Thank you Madhu and Prasoon....
I'm sure such references of court rulings will benefit many of our members who just sign the bonds without even knowing about them in detail, and once they are stuck or find better opportunity then they look for options to come out of it.
Thankful to you both.
Regards,
From India, Delhi
113I'm sure such references of court rulings will benefit many of our members who just sign the bonds without even knowing about them in detail, and once they are stuck or find better opportunity then they look for options to come out of it.
Thankful to you both.
Regards,
From India, Delhi
Employer has such kind of clause only to avoid their employees joining their competitors - to reduce the attrition rate. But such law is leagal and not many companies follow it. Top reputed companies may be stating, you are not permitted to join at the clients place within specified period of span but this clause is not practised by many
From India, Bangalore
From India, Bangalore
Few more case references
Pepsi Foods Ltd vs Bharat Coca Cola Holding Pvt. Ltd
Pepsi Foods Ltd. filed a suit in the High Court against the Bharat Coca Cola Holding Pvt. Ltd., stating that it has a strong and well trained employees who have executed an undertaking not to take up any employment with its competitor within a year of leaving employment for any reason whatsoever, whereas the Bharat Coca Cola Holding Pvt. Ltd. has been inducing many of its employees to breach their existing employment contracts and other obligations with Pepsi Foods Ltd. Hence the Bharat Coca Cola Holding Pvt. Ltd. be restrained by the Court from doing so as it has been hindering its business.
The Bharat Coca Cola Holding Pvt. Ltd. submitted that it has not committed any actionable wrongs but has acted in furtherance of its legitimate business. It further submitted that to restrain the defendants(employees) from doing so would be to stifle free competition. The defendants as employers were entitled to the most meritorious employees and the employees similarly cannot be legitimately denied the opportunity of bettering their prospects and service conditions. It was further mentioned that the Pepsi Foods Ltd has sought to do so contractually by introducing the prohibitory clause which is void and unenforceable in violation of section 27 of the Contract Act.
The Delhi High Court declined to grant the injunction as prayed for stating that :
i. The injunction, if granted would certainly have direct impact of curtailing the freedom of employees for improving their future prospects and service conditions by changing their employment.
ii. Rights of an employee to seek and search for better employment cannot be restricted by an injunction.
iii. 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’.
iv. 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.
v. Inter-changeability of service is an accepted norm of Service Jurisprudence which cannot be curtailed by a Court injunction.
vi. Employees’ right to terminate their contracts also cannot be curtailed by Court injunction.
vii. 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.
viii. 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.
ix. 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.
In one case, the Delhi High Court observed that “you cannot have the cake and eat it too”. But an employer who obtains a temporary injunction against an employee restraining him from joining any firm of his competitors or running a business of his own in similar lines directly and/or indirectly after he leaves the service or when his services are terminated, eats the cake and also preserves.In this context, the Court has made reference to the provisions of section 27 of the Contract Act, 1872 which reads as under : “Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
In Niranjan Shankari v. The Century Spinning and Mfg. Co. Ltd., 1967 (2) SCR 378 the court stated an employer, for instance, is not entitled to protect himself against competition on the part of an employee after the employment has ceased. The Courts, however, have drawn a distinction between restraints applicable during the term of the contract of employment and those that apply after its cessation. 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.
From India, Pune
Pepsi Foods Ltd vs Bharat Coca Cola Holding Pvt. Ltd
Pepsi Foods Ltd. filed a suit in the High Court against the Bharat Coca Cola Holding Pvt. Ltd., stating that it has a strong and well trained employees who have executed an undertaking not to take up any employment with its competitor within a year of leaving employment for any reason whatsoever, whereas the Bharat Coca Cola Holding Pvt. Ltd. has been inducing many of its employees to breach their existing employment contracts and other obligations with Pepsi Foods Ltd. Hence the Bharat Coca Cola Holding Pvt. Ltd. be restrained by the Court from doing so as it has been hindering its business.
The Bharat Coca Cola Holding Pvt. Ltd. submitted that it has not committed any actionable wrongs but has acted in furtherance of its legitimate business. It further submitted that to restrain the defendants(employees) from doing so would be to stifle free competition. The defendants as employers were entitled to the most meritorious employees and the employees similarly cannot be legitimately denied the opportunity of bettering their prospects and service conditions. It was further mentioned that the Pepsi Foods Ltd has sought to do so contractually by introducing the prohibitory clause which is void and unenforceable in violation of section 27 of the Contract Act.
The Delhi High Court declined to grant the injunction as prayed for stating that :
i. The injunction, if granted would certainly have direct impact of curtailing the freedom of employees for improving their future prospects and service conditions by changing their employment.
ii. Rights of an employee to seek and search for better employment cannot be restricted by an injunction.
iii. 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’.
iv. 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.
v. Inter-changeability of service is an accepted norm of Service Jurisprudence which cannot be curtailed by a Court injunction.
vi. Employees’ right to terminate their contracts also cannot be curtailed by Court injunction.
vii. 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.
viii. 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.
ix. 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.
