* IN THE HIGH COURT OF DELHI AT NEW DELHI

% Date of decision: 21st May, 2021

+ FAO(COMM) NO.12/2021
ARVIND MEDICARE PRIVATE LIMITED ..... Appellant
Through: Mr. Biswajit Das and Ms. Anamika
Sharma, Advs.
Versus
DR. NEERU MEHRA ..... Respondent
Through: Mr. Ashim Vachher, Adv.
CORAM:
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
HON'BLE MR. JUSTICE AMIT BANSAL
[VIA VIDEO CONFERENCING]
RAJIV SAHAI ENDLAW, J.
1. This appeal, under Section 13(1A) of the Commercial Courts Act,
2015 read with Order XLIII Rule 1(r) of the Code of Civil Procedure, 1908
(CPC), impugns the order dated 23rd December, 2020 of the Commercial
Court-02, Patiala House Court, New Delhi, of dismissal of application of
the appellant / plaintiff under Order XXXIX Rules 1 and 2 of the CPC.

2. The appellant / plaintiff instituted the suit, from denial of interim

relief wherein this appeal arises, pleading that (i) the appellant / plaintiff
was engaged in the business of healthcare and medical facilities of the
appellant / plaintiff were located at SCO - 1, 2 and 3, Sector 14, Gurugram
and at SCO - 68-69, Sectors 55 and 56, Gurugram; (ii) the respondent /
defendant approached the appellant / plaintiff and assured the appellant /
plaintiff that she will provide reliable and interrupted professional
healthcare and medical service, by serving at the appellant / plaintiff‟s
FAO(COMM) No.12/2021 Page 1 of 21
hospitals; (iii) the appellant / plaintiff, vide Service Contract dated 28th July,
2015, appointed / engaged the respondent / defendant, “on case-to-case
basis” as a “Visiting Consultant –Obstetrics & Gynaecology”, with effect
from 17th August, 2015 and till 16th August, 2016; (iv) the Service Contract
aforesaid between the parties was extended from time to time, upto 15 th
March, 2019; (v) the respondent / defendant approached the appellant /
plaintiff to provide a long term and uninterrupted professional healthcare
and medical service to the appellant / plaintiff and the appellant / plaintiff,
vide Service Contract dated 9th March, 2019, appointed the respondent /
defendant, “on retainership basis”, as a “Visiting Consultant – Obstetrics &
Gynaecology” at the hospitals of the appellant / plaintiff, with effect from
16th March, 2019 till 31st March, 2022; (vi) it was unconditionally
undertaken by the respondent / defendant, that if the respondent /
defendant, for any reason whatsoever chose to terminate the Service
Contract prior to the expiry of term thereof, she will not serve at any
facility/clinic/hospital within a radius of 5 kms. of the appellant / plaintiff‟s
facilities aforesaid at Gurugram, for a period of one year from the date of
termination; (vii) the appellant / plaintiff performed all its obligations under
the Service Contract dated 9th March, 2019; (viii) the respondent /
defendant, suddenly and abruptly sent an e-mail dated 29th October, 2020
showing her desire to resign with effect from 30th October, 2020 and
requested the appellant / plaintiff to accept her resignation; (ix) the
appellant / plaintiff rejected the resignation of the respondent / defendant
and reminded the respondent / defendant of her contractual obligations
under the Service Contract dated 9th March, 2019; (x) the respondent /
defendant however stopped coming to the hospitals of the appellant /

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plaintiff; (xi) the respondent / defendant, inspite of rejection of her
resignation, did not terminate the Service Contract; (xii) thus, the Service
Contract dated 9th March, 2019 between the parties is subsisting; (xiii) as
per the said Service Contract, the respondent / defendant, upto 31st March,
2022 was required to perform her obligations thereunder and was not
entitled to do any private practice anywhere, except at her residence-cum-
clinic at Gurugram and was not entitled to undertake any employment, full-
time or part-time, or to engage herself in any trade or business; and, (xiv)
due to the respondent / defendant, with effect from 30th October, 2020
having stopped performing her obligations under the Service Contract dated
9th March, 2019, the appellant / plaintiff was suffering irreparable loss and
injury and loss of face owing to being unable to serve the patients visiting
its hospitals. The appellant / plaintiff, thus in the suit from which this
appeal arises, sought (a) a decree for permanent injunction restraining the
respondent / defendant from undertaking any private practice anywhere
except at her residence-cum-clinic in Gurugram and from undertaking any
employment or engagement in any trade or business, till 31 st March, 2022
and alternatively from practicing at any facility/clinic/hospital within a
radius of 5 Kms. of the hospitals of the appellant / plaintiff, for a period of
one year; and, (b) of recovery of damages in the sum of Rs.61,75,000/- with
interest.

3. Needless to state, the suit aforesaid was accompanied with an

application under Order XXXIX Rules 1 and 2 of the CPC, to restrain the
respondent / defendant, during the pendency of the suit, from joining any

FAO(COMM) No.12/2021 Page 3 of 21

facility/clinic/hospital within a radius of 5 Kms. from the hospitals of the
appellant / plaintiff and from providing service therein.

4. The need to detail the defence of the respondent / defendant is not

felt.

