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2005 DIGILAW 1041 (MAD)

Blue Dart Aviation Limited, Chennai v. Capt Vikram Bains, Chandigarh

2005-07-08

R.BALASUBRAMANIAN

body2005
Judgment :- 1. Pending suit, the plaintiff seeks an order of ad-interim injunction as prayed for in the Judges summons. A learned Judge of this court ordered only “notice” on 01.04.2005. Pleadings in this application is completed. Heard Mr. Aravind P Datar learned senior counsel appearing for the applicant/plaintiff and Mr. T.V. Ramanujam learned senior counsel appearing for the respondent/defendant. 2. The plaintiff is the employer and the defendant is its employee. The plaintiff is before this court claiming damages from the defendant quantified at Rs. 10,00,000/- and for an injunction restraining the defendant from taking any employment as pilot of any other airline for a period of three years from 01.03.2005 in breach of the bond. The case of the plaintiff in short is that the defendant joined its services on 05.05.2003 and he executed a bond on 12.05.2003 in favour of the plaintiff agreeing to abide by the terms and conditions enumerated therein. Under the terms of the bond, the defendant has to serve the plaintiff for a minimum period of three years and in the event of the defendant committing breach of the said service covenant, he is bound to pay a sum of Rs. 10,00,000/-. In case the defendant commits breach of the contract by disassociating himself from the plaintiff company during the in-service period, then the negative covenant enumerated in the bond would come into operation. The negative covenant on which the plaintiff relies upon for getting the reliefs prayed for in the suit as shown in the plaint are extracted hereunder: During the remainder of the term of the bond, in the event of the defendant leaving, abandoning or resigning from the services, the defendant would not directly or indirectly “(i) Engage in any business, profession or occupation on his own or in partnership which is directly or indirectly related to any activity which is the same as or similar to that carried on by the plaintiff and in respect of which the plaintiff has imparted to him specialized training. (ii) Serve whether as principal, agent, employee or otherwise, either full time or part time, in any firm, company or any other concern whatsoever in any capacity which would require the defendant to perform the same or substantially similar duties and/or activities to those he would be or was performing for the plaintiff and/or which was directly or indirectly related to any activity which is the same as or similar to that carried on by the plaintiff and/or in respect of which the plaintiff imparted specialized training. (iii) Disclose, divulge, make public or available to anybody in any manner, or otherwise part with any of the technical know-how and/or processes and/or information imparted to him in the course of the specialized training including information relating to the operations and transactions of the plaintiff acquired by him in the course of his work experience with the plaintiff, to any firm, concern or company which he may subsequently join and/or utilize such know-how or information in the course of any b usiness, directly or indirectly, which he may engage in, either on his own or in partnership or otherwise with any individual, concern or company.” Stating that the defendant had abruptly abandoned the services during the in-service period with effect from 01.03.2005, the plaintiff is before this court to enforce the clause providing for damages as well as to enforce the negative covenants. The defendant had filed a counter contending that the covenants referred to above are in violation of section 27 of the Indian Contract Act and therefore they are void and unenforceable. The defendant stated that he had resigned from the job; the plaintiff accepted it and he had already joined Royal Airways Limited, New Delhi on 02.03.2005. The plaintiff, who had accepted the resignation with effect from 01.03.2005, had not paid his salary for February 2005 as adjustment against notice period. The plaintiff is having a sum of Rs. 42,400/- and a sum of Rs. 21,000/- plus interest payable to the defendant under the cumulative business reimbursement and Employees Savings Scheme Contributions respectively/The defendant had agreed to pay his new employer a sum of approximately Rs. 12 lakhs in sixty equal interest free instalments for endorsement and I.R of a modern new generation aircraft on his licence. The defendant states that he paid a sum of Rs. 12 lakhs in sixty equal interest free instalments for endorsement and I.R of a modern new generation aircraft on his licence. The defendant states that he paid a sum of Rs. 12 lakhs upfront towards the cost of his training to the plaintiff in B737 - 200 aircraft and therefore the plaintiff had not spent even a pie in meeting towards that training costs. Due to the resignation of the defendant, the plaintiff is not put to any hardship at all and that the plaintiff is having enough strength of pilots. The training facility available at South Africa can be had by any intending trainee on his own without any sponsorship. A sum of Rs. 10 lakhs stated to have been suffered by the plaintiff as indirect costs is not supported by any details. Therefore the plaintiff has no cause of action at all to maintain the suit itself. The plaintiff filed a reply affidavit reiterating the allegations made earlier and contended that the plaintiff never accepted the resignation of the defendant since the alleged resignation