Modicare Limited vs Gautam Bali & Ors
2019 Latest Caselaw 4526 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                   Date of decision: 23rd September, 2019.

+     CS(COMM) 763/2016& IAs No.9555/2016 & 11189/2016 (both
      u/O XXXIX R-2A CPC)

      MODICARE LIMITED                                          ..... Plaintiff
                  Through:              Mr. Parag P. Tripathi, Sr. Adv. with
                                        Mr. Tarun Singla, Mr. Srinivasan
                                        Ramaswamy and Mr. K.C. Joshi,
                                        Advs.

                                    Versus
      GAUTAM BALI & ORS                                     ..... Defendants
                  Through:              Mr. AnurajTirthankar, Adv. for
                                        D-1&2.
                                        Mr. Sanjay Gupta and Ms. Naina
                                        Dubey, Advs. for D-3,7,9&10.
                                  AND

+     CS(COMM) 764/2016& IA No.15325/2016 (u/O XXXIX R-2A
      CPC)

      MODICARE LIMITED                                           ..... Plaintiff
                  Through:              Mr. Parag Tripathi, Sr. Adv. with Mr.
                                        TarunSingla,      Mr.        Srinivasan
                                        Ramaswamy and Mr. K.C. Joshi,
                                        Advs.

                                    Versus
      GAUTAM BALI & ORS                                ..... Defendants
                  Through:              Mr. AnurajTirthankar, Adv. for
                                        D-1&2.
                                        Mr. Sanjay Gupta and Ms. Naina
                                        Dubey, Advs. for D-3&4.




CS(COMM) 763/2016 & CS(COMM) 764/2016                             Page 1 of 22
 CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.

The adjudication hereunder is on the subject, "whether to a claim founded on tort of unlawful interference with business, as distinct from a claim based upon a contract, Section 27 of the Contract Act, 1872 does not apply".

2. The plaintiff instituted CS(COMM) No.763/2016 for, (I) permanent injunction restraining its ex-employees and the businesses set up by them from (a) using the plaintiff‟s databases and database relating to consultants, resulting in infringement of plaintiff‟s copyright; (b) acting as selling agents;

(c) using any proprietary or confidential information of the plaintiff including the financial models and rewards systems practiced by the plaintiff; (d) committing breach of contract; and, (e) enticing the customers and other consultants in the marketing network of the plaintiff; and, (II) rendition of accounts and recovery of damages.

3. CS(COMM) No.764/2016 has been instituted by the same plaintiff against seven defendants all of which are also defendants in CS(COMM) No.763/2016, for permanent injunction restraining the defendants from defaming the plaintiff and for recovery of compensation for defamation.

4. CS(COMM) No.763/2016 came up first before this Court on 10 th June, 2016, when while entertaining the same, vide ex-partead-interim order, the defendants were restrained from a) using the plaintiff‟s customer databases and database relating to consultants resulting in infringement of the plaintiff‟s copyright;b) representing themselves to the public at large as the agents or consultants of the plaintiff;c) using the models/schemes/data,

financial information or any other confidential or proprietary information acquired from the plaintiff; and d) enticing the customers and other consultants in the marketing network of the plaintiff.

5. CS(COMM) No.764/2016 came up first before this Court on 18 th June, 2016, when while entertaining the same, vide ad-interim ex- parteorder, the defendants therein were restrained from defaming the plaintiff.

6. Vide order dated 11th July, 2016 in CS(COMM) No.763/2016, the earlier ex-parteorder dated 10th June, 2016 was modified as under:

"3. The senior counsel for the plaintiff has drawn attention to IA No.7736/2016 under Order XXXIX Rule 2A of Code of Civil Procedure, 1908 (CPC) and to the averments therein of the defendants enticing the down line consultants of the plaintiff. It is further stated that the applicants/defendants who were earlier the down line consultants of the plaintiff are now using the confidential information of the plaintiff in their custody and possession for promoting the goods of the defendant No.2 Vestige Marketing Pvt. Ltd., a competitor of the plaintiff.

