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For all Sales and Marketing and Service and Support positions experience of working with or having handled Beckman Coulter products and or similar products would be a distinct advantage.

4. A copy of one such advertisement is annexed as Annexure-P-7 and is at page 218 of the paper book. It is the petitioner's case that the aforesaid statement in the said advertisement amounted to solicitation and was in violation of the non-solicitation of employees clause referred to above. The counsel for the petitioner submitted that this amounted to solicitation because reference to experience of working with or having handled Beckman Coulter Products had reference solely to the employees of the petitioner, who had hitherto been the exclusive distributors insofar as the respondent's products in India were concerned. Clearly, therefore, according to the learned Counsel for the petitioner, the advertisement was directed towards the employees of the petitioner and since such personnel were to be given a distinct advantage, it was a clear case of solicitation as contemplated under clause 5 of Exhibit-D to the Canvassing Representative Agreement of January, 2002. It is in this context that the present petition under Section 9 of the said Act has been filed because the agreement by virtue of clause 22 thereof provides for arbitration and, according to the learned Counsel for the petitioner, the petitioner has already issued a notice to the respondent raising disputes arising out of the aforesaid act of solicitation of its employees by the respondent in violation of the non-solicitation of employees clause contained in the said agreement. As indicated in the petition, the petitioner apparently raised claims in the arbitral proceedings for declaring that the respondent's action in issuing the said advertisement and in soliciting its employees thereby was in violation of the contract expressly prohibiting solicitation and the petitioner has claimed damages amounting to Rs.81,400,000/- in respect of employees who have actually submitted their resignations to the petitioner pursuant to the said solicitation by the respondent. This, in sum and substance, is the case of the petitioner.

9. Mr Arun Mohan then submitted that after these documents dated 21.01.2003 and 10.12.2003, on 03.02.2004 the respondent sent a detailed draft agreement for the period 01.01.2004 to 31.12.2006. This draft agreement did not contain any non-solicitation clause. It was then contended by Mr Arun Mohan that while this draft was under consideration of the petitioner, on 06.04.2004, the respondent wrote to the petitioner informing that the distributor agreement was currently under process for renewal and till such time, the existing terms and conditions would be binding on both the parties. According to him, the reference to the existing terms and conditions were as contained in the letter dated 10.12.2003. He submitted that on 17.04.2004, the petitioner sent its response (objections) to the draft distributor agreement under contemplation. What is material is that in its objections, the petitioner did not seek the insertion of any non-solicitation clause. Mr Arun Mohan pointed to page 325 and 326 of the paper book which was a part of the tabulation of suggestions made by the petitioner on the draft agreement submitted by the respondent. According to Mr Arun Mohan, there were differences particularly with regard to clause 16 which spoke of the term and duration. This difference of opinion was whether the agreement was to terminate on 31.12.2006 or 31.12.2008. Secondly, whether the contract was terminable by a termination simplicitor with six months Page 2680 notice or whether it was terminable only if the minimum quantities were not achieved. It was suggested that the exclusivity clause be made non-exclusive. The other aspect which is material, according to Mr Arun Mohan, is that the suggestions did not include the suggestions for inclusion of a non-solicitation clause. He, however, submitted that subsequently on 07.05.2004, an e-mail (at page 365 of the paper book) was sent by the petitioner to the respondent indicating that apart from the changes proposed by the petitioner, it is also necessary to incorporate the 'non hire' clause. According to Mr Arun Mohan, 'non hire' clause was entirely different from a non-solicitation clause. In any event, he submitted that in the wake of such differences between the parties existing in April, May, 2004, how could the letter of 24.05.2004 be read as extending the earlier agreement of 2002. He further submitted, with reference to the letter dated 24.05.2004, that after exchange of drafts as aforesaid, no sane person would by such an informal letter extend the 2002 contract on the same terms and conditions. According to him, stated differently, subsequent to an 'offer' and 'counter-offer' process, to imply extension of the agreement of 2002 in an informal letter is unheard of. He further submitted that if the letter of 24.05.2005 was by itself an extension of the 2002 contract, one would have in the normal course expected the petitioner to at least write a letter proposing that instead of the terminal date being 31.12.2005, the respondent may make it, if necessary, 2008, as the petitioner had sought, or at least 2006, as the respondent itself had proposed. According to him, the fact that no communication was sent by the petitioner asking for signing a formal contract on the same terms and conditions as the original contract of 2002 was a significant fact.

