining to Issues Nos.1 and 4 passed in Arbitration Claim No.1
of 2021 arising out of O.P.No.331 of 2021.
For Petitioner : Mr.R.S.Diwaaagar
for M/s.Vivriti Law
For Respondent : Ms.Tanya Kapoor
https://www.mhc.tn.gov.in/judis
2
ORDER
This petition is filed challenging the award passed by the learned Arbitrator directing the company/applicant to pay a sum of Rs.24,00,000/- to the employee/respondent towards the damages and also the validity of the agreement/contract, this original petition has been filed.
2. For the sake of convenience, the parties in this petition will be referred to as per their array in the award.
3. The brief facts leading to filing of this petition are as follows:
3.a. As per the letter of Employment dated 19.03.2018, Confidentiality and Invention Assignment Agreement executed, the claimant was appointed in the respondent company. The agreement contains several terms in respect of salary, annual variable incentives, compensation, performance reviews etc., The agreement also provides for term and termination of the employee.
Similarly, non compete clause is also included in the agreement. The Claimant was in-charge of the sales and business development of products of both the respondent and Latitude Fintech Pvt Lt. The claimant's achievement of target and generation of multiple business opportunities were appreciated https://www.mhc.tn.gov.in/judis 3 by the respondent. However, instead of paying the bonus and other benefits as per the terms of the agreement, the claimant was asked to leave the respondent company by an email dated 17.12.2018 terminating the claimant's employment. The claimant sent a notice dated 29.07.2019 seeking Rs.37,68,048/- compensation towards Annual Variable and incentives with interest for variables, bonus and incentive dues. Similarly, it is the contention of the claimant that he could not find suitable employment, after the sudden loss of job due to Non-Compete clause for 12 months and had to sell his property to manage his affairs. Hence, the respondent company has to compensate the claimant by paying Rs.24 lakhs, the annual CTC salary offered by the company and Rs.5 lakhs compensation which is the difference between the annual salary paid by the former employer and the respondent/company for loss of income and wrongful termination.
3.b. The respondent/company took a stand that before filing the Arb.O.P.No.331 of 2021, the claimant approached the NCLT, Chennai, which was rejected. The letter of employment dated 19.03.2018 was not duly signed and returned to the company by the claimant and the claimant never accepted the letter of employment. There is no contract between the parties, https://www.mhc.tn.gov.in/judis 4 hence, the Dispute Resolution Clause is not binding on the parties. Even at the time of appointment of arbitrator, this Court recorded that there was genuine doubt as to whether there was any concluded contract at all between the parties. The claimant has not positively proved the return of signed agreement dated 19.03.2018 to the company on 28.05.2018. The claimant has not returned the signed document of employment letter prior to initiation of the arbitration proceedings, therefore, according to the company, there is no agreement existed between the parties to refer to dispute.
3.c. It is the further case of the company that the letter of employment is a concocted one and the claimants copy of letter of employment does not bear the authorised round seal of the company, hence, the document is a forged one. The company was incorporated on 15.02.2018 and is involved in the business of software designing, development etc., catering mainly to the software support needs of financial institutions in India and overseas. Since, the claimant failed to support to achieve the sales target set forth by the company, the company asked the claimant vide email to refrain from working by providing three months notice period effective 17.12.2018, instead of one month. While rejecting the claims of claimant on account of his not achieving https://www.mhc.tn.gov.in/judis 5 the target, the company also pointed out to the need for discussing about the huge cultural gap that existed between the claimant and the company. The claimant has not achieved his target, in fact, the entire business booked by the company, therefore, the claimant cannot claim Annual Variable and incentives.
3.d. As per the Standard Operating Procedure (SOP), the claimant did not execute the letter of employment and return it to the company. There is no date along with the signature and that a seal other the round seal of the company was used, hence, the company suspected that the claimant has forged the letter of employment.