4. I am of the view that even if the applicants/defendants had contractually bound themselves to, even after termination of the relationship with the plaintiff and / or ceasing to be the down line consultants of the plaintiff, not to engage in the same business and similar products, such an agreement would be violative of Section 27 of the Contract Act, 1872 and would not be enforceable.

5. Accordingly, the order dated 10th June, 2016 is modified by vacating the part thereof vis-a-vis applicants/defendants whereby they have been restrained from acting as selling agents of the defendants No.1&2 and by adding a condition thereto that none of the defendants shall access the software containing the confidential information and data of the plaintiff through any of the consultants of the plaintiff."

7. The order dated 10th June, 2016 as modified on 11th July, 2016 in CS(COMM) No.763/2016 and the order dated 18th June, 2016 in CS(COMM) No.764/2016 vide order dated 20th October, 2016, were made absolute till the decision of the suits.

8. Vide order dated 18th January, 2017, the two suits along with yet another suit between the parties, being CS(COMM) No.767/2016, were consolidated for the purposes of trial and the following issues framed:

"(i) Whether the plaintiff has any copyright in the customer data bases and data bases related to consultants and if so, whether any of the defendants in the said suit have infringed the said copyright of the plaintiff and if so to what damages if any is the plaintiff entitled to and from which of the defendants? OPP

(ii) Whether the defendants no.3 to 16 in CS(COMM) No.763/2016 have committed any breach of contract with the plaintiff and if so whether the plaintiff is entitled to any damages / compensation therefor and if so in what amount and from which of the defendants? OPP

(iii) Whether the defendants in CS(COMM) No.764/2016 or any of them have defamed the plaintiff and if so whether the plaintiff is entitled to any damages and if so in what amount and from which of the defendants? OPP.

(iv) If the above issue is to be decided in favour of the plaintiff, whether the alleged defamatory statements made by the defendants are true and in the interest of public at large and if so to what effect? OPD.

(v) Whether the plaintiff is the owner of the trademark „ACHIEVERS ACADEMY‟? OPP

(vi) Whether the defendants in CS(COMM) No.767/2016 coined the mark „ACHIEVERS ACADEMY‟ before their association with the plaintiff? OPD

(vii) If the above issue is decided in favour of the defendants, whether the defendants are not entitled to claim any rights in „ACHIEVERS ACADEMY‟ owing to non-use thereof for the trade in which the same was used during the association of the defendants with the plaintiff? OPD1&4.

(viii) Whether the domains www.achieveracademy.org.in and www.achieveracademy.net are the property of and are registered by the plaintiff? OPP

(ix) Whether the plaintiff has copyright over the MCA numbers? OPP

(x) If the issue nos.(v) to (ix) are decided in favour of the plaintiff, to what damages, if any, is the plaintiff entitled to and from which of the defendants in CS(COMM) No.767/2016? OPP

(xi) Relief."

and the parties relegated to trial.

9. Vide common order dated 2nd July, 2019, in all the three suits aforesaid, CS(COMM) No.767/2016 was disposed of with the consent of counsels.

10. On 2nd July, 2019, finding the claim of the plaintiff against its ex- employees, in CS(COMM) No.763/2016 to be the same as that in Navigators Logistics Limited Vs. Kashif Qureshi 2018 SCC OnLine Del 11321, it was enquired from the counsel for the plaintiff, why the suit should not be disposed of in terms of the said judgment and the suits posted for consideration of the said aspect.

11. After hearing the senior counsel for the plaintiff on 19th August, 2019, the following order was passed:

"1. The senior counsel for the plaintiff has been heard in pursuance to the query raised in the order dated 2nd July, 2019.

2. The senior counsel for the plaintiff has contended that at best the reliefs claimed in paragraph 28 (a), (b) & (c) of the plaint in CS(COMM) No.763/2016 would be covered by Navigators Logistics Limited Vs. Kashif Qureshi 2018 SCC OnLine Del 11321, appeal whereagainst also is pending before the Division Bench of this Court, though there is no stay. He however further contends that the plaintiff has also sought to restrain the defendants from enticing the customers and consultants in the marketing network of the plaintiff and claimed damages therefor. It is contended that interference with contractual relations has been identified as a tort and the reliefs claimed by the plaintiff for the said tort committed by the defendants would survive, notwithstanding Navigators Logistics Limited supra.