letter was not tendered to the person, who has the authority to receive and accept the resignation. It is further stated in the reply affidavit that as per the norms provided by the Ministry of Civil Aviation, the plaintiff must have a strength of 46 pilots for the five aircrafts, which it owns. As on date the plaintiff has 39 pilots, out of whom, six First Officers are currently undergoing training and two commanders are yet to be released. Therefore in effect the plaintiff has only 31 pilots, out of whom, two officers are serving their notice period upto 05.07.2005, which would mean that after the expiry of the above referred to period, the plaintiff will be left only with 29 pilots. The plaintiff had recently recruited four pilots from Brazil and they are likely to join the services after almost three months, which is the period involved for getting clearances from the various Ministries of the Government of India. 3. Mr. Aravind P Datar learned senior counsel appearing for the plaintiff would submit that the negative covenant to be in force during the in-service period is enforceable and is not hit by section 27 of the Indian Contract Act. 3. Mr. Aravind P Datar learned senior counsel appearing for the plaintiff would submit that the negative covenant to be in force during the in-service period is enforceable and is not hit by section 27 of the Indian Contract Act. He would then submit that the plaintiff had given specialised training to the defendant in flying B737 - 200 Aircraft in a place at South Africa and but for this specialised training imparted to him by the plaintiff, the defendant would not have become eligible to fly aircraft of the type mentioned above. As per the norms prescribed by the Government of India, the plaintiff, for the number of planes it owns, should have a minimum number of pilots and the defendant, by his conduct of abruptly leaving the services of the plaintiff, had depleted the pilot strength in the plaintiff airlines and this exposes the plaintiff not only to considerable hardships in maintaining their service schedules but also may face some consequential action from the Government of India/Ministry of Civil Aviation. Every employee must be made to realise that they are bound by the terms of the contract during the in-service period and they cannot be allowed to move from one employment to another employment at their whims and fancies causing irreparable injury to his erstwhile employer. The defendant had the advantage of specialised training given to him by the plaintiff as a pilot of B 737 - 200 Aircraft and by leaving the plaintiffs employment, he had taken up another employment with another airlines doing the same profession namely, flying an aircraft. Therefore the submission is that this court would be well within its limits if it injuncts the respondent from violating the negative covenants extracted earlier by taking employment with any other airlines. Stating that the negative covenants to be performed during the in-service period is not hit by section 27 of the Indian Contract Act, the learned senior counsel would submit that the court would be justified in granting an order of injunction. To sustain this point the learned senior counsel relied upon the following judgments: (a) Evening Standard Co. Ltd. v. Henderson (1987) FSR Pg. 165; and (b) Niranjan Shankar Golikari v. Century Spinning & Manufacturing company (AIR 1967 SC Pg. 1098). 4. Mr. To sustain this point the learned senior counsel relied upon the following judgments: (a) Evening Standard Co. Ltd. v. Henderson (1987) FSR Pg. 165; and (b) Niranjan Shankar Golikari v. Century Spinning & Manufacturing company (AIR 1967 SC Pg. 1098). 4. Mr. T.V. Ramanujam learned senior counsel appearing for the defendant would rely upon the judgment of the Honble Supreme Court of India in the case reported in AIR 1980 SC 1717 = 94 L.W. 17 S.N. ( Superintendence Co. of India v. Krishan Murgai ) to contend that the negative covenants relied upon by the plaintiff is definitely hit by section 27 of the Indian Contract Act. According to the learned senior counsel, unless the exception provided in section 27 of the Indian Contract Act is satisfied, which in this case is not done, there is no question of enforcing such negative covenants. Learned senior counsel, for the same purpose, relied upon a Division Bench judgment of this court in the case reported in 1995 1 L.W. 274 ( G.R.V. Rajan v. Tube Investments of India Ltd ). Learned senior counsel then relied upon another Division Bench judgment of this court in the case reported in 2004 (2) CTC 684 =2004 L.W. 397 ( R. Babu v. TTK LIG Ltd. ) for the proposition that when more than one Judge constitutes a coram where one Judge does not speak anything on the legal aspect but decides and disposes the lis before the court from a different angle and another Judge constituting the same coram pronounces the law on the legal issue, then it should be taken as a binding precedent under Article 141 of the Constitution of India. Learned senior counsel also relied upon a judgment reported in AIR 1995 SC Pg.2372 to contend that courts in India are not bound to grant an injunction in every case to enforce a negative covenant. On facts, the learned senior counsel contended that the resignation tendered by the defendant had been accepted by the plaintiff. The resignation came into effect on 01.03.2005 and the plaintiff is aware that the defendant had already joined another airlines. The plaintiff filed the plaint and the interim application before this court only on 22.03.2005 and the delay in approaching the court, on the facts stated above, would disentitle the plaintiff from getting the interim relief. 