Delhi District Court
Ezeeflights Travels Pvt. Ltd vs Gaurav Arora Ors on 2 April, 2024
IN THE COURT OF MS. SHAINA GOYAL: CIVIL JUDGE
NORTH WEST: ROHINI COURTS: DELHI
DLNW030005872016
CS No. 61294/2016
Ezeeflights Travels Pvt. Ltd
16, Central Market,
2nd & 3rd Floor, Punjabi Bagh,
New Delhi-110026 ..... Plaintiff
Versus
1. Gaurav Arora
S/o Sh. Praveen Kumar Arora
Address: A-18-B, Kiran Garden,
Uttam Nagar, Near Hanuman Mandir,
New Delhi-110059
2. Ajay Gahlot
A-266 PTS Colony
Malviya Nagar
New Delhi-110017
3. Navdeep Singh
WZ G-96A
Sant Nagar Extn
New Delhi-110059
4. Fly 7 Continents Travels Pvt. Ltd.
11-C1 Z Block Uttam Nagar
New Delhi
5. Amaze Flights Pvt Ltd.
G-96A Sant Nagar Extn, New Delhi ......Defendants
CS No. 61294/2016 1 of page no. 15
SUIT FOR PERMANANT INJUNCTION
Date of institution : 18.03.2016
Date of decision : 02.04.2024
Final Order : Dismissed.
JUDGMENT
1. Brief facts necessary for the disposal of the present suit are that the plaintiff filed a suit for permanent injunction stating therein that the plaintiff is engaged in the business of providing services as a travel agent. It is stated that defendant no.1 had approached the plaintiff company for a job in the month of April, 2012 and after the interview, the plaintiff had appointed him as Sr. Travel Sales Consultant at a salary of Rs. 2,75,000/- per annum, vide letter of employment dated 05.04.2012. As per the plaintiff, defendant no.2 had approached the plaintiff company for a job in the month of April, 2014 and after the interview, the plaintiff had appointed him as a Travel sales Consultant at a salary of Rs. 3,60,000/- p.a., vide letter of employment dated 09.04.2014. Defendant no.3 had approached the plaintiff company for a job in the month of April, 2014 and after the interview, the plaintiff had appointed him as a Travel sales Consultant at a salary of Rs. 3,60,000/- p.a., vide letter of employment dated 09.04.2014. As per the plaintiff, as per the clauses of letters of employment dated 05.04.2012 and 09.04.2014, defendant no.1 to 3 had agreed that they would not enter into another employment contract or conduct any trade or business, without the prior written approval of the plaintiff. As per the plaintiff, during the course of employment, defendant no.3 incorporated a company on 01.10.2014 in the name and CS No. 61294/2016 2 of page no. 15 style of "Fly 7 Continents Travel Pvt. Ltd.", i.e. defendant no. 4, having its registered office at 11-C1, Z Block, Uttam Nagar, New Delhi-110059. On 09.06.2015, defendant no.1 to 3 incorporated another company in the name and style of "Amaze Flights Pvt. Ltd." i.e. defendant no. 5, having its registered office at G-96A, Sant Nagar Extension, New Delhi-110018 and transfered a substantial business of the plaintiff company to the newly incorporated company. As per the plaintiff, defendant no. 1 did not report on duty from 15.07.2015, without giving one month's notice as envisaged in the letter of employment and sent his resignation vide e-mail dated 21.07.2015. It is further stated that on 11.09.2015, defendant no. 2 was terminated from the services by the plaintiff company. Defendant no. 3 did not report on duty from 15.01.2015 without giving one month's notice and sent his resignation vide e-mail dated 17.01.2015. That the acts of the defendants have caused the company irreparable loss. As per the plaintiff, on 06.10.2015, the plaintiff company got filed a police complaint against the defendant no.1 to 3 in P.S. Pubjabi Bagh but to no avail. Hence the present suit.
