Madras High Court
Tata Sons Limited vs Mastech Corporation And Ors. on 21 August, 1995
Equivalent citations: 1996(2)CTC752
ORDER Govardhan, J.
1. In A.No.5675 of 1994, the petitioner has stated as follows: The suit is filed against the respondents for restraining them by means of a permanent injunction from inducing the employees of the plaintiff engaged with the plaintiff's office of Madras to abandon the service of the plaintiff in disregard of the subsisting contract of employment. The plaintiff recruits candidates with suitable background and gives extensive training at the plaintiff's costs to develop them as Software Engineers and equip them with problem solving techniques. After such training they are taken into regular service. Several crores of rupees were spent per annum by the plaintiff on training. The trainees receive salary during the period of training. A trainee has to serve to plaintiff for a period of three years from the date of joining and should undertake that he will not take up employment with anyone else during that period. An agreement is entered into between the employee and the plaintiff for that purpose. The plaintiff also deputes employees abroad for training on the job study. The plaintiff spends huge amounts towards travel cots, allowances paid abroad besides the salary and emoluments paid in India. The persons deputed abroad should execute an agreement undertaking to serve the plaintiff on return to India for twice the period of deputation abroad. This period will not exceed twenty-four months during the career of the employee. The first defendant is in the field of Computer/Consultancy in the United States. The second defendant is involved in recruiting personnel for the projects abroad of the first defendant. Since they do not have any office at Madras, they have engaged the third defendant to recruit the personnel for them. The defendants who are in need of highly trained and experienced personnel are keen and inducing the employees of the plaintiff to bread their contractual relations. They are aware of the agreement between the plaintiff and their employees. They are also aware of the undertaking given by the employees not to take employment with anyone during the period of deputation. But, intentionally and without lawful justification, they have induced the employees of the plaintiff to commit breach of the service of the agreement. Hence the suit. Since the defendants 1 and 2 are carrying on business outside the jurisdiction of this Court, leave to sue is sought for.
2. When this application was moved on the date of the filing of the suit, leave was granted.
3. The first respondent has filed an application for revoking the leave in A.No.58 of 1995 contending as follows: The leave has been sought on the basis that a substantial part of the cause of action had arisen within the jurisdiction of this Court. Clause 12 of the Letters Patent provides that a party could obtain leave only on satisfying the Court with a substantial part of the cause of action against the first respondent had arisen within the jurisdiction of this Court. On that ground alone, the leave granted should be revoked. According to the plaintiff, the applicants are in dire need of highly trained and experienced personnel and therefore, they are inducing the employees of the plaintiff to break the agreement which they have entered into with the plaintiff. The said allegation is not true. The plaintiff has not pleaded that any part of the cause of action arose within the jurisdiction of this Court. The plaintiff has alleged that the third respondent recruits personnel on behalf of the defendants 1 and 2. The plaintiff has not pleaded that the defendants 1 and 2 have induced their employees and such inducement has been done within the jurisdiction of this Court. The suit is, therefore, liable to be dismissed. It is also liable to be dismissed on the ground that notice was not issued to the defendants before leave was granted. The first defendant is a big organisation with a turnover of over 70 million dollars and having about 1100 employees. They provide excellent cross platform training. The first defendant has no necessity to induce the employees of the plaintiff. The first defendant company receives applications from prospective employees apart from oral and personnel enquiries. There is no reason for them to induce the employees of the plaintiff. The leave granted, therefore, should be revoked.
4. In the counter, the plaintiff has stated as follows: The suit has been filed contending mat the defendants are inducing the employees of the plaintiff engaged at Madras to abandon the service of the plaintiff in disregard of subsisting contract of the agreement between the employees and the plaintiff. Both in the plaint and in the affidavit for leave to sue, it has been specifically mentioned that the inducement which is an actionable wrong, was being offered at Madras to the employees of the plaintiff employed at Madras. Substantial part of the cause of action had, therefore, arisen within the jurisdiction of this Court. Since the defendants 1 and 2 do not have any office at Madras, they have engaged the third defendant to recruit the personnel for them. The second and third defendants are paid Commissions for the work done. The first defendant has induced highly trained personnel of the plaintiff to break their commitments under the agreement with the plaintiff. The inducement took place at Madras. The breach of the contractual relations took place at Madras and the harm to the plaintiff took place at Madras. Substantial part of the cause of action has therefore arisen at Madras within the jurisdiction of this Court. Leave granted, therefore, cannot be revoked and the application is liable to be dismissed.