3.e.Based on the pleadings, the learned Arbitrator framed the following points for consideration:
a. Do the parties prove the validity of arbitration agreement between them?
b. Has the claimant wrongfully been terminated under the letter of employment dated 19.03.2018?
c. Is the Claimant to Rs.37,68,048/- towards annual variable and https://www.mhc.tn.gov.in/judis 6 product incentive as claimed by him?
d. Is the Claimant entitled to Rs.29,00,000/- towards damages?
e. Is the Claimant entitled to interest?
f. Is Claimant entitled to rendition of accounts?
3.f. After, hearing the parties, the learned Arbitrator dismissed the claim as far as the compensation of Rs.37,68,084/- and also Rs.5,00,000/-
holding that in the absence of any material evidence of the supplies effected against the invoices and payments collected, the claimant cannot make a claim for achieving targets in real terms. The Tribunal also recorded the fact that the claimant has not proved his individual contribution to make himself eligible for variables and incentives. However, the Tribunal had directed the respondent company to pay a sum of Rs.24 lakhs towards the damages to the claimant and the Tribunal while awarding the said amount held that it appears that the claimant could not accept offers from good companies for the 12 months period and had to accept a consultancy offer for a meagre sum of Rs.25,000/- p.a. It appears that the claimant has also sold his house which he co-owned with his wife in order to manage the post-termination life and expenses. As against the award passed by the learned Arbitrator directing the https://www.mhc.tn.gov.in/judis 7 company/applicant to pay a sum of Rs.24,00,000/- to the employee/respondent, this original petition has been filed.
4. The award was mainly challenged on the ground that the offer letter of employment is not accepted by the claimant and there was no consensus ad idem between the parties. Therefore, when the offer has not been accepted mere letter cannot constitute the contract between the parties. The letter of employment has been forged. The termination is made only as per the contract, three months notice has been given and salaries are also paid. The claimant did not raise a dispute about his termination for more than 7 months. Therefore, the learned Arbitrator held that the claimant was illegally terminated is an afterthought, the finding is nothing but patent illegality. The learned Arbitrator has not appreciated the evidences placed before the Tribunal. The public law principles do not apply to private employment. Hence, the petition.
5. The learned counsel for the applicant/company vehemently submitted that there is no agreement existed between the parties. However, the learned Arbitrator held that there was a valid agreement such finding is https://www.mhc.tn.gov.in/judis 8 nothing but patent illegality when the offer letter was not signed. The contention made was to the effect that the letter of employment should be accepted by the claimant. However, the claimant has not returned the signed copy and his evidence also clearly shows that there was no consensus reached between the parties. Such being a position, when the contract has not been concluded, now, the claimant cannot rely upon the mere offer letter. It is the contention that even the application filed by the claimant before the NCLT, it is not the case of the claimant that he has returned a signed copy of the agreement. Similarly, application filed under Section 11 of the Arbitration and Conciliation Act, it is not his case that he has returned a signed copy of the employment letter. Therefore, when there is no consensus reached between the parties and the contract has not been concluded, now the claimant cannot seek a compensation on the basis of employment letter.
6. The learned counsel also submitted that the letter is forged one, the letter relied upon by the claimant is a forged one, the seal of the company is different, this aspect is also not gone by the learned Arbitrator. As far as the awarding of compensation, even assuming that there is a contract between the parties, the terms of the contract clearly indicate that the employee can be https://www.mhc.tn.gov.in/judis 9 terminated with or without cause upon thirty days prior written notice, whereas, in this case, as the claimant's performance is not satisfied, he was terminated by giving a three months notice. The learned Arbitrator has held that because of Non-Compete clause, the claimant could not go for other jobs, besides he has sold the immovable property to maintain his family. Such finding is totally contradictory to the facts, the learned Arbitrator has considered irrelevant material and ignored the substantive evidence.