2. On issuance of summons for settlement of issues, joint written statement has been filed by defendant no. 1 to 3 wherein while denying the contents of the plaint, it is stated that from time to time undue pressure were mounted upon the defendants and the defendants were forced to resign from their jobs. It is further stated that the plaintiff company had at first accepted the oral resignation of defendant no. 1 and 3 and later forced defendant no. 1 and 3 to give a written resignation and moreover, the defendants were pressurized by the plaintiff company to follow CS No. 61294/2016 3 of page no. 15 its dictates. It is further stated that defendant no. 2 was arbitrarily and illegally terminated from his employment by developing false and frivolous story against defendant no. 1 and 3. Thus, it is prayed that the present case be dismissed being devoid of any merits.
3. From the pleadings of the parties, the following issues were framed on 22.02.2017:
1. Whether the plaintiff is entitled to a decree of permanent injunction thereby restraining defendant no. 1 to 3, their agents, assignees from doing the business of travel and further from doing any travel related or call centre related business either from home or any other premises, as prayed for? (OPP)
2. Whether the plaintiff is entitled to a decree of permanent injunction thereby restraining defendant no. 4 and 5, their agents, assignees from doing the business of travel and further from doing any travel related or call center related business either from home or any other premises, as prayed for? (OPP)
3. Relief.
EVIDENCE LED BY THE PARTIES AND DOCUMENTS RELIED UPON BY THEM:
4. To discharge his onus, the plaintiff examined himself as PW1 and tendered his evidence by way of affidavit Ex. PW1/1, besides himself, has also examined PW-2 as witnesses in order to CS No. 61294/2016 4 of page no. 15 prove his case.
4.1 During the course of evidence, PW-1 was examined and he relied upon following document:-
(i) Mark A: Certificate of incorporation;
(ii) Ex. PW 1/2 : Board resolution;
(ii) Ex. PW1/3: Letter of employment dated 05.04.2012;
(iii) Ex. PW 1/4: Original letter of employment dated 09.04.2014;
(iv) Ex. PW 1/5: Original letter of employment dated 09.04.2014;
(v) Ex. PW1/6: True copy of e-mail dated 21.07.2015;
(vi) Ex. PW 1/7 : True copy of e-mail dated 17.01.2015;
(vii) Ex. PW1/8: Complaint dated 06.10.2015;
(viii) Ex. PW1/9: Certificate u / s 65-B of Indian Evidence Act;
and
(ix) Mark B (colly): Copy of companies Master Data and list of signatories/Directors.
PW-1 was cross examined by Ld. Counsel for defendant.
4.2 During the course of evidence, Sh. R. K Saini was summoned as a witness i.e. PW-2 and he relied upon document Ex. PW2/1. He was cross examined by Ld. Counsel for defendant.
4.3 Sh. Nawal Kishore Gupta was summoned as a witness i.e. PW-3 and he relied upon document Ex. PW3/1 and Ex.PW3/2. He was cross examined by Ld. Counsel for defendant.
CS No. 61294/2016 5 of page no. 15
5. On the other hand, defendant in order to rebut the case of the plaintiff, has examined himself as DW1 and tendered his evidence on affidavit as Ex. DW1/A. DW-1 was cross examined by Ld. Counsel for defendant.
5.1 No other witness were examined in DE. DE stood closed on 10.03.2023.
6. I have heard the arguments of Ld. Counsels for the parties and perused the record of the case.
FINDINGS AND ANALYSIS
7. Before embarking to decide the present case, it would be appropriate to reiterate the burden of proof required to be discharged in civil proceedings. As laid down in Postgraduate Institute of Medical Education and Research v. Jaspal Singh, (2009) 7 SCC 330, the burden which ought to be discharged in civil proceedings in not as strict as in criminal cases and in order for any party to succeed, he/it is required to prove his/its case on the preponderance of probabilities. The relevant portion of the aforesaid pronouncement is hereby produced here for the sake of brevity:
"It has been held that there is a marked difference as to the effect of evidence, namely, the proof, in civil and criminal proceedings. In civil proceedings, a mere preponderance of probability is sufficient, and the defendant is not necessarily entitled to the benefit of every reasonable doubt; but in criminal proceedings, the persuasion of guilt must amount to such a moral certainty as convinces the mind of the court, as a reasonable man, beyond all reasonable doubt."
