29.It must be held that Clause No.1 of the agreement executed by him does not suffer from any arbitrariness or it was not done due to any unequal bargaining power. On the contrary, the petitioner is a trained medical doctor and has been in service for several years. Therefore, it cannot be said that he signed it with an unequal bargaining power. This is especially so when there are thousands of candidates standing for direct selection to Super Speciality PG courses, the petitioner had the advantage of being selected as a service candidate under the 50% quota. He was also paid for the entire period salary by the IRT management. Without standing on any prestige, they had waived the earlier bond condition so as to enable him to undergo the Super Speciality course. The petitioner having had the fruits of all the benevolence showered on him ought to have served the institution by the knowledge gained in the higher studies. If had to resile from the terms of the agreement, there is no other option except to pay the quantified damages as agreed to by him in clause 2 of the agreement which is also not under challenge in these writ petitions.1
Madras High Court
Dr.S.Gobu vs The State Of Tamilnadu on 8 June, 2010
Citation;
W.P.No.264 of 2010 has been preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorarified mandamus to call for the records relating to the order of the third respondent in Ref.No.308/E2/Sa Po Ni/Pea Ma Ka Ma/2009 dated 7.12.2009 and the conditions of agreement in Clause (1) and (5) of the Agreement dated 2.9.2006 executed by the petitioner in favour of the second respondent as null and void and to quash the same and consequently, direct the second respondent to treat the petitioner as deemed to have resigned with effect from 30.11.2009. (prayer amended as per MP No.2 of 2009, dated 23.4.2010) W.P.No.5674 of 2010 has been preferred under Article 226 of the Constitution of India praying for the issue of a writ of certiorarified mandamus to call for the records relating to the order of the second respondent in his letter No.2063/A4/IRT/94 dated 26.2.2010 and the conditions of agreement in Clause (1) and (5) of the Agreement, dated 2.9.2006 executed by the petitioner in favour of the third respondent and to quash the same and consequently direct the second respondent to treat the petitioner as deemed to have resigned with effect from 30.11.2009.
For Petitioner : Mr.R.Gandhi, SC
for Mr.R.G.Narendiran
For Respondents : Mr.N.Senthilkumar, AGP
Mrs.Kala Ramesh for R2
Mr.K.H.Ravikumar, GA
- - - -
COMMON ORDER
The two questions arise for consideration in these two writ petitions are (1) whether the petitioner, an Associate Professor in General Surgery working in the third respondent College is entitled to wriggle out of an agreement reached between him and the management on 2.9.2006? and (2) whether the petitioner is entitled to leave his service as a matter of right without fulfilling his obligations?
2.The petitioner in both the writ petitions is one and the same person. In the first writ petition, the petitioner was seeking to quash the order, dated 7.12.2009, wherein and by which he was informed that his letter of resignation, dated 30.11.2009 sent along with the amount in lieu of three months' notice was rejected and returned. He was further informed that since he had undergone Post Graduate Degree in M.Ch (Gastroenterology) as a service candidate and had executed an agreement to serve the institution for a period of six years, failing which he was bound himself to pay six months' salary together with three months' notice pay. The petitioner was directed to report for duty on account of rejection of his resignation letter. The petitioner subsequently filed a petition in M.P.No.2 of 2010 seeking amendment of prayer challenging not only the order refusing to accept his resignation letter, but also Clauses 1 and 5 of the agreement, dated 2.9.2006 executed by him. The same was ordered by this court on 23.4.2010.
3.Subsequently, the petitioner filed the second writ petition with an identical prayer. That writ petition came up for admission on 22.3.2010 and the matter was directed to be posted along with the other writ petition. Accordingly, both the writ petitions were posted together.
4.On notice from this court, the second respondent has filed a counter affidavit, dated 24.3.2010, for which the petitioner has filed a reply affidavit dated 14.4.2010. It is seen from the records that the petitioner had passed MBBS Degree course in the year 1986. He was appointed as a Medical Officer in the third respondent Medical College and Hospital on 10.1.1991. His services were regularised on 13.1.1992. The petitioner wanted to pursue his higher studies in MS (General Surgery) and applied for leave on loss of pay. He was relieved from service on 28.7.1994. After completion of his course, he rejoined the institution on 1.12.1997. The petitioner's post was redesignated as an Assistant Professor with effect from 1.10.1998 based on the PG qualification acquired by him. Subsequently, he was promoted as an Associate Professor on 5.2.2005. At the time of his promotion, the petitioner had executed an indemnity bond to serve the institution for a minimum period of two years from the date of promotion as an Associate Professor.