7. It is the further contention that non compete clause cannot be invoked, in fact, the claimant was given a certificate of good conduct after relieving him. The termination was never questioned by the claimant at any point of time. Further, there is no evidence whatsoever available on record to show that the claimant has made any attempt to secure other job. Therefore, the award of compensation without even assessing the mitigating damages is against the well settled provision of law. Further, as far as the contract of private employment, the principles of administrative law or public law cannot be applied. When the contract provides for termination of service by 1 month notice, the employee will pay only 1 month pay in terms of employee contract.
https://www.mhc.tn.gov.in/judis 10
8. In support of his submissions, he relied upon by the judgment of the Full Bench of the Hon'ble Apex Court in the case of S.S.Shetty vs. Bharat Nidhi Ltd reported in AIR 1958 SC 12 and also the judgment of the Delhi High Court in the case of Satya Narain Gard through his legal heirs vs. DCM Ltd and others reported in 2012 (127) DRJ 216.
9. The learned counsel for the respondent/claimant would submit that the learned Arbitrator has clearly found that there is a valid agreement existed between the parties. When the correspondence between the parties makes it clear that there is an existence of valid agreement, the contention of the applicant company that there is no valid agreement has no legs to stand. Except the bare allegation of fraud and forgery, there is no proof of fraud, such contention also has no force in the eye of law.
10. As far as the awarding of Rs.24 lakhs as damages, it is the contention that the claimant was one of the founder and had occupied the position of Director and Senior Vice President. Therefore, even the letter of employment provides for removal of employee only in account of mis- conduct or wilful failure in duties. In the absence of any evidence to show https://www.mhc.tn.gov.in/judis 11 that the claimant has committed misconduct or wilful failure in performing duties, he was simply sent out on the ground that there was a vast cultural gap. The principles of natural justice has not been followed and letter of termination is also sent by the person who is not authorised to do so. Without indicating the performance of appraisal from time to time merely on the basis of self appraisal submitted by the claimant, the communication has been sent and he was sent out as if there was a vast cultural gap. The claimant has also sold his property to maintain his family besides, he could not secure any other job owing to non compete clause in the agreement. Therefore, the learned Arbitrator directing the company to pay a sum of Rs.24 lakhs does not warrant interference. Hence, seeks dismissal of this original petition.
11. Heard both sides and perused the entire materials placed on record.
12. On the basis of above pleadings, the following points arise for consideration:
A. Whether there is no arbitral agreement existed between the parties?
B. Whether Ex.C-3 before the Arbitral Tribunal/letter of employment is forged one?
https://www.mhc.tn.gov.in/judis 12 C. Whether the damage awarded by the Tribunal fall within the ambit of patent illegality?
Point A
13. As far as the Point A is concerned, the Letter of Employment is filed as Ex.C3 before the Tribunal along with the Confidential and Invention Assignment Agreement is signed by both the parties. The signature contained in this document is not disputed. The only contention of both the parties is that the claimant has the duplicate copy and the letter of employment has not been returned by the claimant. Therefore, according to applicant, there is no consensus. It is relevant to note that the letter of employment is signed by all the parties. Though the return of the duplicate has not been established, the fact remains that the company has allowed the claimant to work in their company for some terms, awarded salary and other aspects as per the employment letter and in fact, the correspondences between the parties which are also filed as Exs.C4 to C6 before the Tribunal make it clear that the parties were aware of the terms of the contract.
https://www.mhc.tn.gov.in/judis 13
14. Further, the respondent company has not insisted by way of communication to claimant to accept the letter of employment. On the contrary, only on the terms contained in the contract, his employment was allowed and paid necessary salaries. Also till his termination, he was treated as regular employee. Therefore, it cannot be said that there is no agreement at all. Hence, the contention in this regard made by the company cannot be countenanced. Though there were demands in the correspondence for certain allowances, it cannot be said that contract has not concluded between them. When the person was allowed to work as a senior vice president on the basis of employment letter it cannot be said that there was no contract to refer the dispute to the arbitrator. Accordingly, the contention of the respondent company in this regard is rejected.