3. The senior counsel for the plaintiff has in Court handed over a note on submissions which is taken on record and be tagged to Part-I A file.

4. The senior counsel for the plaintiff has drawn attention to The Torquay Hotel Company Limited Vs. Cousins [1969] 2 Ch. 106 in this regard.

5. I have enquired, whether there is an equivalent of Section 27 of the Contract Act, 1872 in the law in United Kingdom inasmuch as once the law of this country is that there can be no restraint by contract against an employee, from competing with the ex-employer, the effect thereof cannot be whittled down by holding that the said employee, while carrying on his competing business, would not be entitled to offer terms to other employees or the customers of the ex-employer, which would attract them to enter into a contract with the employee and break the existing contracts with the ex-employer.

6. In my opinion, the remedy if any of the ex-employer in such a situation would be only of suing for breach of contract and not to restrain the employee.

7. If a contract is terminable by its very nature, even though with liability for damages, the contractee cannot also be bound down by the contract and the same, it appears, would also be in violation of the freedom of trade and commerce.

8. As far as I recall, rights under Section 27 of the Contract Act have also been held to be within the domain of Article 21 of the Constitution of India and would thus have a better claim for enforcement than of a tort of interference with contractual relations.

9. The senior counsel for the plaintiff has also referred to Amway India Enterprises Pvt. Ltd. Vs. 1MG Technologies Pvt. Ltd. (2019) 260 DLT 690 (paragraphs 323 to 328) but which also is found to be relying on foreign judgment and the senior counsel for the plaintiff, on enquiry, states that he needs to check, whether in such foreign jurisdiction, equivalent to Section 27 of the Contract Act exists.

10. Moreover, as far as I have read Amway India Enterprises Pvt. Ltd. supra, the same is based on the defence of being freed from liability as intermediaries and is an interim order. The defendants herein are not claiming to be intermediaries under the Information Technology Act, 2000 and the only question for determination is the entitlement of the defendants to offer better terms to the customers and employees of the plaintiff.

11. It also needs to be considered, where the line should be drawn, between what constitutes inducement and what constitutes competition.

12. On request, list on 23rd September, 2019."

12. The senior counsel for the plaintiff has been heard further today.

13. Since the issue concerned is purely legal, the need to state the facts in detail is not felt and suffice it is to state that it is the case of the plaintiff in

the plaint in CS(COMM) No.763/2016, which alone is concerned with the subject matter of argument (with CS(COMM) No.764/2016 being confined to defamation), (i) that the plaintiff is engaged in the business of direct selling to the customers, wherein the products are sold on „principal to principal basis‟ by one person to another; (ii) that the plaintiff employs individuals termed as „consultants‟ who in turn develop a line of free- lancing consultants who agree to sell the goods of the plaintiff by using their contacts; (iii) that each consultant is offered rewards and bonuses based on the performance and sale; (iv) that in this model of business, goods are not offered at retail stores; (v) that the plaintiff, as part of its direct selling business, promotes various products including consumer products; (vi) that at the time of engaging consultants, an agreement in the form of an application form is executed by the plaintiff with the consultants, together with business manual containing the Rules of Business, Code of Ethics and sales and marketing plan of the plaintiff; (vii) that the consultants are required to adhere to the rules of business as well as the Code of Ethics;

(viii) that the defendant No.1 Gautam Bali was an employee of the plaintiff and the defendant No.3 Pawan Malik was a consultant of the plaintiff; defendant No.3, as a consultant of the plaintiff had deployed defendants No.4 to 16 as consultants under his line; (ix) that the defendant No.1, after leaving employment of the plaintiff, set up defendant No.2 Vestige Marketing Pvt. Ltd.; and, (x) that the defendant No.3 joined the defendants No.1&2 along with his entire line of consultants i.e. defendants No.4 to 16, in breach of consultancy agreement with the plaintiff.

