11 November 2021 | Chem Academy Pvt. Ltd. v. Sumit Mehta with Chem Academy Pvt. Ltd. v. Anoop Lamba | OMP (I) (Comm.) 356 of 2021 | OMP (I) (Comm) 357 of 2021| Sanjeev Narula J | Delhi High Court | 2021 SCC OnLine Del 4985

In October we covered the case of a TV anchor. Another set of cases involve teachers of a coaching institute. The identically worded agreements of two faculty staff memebers of Chem Academy provided that the appointment was for three years, and they could leave before that but with three months’ notice. Another clause provided that during the three-year period they would not associate with a competitor.

They resigned and joined a competitor (Unacademy) without serving the notice period. Chem applied to injunct them from teaching or doing any allied activity in a competing organization, and a mandatory injunction to rejoin.

The latter prayer was given up during arguments, but the court nevertheless found it “imperative to note that, the prayer is even otherwise misconceived” because the agreement was determinable in nature and the bar contained in Section 14(d) read with Section 41(e) of the Specific Relief Act, 1963 was attracted. Moreover, it was a contract of personal service, and no mandatory injunction could lie in view of Section 14(c) SRA.

The first prayer was also rejected after a detailed discussion for the following main reasons:

1. Side-lining professional(s) is likely to inflict their prospects and would have an adverse impact on their mental wellbeing.
2. Niranjan Golikari AIR 1967 SC 1098 was distinguishable on facts. Superintendence Company (1981) 2 SCC 246 also does not apply because restrictive covenant contained in that case was unenforceable post-termination, and the restrictions were found in restraint of trade.
3. The employment agreements were terminated, rightly or wrongly. But a relief founded on the negative covenant of a terminated contract is not to be granted. [citing Arvind Medicare 2021 SCC OnLine Del 2225, a 2-judge bench of Delhi High Court].
4. The argument that since the negative covenant was enforceable for the full three-year term, there should be an injunction for that period, is misconceived. The term was not a minimum fixed term.
5. The only dispute could be not serving the notice, for which the remedy is to seek compensation.
6. Negative covenant need not be necessarily enforced if it would indirectly compel the employees either to idleness or to serve the employer.
7. To a question if Chem would pay the respondents for the remaining term notwithstanding that they cannot be compelled to join, Chem’s answer was that they can join somewhere else than Unacademy. So, grant of injunction would necessarily entail treating the employees as continuing to be with Chem Academy.

Read the judgment here.