Point B
15. As far as the plea of forgery is concerned, in the entire reply statement, vague plea has been taken as if instead of round seal of the company other seal has been used and in fact, the pleading was to the effect that the respondent company suspect that the document could have forged. The learned counsel himself was not sure about the forgery. As long as the https://www.mhc.tn.gov.in/judis 14 signature of the parties signing the document are not disputed, it cannot be said that the document is forged and no attempts whatsoever was made to establish the stand of the forgery. Therefore, mere vague allegation of fraud and forgery cannot be a ground to non suit the valid agreement existed between the parties. Accordingly, the contention of the respondent company in this regard is rejected.
Point C
16. With regard to the awarding of Rs.24 lakhs as compensation towards damages is concerned, the Tribunal has awarded the compensation only on the ground that owing to Non-Compete clause contained in the agreement, the claimant could not secure any job and further he had to sell his immovable property in order to maintain his family. In this regard, of course, the Court cannot re-appreciate the evidence, but, at the same time, when the findings are contrary to the facts placed before it, there is no bar for the Court to find out any patent illegality. In this case, if the learned Arbitrator has considered the irrelevant materials or omitted to consider the facts properly and it will certainly fall within the ambit of patent illegality. Having held that the contract is binding between the parties and there existed https://www.mhc.tn.gov.in/judis 15 a valid agreement, the learned Arbitrator has not gone into the terms of the contract. Clause 10 of Ex.C3/Letter of Employment reads as follows:
“ 10. Term and Termination:
The Company may terminate your employment, with cause, immediately upon written notice to you, or without cause upon thirty (30) days prior written notice to you or salary in lieu of notice.
For the purposes of this letter agreement, "cause" means:
(i) the commission of any crime involving fraud, theft, misappropriation, dishonesty or embezzlement or of moral turpitude;
(ii)any material breach of any written policies or procedures of the Company or your wilfully or intentionally acting in any way, with the intent to harm The Company
(iii) any misconduct, negligence or willful failure by you to substantially perform your duties hereunder for reasons other than death or permanent disability; or
(iv) any breach by you of any agreement, representation, warranty or covenant set forth in this letter agreement.
(v) Any direct or indirect participation by the employee or authorized agents in any political activity in any country or in any professional or business undertaking or activity that could lead to a conflict of interest. Any political activity in any country https://www.mhc.tn.gov.in/judis 16 or in any professional or business undertaking or activity that could lead to a conflict of interest.
(vi) Absconding for a period of 10 consecutive days without notice to the Company.
In such an event, payment of salary and all other payments shall cease as per the date of this dismissal.
You may terminate your employment at any time by giving three (3) months' prior written notice to the Company. In case you terminate your employment without notice, you will be Table for damages incurred by the Company on this account and no relieving order will be issued and settlement of dues will be at the discretion of the Company.”
17. Similarly, when the contract itself provides for termination of the employment with or without cause, the learned Arbitrator has found that his termination is against the principle of natural justice. The Tribunal while dismissing the claim of Rs.37,68,048/- has recorded the fact that the claimant has not proved his individual contribution to make himself eligible for variables and incentives. Only when self appraisal statement submitted by the claimant, there was a communication by the respondent company that there was a vast cultural gap between existed between the claimant and the https://www.mhc.tn.gov.in/judis 17 respondent company which followed mail dated 17.12.2018 for terminating the claimant.
18. Even the email sent by the claimant, which is marked as Ex.C28, he requested the termination clause should be in both sides and he also requested the notice period also. Therefore, the claimant was also aware of the termination simplicitor without any reasons and in fact, before the termination itself, the respondent company had indicated that in his working style, there is a vast cultural gap with them. When the contract itself provides for termination, now it cannot be said that such clause cannot be invoked.