CS No. 61294/2016 6 of page no. 15 7.1 Further, Section 101 of the Evidence Act, 1872 defines
"burden of proof" and lays down that the burden of proving a fact always lies upon the person who asserts the facts. Until such burden is discharged, the other party is not required to be called upon to prove his case. The court has to examine as to whether the person upon whom the burden lies has been able to discharge his burden. A party cannot proceed on the basis of weakness of other party. In view of Section 103 of Evidence Act, the burden of proof as to any particular fact lies on that person who wishes the Court to believe in its existence, unless it is provided by any law that the proof of that fact shall lied on any particular person. Further, Section 58 of the Indian Evidence Act contains that no fact need to be proved in any proceedings which parties thereto or their agents agree to admit at the hearing, or which, before the hearing, they agree to admit by any writing under their hands or which by any rule of pleadings enforce at the time they are deemed to have admitted by their pleadings.
7.2. Having determined the burden of proof required to be discharged in civil cases, this court will now proceed to give it issue wise findings as per the issues framed as follows:-
ISSUE NO 1 & 2 :
ISSUE NO 1. Whether the plaintiff is entitled to a decree of permanent injunction thereby restraining defendant no. 1 to 3, their agents, assignees from doing the business of travel and further from doing any travel related or call centre related business either from home or any other premises, as prayed for?
CS No. 61294/2016 7 of page no. 15 (OPP)
ISSUE NO 2. Whether the plaintiff is entitled to a decree of permanent injunction thereby restraining defendant no. 4 and 5, their agents, assignees from doing the business of travel and further from doing any travel related or call center related business either from home or any other premises, as prayed for? (OPP)
8. These issues are being taken together for the sake of brevity as they are interlinked and involve common questions of fact and law. As already noted, that civil disputes, such as the present one, are determined on the touchstone of preponderance of probability. The burden of proving the said issues was upon the plaintiff.
8.1 Briefly put, it is the case of the plaintiff that defendant no 1-3 have violated the terms of their letters of employment and in violation of the same, they have constituted companies i.e defendant no 4 & 5. In order to establish his case, the plaintiff has relied upon terms of the letters of employment which are Ex PW 1/3, Ex PW 1/4 & Ex PW 1/5. The relevant clause in the said letters is under the head "Other Employment". The clause is same in all letters of employment relied upon by the plaintiff and therefore is being reproduced as hereunder only once. The relevant clause is reproduced as below :-
"Other employment You shall not enter into another employment contract or CS No. 61294/2016 8 of page no. 15 conduct any trade or business without the prior written approval of the company, you will not indulge or carry out any travel related or call center related business either from home or any other premises."
8.2 Now, as the case of the plaintiff is entirely based upon alleged violation of the abovesaid clause, it is important to firstly examine its validity and then the application of the abovesaid clause to the present facts to see whether the plaintiff is entitled to the relied sought for or not.
8.3 The implication of the clause is that the defendants are required to seek prior approval of the plaintiff before engaging in any travel related business. The restriction or the condition stipulated by the abovesaid clause is for both during and post employment.
9. At this stage, It is pertinent to note the judgment of Hon'ble Supreme Court of India in Niranjan Shankar Golikari v. The Century Spinning and Mfg. Co. Ltd., AIR 1967 SC 1098 held as hereunder :
"20. The result of the above discussion is that considerations against restrictive covenants are different in cases where the restriction is to apply during the period after the termination of the contract than those in cases where it is to operate during the period of the contract. Negative covenants operative during the period of the contract of employment when the employee is bound to serve his employer exclusively are generally not regarded as restraint of trade and therefore do not fall under Section 27 of the Contract Act. A negative covenant that the employee would not engage himself in a trade or business or would not CS No. 61294/2016 9 of page no. 15 get himself employed by any other master for whom he would perform similar or substantially similar duties is not therefore a restraint of trade unless the contract as aforesaid is unconscionable or excessively harsh or unreasonable or one sided as in the case of W.H. Milsted & Son Ltd. Both the trial Court and the High Court have found, and in our view, rightly, that the negative covenant in the present case restricted as it is to the period of employment and to work similar or substantially similar to the one carried] on by the appellant when he was in the employ of the respondent Company was reasonable and necessary for the protection of the company's interests and not such as the Court would refuse to enforce. There is therefore no validity in the contention that the negative covenant contained in Clause 17 amounted to a restraint of trade and therefore against public policy."