In one case, the Delhi High Court observed that “you cannot have the cake and eat it too”. But an employer who obtains a temporary injunction against an employee restraining him from joining any firm of his competitors or running a business of his own in similar lines directly and/or indirectly after he leaves the service or when his services are terminated, eats the cake and also preserves.In this context, the Court has made reference to the provisions of section 27 of the Contract Act, 1872 which reads as under : “Every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
In Niranjan Shankari v. The Century Spinning and Mfg. Co. Ltd., 1967 (2) SCR 378 the court stated an employer, for instance, is not entitled to protect himself against competition on the part of an employee after the employment has ceased. The Courts, however, have drawn a distinction between restraints applicable during the term of the contract of employment and those that apply after its cessation. 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.
From India, Pune
Hello Kamal Prasoon Sinha & others,
Looks like the Comm gap between what I 'meant to convey' & what 'was perceived to be conveyed' in my last Posting was HUGE.
When I mentioned the various aspects of 'how things can be argued legally', what I was trying to convey was the various ways Employers can handle this issue--IF it goes legal.
However, let me be clear on one thing: I WASN'T primarily focusing on the legal aspects--NOT because there are more qualified members in this Forum, BUT because I AM NOT qualified.
I was focusing on the NEXT/SUBSEQUENT step altogether. Let me explain.
All of us are, by & large, unanimous that this sort of Restriction to join a Competitor is ILLEGAL [maybe unethical too]. But what I was trying to point out was: how will all this exercise help the person involved NOW--who is waiting for a way to handle this issue since, he/she has to make a decision reg a job-in-hand?
Now, in general, when a candidate attends the Interview & is selected, he/she will be presented with this document to sign BEFORE joining.
How do you think he/she can/should respond/react? If he/she takes all the Court Verdicts/Rulings/Judgments & shows it to the HR person, what is the response likely to emanate: Will the HR exec say: "Oh...we didn't know that what we were doing was illegal. Fine....forget this & you can join tomorrow?" DEFINITELY NOT. A more likely answer would be: 'Our legal dept has told us it's legal & they are there to take care of such things. If you want this job, you need to sign this. If not........'--in the best-case-scenario.
By this exercise thru this thread, all I can see is BUILDING AN AWARENESS--about this issue. NOT THAT THIS IS WRONG OR UNNECESSARY--DEFINITELY NOT. But at the same time, Nothing else--even though the projected motive seems to be to resolve the issue [pl correct me if I am wrong].
An analogy would be this--but before taking it up, let me be very clear that EXCEPT FOR THE FUNDAMENTAL ASPECT, nothing else is common between the issue under discussion & the analogy.....the scale, length, breadth, depth, etc between the two are worlds apart.
Despite knowing well where the fault lies for all the corruption we see around us, why did Anna Hazare 'engage' the Government? He & others in his team knew very well that howsoever the LEVEL OF AWARENESS among the people of this country about corruption, it's FINALLY the GoI which has to take the Final call/stand IF CORRUPTION has to be reduced, if not altogether eliminated--BECAUSE IT CONTROLS THE LEVERS OF IMPLEMENTATION/PRACTICE.
Coming back to our issue, instead of trying to prove that this practice is WRONG [where none may be needed, after having so many Court Rulings] to the individuals/candidates who FACE THE BRUNT OF THIS PRACTICE, MAYBE it would be BETTER TO FOCUS ON THE HR Managers of such Companies--who actually lay-out the policies & finally implement such practices? Since until there's some Law forbidding such practices, I can't see any other way out [not that laws can prevent such occurances.. but that's beside the point].
As long as Companies don't stop from practicing such measures, all we will keep seeing are more Court Rulings: THAT THIS IS ILLEGAL.
There's another aspect to the whole issue--which I mentioned earlier: '........argue in the court that THOSE RULINGS DON'T APPLY TO THIS CASE' for which Kamal Prasoon Sinha said: how can that happen when the SC rulings are there?
I am not a legal person, but I can definitely tell this much: if the lawyer can manage, with some level of smart arguments, to get the 'matter' [not sure if this is the right 'legal' word] posted & not dismissed at the outset, then the case can go on & on and the individual/complainant had it--in terms of timeframe, energy, etc. I know this can happen SINCE I HAVE SEEN IT HAPPEN.
Maybe the court will finally give a Ruling that the Company is wrong--but when?. AND who will pay for the time [maybe years], effort, money [even if the case is 'with costs']? Knowing our legal process, is it worth for the individual to first sign such a Agreement WITH THE INTENT to jump later? I know what it entails, again, since I HAVE SEEN IT HAPPEN. For the legal professionals, that's THEIR PROFESSION but for the individual, IT'S NOT--that's the basic & the whole difference.
