2013 (4) TMI 334 - HC - Companies Law

Section 9 of Arbitration and Conciliation Act, 1996 - Violation of the terms of the Agreement - Section 27 of the Contract Act, 1872 as the doctrine of restraint of trade - Nature of interim order - Held that - . It has been argued that incase, the respondent is allowed to get away from his such deeds without any pinch, wrong message would also go to the similar situated employees who may do the same without any fear and fairness - In normal case, such argument would not have been considered but in the present case it is evident from the entire gamut of the matter, the respondent had been negotiating with the competitor of the petitioner during the terms of the agreement. Further, the modus operandi adopted by him at the time of termination of contract was not straight and frank. Rather in his e-mail dated 13th February, 2013 he asked the petitioner not to resort to manipulating tactics and reserved his right to take action against the petitioner for damages and loss. In order to give him a correct message, it has become necessary to pass some interim directions, the respondent is restrained for the period of seven days between 12th April, 2013 to 18th April, 2013 from any manner engaging or providing services either as a presenter, host, anchor, reporter or in any other manner on-screen solo of television in any channel including in the channel where he has been recruited - No further orders are required to be passed - The petition is accordingly disposed

Issues Involved:
1. Restraint of Trade
2. Validity of Negative Covenants
3. Termination Clause
4. Confidentiality Clause
5. Interim Relief

Issue-wise Detailed Analysis:

1. Restraint of Trade:
The respondent argued that the restrictive covenants in the agreement were void and unenforceable under Section 27 of the Contract Act, 1872, as they imposed an absolute bar on taking up any assignment with any other television channel. The court referred to the Supreme Court decision in *Superintendence Company of India (P) Ltd. vs. Sh. Krishnan Murgai*, which held that employee covenants should be scrutinized carefully due to the inequality of bargaining power. The court also cited *Ambience India Pvt. Ltd. vs. Naveen Jain*, emphasizing that not all matters encountered by employees constitute trade secrets or confidential information.

2. Validity of Negative Covenants:
The petitioner argued that the negative covenants were enforceable during the term of the contract and for one year thereafter. The court referred to the case of *Wipro Limited v. Beckman Coulter International S.A.*, which outlined that negative covenants tied with positive covenants during the subsistence of a contract are not normally regarded as being in restraint of trade unless they are unconscionable or wholly one-sided. The court found that the negative covenants in the present case were valid during the term of the contract.

3. Termination Clause:
The respondent contended that he had exercised his option to terminate the contract by paying an amount equivalent to six months' professional fee, as stipulated in the termination clause. The court noted that the termination clause allowed the company to terminate the agreement with three months' notice, but the respondent did not have the right to terminate the agreement. The court found that the respondent's actions were contrary to the stipulations of the agreement.

4. Confidentiality Clause:
The confidentiality clause in the agreement prohibited the respondent from presenting any other show for any other television channel during the term of the contract and for one year thereafter. The court found that the respondent had breached this clause by joining a competitor channel during the term of the contract. The court emphasized that such a negative covenant is not a restraint of trade during the term of the contract, as discussed in *Krishan Murgai vs. Superintendence Company of India (P) Ltd.*

5. Interim Relief:
The petitioner sought an injunction to restrain the respondent from engaging in any on-screen role with any other television channel during the term of the contract and for one year thereafter. The court held that compelling the respondent to leave his new employment and rejoin the petitioner would be impermissible under Sections 14 and 41 of the Specific Relief Act, 1963. However, to give a correct message and considering the overall facts and circumstances, the court restrained the respondent from engaging in any on-screen role for a period of seven days.

Conclusion:
The court concluded that while the respondent had breached the agreement, the specific relief sought by the petitioner could not be granted. Instead, an interim direction was issued restraining the respondent for a limited period. The petition was disposed of with no costs.

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