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1990 Supreme(Bom) 368
IN THE HIGH COURT OF BOMBAY
Mrs. Sujata Manohar T.D. Sugla, JJ.
Bhavesh J. Bhatt ... Appellant
Versus
Cyrus N. Baxter and another ... Respondents.
Appeal No. 592 of 1990 in Notice of Motion No. 979 of 1990 in Suit No. 1077 of 1990, decided on 13-9-90.
Advocates appeared :
R.A. Kapadia with G. Ramaswamy, S.U. Kamdar and Ms. Meena Gupta i/b Harish Joshi Co., for appellant.
K.S. Cooper with D.R. Zaiwala, S.K. Cooper, M.D. Siodia and D.J. Kakalin i/b Mulla Mulla, Craigie Elunt Caroe, for respondent No. 1.
P.D. Shah with V.M. Bhatia i/b M.K. Ambalal Co., for respondent No. 2.
Headnote:Section 27-Covenant In contract of employment-Employee restrained during his period of service from seeking employment elsewhere-Whether such a negative covenant enforceable.
Held-Restraint by which a person buts himself during period of contract from not taking service with any other employer is not a restraint in trade and not hit by Section 27-Courts, however, have discretion is enforcing such a negative covenant in contract of employment.
Sections 27- Specific Relief Act, 1963, Section 41 (c) and 42-Civil Procedure Code, 1908, O. 39, Rules 1 and 2-interim injunction-Contract of employment binding employee not to take up any other employment during subsistence of contract- Interim injunction in terms of negative covenant-Reasenable injunction can be granted by such under discretionary power-It is not this by Section 27 of Contract Act" However no injunction can be granted if employer has not performed his part of contract.
In order to decide whether any inter injunction in terms of negative covenant can be granted in favour of the plaintiff and against the 1st defendant, it is first necessary to examine the question of forcibility of such a negative covenant. There is a distinction between a negative covenant in contract of employment restraining an employee from carrying on business or engaging in any occupation after the contract comes to an end and a negative covenant in a contract of employment which restrains the employee during his period of service from seeking employment elsewhere or engaging in any trade or business. It is now well settled that a restraint by which a person binds himself during the period of contract from not taking service with any other employer is not in restraint of trade and is not hit by Section 27 of the Contract Act.
The Courts, however, have a discretion in enforcing such a negative covenant contained in the contract of employment The negative covenant should not be unreasonable in the sense that it should not compel an employee either to serve the employer only or to remain wholly idle or starve. A contract of personal service cannot be specifically enforced. And it is also well settled that Courts cannot compels person to perform indirectly what he cannot be compelled to perform directly. Therefore, a negative covenant which compels a person either to specifically perform his contract of personal service or to remain idle or starve will not be specifically enforced. The Courts have also spelt out at times the public interest is utilising the skills and knowledge of an employer. The Courts have, therefore, held that even if such a covenant is in wide terms the Courts have a discretion to grant an injunction in limited terms so as to ensure first, that there is adequate protection to the employer and secondly, an injunction is not so wide as to bar an alternative venue of employment or earning a livehhood for an employee.
"7) The Professes hereby agrees that he shall not render his services to any other person or Institution at any time during the said period of six years covered by this agreement.
8) The Professor shall be entitled to do private tuitions work outside the class's premises provided however, that the tuition timings should not clash with his service timings at Sukh Sagar Classes and that it should not impinge on the interest of Sukh Sagar Classes." (six).
On the same day the 1st defendant also gave to the plaintiff a hand-written letter to the effect that he had agreed to work with the plaintiff's classes and not with anybody else.
2. According to the 1st defendant, on or about 27th March, 1990 he had a talk with the plaintiff to the effect that he was not satisfied with the remuneration which was being paid to him by the plaintiff. According to the 1st defendant, for the years 1987-88, 1988-89 and 1989-90 he has not been paid 43% of the collection from tuition fees received from students taking the 1st defendant's subject. According to the plaintiff; he came to know on or about 29th March, 1990 that the 1st defendant was joining she coaching classes of the 2nd defendant-respondent No. 2 herein known as Deepak Commerce Classes. It seems that on 29th March, 1990 an advertisement in the Bombay Samachar appeared from Deepak Commerce Classes to the effect that Professor-Cyrus Baxter of Sukh Sagar Classes was joining Deepak Commerce Classes from the ensuing term. The plaintiff also inserted an advertisement in the same news-paper on the same day to the effect that Professor Cyrus Baxter was teaching in Sukh Sagar Classes. On 30th March, 1990 the plaintiff filed the present suit praying, inter alia, for an injunction restraining the 1st defendant from joining the 2nd defendant-classes as a professor until 31st May, 1993 as per the negative covenant in the agreement dated 12th March, 1987. The plaintiff applied for an ad-interim injunction in terms of the negative covenant which has been refused. The plaintiffs Notice of Motion for an interim injunction in terms of the negative covenant has also been dismissed by a judgment and order dated 8th June, 1990. Hence the present appeal.
3. In the meanwhile the 1st defendant claims to have entered into a partnership with Deepak Mistry, the sole proprietor of the 2nd defendant unde