19. It is also relevant to note that the claimant has not protested the termination immediately, but, he has sent communication demanding incentives and variables. When the learned Arbitrator has held that there is no evidence to show that the claimant has achieved the target to claim incentives and variables, merely, because when the claimant demand has not met, it cannot be concluded that he should be compensated. When contract provides for termination with or without cause, principle of administrative law or public law cannot be applied. If the contract provides for termination of https://www.mhc.tn.gov.in/judis 18 service for 1 month notice, then at the best, the employee will be liable for 1 month pay in terms of contract. As per the provision of Section 14(1)(c) of the Specific Relief Act, 1963, a contract which is determinable in nature cannot be specifically enforced. Since the service contract in the present case is determinable by one month's notice, there does not arise the question of giving any reliefs which tantamount to enforcement of a determinable contract. As per Section 14(1)(b) of the Specific Relief Act, 1963, a contract of personal service cannot be enforced when the employer is not the Government or State as per Article 12 of the Constitution of India.
20. It is relevant to note that even assuming that there was a wrongful termination, to award a compensation, it must be shown that claimant has taken steps to obtain alternative employment which was denied because of the conduct of the respondent company. It is also to be noted that the claimant has also obtained experience and relieving letter from the respondent company which is evident in Ex.C7. If really, the respondent company invoked the non-compete clause, the letter/Ex.C7 would not have been issued to the employee namely the claimant. Clause 14 of the agreement reads as follows:
https://www.mhc.tn.gov.in/judis 19 "... 14.Non-compete : You shall not for a period of twelve (12) months following the termination of your employment with the Company, without the prior written consent of the Company, directly or indirectly, invest, operate or assist, whether as shareholder, lender, director, employee or consultant or in any other manner whatsoever, in any business activity that competes with the business of the Company or any of its affiliates or with whom you have dealt with or provided services to in the course of your employment with the Company."
21. The above makes it very clear that the employee shall not take out any employment without the prior written consent of the company, directly or indirectly. The fact that the respondent company issuing an experience and relieving letter indicate that they have not invoked Non-Compete clause. Further, it is not the case of the claimant that whenever he made an attempt to secure other job, same was prevented by issuing notice by the respondent. There was no evidence available on record to show that the non-compete clause has been invoked by the respondent. Further, there is no evidence on record to show that claimant made an attempt to secure other job which has been prevented only because of invoking non-compete clause. In the absence of evidence to show that only by invoking Clause-14/Non-compete clause, he https://www.mhc.tn.gov.in/judis 20 could not secure other job, a compensation of Rs.24 lakhs cannot be sustained in the eye of law. It is also to be noted that the learned Arbitrator has not recorded the finding based on the proved facts in arriving the compensation, whereas, he has come to the conclusion based on the assumption. The finding recorded by the learned Arbitrator is as follows: 6.
... Owing to this clause, it appears the claimant could not accept offers from good companies for the period and had to accept a consultancy offer for a meagre sum of Rs.25,000/- P.A. It appears that the claimant has also sold his house which he co- owned with his wife in order to manage the post-termination life and expenses."
22. Only on the inference, the learned Arbitrator has recorded the said finding without the facts established in this regard. It is also relevant to note that the learned Arbitrator has failed to consider the relevant admissions with regard to the sale of the property by the claimant. The claimant, in fact, admitted in his evidence that of sale proceeds of property was re-invested. His answer to the question Nos.241 to 248 in the cross examination makes it clear that he has sold the property worth about Rs.93 lakhs and he has purchased other property for one crore. That apart he has also deposited some https://www.mhc.tn.gov.in/judis 21 amount and shown as capital gain. Therefore, when person has sold the property, purchased another property and invested in capital gain, it cannot be said that he had to sell the property only because of his termination. Therefore, merely on the basis of inference, such a finding has been recorded by the learned Arbitrator. The irrelevant materials has been considered by the learned Arbitrator and award has been passed, the same will certainly fall within the ambit of patent illegality.