22. Mr Ramachandran submitted on behalf of the petitioner that the negative covenant that is contained in the non-solicitation clause is a reasonable restriction that the parties imposed upon themselves for a period of two years after termination of the agreement because of the peculiar nature of their relationship spanning over 17 years. He submitted that the petitioner during this period had, as the exclusive Canvassing Representative of the respondent in India, submitted to a stipulation that it would refrain from 'promoting, selling, or offering for sale during the life of this agreement any products which are competitive with such products' by virtue of clause 3.8 of the original Canvassing Representative Agreement of January, 2002. In the words of Mr Ramachandran, this stipulation had effectively barred the petitioner from promoting its business over and above the respondent's products. It was further explained by him that it was in this context that the inclusion of non-solicitation clause had become a necessity. By virtue of the same, the parties intended, in effect, that the petitioner would be given a fair chance to develop its business interest for a period of two years after termination of the agreement with the aid of its specially trained, highly skilled, very valuable sales, marketing, service and support personnel. In these circumstances, it was further submitted that the reasonable restriction set out in the non-solicitation clause, which does not seek to impose a restriction on the petitioner's employees, has to be enforced. According to Mr Ramachandran, if the same is not done and the petitioner loses its most valuable resources, i.e., its sales and marketing and service and support personnel, its business in the bio-med segment would come to an end. Quite dramatically, he had submitted that the petitioner would be 'wiped out' from the market and thereby suffer damage and irreparable harm. It was also submitted that the petitioner had relieved the employees who had resigned and has not tried to hold them back. Such employees are free to join any other company besides the respondent because the respondent is barred from employing them in terms of the non-solicitation clause. According to Mr Ramachandran, the non-solicitation clause is a reasonable restriction and is not hit by Section 27 of Page 2688 the Indian Contract Act, 1872 since the clause does not impose a restriction on the petitioner's employees from joining any of the competitors of the petitioner post termination of such employees' contracts.

4) The question of reasonableness as also the question of whether the restraint is partial or complete is not required to be considered at all whenever an issue arises as to whether a particular term of a contract is or is not in restraint of trade, business or profession.

48. In the light of these principles which have been culled out from the decisions with regard to the scope and ambit of the provisions of Section 27 of the Indian Contract Act, it remains to be considered as to whether the non-solicitation clause in question amounts to a restraint of trade, business or profession. Two things are material. First of all, the contract in which the non-solicitation clause appears is a contract between the petitioner and the respondent whereby the petitioner was appointed as the sole and exclusive Canvassing Representative/Distributor of the respondent for its products in India. Secondly, it is not a contract between an employer and an employee. If one considers the non-solicitation clause, it becomes apparent that the parties are restrained for a period of two years from the date of termination of the agreement, from soliciting, inducing or encouraging any employees of the other party to terminate his employment with or to accept employment with any competitor, supplier or customer of the other party. It is a covenant which essentially prohibits either party from enticing and/or alluring each other's employees away from their respective employments. It is a restriction cast upon the contracting parties and not on the employees. The later part of the non-solicitation which deals with the exception with regard to general advertising of positions makes it clear that there is no bar on the employees of the petitioner leaving its employment and joining the respondent and vice versa. The bar or restriction is on the petitioner and the respondent from offering inducements to the other's employees to give up employment and join them. Therefore, the clause by itself does not put any restriction on the employees. The restriction is put on the petitioner and the respondent and, Page 2705 therefore, has to be viewed more liberally than a restriction in an employer-employee contract. In my view, therefore, the non-solicitation clause does not amount to a restraint of trade, business or profession and would not be hit by Section 27 of the Indian Contract Act, 1872 as being void.