14. Though the senior counsel for the plaintiff on 19th August, 2019 stated that the plaintiff was also seeking to restrain the defendants from enticing

the customers and consultants in the marketing network of the plaintiff and claiming damages therefor and that interference with the contractual relations had been identified as a tort and the reliefs claimed by the plaintiff for the said tort committed by the defendants would survive notwithstanding Navigators Logistics Limited supra, but a reading of the plaint, while dictating this order does not show the plaintiff to have pleaded the tort of interference with the contractual relations; it is found that the case of the plaintiff is premised solely on contract. However, since in prayer paragraph 28(e) of the plaint dated 10th June, 2016 in CS(COMM) No.763/2016, permanent injunction restraining defendants No.3 to 16 from enticing the customers and other consultants in the marketing network of the plaintiff has been claimed, notwithstanding the lack of plea of tort, I proceed to adjudicate the legal issue. However, before doing so, it is worth recording that though vide ex-parteorder dated 10th June, 2016 in CS(COMM) No.763/2016, the defendants No.3 to 16 were also restrained from acting as selling agents of defendants No.1&2 and enticing the customers and other consultants in the marketing network of the plaintiff but the said part of the ex-parteorder, as aforesaid, was vacated on 11th July, 2016, reasoning that the agreement, even if any of the defendants No.3 to 16 with the plaintiff, binding themselves, not to engage in the same business and similar products, would be violative of Section 27 of the Contract Act and would not be enforceable. The said modification at the instance of the defendants was not only not appealed against by the plaintiff but again, as aforesaid, vide order dated 20th October, 2016, with the consent of the senior counsel then appearing for the plaintiff, the order dated 10th June, 2016 as modified on 11th July, 2016 was made absolute till the decision of the suit.

15. The senior counsel for the plaintiff, with respect to "Interface between the Doctrine of Restraint of Trade and Principles of Unlawful Interference", has in his written note of argument contended, (a) that the law of restraint of trade in England, is a part of common law permitting the employer to in the contract of employment provide that after cessation of the relationship between the employer and employee, the latter may be restrained from carrying on or being employed in a similar type of business within a reasonable geographical limit or for a reasonable length of time;reliance in this regard is place on Nordenfelt Vs. Maxim Nordenfelt& Co. [1894] A.C. 535 and Esso Petroleum Co. Limited Vs. Harper's Garage (Stourport) Limited [1968] A.C. 269; (b) that this is however in contrast to the law relating to restraint of trade in India, where the same is codified as a part of Section 27 of the Contract Act; (c) that the Supreme Court in Niranjan Shankar Golikari Vs. Century Spinning & Manufacturing Company Limited AIR 1967 SC 1098 applied the principle of reasonableness of a restrictive covenant; (d) that even prior thereto in Madhub Chunder Poramanick Vs. Bajcoomar Doss 1874 SCC Online Cal 34, a Division Bench of the Calcutta High Court drew a distinction between the English Law and the codified Indian Law and opined that the meaning that was to be ascribed to the word „restraint‟, was any kind of restraint and that it did not matter whether the restraint was partial or appeared to be reasonable; this view has since been reiterated in Superintendence Company of India (P) Limited Vs. Krishan Murgai(1981) 2 SCC 246, Gujarat Bottling Co. Limited Vs. Coca-Cola Co. (1995) 5 SCC 545 and Percept D'Mark (India) (P) Limited Vs. Zaheer Khan (2006) 4 SCC 227; (e) that the law of contract and the law of torts, operate in different spheres; reliance is placed on Clerk

& Lindsell on Torts opining that while contract is concerned with voluntary obligations, tort is concerned with involuntary obligations and that tortuous duties are owned to persons generally in rem, whereas contractual duties are undertaken towards a specific person; (f) that thus the prohibition under the Indian Contract Act cannot curtail the remedy available under torts, since the rights in tort law, in the nature of rights in rem,exist de hors a contract;

