IN THE HIGH COURT OF DELHI AT NEW DELHI
MUKTA GUPTA, J.
M/S PARAMOUNT COACHING CENTRE PVT LTD. - Plaintiff
Versus
RAKESH RANJAN JHA - Defendant
I.A. No.7890 of 2017 (under Order XXXIX Rule 1 and 2 CPC) in CS (COMM) 465 of 2017
Decided On : 24-08-2017
Injunction - Breach of Contract - MOU dated 6th January, 2017 - Clauses 2, 4, 6, 7, and 8 - Summary of Acts and Sections: Section 27 of the Indian Contract Act, AIR 1967 SC 1098, Niranjan Shankar Golikari vs. The Century Spinning and Manufacturing Co. Ltd., AIR 1986 SC 1571 Central Inland Water Transport Corporation Limited & Anr. vs. Brojo Nath Ganguly & Anr., 2015 (149) DRJ 88 Arvinder Singh & Anr. Vs. Lal Path Lab Pvt. Ltd. & Ors.
Fact of the Case:
The plaintiff sought an injunction against the defendant, a teacher, for breaching a Memorandum of Understanding (MOU) by leaving the plaintiff's institute and joining a competing institute. The defendant claimed the MOU was obtained through undue influence and was unconscionable due to harsh treatment and non-payment.
Finding of the Court:
The court found that the negative covenant in the MOU was valid during the period of the contract and did not restrain the defendant from carrying out his lawful profession. The court partially restrained the defendant from teaching at any institute until the MOU subsisted.
Issues: The issues included the validity of the MOU's negative covenant, whether the MOU was unconscionable, and the impact of the defendant's departure on the plaintiff's institute.
Ratio Decidendi: The court applied Section 27 of the Indian Contract Act and precedent cases to determine the validity of the negative covenant and the unconscionability of the MOU. It found the covenant valid during the contract period and partially restrained the defendant.
Final Decision: The court partially restrained the defendant from imparting private tuition to any student of the plaintiff’s coaching institute or any other coaching institute until the MOU subsisted.
1. Plaintiff has filed the present suit inter alia praying for a decree of permanent injunction in favour of the plaintiff and against the defendant restraining him from teaching students in any other educational institution including, but not limited to M/s K.D. Campus Pvt. Ltd. and a further decree of mandatory injunction directing the defendant to teach exclusively in the plaintiff’s institute till the Memorandum of Understanding (in short MOU) dated 6th January, 2017 subsists, that is, till 5th January, 2020. In the application, plaintiff prays for an ad-interim injunction in respect of the first prayer mentioned above.
2. As per the plaint, plaintiff institute is an educational institute imparting education to the aspiring students of various competitive examinations having its branches throughout India. On 6th January, 2017 defendant entered into an agreement with the plaintiff company through its Director with regard to rendering service for the purpose of imparting education particularly in the subject of English for the students aspiring to appear in the competitive exams of SSC for a further period of three years w.e.f. 6th January, 2017 to 5th January, 2020. It is stated that the defendant had earlier also been associated with the plaintiff company for a period of more than three years without any break and in this regard an earlier Memorandum of Understanding dated 10th May, 2014 was entered into between the plaintiff and the defendant. Renewal of three years was granted on the request of the defendant vide MOU dated 6th January, 2017. Plaintiff took admissions of thousands of students in several batches and advertised the name of the defendant as part of faculty for English. Further the students of the plaintiff institute also invested huge amount of their parents’ earnings believing that the defendant would be teaching them English to help them complete the course within the stipulated period. Since the defendant was facing a rough phase in his life the plaintiff granted a loan of Rs.10 lakhs to the defendant on account of his sister’s marriage in good faith in the month of September, 2016. However, on 28th June, 2017 the plaintiff saw a Facebook post by defendant stating that he had left the plaintiff company. There was no intimation by the defendant to the plaintiff and he illegally joined rival competing teaching institute namely M/s K.D. Campus Pvt. Ltd. That till 27th June, 2017 the defendant was taking classes at the plaintiff institute and all of a sudden on 28th June, 2017 he joined the competing company in greed of money, leaving the career of thousands of students in dark. Because of the defendant leaving the plaintiff company on 29th June, 2017, the students at the Patna Centre of the plaintiff became furious and staged revolt for which a complaint was lodged at PS Kadam Kuan, Patna against the defendant.
3. In reply to the application defendant has stated that he had joined the plaintiff company around 20th June, 2012 and taught few batches of students but had to leave on account of certain personal reasons. Thereafter the defendant was once again invited by the then Director of the plaintiff company Ms. Neetu Singh and accordingly the defendant rejoined the plaintiff company on 20th June, 2013. Defendant was coaching the students who were appearing in various competitive exams and he had agreed to teach in the plaintiff institute based on the understanding that he would be paid on hourly basis and the said rate per hour would be revised from time to time. Initially when the defendant joined on 20th June, 2013 he was paid approximately Rs.400/- per hour which was revised to Rs.650/- per hour and then to Rs.1,200/- per hour and lastly around November, 2016 to Rs.1,500/- per hour. In May, 2014 the defendant was forced to sign on certain blank pages by the plaintiff and he was warned that if he did not sign the blank pages he would be denied his salary and would not be permitted to teach at the p
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