5. O.A.No.996 of 1994: The averments in the affidavit of the plaintiff is the same as in A.No.5675 of 1994 except for the prayer in this application to the effect that an ex-parte order of injunction restraining the respondents from inducing the employees of the applicant to abandon their services in disregard of the subsisting contract of employment between the employees and the applicant-plaintiff pending disposal of the suit.
6. The first respondent in their counter contents as follows: The first respondent is not aware of the kind and extend of the training offered by the applicant to its employees. The plaint is bald as to how the respondent had induced the employees. The first respondent is engaged in the business of providing highly specialised Software Engineering Services to large Commercial and Government Organisation all over the world with a turn over of Rs. 200 crores per annum. The first respondent has developed a highly competitive and responsive international organisation. It has received the United States Government's Award for excellence in the years 1991 and 1992. The allegation that the first respondent does not have any training programme as imparted by the applicant is devoid of merits. The first respondent provides excellent cross platform training. The first respondent had about 1,100 employees engaged in specialised software programmes. The allegation that the first respondent in need of highly trained and experienced personnel and consequently inducing the employees of the applicant company knowing that the employees have entered into service agreement for a period of three years with the applicant company is without basis. The first respondent is not aware that 135 employees have left the office of the applicant company. The very allegation would show that there is a dearth of talent and the demand for qualified professionals is increasing and persons who are qualified go in search of placements which are the most remunerative and there is no question of anybody inducing them. The feature of professional jumping from one job to another, is a phenomenon which is fast increasing and qualified personnel are always on the look out for better placements. This respondent has not induced any employee of the applicant company to commit the breach of contractual obligation. The application is, therefore, liable to be dismissed.
7. The plaintiff has filed the suit for permanent injunction restraining the defendants and their men from inducing the employees of the plaintiff engaged at Madras to abandon the services of the plaintiff in disregard of the subsisting contract of employment between them and the plaintiff. In the plaint, it is alleged that the first defendant is having its office in Pittsburg, Pennsylvania and the second defendant is having its office at Pune and through the third defendant, who is having his office at Madras, they are inducing the employees of the plaintiff for whom the plaintiff has given training at heavy cost, to leave the service of the plaintiff and engage them and if the defendants are allowed to induce the employees of the plaintiff in violation of their service agreement, considerable damage and prejudice will be caused to the plaintiff. Leave has been sought for to file the suit at Madras on the ground that the defendants 1 and 2 are carrying on their business outside the jurisdiction of this Court. It was also granted.
8. The defendants who have come forward with an application for revoking the leave so granted, would contend that the leave granted has to be revoked since there was no notice issued to the respondents. The plaint, the defendants 1 and 2 are carrying on their business outside the jurisdiction of this Court and through the third defendant who is carrying on business within the jurisdiction of this Court, they are inducing the employees of the plaintiff at Madras to abandon the employment under the plaintiff at Madras. The inducement given to the employees of the plaintiff being at Madras, as per the plaint allegations, part of the cause of action arises in Madras and since the defendants 1 and 2 are carrying on their business outside the jurisdiction, leave has been granted under Clause 12 of the Letters Patent. There is no necessity for giving any notice as in the case of a leave sought under Section 92 of the Code of Civil Procedure. Therefore, the contention of the learned counsel appearing for the defendants that the plaint is to be rejected on the ground that leave has been granted without issuing notice to the defendants, is not sustainable. Therefore, I am of opinion that the defendants have not placed any materials to revoke the leave granted.