9.1 It is also pertinent to note the judgment of Hon'ble Supreme Court of India in Superintendence Company of India (P) Ltd. v. Shri Krishna Murgai,: (1981) 2 SCC 246. Relevant paragraphs are being reproduced as hereunder :
"58. The drafting of a negative covenant in a contract of employment is often a matter of great difficulty. In the employment cases so far discussed, the issue has been as to the validity of the covenant operating after the end of the period of service. Restrictions on competition during that period are normally valid, and indeed may be implied by law by virtue of the servant's duty of fidelity. In such cases the restriction is generally reasonable, having regard to the interest of the employer, and does not cause any undue hardship to the employee, who will receive a wage or salary for the period in question. But if the covenant is to operate after the termination of services, or is too widely worded, the Court may refuse to enforce it.
59. It is well settled that employees covenants should be carefully scrutinised because there is inequality of bargaining power between the parties; indeed no bargaining power may occur because the employee is CS No. 61294/2016 10 of page no. 15 pre-sented with a standard form of contract to accept or reject. At the time of the agreement, the employee may have given little thought to the restriction because of his eagerness for a job; such contracts "tempt improvident persons, for the sake of present gain, to deprive themselves of the power to make future acquisitions, and expose them to imposition and oppression.
60. There exists a difference in the nature of the interest sought to be protected in the case of an employee and of a purchaser and, therefore, as a positive rule of law, the extent of restraint permissible in the two types of case is different. The essential line of distinction is that the purchaser is entitled to protect himself against competition on the part of his vendor, while the employer is not entitled to protection against mere competition on the part of his servant. In addition thereto, a restrictive covenant ancillary to a contract of employment is likely to affect the employee's means or procuring a livelihood for himself and his family to a greater degree than that of a seller, who usually receive ample consideration for the sale of the goodwill of his business.
61. The distinction rests upon a substantial basis, since, in the former class of contracts we deal with the sale of commodities, and in the latter class with the performance of personal service-altogether different in substance; and the social and economic implications are vastly different.
62. The Courts, therefore, view with disfavour a restrictive covenant by an employee not to engage in a business similar to or competitive with that of the employer after the termination of his contract of employment.
63. The true rule of construction is that when a covenant or agreement is impeached on the ground that it is in restraint of trade, the duty of the Court is, first to interpret the covenant or agreement itself, and to ascertain according to the ordinary rules of construction what is the fair meaning of the parties. If there is an ambiguity it must receive a narrower construction than the wider. In Mills v. Dunham, L.R. [1891] 1 Cha 576 Kay, LJ. observed : If there is any ambiguity in a stipulation between employer and employee imposing a restriction on the latter, it CS No. 61294/2016 11 of page no. 15 ought to receive the narrower construction rather than the wider -- the employed ought to have the benefit of the doubt. It would not be following out that principle correctly to give the stipulation a wide construction so as to make it illegal and thus set the employed free from all restraint. It is also a settled canon of construction that where a clause is ambiguous a construction which will make it valid is to be preferred to one which will make it void.
64. The restraint may not be greater than necessary to protect the employer, nor unduly harsh and oppressive to the employee. I would, therefore, for my part, even if the word 'leave' contained in Clause 10 of the agreement is susceptible of another construction as being operative on termination, however, accomplished of the service e.g. by dismissal without notice, would, having regard to the provisions of Section 27 of the Contract Act, 1872, try to preserve the covenant in Clause 10 by giving to it a restrictive meaning, as implying volition i.e. where the employee resigns or voluntarily leaves the services. The restriction being too wide, and violative of Section 27 of the Contract Act, must be subjected to a narrower construction."