5.The petitioner applied for PG course (Super Speciality) course in M.Ch Gastroentrology by an application, dated 18.5.2006. His application was forwarded by the institution to the selection committee to treat him as a service candidate on 26.5.2006. At the time of forwarding his application for the course, he was informed that during the study period, he will not be paid any salary or stipend as well as course fee and the period will be treated as leave on loss of pay. Even when the application was forwarded, there is no guarantee that his leave on loss of pay will be sanctioned and it will be done on the basis of administrative exigency prevailing at that time. He was also informed that for doing PG Super Speciality course, he should execute an undertaking cum indemnity bond that he will serve in the third respondent college for a minimum of twice the period of study leave after completion of course (i.e. for six years). In case, he discontinues the course before completion or leave the college after completion but before the bond period, he had to pay penalty as per the bond condition. He was also informed that the selection committed has declared the third respondent as an unaided non-minority institution. The petitioner did not object to these conditions at the time of forwarding his application.
6.In the meanwhile, the petitioner filed a writ petition before this court being W.P.No.20916 of 2006. Pursuant to the said writ petition, the petitioner was treated as a service candidate and he was directed to be admitted for the said course under the service quota. Consequent upon his admission, he was relieved from the third respondent College on 2.9.2006. He was also relieved even before completion of two years bond period which he had executed after acquiring PG qualification. The petitioner successfully completed PG Super Speciality course and rejoined the college on 11.8.2009. Before he was relieved for attending the course, he had executed an agreement and an undertaking dated 2.9.2006 to serve in the college for a minimum period of six years after completion of the course. The said agreement was signed in the presence of witnesses. He had bound himself for the reimbursement of the amount equal to pay and allowance for bond period as well as expenditure for study which was borne out by the institution. But notwithstanding the agreement executed by the petitioner, after serving for three months, he applied for earned leave from 30.11.2009 to 28.12.2009 which were not entertained. Thereafter, the petitioner sent a resignation letter, dated 30.11.2009 by post enclosing a Demand Draft for Rs.96192/- and requested to relieve him with effect from 1.12.2009. The said request of the petitioner was rejected by a letter, dated 17.12.2009 by the third respondent. He was informed that his resignation cannot be accepted as it was contrary to the bond condition. It was also informed that if he did not report for duty, action will be taken against him as well as against the sureties. The petitioner never went back to work. But he has chosen to file these two writ petitions.
7.The conditions of bond executed by the petitioner and impugned in the writ petitions as found in Clauses 1 and 5 are as follows:
"1.The Employee agrees and undertakes to serve the employer for a minimum period of six years after completion of the course for which the employee was sponsored.
.....
5.That the employer reserves the right to terminate the appointment at its absolute discretion after giving three months notice or on payment of three months salary in lieu of notice."
8.But Clause No.2 of the agreement which is not under challenge is as follows:-
"2.That in the event of the employee leaving the Employer or any of the Offices that come under the control of the Director of the Employer on his own accord within the minimum period of six years specified in the earlier paragraph from the date of his joining with the employer, after completion of the course for which he was sponsored, the employee shall reimburse to the employer an amount equal to pay and allowance for this bond period and the expenditure on the study by the institution if any."
9.The ground of challenge of the petitioner was that the contractual obligation between the petitioner and the second respondent was only to give three months notice either way or three months pay in lieu of notice. Once the petitioner has sent a valid resignation, there is no master and servant relationship between the petitioner and the second and third respondents. The agreement executed between the petitioner and the second respondent has no legal validity.
10.Per contra, Ms.Kala Ramesh, learned counsel appearing for respondents 2 and 3 submitted that not only the petitioner was treated as a service candidate, but was paid full salary for the said period. The college even waived the earlier bond condition for serving two years to enable him to join the said course. Even the prospectus released by the selection committee under the Director of Medical Education for undergoing the PG course in respect of the service candidates had stipulated the following two conditions in paragraphs 59(c) and (d) and they read as follows: "59(c)All Service Candidates of Tamil Nadu having more than five years of a service after passing the PG Degree/Diploma courses shall execute a bond for a sum of Rs.5,00,000/- (Rupees Five lakhs only) for Diploma courses and Rs.10,00,000/- (Rupees Ten Lakhs only) for Degree courses and MDS/5 year M.Ch Neuro Surgery Courses as security amount with the undertaking that they will service the Government of Tamil Nadu till Superannuation. Two permanent Government servants in the same or higher rank than the candidate shall execute sureties. The prescribed form will be available in the colleges at the time of admission. The bond will become infructuous if the service candidates serve the Government of Tamil Nadu after the completion of the Course until superannuation. (d)All service candidates of Tamilnadu who have less than 5 years of service after passing PG Degree/Diploma courses have to serve the Government for a period of 5 years from the date of passing the examination irrespective of the date of superannuation, if the Government requires their services. They will be paid salary/stipend till superannuation only. They have to furnish an undertaking to this effect at the time of joining the course."