That's what I meant when I said: 'pl sign such a document ONLY IF YOU INTEND TO HONOR IT. Else, look for another job where this won't be an issue'. By saying this, my intent was to be 'practical & realistic' rather than any other way--mind you, ethics may be involved, but I didn't even consider that aspect.
I hope I haven't created more confusion :-)
Rgds,
TS
From India, Hyderabad
Looks like the Comm gap between what I 'meant to convey' & what 'was perceived to be conveyed' in my last Posting was HUGE.
When I mentioned the various aspects of 'how things can be argued legally', what I was trying to convey was the various ways Employers can handle this issue--IF it goes legal.
However, let me be clear on one thing: I WASN'T primarily focusing on the legal aspects--NOT because there are more qualified members in this Forum, BUT because I AM NOT qualified.
I was focusing on the NEXT/SUBSEQUENT step altogether. Let me explain.
All of us are, by & large, unanimous that this sort of Restriction to join a Competitor is ILLEGAL [maybe unethical too]. But what I was trying to point out was: how will all this exercise help the person involved NOW--who is waiting for a way to handle this issue since, he/she has to make a decision reg a job-in-hand?
Now, in general, when a candidate attends the Interview & is selected, he/she will be presented with this document to sign BEFORE joining.
How do you think he/she can/should respond/react? If he/she takes all the Court Verdicts/Rulings/Judgments & shows it to the HR person, what is the response likely to emanate: Will the HR exec say: "Oh...we didn't know that what we were doing was illegal. Fine....forget this & you can join tomorrow?" DEFINITELY NOT. A more likely answer would be: 'Our legal dept has told us it's legal & they are there to take care of such things. If you want this job, you need to sign this. If not........'--in the best-case-scenario.
By this exercise thru this thread, all I can see is BUILDING AN AWARENESS--about this issue. NOT THAT THIS IS WRONG OR UNNECESSARY--DEFINITELY NOT. But at the same time, Nothing else--even though the projected motive seems to be to resolve the issue [pl correct me if I am wrong].
An analogy would be this--but before taking it up, let me be very clear that EXCEPT FOR THE FUNDAMENTAL ASPECT, nothing else is common between the issue under discussion & the analogy.....the scale, length, breadth, depth, etc between the two are worlds apart.
Despite knowing well where the fault lies for all the corruption we see around us, why did Anna Hazare 'engage' the Government? He & others in his team knew very well that howsoever the LEVEL OF AWARENESS among the people of this country about corruption, it's FINALLY the GoI which has to take the Final call/stand IF CORRUPTION has to be reduced, if not altogether eliminated--BECAUSE IT CONTROLS THE LEVERS OF IMPLEMENTATION/PRACTICE.
Coming back to our issue, instead of trying to prove that this practice is WRONG [where none may be needed, after having so many Court Rulings] to the individuals/candidates who FACE THE BRUNT OF THIS PRACTICE, MAYBE it would be BETTER TO FOCUS ON THE HR Managers of such Companies--who actually lay-out the policies & finally implement such practices? Since until there's some Law forbidding such practices, I can't see any other way out [not that laws can prevent such occurances.. but that's beside the point].
As long as Companies don't stop from practicing such measures, all we will keep seeing are more Court Rulings: THAT THIS IS ILLEGAL.
There's another aspect to the whole issue--which I mentioned earlier: '........argue in the court that THOSE RULINGS DON'T APPLY TO THIS CASE' for which Kamal Prasoon Sinha said: how can that happen when the SC rulings are there?
I am not a legal person, but I can definitely tell this much: if the lawyer can manage, with some level of smart arguments, to get the 'matter' [not sure if this is the right 'legal' word] posted & not dismissed at the outset, then the case can go on & on and the individual/complainant had it--in terms of timeframe, energy, etc. I know this can happen SINCE I HAVE SEEN IT HAPPEN.
Maybe the court will finally give a Ruling that the Company is wrong--but when?. AND who will pay for the time [maybe years], effort, money [even if the case is 'with costs']? Knowing our legal process, is it worth for the individual to first sign such a Agreement WITH THE INTENT to jump later? I know what it entails, again, since I HAVE SEEN IT HAPPEN. For the legal professionals, that's THEIR PROFESSION but for the individual, IT'S NOT--that's the basic & the whole difference.
That's what I meant when I said: 'pl sign such a document ONLY IF YOU INTEND TO HONOR IT. Else, look for another job where this won't be an issue'. By saying this, my intent was to be 'practical & realistic' rather than any other way--mind you, ethics may be involved, but I didn't even consider that aspect.