23. It would be apt to point out the judgment of the Full Bench of the Hon'ble Apex Court in the case of S.S.Shetty vs. Bharat Nidhi Ltd reported in AIR 1958 SC 12, wherein, the Hon'ble Apex Court has held as follows:
12. The position as it obtains in the ordinary law of master and servant is quite clear. The master who wrongfully dismisses his servant is bound to pay him such damages as will compensate him for the wrong that he has sustained. "They are to be assessed by reference to the amount earned in the service wrongfully terminated and the time likely to elapse before the servant obtains another post for which he fitted. If the contract expressly provides that it is terminable upon, e.g., a month's notice, the damages will ordinarily be a month's wages... No compensation can be claimed in respect of the injury done to the servant's feelings by the circumstances of his dismissal, nor in https://www.mhc.tn.gov.in/judis 22 respect of extra difficulty of finding work resulting from those circumstances. A servant who has been wrongfully dismissed must use diligence to seek another employment, and the fact that he has been offered a suitable post may be taken into account in assessing the damages.(Chitty on Contracts, 21st Edition, Vol (2), p. 559 para. 1040).
13. If the contract of employment is for a specific term, the servant would in that event be entitled to damages the amount of which would be measured prima facie and subject to the rule of mitigation in the salary of which the master had deprived him. (Vide Collier v. Sunday Referee Publishing Co.
Ltd., 1940-4 ALL. E.R. 234 at p.237 (A). The servant would then be entitled to the whole of the salary, benefits, etc., which he would have earned had he continued in the employ of the master for the full term of the contract, subject of course to mitigation of damages by way of seeking alternative employment."
24. Similarly, in the case of Satya Narain Gard through his legal heirs vs. DCM Ltd and others reported in 2012 (127) DRJ 216, the Delhi High Court following the judgment of the Hon'ble Apex Court (cited supra) held as follows:
12. The position as it obtains in the ordinary law of master and servant is quite clear. The master who wrongfully dismisses his servant is bound to pay him such damages as will https://www.mhc.tn.gov.in/judis 23 compensate him for the wrong that he has sustained.
"They are to be assessed by reference to the amount earned in the service wrongfully terminated and the time likely to elapse before the servant obtains another post for which he fitted. If the contract expressly provides that it is terminable upon, e.g., a month's notice, the damages will ordinarily be a month's wages... No compensation can be claimed in respect of the injury done to the servant's feelings by the circumstances of his dismissal, nor in respect of extra difficulty of finding work resulting from those circumstances. A servant who has been wrongfully dismissed must use diligence to seek another employment, and the fact that he has been offered a suitable post may be taken into account in assessing the damages.(Chitty on Contracts, 21st Edition, Vol (2), p. 559 para. 1040).
13. If the contract of employment is for a specific term, the servant would in that event be entitled to damages the amount of which would be measured prima facie and subject to the rule of mitigation in the salary of which the master had deprived him. (Vide Collier v. Sunday Referee Publishing Co. Ltd., 1940-4 ALL. E.R. 234 at p.237 (A). The servant would then be entitled to the whole of the salary, benefits, etc., which he would have earned had he continued in the employ of the master for the full term of the contract, subject of course to mitigation of damages by way of seeking alternative employment."
https://www.mhc.tn.gov.in/judis 24
8. A reference to the evidence led on behalf of the deceased plaintiff shows that the following is the only evidence which is led to show efforts made for alternative employment:
"I did not join any service after termination by defdt No.1. I am not doing any job since 22.9.93 as I could not find any job despite my efforts."
9. Surely, these types of self-serving averments cannot be held as discharge of onus of proof of mitigation of damages. The statement made by the deceased plaintiff is bereft of any details as to which companies or firms or persons he applied to, and on which dates, and for what position, and for what salary and also the details as to why he could not obtain the alternative employment. I am, therefore, of the opinion that the deceased plaintiff, even assuming he was wrongly terminated from services, failed to prove that he had taken sufficient steps for mitigation of damages.