11.Therefore, the learned counsel stated that it is not as if only the second respondent insisted upon bond condition, but even in respect of the Government Hospitals, such condition is available. The petitioner having availed leave with wages and waiver of the earlier bond condition cannot wriggle out of the agreement. Therefore, both writ petitions are deserve to be dismissed with a direction to the petitioner to pay the amount as agreed to by him.
12.In the reply affidavit, the petitioner contended that the agreement was an unilateral agreement and it has no legal value. Once the College forwards the name of the petitioner, no further condition is valid. The forwarding was only for the purpose of selection. The second respondent college did not have any service rules akin to the rules framed under Article 309 of the Constitution of India. The petitioner had worked in the institution for nine years. Since the third respondent college is a State within the meaning of Article 12 and the matter is pending in the Supreme Court as of now any order passed by them should be confirm to non arbitrariness protected by Article 14 of the Constitution. If the bond requires to be executed, that will be impracticable.
13.In the light of the rival submissions, it has to be seen whether the impugned order suffers from legal infirmity and whether the agreement is liable to be declared as null and void by this court.
14.It is admitted case by both sides that there are no service rules framed by the second and third respondents in respect of the employees engaged by them. Therefore, the question of agreement being contrary to any terms of employment or statutory service conditions did not arise. The very fact that the petitioner has chosen to challenge Clauses 1 and 5 of the agreement, dated 2.9.2006 itself shows that the agreement exists and the petitioner had executed the agreement on his own volition and that there was no compulsion or contravention of provisions of the Indian Contract Act, 1872.
15.In cases of breach of contracts, Section 73 provides for compensation of loss or damages caused by breach. Section 73 reads as follows:
"73. Compensation for loss or damage caused by breach of contract. When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
Compensation for failure to discharge obligation resembling those created by contract. When an obligation resembling those created by contract has been incurred and has not been discharged, any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as if such person had contracted to discharge it and had broken his contract."
16.Section 74 of the Contract Act also provides for penalty when parties agreed to such term. Section 74 reads as follows:
"74. Compensation for breach of contract where penalty stipulated for. 1[When a contract has been broken, if a sum is named in the contract as the amount to be paid in case of such breach, or if the contract contains any other stipulation by way of penalty, the party complaining of the breach is entitled, whether or not actual damage or loss is proved to have been caused thereby, to receive from the party who has broken the contract reasonable compensation not exceeding the amount so named or, as the case may be, the penalty stipulated for."
17.If a party enters into a contract and the damages are quantified, the question of assessing actual damages will not arise as held by the Supreme Court in Chunilal V. Mehta and Sons Ltd. vs. Century Spg. & Mfg. Co. Ltd., reported in 1962 Supp (3) SCR 549 = AIR 1962 SC 1312. In paragraph 11 of the order, the Supreme Court observed as follows: "11....Again the right to claim liquidated damages is enforceable under Section 74 of the Contract Act and where such a right is found to exist no question of ascertaining damages really arises. Where the parties have deliberately specified the amount of liquidated damages there can be no presumption that they, at the same time, intended to allow the party who has suffered by the breach to give a go-by to the sum specified and claim instead a sum of money which was not ascertained or ascertainable at the date of the breach...."
18.The Supreme Court further held that if the terms of contract provides for certain rates after entering into contract, it is not open to consumer or any contracting party to state that the terms are not fair as held by the Supreme Court in S. Narayan Iyer v. Union of India reported in (1976) 3 SCC 428. In paragraph 6, the Supreme Court held as follows: "6. There are three principal reasons why the writ petition is incompetent and not maintainable and the appeal should fail. First, when any subscriber to a telephone enters into a contract with the State, the subscriber has the option to enter into a contract or not. If he does so, he has to pay the rates which are charged by the State for installation. A subscriber cannot say that the rates are not fair. No one is compelling one to subscribe......."