5. The resignation came into effect on 01.03.2005 and the plaintiff is aware that the defendant had already joined another airlines. The plaintiff filed the plaint and the interim application before this court only on 22.03.2005 and the delay in approaching the court, on the facts stated above, would disentitle the plaintiff from getting the interim relief. 5. Having regard to the submissions made by the learned senior counsel on either side, I have gone through the material papers and the case laws submitted before this court with utmost care and caution. The question as to how far the agreement in restraint of trade would be hit by section 27 of the Indian Contract Act is not coming before the court for the first time. As early as 1967, the Honble Supreme Court of India had an occasion to consider as to whether an agreement in restraint of trade would be hit by section 27 of the Indian Contract Act as is seen from the judgment reported in AIR 1967 SCC Pg. 1098 ( Niranjan Shankar Golikari v. Century Spinning & Manufacturing Co. Ltd ). The Honble Supreme Court of India, after referring to case laws on the subject and Halsburys Laws of England, held as follows: “The result of the above discussion is that consideration 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. , 1927 WN 233 (Supra). 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 employment of the respondent company was reasonable and necessary for the protection of the companys interests and not such as the court would refuse to enforce. There is therefore no validity in the contenti on that the negative covenant contained in clause 17 amounted to a restraint of trade and therefore against public policy.” The Supreme Court in the judgment reported in AIR 1980 SC Pg.1717 (Judgment of A.P. Sen, J.) had referred to the earlier judgment of the Supreme Court referred to supra and proceeded to hold that the said judgment was of little assistance to that case, since in the case decided by the latter judgment, the negative covenant was in the nature of a post-service restraint. It must be noticed that in Golikaris case referred to supra, the negative covenant was in the nature of an in-service restraint. Admittedly, in this case the negative covenants referred to in the plaint and extracted by me earlier in this order are in-service restraints. Therefore without any hesitation, I am inclined to agree with the submissions made by Mr. Arvind P Datar learned senior counsel for the plaintiff that as the negative covenant in the service contract between the parties to the suit is a covenant agreed to between the parties during the currency of the service period, the said negative covenant is not hit by section 27 of the Indian Contract Act. 6. Learned senior counsel appearing for the plaintiff would then, relying upon Hendersons case and Golikaris case , submit that in this case the plaintiff has made out a case for an interim injunction. The question whether in every case where there is a breach of an in-service restraint, an injunction enforcing such negative covenant must be granted as prayed for or not, would necessarily depend upon the facts of each case. The question whether in every case where there is a breach of an in-service restraint, an injunction enforcing such negative covenant must be granted as prayed for or not, would necessarily depend upon the facts of each case. In Hendersons case , the English court found that Henderson had acquired special knowledge; expertise in the trade of his employer; his services were almost indispensable to his employer; and allowing him to join the new employer carrying on the same trade during the currency of the service contract period would not only cause irreparable injury to the erstwhile employer but also would give added undue advantage to his new employer. In Golikaris case , it was found that he had acquired during his training provided by his erstwhile employer knowledge of the technique, processes and the machinery evolved by his employers collaborators as also of certain documents supplied by the collaborator to the employer. The Supreme Court also found that such expertise obtained by Golikari would give an undue advantage to his new employer, who is in a similar business. Therefore it is clear from the two case laws referred to above that the employee was possessed of a special expertise during his previous employment and if he is allowed to leave his employer and join another employer more or less dealing in the same trade, then such an expertise, which the employee had come to acquire during his previous employment, is likely to be utilised by the employee for benefit of the new employer and therefore injunction was granted. 