Friday, 19 August 2016

Whether injunction can be granted to restrain employee from joining another company?

Civil Procedure Code, 1908 - Order 39 Rule 1 & 2--Interim injunction--Inducement to breach of contract-Attempt by one company to induce the employees of competitor company to join the employment of inducing company contrary to the contract of employment prohibiting such employment--Entitlement of Interim injunction against such conduct.
The grant of injunction is an equitable relief and various factors have to be carefully taken into consideration before graining it.
On consideration of the totality of the facts and circumstances of this case, prima facie, in my considered opinion, the plaintiffs are not entitled to injunction.
Admittedly in the service and employment contracts of the plaintiffs, there is a negative covenant clause, restraining an employee from engaging or undertaking employment for 12 months after he has left the plaintiffs' service. It is well settled that such post termination restraint, under Indian Law, is in violation of Section 27 of the Contract Act. Such contracts are unenforceable, void and against the public policy. What is prohibited by law cannot be permitted by Court's injunction.
Equitable relief of injunction can only he granted if the plaintiffs have approached the Court by disclosing the whole truth and have inspired implicit trust and confidence of the Court by demonstrating their conduct.
The plaintiffs are not entitled for injunction for the following reasons also:
(a) The injunction, as prayed for by the plaintiffs, if granted would certainly have a direct impact of curtailing the freedom of employees for improving their future prospects and service conditions by changing their employment.
(b) Rights of an employee to seek and search for better employment cannot be restricted by an injunction.
(c) Injunction cannot be granted to create a situation such as "Once a Pepsi employee, always a Pepsi employee". It would almost be a situation of 'economic terrorism' or a situation creating conditions of 'bonded labour'.
(d) Freedom of changing employment for improving service conditions is a vital and important right of an employee, which cannot be restricted or curtailed by a Court injunction.
(e) Inter-changeability of service is an accepted norm of Service Jurisprudence which cannot be curtailed by a Court injunction.
(f) Employees' right to terminate their contracts also cannot be curtailed by Court injunction.
(g) An injunction can be granted only for protecting the rights of the plaintiffs, but cannot be granted to limit the legal rights of the defendants.
(h) An injunction cannot be granted where the Courts have a doubt in the credibility, veracity and truthfulness of the plaintiffs' version.
(i) An injunction also cannot be granted in a case where the Court directly or indirectly gets the impression that the injunction has been sought for extraneous considerations or oblique motives.
(j) Rough and tumble of the business including stiff competition has to be faced in a free market economy. The problems which should be settled in the market place cannot be brought to Law Courts or settled by a Court injunction.
(k) in economic matters, while granting injunction, business realities have to be taken into consideration: The employees seek betterment and advancement of their careers, while they are in service. It is impracticable and unrealistic to artificially create a situation by a Court injunction when employees would first leave the employment and then look for better service conditions and job opportunities elsewhere.
(l) Most of the senior employees of the plaintiffs or the defendants were working with other multinationals or business organisations. They joined the plaintiffs or the defendants because attractive salaries and better service conditions were offered by them. The plaintiffs themselves have engaged a large number of employees who were working in other multinational or business organisations. They were appointed because they had work experience with other organisations. The same plaintiffs are not justified in seeking an injunction so that their employees may not join the defendants. All that is to be seen is whether the defendants had adopted unfair means in advancing their business interests or not.
(m) In a free market economy, everyone concerned, must learn that the only way to retain their employees is to provide them attractive salaries and better service conditions. The employees cannot be retained in the employment perpetually or by a Court injunction.
(n) Free, fair and uninterrupted competition is the life of trade and business. This freedom in free market economy has to be zealously protected in the larger interest of free trade and business. No injunction can be granted which is likely to restrict or curtail this freedom.
(o) It is difficult to hold at this stage that the predominant object and paramount consideration behind the actions of the defendants was designed to injure the plaintiffs.
(p) At this stage, it is also difficult to hold that the defendants resorted to business practices which are unethical, illegal and constitute tortious interference in the business of the plaintiffs.
On consideration of the totality of the facts and circumstances, the plaintiffs have not made out a strong prima facie case for the grant of injunction at this stage. The balance of convenience is also not in favor of the plaintiffs. No irreparable injury is likely to be caused to the plaintiffs.
I.A. Nos. 3214 of 1998 in Suit No. 734 of 1998
Decided On: 30.07.1999
Appellants:Pepsi Foods Ltd. and Others
Respondent: Bharat Coca-cola Holdings Pvt. Ltd. & others
Hon'ble Judges/Coram:
Dalveer Bhandari, J.
Read full judgement here:click here

Print Page

No comments:

Post a Comment