(g) that the High Court of Calcutta in Embee Software Limited Vs. Samir Kumar Shaw MANU/WB/0378/2012 held that a tort is capable of being committed by an ex-employee despite the protection granted to him by Section 27 of the Contract Act; and, (h) that the High Court of Madras in Tata Sons Limited Vs. Mastech Corporation 1995 SCC OnLine Mad 368, this Court in Wipro Limited Vs. Beckman Coulter International Limited 131 (2006) DLT 681 and Amway India Enterprises Limited Vs. 1mg Technologies Private Limited 2019 SCC OnLine Del 9061 have also held so. The senior counsel for the plaintiff thus contends that the defendants, not only under the contract but otherwise also under the common law of tort, are not entitled to, in exercise of their right of trade and commerce, entice customers and consultants of the plaintiff, to commit breach of their contract with the plaintiff and to align with the defendants.

16. I may mention that the senior counsel for the plaintiff during the hearing on 19th August, 2019 also had handed over a note of submissions and in which reliance was placed, besides on the judgments already noticed in the order dated 19th August, 2019 as reproduced above, also on Pepsi Foods Ltd. Vs. Bharat Coca-Cola Holdings Pvt. Ltd. 81 (1999) DLT 122, Hi-Tech Systems & Services Limited Vs. Suprabhat Ray AIR 2015 Cal 261besides several learned authors on the subject to torts.

17. Per contra, the counsel for the defendants No.3,7,9&10 in CS(COMM) No.763/2016 has argued, (i) that no issue was sought by the plaintiff on 18th January, 2017, when issues were framed, on tort of enticement / solicitation; thus even if any plea to the said effect were to be read in the plaint, though there is none, the plaintiff is deemed to have given up the same; (ii) that the grievance with which the suit is filed, as evident particularly from paragraphs 4 and 17 to 19 of the plaint, is of the defendants competing with the plaintiff; (iii) that the plaintiff, while in the present suit has claimed to be having three lacs consultants, in the other suit has claimed to be having 20 lacs consultant; with such mammoth number of consultants, the number of defendants No.3 to 16 is insignificant; (iv) that the cause of action pleaded by the plaintiff in paragraph 24 of the plaint also is on the basis of agreement only and not on the plea of tortuous interference; (v) that even as per the agreement relied upon by the plaintiff, the defendants as consultants had agreed to not entice consultants from another line of the plaintiff and not from their own line which had been built by themselves and that too only during the period of engagement with the plaintiff; (vi) that even in the agreement, there is no clause whereunder the defendants had agreed to non-solicitation of customers or consultants of the plaintiff; (vii) that institution of the suits by the plaintiff is an act of economic terrorism within the meaning of Pepsi Foods Ltd.supra; (viii) that in Superintendence Company of India (P) Limited supra, Supreme Court has clearly held that there can be no partial restriction on the right of trade;

(ix) that Tata Sons Limitedsupra cited by the senior counsel for the plaintiff related to a bond executed by an employee who had been granted specialized training by the employer and thus has no application; (x) that the

paragraphs of Embee Software Limitedsupra relied upon by the senior counsel for the plaintiff are not laying down any law but only recording the submissions of the counsel therein; and, (xi) that the defendant No.3, who was earlier a consultant (as distinct from an employee) of the plaintiff, has become a consultant of defendant No.2 along with his own line of consultants comprising of defendants No.4 to 16 and thus there is no breach even of the agreement entered into with the plaintiff.

18. The counsel for the defendants No.1&2 has adopted the arguments aforesaid of the counsel for the defendants No.3,7,9&10 to in CS(COMM) No.763/2016.