10. One issue argued before this Court on 17.11.2011 was with regard to a decision of a learned Single Judge of this Court in the case of Tarlochan Singh Mokha v. M/s. Shriram Pistons & Rings Limited & Ors., 74 (1998) DLT 455, wherein a learned Single Judge of this Court has, relying upon the decision of the Supreme Court in the case of Central Inland Water Transport Corporation Ltd & Anr. Etc V.Brojo Nath Ganguly & Anr, AIR 1986 SC 1571, held that public policy principles contained and explained in the Brojo Nath Ganguly's case will also apply to https://www.mhc.tn.gov.in/judis 25 private employment. This judgment, however, in my opinion, no longer lays down the correct law inasmuch as the Supreme Court recently in the case of Binny Ltd & Anr. v. V.Sadasivan & Ors. (2005) 6 SCC 657 has held that public policy principles cannot apply to private employment. Head note "E" of the judgment succinctly brings out the ratio in this regard and the same reads as under:
"E. Constitution of India – Art.226 - Maintainability - Generally - Relief, held, cannot be granted once writ petition is held to be not maintainable Public-policy principles can be applied to employment in public sector undertakings in appropriate cases. But the same principles cannot be applied to private bodies. There are various labour laws which curtail the power of the employer from doing any anti-labour activity. Sufficient safeguards are made in the labour law enactments to protect the interests of the employees of the private sector. The service rules and regulations which are applicable to government employees or employees of public sector undertakings stand on a different footing and they cannot be tested on the same touchstone or enforced in the same manner. (Para 26) In the matter of employment of workers by private bodies on the basis of contracts entered into between them, the courts have been reluctant to exercise the powers of judicial review and whenever the powers were exercised as against private https://www.mhc.tn.gov.in/judis 26 employers, it was solely done based on the public law element involved therein. (Para 16) Praga Tools Corpn. v. C.A. Imanual, (1969) 1 SCC 585; VST Industries Ltd. v. Workers' Union,(2001) 1 SCC 298 : 2001 SCC (L&S) 227; G.M., Kisan Sahkari Chini Mills Ltd. v. Satrughan Nishad, (2003) 8 SCC 639; Federal Bank Ltd. v. Sagar Thomas, (2003) 10 SCC 733, followed Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly, (1986) 3 SCC 156 : 1986 SCC (L&S) 429 : (1986) 1 ATC 103; Delhi Transport Corpn. v. D.T.C. Mazdoor Congress, 1991 Supp (1) SCC 600 : 1991 SCC (L&S) 1213, explained and distinguished Shri Anadi Mukta Sadguru Shree Muktajee Vandas Swami Suvarna Jayanti Mahotsav Smarak Trust v. V.R. Rudani, (1989) 2 SCC 691, distinguished.
The decision of the employers in the preset cases to terminate the services of their employees cannot be said to have any element of public policy and the remedy available to the respondents is to seek redressal of their grievance in civil law or under the labour law enactments, especially in view of the disputed questions involved as regards the status of employees and other matters. Their cases were purely governed by the contract of employment entered into between the employees and the employer. It is not appropriate to construe those contracts as being opposed to the principles of public policy and thus as void and illegal under Section 23 of the Contract Act, 1872. (Para 31)"
https://www.mhc.tn.gov.in/judis 27
25. Therefore, in the absence of any attempt made by the claimant to secure an alternative job, merely, on the basis of termination, he cannot seek damages. Even any damages are payable, the same would be measured subject to the Rule of mitigation of damages by way of seeking alternative employment.
26. Considering the above, in the absence of any document to show that he could not secure any job only because of invocation of Non-Compete clause by the respondent company, the claimant is not entitled to compensation.
27. This Court is of the view that the award granting Rs.24,00,000/- to the claimant as compensation towards damages is contrary to the contract and facts certainly fall within the ambit of patent illegality. Accordingly, the same is set aside and this original petition stands allowed. No costs. Consequently, connected applications stands closed.
04.04.2024
dhk
Internet : Yes/No
Neutral Citation : Yes/No
https://www.mhc.tn.gov.in/judis
28
N. SATHISH KUMAR, J.
dhk
Arb.O.P.No.39 of 2023
and A.Nos.3275 & 5937 of 2023
04.04.2024
https://www.mhc.tn.gov.in/judis