19.Mr.R.Gandhi, learned Senior Counsel contended that he had signed on the dotted lines and there was no level playing field in signing the agreement. But, the Supreme Court after analysing the English decisions which have bearing on the question of "inequality of bargaining power" vide its judgment in Central Inland Water Transport Corpn. v. Brojo Nath Ganguly, reported in (1986) 3 SCC 156 dealt with the concept under Indian Law with Constitutional backdrop. It is necessary to extract the following passages found in paragraph 83, 90 and 91, which is as follows: "83....It was in Lloyds Bank Ltd. v. Bundy232 that Lord Denning first clearly enunciated his theory of inequality of bargaining power . He began his discussion on this part of the case by stating: (at p. 763)
There are cases in our books in which the courts will set aside a contract, or a transfer of property, when the parties have not met on equal terms, when the one is so strong in bargaining power and the other so weak that, as a matter of common fairness, it is not right that the strong should be allowed to push the weak to the wall. Hitherto those exceptional cases have been treated each as a separate category in itself. But I think the time has come when we should seek to find a principle to unite them. I put on one side contracts or transactions which are voidable for fraud or misrepresentation or mistake. All those are governed by settled principles. I go only to those where there has been inequality of bargaining power, such as to merit the intervention of the court. (emphasis supplied)
He then referred to various categories of cases and ultimately deduced therefrom a general principle in these words: (at p. 765)
Gathering all together, I would suggest that through all these instances there runs a single thread. They rest on inequality of bargaining power . By virtue of it, the English law gives relief to one who, without independent advice, enters into a contract on terms which are very unfair or transfers property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his own ignorance or infirmity, coupled with undue influences or pressures brought to bear on him by or for the benefit of the other. When I use the word undue I do not mean to suggest that the principle depends on proof of any wrongdoing. The one who stipulates for an unfair advantage may be moved solely by his own self-interest, unconscious of the distress he is bringing to the other. I have also avoided any reference to the will of the one being dominated or overcome by the other. One who is in extreme need may knowingly consent to a most improvident bargain, solely to relieve the straits in which he finds himself. Again, I do not mean to suggest that every transaction is saved by independent advice. But the absence of it may be fatal. With these explanations, I hope this principle will be found to reconcile the cases. (emphasis supplied) ..........
90. It is not as if our civil courts have no power under the existing law. Under Section 31(1) of the Specific Relief Act, 1963 (Act 47 of 1963), any person against whom an instrument is void or voidable, and who has reasonable apprehension that such instrument, if left outstanding, may cause him serious injury, may sue to have it adjudged void or voidable, and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled. ......
91.......Contracts in prescribed or standard forms or which embody a set of rules as part of the contract are entered into by the party with superior bargaining power with a large number of persons who have far less bargaining power or no bargaining power at all. Such contracts which affect a large number of persons or a group or groups of persons, if they are unconscionable, unfair and unreasonable, are injurious to the public interest. To say that such a contract is only voidable would be to compel each person with whom the party with superior bargaining power had contracted to go to court to have the contract adjudged voidable. This would only result in multiplicity of litigation which no court should encourage and would also not be in the public interest. Such a contract or such a clause in a contract ought, therefore, to be adjudged void. While the law of contracts in England is mostly judge-made, the law of contracts in India is enacted in a statute, namely, the Indian Contract Act, 1872. In order that such a contract should be void, it must fall under one of the relevant sections of the Indian Contract Act. The only relevant provision in the Indian Contract Act which can apply is Section 23 when it states that The consideration or object of an agreement is lawful, unless ... the court regards it as ... opposed to public policy. (Emphasis added)
20.In the very same judgment, in paragraph 111, the Supreme Court held that the employer under certain contingencies can refuse to accept the resignation. In paragraph 111, it was observed as follows:
"111. ..... By entering into a contract of employment a person does not sign a bond of slavery and a permanent employee cannot be deprived of his right to resign. A resignation by an employee would, however, normally require to be accepted by the employer in order to be effective. It can be that in certain circumstances an employer would be justified in refusing to accept the employee s resignation as, for instance, when an employee wants to leave in the middle of a work which is urgent or important and for the completion of which his presence and participation are necessary. An employer can also refuse to accept the resignation when there is a disciplinary inquiry pending against the employee. In such a case, to permit an employee to resign would be to allow him to go away from the service and escape the consequences of an adverse finding against him in such an inquiry. There can also be other grounds on which an employer would be justified in not accepting the resignation of an employee. The Corporation ought to make suitable provisions in that behalf in the said Rules. ......" (Emphasis added)
21.The Supreme Court also held that the principles of the Contract Act, 1872 are also applicable to contract in industrial employment in Uptron India Ltd. v. Shammi Bhan reported in (1998) 6 SCC 538. In paragraph 9, the Supreme Court observed as follows: "9. The general principles of the Contract Act, 1872 applicable to an agreement between two persons having capacity to contract, are also applicable to a contract of industrial employment, but the relationship so created is partly contractual, in the sense that the agreement of service may give rise to mutual obligations,....."