19. The senior counsel for the plaintiff, in rejoinder has contended (A) that though no issue on the entitlement of the plaintiff to the relief on the basis of tort has been framed but issues can always be amended; (B) that in Manoranjan Paul Vs. Narendra Kumar Pave AIR 1994 Gau 64 it has been held that where both plaintiff and defendant were well aware of the issue for adjudication and had also led evidence thereon, no prejudice can be said to have been suffered, from non-framing of issue and the same cannot be a ground for remand; (C) that though the Code of Ethics of the plaintiff restrains enticement of consultants from another line but if the Code of Ethics is read in entirety, it is clear that the restraint is also on enticement of consultants from another line; (D) that in the cause of action paragraph 24 of the plaint, the word „entice‟ has been used; (E) that in Superintendence Company of India (P) Limited supra it was in the context of the clause in the employment contract in that case restraining the employee from running a business of his own, in similar line, directly or indirectly, for a period of

two years, that it was held that there can be no partial restraint; (F) Pepsi Foods Ltd. supra cited by the counsel for the defendants No.3,7,9&10 was on its own facts; (G) that it is not his argument that no consultant of the plaintiff can ever leave the plaintiff; and, (H) that the plaintiff is only seeking to restrain the defendants from doing what the law of tort restrains the defendants from doing.

20. I have considered the rival contentions.

21. At the outset, I reiterate that the plaintiff in its pleadings has not based the reliefs claimed by it on any liability of the defendants under the law of tort. The plaint as drafted, is pure and simple in enforcement of the rights under contract and the ingenuity of the senior counsel for the plaintiff, in during the hearing on 19th August, 2019 pursuant to the query on 2nd July, 2019, realizing that the plaintiff could have no case on contract, arguing on the basis of tort, including by handing over a note of submissions solely on the law of tort, cannot come to the rescue of the plaintiff.

22. The position in law in this respect admits of no ambiguity. A suit is governed by its pleadings and findings in the final judgment of the suit are to be on the issues sought and framed. No amount of evidence beyond pleadings and beyond issues, even if recorded can be seen, and no finding returned on the basis thereof. The reliance placed on ManoranjanPaul supra and which in turn relies on NedunuriKameswaramma Vs. SampatiSubha RaoAIR 1963 SC 884, both of which are of the stage of appeal, after final adjudication, is misconceived. Here, neither is there pleading, nor issue and any argument de hors the same cannot be entertained.

23. The fact that the plaintiff, neither at the time of drafting and filing of the plaint nor till queries raised from the plaintiff on 2 nd July, 2019, was itself not treating its case to be based on the law of tort is evident also from the proceedings of 11th July, 2016 in CS(COMM) No.763/2016, modifying the ex-parte order dated 10th June, 2016 referring to Section 27 of the Contract Act. The plaintiff, on that date did not contend any right under the law of tort. Not only so, the plaintiff subsequently on 20th October, 2016 itself sought disposal of its applications for interim relief by confirming the ex-parte order dated 10th June, 2016 as modified on 11th July, 2016 and which was consented to by the counsels for the defendants also. Had the plaintiff been treating its claim in the suits to be premised also on the law of tort, the plaintiff would have at least asserted the same.

24. I thus hold the claim of the plaintiff for permanent injunction to prevent the defendants from unlawfully interfering with the business of the plaintiff by enticing the customers and consultants of the plaintiff to breach their contract with the plaintiff, to be premised on contract only and not on tort.

25. However for the sake of completeness, I also proceed to adjudicate the legal question which, in the very first paragraph of this judgment, is stated to arise for consideration.

26. The counsel for the plaintiff at this stage has also handed over a copy of the judgment in Bholanath Shankar Das Vs. LachmiNarainAIR 1931 All 83, contending that the same unequivocally holds that when the claim is founded upon a tort alleged against the defendant, Sections 23 & 27 of the Contract Act do not apply.

27. I have during the hearing, enquired from the senior counsel for the plaintiff, whether not the law of tort is at best common law and which even if extended to and followed in India, whenever in conflict with the statutory law has to give way to the statutory law.

28. The senior counsel for the plaintiff does not controvert that torts are principles of common law.

29. Section 27 of the Contract Act makes void i.e. unenforceable, every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind. Thus, even if the defendants or any of them, under their agreement with the plaintiff, had undertaken not to carry on or be involved in any capacity in any business competing with the business of the plaintiff, even after leaving employment with/association of the plaintiff, the said agreement, owing to Section 27 supra, would be void and unenforceable and the plaintiff on the basis thereof could not have restrained any of the defendants from carrying on any business or vocation, even if the one which the defendant had agreed not to carry on. I find it incongruous that the law, on the one hand would disable a plaintiff from enforcing a contract where the defendant had voluntarily agreed not to do something, by going to the extent of declaring such contract void, but on the other hand, enable the same plaintiff to the same relief under the law of tort. To hold so, would make the law look like an ass.