9.2 The judgments in Niranjan Golikari (supra) and Krishna Murgai (supra) were discussed in the judgment of Hon'ble High Court of Delhi in K.D Campus Pvt. Ltd. Vs. Metis Eduventures P. Ltd. India & Ors. 2018 SCC OnLine DeL 13366. Relevant para is being reproduced as hereunder :
"I have also wondered whether the expressions "period of the contract", "period of employment" used in Niranjan Shankar Golikari (supra) would extend to the period when one of the parties to the contract or employer-employee relation ship, has illegally terminated the contract/employment prior to the contracted period. In other words, whether an employee who has ceased to serve the employer before the expiry of the period for which he had contracted to serve the employer can be restrained by the employer from serving anywhere else for the remaining contracted period. As per Niranjan Shankar Golikari (supra), CS No. 61294/2016 12 of page no. 15 negative covenants operate during the period of the contract of employment when the employee is bound to serve his employer exclusively are generally not regarded in restraint of trade and do not fall under Section 27 of the Contract Act. However it has further been explained that the Courts have a wide discretion to enforce by injunction a negative covenant and will enforce the same where it is necessary to protect the employer's interest and where there is nothing to show that if the negative covenant is enforced, the employee would be driven to idleness or would be compelled to go back to the earlier employer. In Shri Krishna Murgai(supra) it was further explained that injunction shall be granted where the restriction is reasonable, having regard to the interest of the employer and does not cause hardship to the employee, who will receive a wage or salary for the period in question. It was further held that if the covenant is to operate after the termination of service or is too widely worded, the Court may refuse to enforce it."
9.3 It is also pertinent to note the judgment of Hon'ble Supreme Court of India Percept D' Markr ( India) Pvt Ltd Vs Zaheer Khan & Anr AIR 2006 SC 3426. Relevant paras are being reproduced as under -
"The legal position with regard to post-contractual covenants or restrictions has been consistent, unchanging and completely settled in our country. The legal position clearly crystallised in our country is that while construing the provisions of Section 27 of the Contract Act, neither the test of reasonableness nor the principle of restraint being partial is applicable, unless it falls within express exception engrafted in Section 27.
Section 27 of the Indian Contract Act, 1872 provides as follows:-
"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.
Exception 1.- Saving of agreement is 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."
CS No. 61294/2016 13 of page no. 15
10. In light of the abovesaid principles, coming back to the facts of the present case, it becomes amply clear that the clause stipulated by the plaintiff in the letter of employment would have to fall within the four corners of exception engrafted under Section 27 of Indian Contract Act, 1872, in order to constitute as valid. The burden to prove that the case falls within the exception of Section 27 of Indian Contract Act, 1872 would lie upon the plaintiff by virtue of Section 105 of Indian Evidence Act. However, in the present facts, it is neither the case of the plaintiff that he sold goodwill to the defendants nor he has led any evidence whatsoever to show that his case fell within the four corners of the abovesaid Exception. The clause stipulated by the plaintiff in the letters of employment is too wide as the same is not limited in terms of time or area. Thus, the same is hit by Section 27 of Indian Contract Act, 1872.
11. Even so, the plaintiff, by way of the present suit, is seeking to get enforced a post service restrictive covenant which by itself was neither limited in terms of time nor limited in terms of area. In the present facts, it is disputed that whether the employment was prematurely terminated or not. While the plaintiff's case is that the defendants constituted their own businesses while still remaining employees of plaintiff, it is the case of the defendant that they had already sent in their oral resignations to the plaintiff. Be that as it may, it is undisputed and a matter of record that The injunction sought by the plaintiff against the defendants in the present matter relates to "any" travel related business thus making it too wide. The same is neither restricted as to time nor CS No. 61294/2016 14 of page no. 15 to area and can therefore be said to be too wide, unreasonable and unnecessary for the protection of the interests of the plaintiff Company.
12. As regards defendant no 4 & 5, although, no written statement was filed on behalf of defendant no 4 & 5, the nature and grounds of relief relied upon by the plaintiff are same and the plaintiff has failed to prove his case even qua defendant no 4 & 5.
13. Thus, The plaintiff has failed to discharge the burden of proof. Accordingly, issue no. 1 & 2 are decided against the plaintiff and in favour of the defendants.
RELIEF:
14. In view of the above discussion, it is clear that the plaintiff has not been able to prove his case on the touchstone of preponderance of probability either by way of oral evidence or by documentary evidence and therefore he is not entitled to any of the reliefs claimed. Accordingly, the following order is passed:
ORDER:
The suit of the plaintiff is dismissed. Parties to bear their own costs. Application, if any, pending on record is disposed of in terms of this judgment.
File be consigned to record room after due compliance.
Announced in the open Court today.
(Shaina Goyal)
Civil Judge-N/W District
Rohini Courts/02.04.2024
CS No. 61294/2016 15 of page no. 15