22.As to whether such agreement could be enforced came to be considered by the Supreme Court in M. Sham Singh v. State of Mysore reported in (1973) 2 SCC 303. In paragraph 8 of the order, the Supreme Court held as follows:
"8. .... The High Court is quite right in saying that when the appellant came to Bangalore in July 1950 he did not do so for the purpose of staying at Bangalore and accepting any employment which might be offered to him. He had to come as he admitted in his own letters, on account of domestic reasons. He wanted to go back and finish that period of training with the General Electric Company. He sought permission in that behalf and was allowed to return to the United States for that purpose. We are unable to see how in these circumstances the Government was bound to offer him any employment within a period of six months from July 18, 1950. By writing the letter, dated November 27, 1950 the appellant had unequivocally indicated his desire to finish the training with the General Electric Company. He had made no suggestion and given no hint that he was waiting for the offer of any employment. The period of six months was to expire on January 18, 1951 whereas the letter, dated November 27, 1950 was written well before that date. The mere fact that he left after the expiry of the period of six months would not show that he had returned to Bangalore and was waiting for any employment being offered to him within six months of his arrival in terms of the bond. It is significant that in the letter, dated November 27, 1950 he had reiterated his assurance that he would place his services at the disposal of the Government on his return provided a suitable position was available. This shows that he was fully conscious of what the true legal position was. Instead of returning to India the appellant chose to take up a job at San Francisco. Surely the Mysore Government had not expended all the amount in question on the studies of the appellant to enable him to seek employment on his own without first placing his services at the disposal of the Mysore Government which he was legally bound to do under the terms of the bond and the subsequent mutual agreement between the parties." (Emphasis added)
23.In the present case, the impugned clause No.1 in the agreement obliges the petitioner to serve the institution for six years after completion of the course. At the same time, the institution reserved its right to terminate the appointment after giving three months notice or on payment of three months salary in lieu of notice. Such an agreement was never held to be an agreement in restraint of trade being void under Section 27 of the Contract Act. The issue that after termination of contract the restrictive negative covenant can be enforced by courts came to be considered by the Supreme Court in Superintendence Co. of India v. Krishan Murgai reported in (1981) 2 SCC 246. It is useful to extract the following passages found in paragraphs 58, 59 and 62 to 64, which is as follows: "58. The drafting of a negative covenant in a contract of employment is often a matter of great difficulty. In the employment cases so far discussed, the issue has been as to the validity of the covenant operating after the end of the period of service. Restrictions on competition during that period are normally valid, and indeed may be implied by law by virtue of the servant s duty of fidelity. In such cases the restriction is generally reasonable, having regard to the interest of the employer, and does not cause any undue hardship to the employee, who will receive a wage or salary for the period in question. But if the covenant is to operate after the termination of services, or is too widely worded, the court may refuse to enforce it.
59. It is well settled that employee covenants should be carefully scrutinised because there is inequality of bargaining power between the parties; indeed no bargaining power may occur because the employee is presented with a standard form of contract to accept or reject. At the time of the agreement, the employee may have given little thought to the restriction because of his eagerness for a job; such contracts tempt improvident persons, for the sake of present gain, to deprive themselves of the power to make future acquisitions, and expose them to imposition and oppression . ..........
62. The courts, therefore, view with disfavour a restrictive covenant by an employee not to engage in a business similar to or competitive with that of the employer after the termination of his contract of employment.
