HIGH COURT OF GUJARAT
V. B. RAJU, J.
Maganlal Rambhai Gandhi
Versus
Ambica Mills Ltd.
A. F. A. D. No. 851 of 1962 against decision of Joint Civil J., IIIrd City Civil Court, Ahmedabad in C. A. No. 1295 of 1961.
Decided On : 19-09-1963
Indian Contract Act - Sections 23 and 27 - Specific Relief Act - Section 21 - Constitution of India,1950 - Article 19(1)(g) - Suit agreement hits - Illegal and unenforceable – Contrary - Service of any employer - Appeal by original defendant admitted facts giving rise to this litigation are that defendant who is a graduate of Engineering College entered into a contract with respondent plaintiff Ambica Mills Ltd., agreeing to serve plaintiff for a period of five years from November agreement also provided that defendant was not to serve anywhere else during that period - From February defendant left service of the plaintiff and started service in another firm – Held, To specifically enforce such a negative covenant would amount to specifically enforcing positive covenant also because defendant cannot serve any other firm in any part of India - It is open to plaintiff to employ any other person to perform same job - It may be that it may have to pay higher salary to such a person - If that is so it can be compensated by damages - It is therefore clear that issue of an injunction such as one ordered to be issued by Court below would be to decree specific performance of a negative covenant and to give plaintiff an unfair advantage over defendant and would involve some hardship on defendant whereas non-performance would not involve such hardship on plaintiff - For these reasons hold that in this case discretion was not exercised properly in ordering issue of an injunction such as one ordered to be issued - Appeal allowed
2. Before me, the learned counsel for the appellant has urged the following points :
(a) The agreement was his by Sections 23 and 27 of the Indian Contract Act, and therefore void and unenforceable. (b) The suit agreement hits Section 21 of the Specific Relief Act and therefore void, illegal and unenforceable.
(c) The discretion exercised by the learned Judge is exercised contrary to the principles laid down in Section 22 of the Specific Relief Act.
(d) Section 57 of the Specific Relief Act in so far as and to the extent that it empowers the Court to grant an injunction restraining a person from serving any employer of his choice after having left service of any employer is unconstitutional and void because it is inconsistent with the fundamental right guaranteed in Article 19(1)(g) of the Constitution of India. The said section takes away or restricts the appellants freedom of trade, occupation or business and the restriction imposed by it is not reasonable nor is it imposed in the interests of the general public.
(e) Assuming that Section 57 is not void on the ground stated above, the order of injunction passed by the learned Judge is violative of Articles 19(1)(g) and 23 of the Constitution of India and is therefore illegal.
3. There is no merit in the contention that the agreement between the parties is hit by Section 23 of the Contract Act. That section reads as follows :
"The consideration or object of an agreement is lawful, unless :
It is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void."
4. The agreement to serve a particular person for a particular period implies an agreement not to serve any other person during that period. This was recognised in Burn and Co. v. McDonald, ILR 36 Cal 354. Such an agreement would not therefore be hit by Section 23 of the Contract Act, even if the contract consists of two covenants, namely a positive covenant undertaking to serve a particular person during a particular period and also a negative covenant agreeing not to serve any other person during that particular period. That such an agreement would not offend the provisions of the Contract Act was also recognised in Charles worth v. McDonald, ILR 23 Bom 103.
5. There is also no merit in the contention that the agreement is hit by Section 27 of the Contract Act, which relates to agreement in restraint of trade. Section 27 reads as follows :
"Every agreement by which any one is
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