I hope I haven't created more confusion :-)
Rgds,
TS
From India, Hyderabad
Dear Mr TS,
With your latest input now I am doubting that you are a lawyer....in your own words...lawyer can manage, with some level of smart arguments, to get the 'matter' (here input) posted & not dismissed at the outset, then the case can go on :-)
No confusion at all :)
regards,
Kamal
From India, Pune
With your latest input now I am doubting that you are a lawyer....in your own words...lawyer can manage, with some level of smart arguments, to get the 'matter' (here input) posted & not dismissed at the outset, then the case can go on :-)
No confusion at all :)
regards,
Kamal
From India, Pune
Hello Kamal Prasoon Sinha,
No confusion at all---about what? I don't get it. Pl elaborate.
If you mean: no confusion at all THAT I AM lawyer--forget it--I AM NOT A LAWYER. And to the extent possible/necessary, I try to keep myself away from them.
All I can say is: I have seen & faced of how the law can be distorted/misused--EVERYTHING LEGALLY--by those who 'want' to, misusing the legal knowledge-base they have. That's what I meant when I said: SINCE I HAVE SEEN IT HAPPEN. Such experiences may not have taught me 'how to do things' but DEFINITELY TAUGHT me on 'how not to do things'--if I have to keep my conscience clear.
Suffice it to say that there are many things I have faced & missed that for most average persons could be 'casual/taken-for-granted/assumed', but were 'luxuries' for me.
Rgds,
TS
From India, Hyderabad
No confusion at all---about what? I don't get it. Pl elaborate.
If you mean: no confusion at all THAT I AM lawyer--forget it--I AM NOT A LAWYER. And to the extent possible/necessary, I try to keep myself away from them.
All I can say is: I have seen & faced of how the law can be distorted/misused--EVERYTHING LEGALLY--by those who 'want' to, misusing the legal knowledge-base they have. That's what I meant when I said: SINCE I HAVE SEEN IT HAPPEN. Such experiences may not have taught me 'how to do things' but DEFINITELY TAUGHT me on 'how not to do things'--if I have to keep my conscience clear.
Suffice it to say that there are many things I have faced & missed that for most average persons could be 'casual/taken-for-granted/assumed', but were 'luxuries' for me.
Rgds,
TS
From India, Hyderabad
Dear TS,
Plz dont be serious. I know you are not a lawyer.
We are here to share our knowledge and learn from each other's experiences. What you said is also right that there are lawyers to manipulate and argue the cases just to delay the final decision of the court and we all know about the slow judicial process of our country. That's why govt. is coming up with an amendment where the court has to dispose off a case in maximum period of three and a half years.
regards,
Kamal
From India, Pune
Plz dont be serious. I know you are not a lawyer.
We are here to share our knowledge and learn from each other's experiences. What you said is also right that there are lawyers to manipulate and argue the cases just to delay the final decision of the court and we all know about the slow judicial process of our country. That's why govt. is coming up with an amendment where the court has to dispose off a case in maximum period of three and a half years.
regards,
Kamal
From India, Pune
Commonnnn Kamal Prasoon Sinha........
I am not serious--just setting the record straight.
I thank HIM for ensuring that aspect--if not I would have gone mad/bonkers long back.
Let's see how the Govt works out the nitty-gritty of the new law.
However, we Indians are adept @ finding loopholes which seem to miss from the sight of most nationalities :-)
If this sounds cynical/pessimistic, food for your thought [don't remember who said it]: An Optimist invented the Airplane & the Pessimist invented the Parachute :-)
Rgds,
TS
From India, Hyderabad
I am not serious--just setting the record straight.
I thank HIM for ensuring that aspect--if not I would have gone mad/bonkers long back.
Let's see how the Govt works out the nitty-gritty of the new law.
However, we Indians are adept @ finding loopholes which seem to miss from the sight of most nationalities :-)
If this sounds cynical/pessimistic, food for your thought [don't remember who said it]: An Optimist invented the Airplane & the Pessimist invented the Parachute :-)
Rgds,
TS
From India, Hyderabad
Thank you Kamal Prasoon Sinha for more references...its really going to help many of our members...
Great Job!! just wanted to know the source of such references...if you can mention that as well...
Regards,
From India, Delhi
Great Job!! just wanted to know the source of such references...if you can mention that as well...
Regards,
From India, Delhi
Dear Archna,
Almost all High courts and Supreme court is online now and all judgements are uploaded on the site.
There are few websites also which provides interactive platform and keeps you updated on the subject.
Plus I have also done LL.B and have seen and attended the proceedings of several lower courts, industrial courts and few high courts in the last 12 years of my HR career.
regards,
Kamal
From India, Pune
Almost all High courts and Supreme court is online now and all judgements are uploaded on the site.
There are few websites also which provides interactive platform and keeps you updated on the subject.
Plus I have also done LL.B and have seen and attended the proceedings of several lower courts, industrial courts and few high courts in the last 12 years of my HR career.
regards,
Kamal
From India, Pune
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