9. The learned counsel appearing for the defendants would also argue that the averments in the plaint as well as in the affidavit are very vague, and they are not sufficient to grant the injunction as prayed for by the application in O.A.No.996 of 1994 and injunction granted has, therefore, to be vacated. The allegation in the plaint as well as in the affidavit of the applicant is to the effect that the defendants 1 and 2 are inducing the employees of the plaintiff at Madras through the third defendant to abandon the employment irrespective of the agreement they have entered into with the plaintiff to serve the plaintiff for certain period. In the plaint, it is alleged that 135 employees of the plaintiff who had been trained by the plaintiff at heavy cost, have left the service of the plaintiff, on the inducement of the defendants. It is immaterial whether all the 135 employees who have left the service of the plaintiff have joined the first defendant in United States. The suit being one for restraining the respondents from inducing the employees of the plaintiff to abandon their employment inspire of the training they had received and inspite of the agreement entered into with the plaintiff the question whether the persons who have abandoned their employment, have joined the services of the first defendant or not, need not be considered at all to grant the relief sought for by the plaintiff or to deny the same. The allegation made against the defendants amounts to interference by them with the subsisting contract between the plaintiff on the one hand and the employees on the other. In Winfield and Jolowicz on "Tort" (Tenth edition) at page 445 it is stated as follows:
"A commits a tort if, without lawful justification, he intentionally interferes with a contract between B and C, (a) by persuading B to break bis contract with C, or (b) by some other act, perhaps only if tortious in itself, which prevents B from performing his contract."
In the above book, the learned Author has stated as follows:
"Bowen v. Hall, (1881) 6 Q.B.D.333, and later decisions made it clear that intentionally and without lawful justification to induce or procure anyone to break a contract, whether of personal services or not, made by him with another is a tort actionable at the suit of that other (But not at the suit of the contract breaker himself : Boulting v. Association of Cinematograph, television and Allied Technicians, (1963) 2 Q.B.D.606, 639-640, Pet Upjohn, LJ) if damages results to him. This has been said to be based on the principle' that any violation of legal rights, including rights under contract, committed knowingly and without justification, is a tortious act.' Tempertion v. Russel, (1893) 1 Q.B. 715. The allegations in the plaint are to the effect that defendants 1 to 3 have induced the employees of the plaintiff to abandon their services of the plaintiff and thereby committed an actionable tortious act"
10. In the Book of "The Law of Trots" by Salmond ZNC Heuston at Page 357, the learned Author has stated as follows:
"Intentionally and without lawful justification to induce or procure anyone to break a contract made by him with another is a tort actionable at the suit of that other, if damage has resulted to him.. It was, however, for some time believed that the principles so established were confined to cases where, (i) the defendant's action was malicious, and (ii) the contract in question was to render exclusive personal services for a fixed period. But now it is perfectly well established that the scope of the action is not limited in either of these ways, Indeed, the modern cases indicate that the tort was become so broad as to be better described as unlawful interference with contractual relations."
The learned Counsel appearing for the applicant would argue that even though the term in the agreement, restraining the employees from leaving the service of the plaintiff applicant, is considered as a negative covenant, still, it can be enforced since negative covenants operate during the period of contract of employment when the employee is bound to serve his employer exclusively or generally not regarded as restraint of trade and therefore, do not fall under Section 27 of the Contract Act. I am in agreement with the learned Counsel appearing for the applicant on this aspect with regard to the enforceability of the nagative covenant in an agreement. The learned Counsel appearing for the respondents would argue that if the employees of the plaintiff have left the services of the applicant-plaintiff for better prospects, it cannot be stated that it was due to the inducement of the third respondent at the instance of the respondent 1 and 2 and there is no necessity for any injunction. If really there was no inducement by respondents 1 and 2 through the third respondent, issuing an injunction restraining them from inducing the employees of the plaintiff to leave the services of the plaintiff in utter disregard to the service agreement entered by them with the employer will not cause any prejudice to the respondents. The injunction sought for is restricted to the nature of the employment and to the area and it cannot be stated that it is an unreasonable or unnecessary one as contended by the learned Counsel appearing for the respondents. The question whether there was real inducement by the respondents 1 and 2 through the third respondent and whether the plaintiff has actually suffered damage on account of the inducement has got to be considered in detail only at the time of the trial and suffice it to observe at the present, that there is prima facie case made out by the plaintiff for getting an order of interim injunction, since it is alleged by the plaintiff that 135 employees of the plaintiff who have received training under the plaintiff had abandoned their employment with the plaintiff in utter disregard to the agreement of service entered into with the plaintiff. The plaintiff has, in my opinion, made out a prima facie case for granting injunction and the balance of convenience is also in its favour and therefore, injunction already granted is made absolute in O.A.No.996 of 1994.
11. In the result, A.No.58 of 1995 is dismissed. O.A.No.996 of 1994 is allowed making the interim injunction already granted absolute.