7. In the light of my above discussion, let me now apply my mind to the facts of this case. The plaintiff is a private airlines carrying on business of courier service and there is no dispute about that. It appears that they also carry cargo. The defendant is shown to have taken a new employment in flying a passenger aircraft. The defendant had stated in his counter affidavit that the aircraft, which he is going to fly, is a new generation aircraft and to fly the same, he had to undergo a special training at his cost, though sponsored by his new employer. Such a statement is not denied by the plaintiff in the reply statement. The defendant had stated in his counter affidavit that the aircraft, which he is going to fly, is a new generation aircraft and to fly the same, he had to undergo a special training at his cost, though sponsored by his new employer. Such a statement is not denied by the plaintiff in the reply statement. The defendant had also stated that as a pilot holding a licence given by the Directorate of Civil Aviation, Government of India, he is entitled to have training in flying any type of aircraft of his choice at his cost. No doubt, in this case the defendant came to be sponsored by the plaintiff for his training to fly B737 - 200 aircraft at South Africa and it is seen that the entire training cost was borne by the defendant himself. I have no doubt at all in my mind that there would be a marked difference in flying an aircraft of the type owned by the plaintiff and a passenger aircraft, which the defendant would be called upon to fly by his new employer. The technical expertise in flying the two types of aircrafts would be definitely different. The new employer of the defendant is not shown to be carrying on the same business/profession, which the plaintiff is carrying on. In fact, it appears that they are found operating in two different spheres namely, the plaintiff operating courier and cargo service and the new employer of the defendant operating passenger aircrafts. Therefore at this stage it is not possible to say that but for the training the defendant had to fly B737 -200 aircraft as a sponsored candidate of the plaintiff, the defendant would not have had the opportunity to go for training in flying aircrafts of modern version making use of which he could get a new employment. According to me, the sum and substance of the negative covenant, prima facie, appears to be that the defendant should not carry on any activities, which are either directly or indirectly similar to the activities carried on by the plaintiff. The principal business of the plaintiff is courier/cargo service. It is not shown that the defendant is going to involve himself in any such business. The principal business of the plaintiff is courier/cargo service. It is not shown that the defendant is going to involve himself in any such business. It is no doubt true that the defendant was flying B737 - 200 aircraft owned by the plaintiff and he s is going to fly a modern aircraft owned by the new employer. Therefore the common factor is that the defendant, as captain, was flying an aircraft i.e., B737 - 200 owned by the plaintiff and he would be flying a different aircraft in his new employment. Whether such an act alone-dehors any other factual material i.e., the defendant is going to act in any manner prejudicial to the interest of the business activities of the plaintiff, it is not possible for this court to grant an order of injunction as prayed for at this stage. As already stated, granting injunction pending suit depends upon the facts of each case. In Golikaris case the Supreme Court held as hereunder: “There is no doubt that the courts have a wide discretion to enforce by injunctions a negative covenant.” In Gujarat Bottling Co. v. Coco Cola Co. & Others also (See AIR 1995 SC Pg.2372), the Honble Supreme Court of India held as hereunder: “The court is, however not bound to grant an injunction in every case and an injunction to enforce a negative covenant would be refused if it would indirectly compel the employee either to idleness or to serve the employer.” It also held that in granting or not granting an injunction, the court applies the following decisions: “(a) Whether the plaintiff has a prima facie case? (b) Whether the balance of convenience is in favour of the plaintiff? (c) whether the plaintiff would suffer an irreparable injury if his prayer for interlocutory injunction is disallowed?” 8. Let me now decide on whom the balance of convenience lies. Mr. Arvind P Datar learned senior counsel would state that if an order of injunction is granted as prayed for, the defendant would not be jobless, since the plaintiff is willing to retain him in their service paying the salary which he was last drawing and therefore there will be no loss to him. It is his further submission that the defendant can apply for leave from his new employer and serve the plaintiff atleast for the notice period. However, Mr. It is his further submission that the defendant can apply for leave from his new employer and serve the plaintiff atleast for the notice period. However, Mr. T.V. Ramanujam learned senior counsel would submit that the defendant had already joined the new airlines on a higher salary and it would not be possible for him to apply for leave there, assuming this court grants an order of injunction as prayed for. If such a course is to be adopted, then there is every possibility of the defendant losing his employment opportunity with his present employer. Therefore according to him the submission made by the plaintiffs counsel that the defendant would not suffer monetarily does not stand to reasons and the defendant being an young officer, should not be forced to suffer on account of the breach, assuming he had committed, since the claim of the plaintiff can always be compensated in terms of money. From the facts brought to my notice by Mr. T.V. Ramanujam learned senior counsel, I am inclined to hold that the balance of convenience is only in favour of the defendant in not granting an order of injunction. Consequently, I hold that the plaintiff is not going to suffer any irreparable injury at this stage. For all the reasons stated above, I am of the opinion that the plaintiff has not made out a case for granting an interim order as prayed for and consequently O.A. No. 362/2005 stands dismissed.