63. The true rule of construction is that when a covenant or agreement is impeached on the ground that it is in restraint of trade, the duty of the court is, first to interpret the covenant or agreement itself, and to ascertain according to the ordinary rules of construction what is the fair meaning of the parties. If there is an ambiguity it must receive a narrower construction than the wider. In Mills v. Dunham19 Kay, L.J., observed: If there is any ambiguity in a stipulation between employer and employee imposing a restriction on the latter, it ought to receive the narrower construction rather than the wider the employed ought to have the benefit of the doubt. It would not be following out that principle correctly to give the stipulation a wide construction so as to make it illegal and thus set the employed free from all restraint. It is also a settled canon of construction that where a clause is ambiguous a construction which will make it valid is to be preferred to one which will make it void.
64. The restraint may not be greater than necessary to protect the employer, nor unduly harsh and oppressive to the employee......." (Emphasis added)
24.But, however, during the subsistence of contract of employment, a negative covenant covered by an agreement whether can be enforced came to be considered by the Supreme Court inNiranjan Shankar Golikari v. Century Spg. and Mfg. Co. Ltd. reported in (1967) 2 SCR 378 = AIR 1967 SC 1098. In paragraphs 14 and 17, the Supreme Court observed as follows: "14. A similar distinction has also been drawn by courts in India and a restraint by which a person binds himself during the term of his agreement directly or indirectly not to take service with any other employer or be engaged by a third party has been held not to be void and not against Section 27 of the Contract Act. In Brahmaputra Tea Co. Ltd. v. Scarth 10 the condition under which the covenantee was partially restrained from competing after the term of his engagement was over with his former employer was held to be bad but the condition by which he bound himself during the term of his agreement, not, directly or indirectly, to compete with his employer was held good. At p. 550 of the report the court observed that an agreement of service by which a person binds himself during the term of the agreement not to take service with any one else, or directly or indirectly take part in, promote or aid any business in direct competition with that of his employer was not hit by Section 27. The Court observed: An agreement to serve a person exclusively for a definite term is a lawful agreement, and it is difficult to see how that can be unlawful which is essential to its fulfilment, and to the due protection of the interests of the employer, while the agreement is in force. [See also Pragji v. Pranjiwan 11 and Lalbhai Dalpatbhai & Co. v. Chittaranjan Chandulal Pandya 12]......
.......
17. The result of the above discussion is that considerations against restrictive covenants are different in cases where the restriction is to apply during the period after the termination of the contract than those in cases where it is to operate during the period of the contract. Negative covenants operative during the period of the contract of employment when the employee is bound to serve his employer exclusively are generally not regarded as restraint of trade and therefore do not fall under Section 27 of the Contract Act. A negative covenant that the employee would not engage himself in a trade or business or would not get himself employed by any other master for whom he would perform similar or substantially similar duties is not therefore a restraint of trade unless the contract as aforesaid is unconscionable or excessively harsh or unreasonable or one-sided as in the case of W.H. Milsted & Son Ltd. Both the trial court and the High Court have found, and in our view, rightly, that the negative covenant in the present case restricted as it is to the period of employment and to work similar or substantially similar to the one carried on by the appellant when he was in the employ of the respondent Company was reasonable and necessary for the protection of the company s interests and not such as the court would refuse to enforce. There is therefore no validity in the contention that the negative covenant contained in clause 17 amounted to a restraint of trade and therefore against public policy." (Emphasis added)
25.The said view was once again reiterated by the Supreme Court in Chairman & Managing Director, Indian Airlines v. Binod Kumar Sinha reported in (2001) 8 SCC 722. In paragraphs 15 and 17, the Supreme Court observed as follows:
"15. The arguments on behalf of the writ petitioners are based on Articles 14, 19(1)(g), 16, 21 and 23 of the Constitution only with reference to the implication arising out of the embargo imposed upon the employees of the national carriers that they cannot resign from employment except after a notice of six months as provided for in Regulation 13(b) framed under the Air Corporations Act. If in violation of such conditions, employees of the national carriers can leave their employment and join the employment in any other air service is a matter affecting the operation of the air carriers and, therefore, to give effect to that objective underlying Regulation 13(b) if the circular is issued, we cannot term it to be invalid. If the provision of Regulation 13(b) is valid in law and in violation of which an employee seeks to join employment with an air taxi operator, the restriction in the circular cannot be an infringement of his rights arising under Articles 14, 16, 19(1)(g), 21 and 23 of the Constitution. The argument to the contrary is far-fetched because an employee when joins service is subject to certain terms and conditions of service and he cannot quit the employment without giving requisite notice to the employer. But what should be the duration of a reasonable notice in such circumstances is a matter to be decided in each case depending upon the exigencies, needs or necessities and the essentiality of the service concerned. In the present case, no such exercise has been done by the High Court to find out whether Regulation 13(b) is valid or not. When the validity or scope of that Regulation has not been examined, the impact of the Regulation on the circular also could not be examined. The High Court completely went off the track in examining the broad questions arising under Articles 14, 16, 19(1)(g), 21 and 23 of the Constitution. If a person is in employment he is certainly subject to certain terms and conditions and he can quit his employment under those terms and conditions only which cannot be stated to be violative of Articles 14, 16, 21 and 23, much less Article 19(1)(g) of the Constitution unless on examination such conditions are held invalid. ......