30. Section 27, in Taprogge Gesellschaft MBH Vs. IAEC India Ltd. AIR 1988 Bom 157, Sharp Business System Vs. The Commissioner of Income Tax 2012 SCC OnLine Del 5639, and Pepsi Foods Ltd. supra has been held to have been enacted as a matter of public policy of India, and does not

create any personal right, which can be waived. If it is the public policy of India that there can be no restraint on any one exercising a lawful profession, trade or business, not even when such person has voluntarily agreed not to, it belies logic that such public policy would not apply when the mischief sought to be prevented is sought to be practiced invoking law of torts. It is not as if different reliefs are being claimed, in enforcement of contract on the one hand and invoking the law of torts on the other hand. The reliefs are the same. In my opinion, what is not contractually enforceable is also not enforceable invoking law of torts.

31. Inspite of specific query, whether there is equivalent in UK, of Section 27 of the Contract Act, no response has come. I find Supreme Court in Gujarat Bottling Co. Ltd. supra to have held that while under the common law in England, restraints of trade, whether general or partial, may be good if they are reasonable or reasonably necessary with reference to public policy or for protection of interest of covenantee, in India, agreements in restraint of trade are governed by Section 27 and the question of reasonableness of restraint is outside the purview of Section 27. This explains, the law of tort of unlawful interference in business, in UK. However the same, in my view, has no place in India, at least in the context of present facts. I find the Supreme Court, in Superintendence Company of India (P) Ltd. supra, to have also held that principles of English Law cannot be imported once the Parliament has codified the said principles in the Contract Act; it is the language of the statute which alone has to be considered to ascertain its true meaning and scope.

32. Section 27, contained in a legislation of the year 1872, on promulgation of the Constitution of India in the year 1950, conferring the right to practice any profession or to carry on any occupation, trade or business, the status of a Fundamental Right, under Article 19(1)(g) thereof, today has a different connotation. Article 19(6) only clarifies that nothing contained in Clause (g) shall affect the operation of any existing law or prevent the State from making any law, imposing in the interest of general public, reasonable restrictions on the exercise of right conferred by the said clause. Thus, restrictions, in the interest of general public and if reasonable, to the Fundamental Right to practice any profession or to carry on any occupation, trade or business, can be imposed only by law. The law of tort of unreasonable interference in carrying on business, in view of Section 27 of the Contract Act in force since 1872, was not the existing law within the meaning of Article 19 (6) of the Constitution.

33. I have in Independent News Service Pvt. Ltd. Vs. Sucherita Kukreti(2019) 257 DLT 426, in the context of Section 27 of the Contract Act held the right saved thereby to be a facet of Article 21 of the Constitution of India. The judgment of the Division Bench of Allahabad High Court of the year 1930, after the right sought to be curtailed has been conferred the status of a Fundament Right and a facet of Article 21 of the Constitution of India, does not persuade me to hold that such Fundament Right of the defendants can be subject to the law of tort of enticement to commit breach of contract or of unlawful interference with business.

34. After the coming into force of the Constitution of India, the restriction if any on the fundamental right to carry on any trade or business

or to practice any profession can be imposed only by making a law i.e. a law prohibiting unlawful interference in business and enticing another to commit breach of existing contractual obligations, and the constitutionality of which law if challenged would be tested on the anvil of Article 19(6) of the Constitution of India.