17. We are also not impressed with the view taken by the High Court that the negative covenant of not being employed would be attracted in a case of this nature because during employment certainly an obligation can be placed upon an employee that he shall not be employed by any other organisation or institution and it neither offends Article 19(1)(g) nor the provisions of the Contract Act." (Emphasis added)
26.In cases of employees engaged by Government owned Companies and statutory Corporations, the Supreme court has held that cases of unfair and unreasonable bargaining between the parties can be considered on the basis of each individual's case vide its decision in Delhi Transport Corpn. v. D.T.C. Mazdoor Congress reported in 1991 Supp (1) SCC 600. In paragraph 287, the Supreme Court held as follows: "287. In today s complex world of giant corporations with their vast infrastructural organisations the State through its instrumentalities and agencies has been entering into almost every branch of industry and commerce and field of service, there can be myriad situations which result in unfair and unreasonable bargains between parties possessing wholly disproportionate and unequal bargaining power. These cases can neither be enumerated nor fully illustrated. The court must judge each case on its own facts and circumstances."
27.The Supreme Court has also held that in case of specific performance of an obligation is impermissible in respect of contract to render personal services, damages is the only remedy vide its decision in Nandganj Sihori Sugar Co. Ltd. v. Badri Nath Dixit reported in (1991) 3 SCC 54. The Supreme Court in paragraph 11 of its judgment observed as follows: "11. ..... Even if there was a contract in terms of which the plaintiff was entitled to seek relief, the only relief which was available in law was damages and not specific performance. Breach of contract must ordinarily sound in damages, and particularly so in the case of personal contracts....."
28.In the light of the above and the factual matrix brought on record, this court is of the opinion that though clause No.1 obliges a candidate to serve for six years, but the second clause makes that rigour disappear with the quantified damages to be paid. In the present case, the petitioner is the beneficiary of three years leave period together with salary paid and he was treated as service candidate and not as a direct candidate. Therefore, he cannot have best of both Worlds. The contract agreed to by him stipulates that he should serve for six years in the institution after the completion of the course. The petitioner is bound to serve the institution for six years as agreed to by him. But in case he wants to waive the said condition, then Clause No. 2 provides for a way out by paying the quantified damages. Since the petitioner had left the service abruptly by sending his resignation, he was bound by the terms of the agreement, dated 2.9.2006 and cannot escape from the liability to pay damages.
29.It must be held that Clause No.1 of the agreement executed by him does not suffer from any arbitrariness or it was not done due to any unequal bargaining power. On the contrary, the petitioner is a trained medical doctor and has been in service for several years. Therefore, it cannot be said that he signed it with an unequal bargaining power. This is especially so when there are thousands of candidates standing for direct selection to Super Speciality PG courses, the petitioner had the advantage of being selected as a service candidate under the 50% quota. He was also paid for the entire period salary by the IRT management. Without standing on any prestige, they had waived the earlier bond condition so as to enable him to undergo the Super Speciality course. The petitioner having had the fruits of all the benevolence showered on him ought to have served the institution by the knowledge gained in the higher studies. If had to resile from the terms of the agreement, there is no other option except to pay the quantified damages as agreed to by him in clause 2 of the agreement which is also not under challenge in these writ petitions.
30.This court is not inclined to go into the quantum of quantified damages and the term stipulated do not indicate that it was either arbitrary or fixed on any fancy basis. Even at the time of admission to the PG course, the petitioner was aware of such condition in the prospectus stipulated in respect of the Government hospitals. The present term is more or less similar to the condition stipulated by the State Government in respect of its employees.
31.In the light of the above, both writ petitions will stand dismissed with a cost of Rs.10000/- (Rupees ten thousand only) payable to the second respondent. Consequently, connected miscellaneous petitions stand closed.
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