35. Bholanath Shankar Das supra referred to by counsel for plaintiff is found to be in a different set of facts. The defendants therein, by forming an association, were preventing the others traders in the market from making supplies to the plaintiff therein of the goods which they had agreed to sell to the plaintiff. It was found as a matter of fact that the defendants were doing so to create a monopoly, to hike up the price. It was the plea of the plaintiff therein that the agreement forming an association for the said purpose offended the provisions of Sections 23 and 27 of the Contract Act. While negativing the said contention, it was observed that the case of the plaintiff was founded upon tort and to which Sections 23 and 27 had no application. Reliance placed by the counsel for the plaintiff on the said judgement, without reference to the facts thereof, is thus misconceived.

36. Else, I find a Full Bench of the High Court of Hyderabad to have in Holloor Gopal Rao Vs War Nasi Shiv Ramiah AIR 1953 Hyd 1 held that a suit for establishing exclusive right to „purohitgiri' in a village, axiomatically prohibiting others from acting as purohits, could no longer continue after coming into force on 26thJanuary, 1950 of the Constitution of India. It was held that any order declaring the exclusive right of the plaintiff would amount to laying a restraint upon others to carry on the same profession in the village.

37. In fact, during the hearing on both days, I have also been asking the senior counsel for the plaintiff, that even if the argument of the senior counsel for the plaintiff were to be accepted, where should the Court draw the line, between what constitutes enticement to commit breach of contract and unlawful interference in business on the one hand and competition on the other hand. Any new entrant in the market, to be able to create a niche for itself, in spite of the existing players, has to compete with the existing players, by approaching the same customers and the same cache of employees who over the years have acquired expertise in that particular field. When launching the same product/service, the new entrant to the business cannot possibly create a new set of customers for that product or service. Thus, the consumers to be approached by the new entrant would be the same who were earlier having contractual relationships with the existing players. Similarly, a new entrant cannot possibly compete if does not have the requisite expertise/finesse, required for launching a particular product or service and to be able to provide the same class or quality of service, has to necessarily have with it, hands which have been making the subject product and/or providing the said service in the past, may be under contract with the existing players. In my view, it is practically impossible to draw a line between such persons, on their own approaching the new entrant, and the new entrant approaching them. The process is quite complex and no precise rules can be made with respect thereto. The Courts would not lay down the law in the name of being a matter of evidence, in respect of matters which are incapable of determination by Courts.

38. Attention of the senior counsel for the plaintiff has also been drawn to the widespread business of headhunters and employment brokers, who

sometimes are approached by employees/customers and sometimes by the new entrant and also sometimes on their own make the two meet. I have enquired from the senior counsel for the plaintiff, whether it will make any difference, that the new entrant in the market approaches a headhunter for hiring employees with the specialty and instead of the new entrant, it is the headhunter who approaches employees having contracts with existing players. It is virtually impossible, even if evidence were permitted to be led to draw a line, as to what caused the employee to breach an existing contract of employment and enter into a new contract i.e. whether it was on own violation or on being enticed by the new entrant in the market.

39. No line which can be drawn in this respect has been suggested.

40. A new entrant obviously has to offer better terms to employees having expertise and having contract with other players, to woo them to itself. I have wondered, whether offering such better terms would amount to the tort of enticement to commit breach of contract and unlawful interference with the business of an existing player. Again no clarity has emerged.

41. I thus hold that a claim founded on unlawful interference with business or of enticement to commit a breach of contract with the plaintiff is not enforceable in a court of law, neither contractually nor invoking the law of tort. Such a claim is thus not required to be put to trial.

42. Though, in view of above and Navigators Logistics Limited supra I am of the view there is no need to put CS(COMM) 763/2016 to trial and the same is liable to be disposed of forthwith, but having not heard the counsels on the said aspect, with the hearing having been confined to legal question aforesaid, an opportunity needs to be given. I however implore the parties

to, rather than concentrating on this litigation which has by now outlived its purpose, to now divert their energies to a healthy competition amongst themselves. The parties are also cautioned that if choose to pursue this litigation further and if unsuccessful, would be liable for actual costs of the proceedings of the other.

43. List for further consideration on 18thNovember, 2019.

RAJIV SAHAI ENDLAW, J.

SEPTEMBER 23, 2019 „bs‟..

(Corrected and released on 10th October, 2019)