5. The Commercial Court, vide impugned order dated 23 rd December,

2020, has dismissed the application of the appellant / plaintiff under Order
XXXIX Rules 1 and 2 of the CPC, reasoning that (i) the Service Contract
dated 9th March, 2019 was determinable by nature, as borne out from
Clauses 8, 9 and 10 thereof; (ii) granting any interim injunction to the
appellant / plaintiff would amount to restraining the respondent / defendant
from doing what she has been doing for the last 28 years and what she best
knows to do and has skill to do; (iii) restraining the respondent / defendant
from practicing medicine till 31st March, 2022 will amount to killing the
goodwill acquired by the respondent / defendant in the earlier 28 years in
the profession and which loss could not be monetarily compensated to the
respondent / defendant in the event of it being ultimately found that the
appellant / plaintiff was not entitled to permanent injunction to the said
effect; (iv) on the contrary, in the event of the appellant / plaintiff ultimately
succeeding in the suit, the appellant / plaintiff could always be compensated
monetarily for the loss if any suffered; (v) the clause of the Service Contract
dated 9th March, 2019 vide which the respondent / defendant had agreed to
be so restrained, was void in terms of Section 27 of the Indian Contract Act,
1872 (Contract Act); (vi) the appellant / plaintiff had not paid the agreed
minimum retainership fee of Rs.2,25,000/- per month to the respondent /
defendant for the months of April and May, 2020 and had paid at the rate of

FAO(COMM) No.12/2021 Page 4 of 21

Rs.1,57,500/- per month for the months of June, July and August, 2020 and
it was the case of the respondent / defendant that the respondent / defendant
had no option but to accept the same in full and final settlement; if it was
so, the appellant / plaintiff could not be said to have complied with its
obligations under the Service Contract; (vii) the entire claim of the appellant
/ plaintiff was on the premise of the Service Contract being in force and the
respondent / defendant while continuing to be in the employment of the
appellant / plaintiff being not entitled to serve anywhere else; (viii) however
it was yet to be determined whether the respondent / defendant, by
tendering resignation, had determined the Service Contract; (ix) the
respondent / defendant could not be compelled to render services to the
appellant / plaintiff; (x) benching a professional for as long as more than 15
months could be devastating, capable of inflicting permanent damage,
affecting mental and physical health and future prospects of a professional;
(xi) the appellant / plaintiff thus did not have prima facie case in its favour;
and, (xii) the ingredients of irreparable loss and injury and balance of
convenience were also not in favour of the appellant / plaintiff.

6. This appeal came up first before this Bench on 1st February, 2021,
when it was the contention of the counsel for the appellant / plaintiff, that
on the amendment of the Specific Relief Act, 1963 with effect from 1st
October, 2018, the law of specific performance of contract has totally
changed and under the new law, the appellant / plaintiff is entitled to a
decree for specific performance; it was asserted, that the appellant / plaintiff
was not seeking to enforce a negative covenant in the contract with the

FAO(COMM) No.12/2021 Page 5 of 21

respondent / defendant but seeking the relief in view of amendment in the
law.

7. Attention of the counsel for the appellant / plaintiff, on 1st February,

2021, was however drawn to Section 14(c) of the Specific Relief Act as
amended, and which still provides that a contract which is so dependent on
the personal qualifications of the parties that the Court cannot enforce
specific performance of its material terms, cannot be specifically enforced.
It was enquired from the counsel for the appellant / plaintiff, whether not
rendering the duties as a doctor would amount to a contract dependent on
the personal qualification of the respondent / defendant. Attention of the
counsel for the appellant / plaintiff was also drawn to Arvinder Singh Vs.
Lal Pathlabs Pvt. Ltd. 2015 SCC OnLine Del 8337 and to Modicare Ltd.
Vs. Gautam Bali 2019 SCC OnLine Del 10511.

8. The counsel for the appellant / plaintiff, on 1st February, 2021

contended, that the performance by the respondent / defendant of her duties
under the Service Contract with the appellant / plaintiff was to be
controlled, not by the appellant / plaintiff but by the Medical Council of the
State or of India and thus Section 14(c) of the Specific Relief Act did not
disentitle the appellant / plaintiff from the relief of specific performance.

9. To make sure that the payments, which the appellant / plaintiff had
agreed to make to the respondent / defendant will be received by the
respondent / defendant, on 1st February, 2021, it was enquired, whether the
appellant / plaintiff was willing to perform its part of the contract, by
depositing in this Court, subject to further orders, the entire amount of

FAO(COMM) No.12/2021 Page 6 of 21

Rs.2,25,000/- per month for the period 16th March, 2019 to 31st March,
2022, less the amount already paid to the respondent / defendant.

10. The counsel for the appellant / plaintiff stated that the appellant /
plaintiff would deposit the said amount within three days. Accordingly, the
appeal was adjourned to 5th February, 2021.

11. On 5th February, 2021, the counsel for the respondent / defendant
informed that the appellant / defendant had deposited Rs.38,79,000/- in this
Court. Accordingly, notice of the appeal was issued to the respondent /
defendant.

12. The counsel for the respondent / defendant however, under

instructions from the respondent / defendant, states that the respondent /
defendant, for reasons already stated in the written statement, is not willing
to continue with the appellant / plaintiff, even if assured of payments in
terms of the Service Contract, from the amounts deposited by the appellant /
plaintiff in this Court. We have thus proceeded to hear the counsels.

13. Before recording the contentions of the counsels, it is apposite to

detail the Service Contract between the parties, in the form of a letter dated
9th March, 2019 from the appellant / plaintiff to the respondent / defendant
and the terms and conditions contained wherein were accepted by the
respondent / defendant and in pursuance whereto the respondent / defendant
joined the appellant on 16th March, 2019. Vide the said letter, (a) the
appellant / plaintiff appointed the respondent / defendant as a “Visiting
Consultant – Obstetrics & Gynaecology”, at its facilities at Sector 14 and
Sectors 55 and 56, Gurugram and the respondent / defendant agreed to

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provide the said consultancy, between specified times and on specified days
and to oversee and monitor all obstetrics and gynaecology related tests and
procedures being conducted at the said facilities of the appellant / plaintiff;
(b) the consultancy charges of the respondent / defendant and the ratio in
which the same were to be shared between the appellant / plaintiff on the
one hand and the respondent / defendant on the other hand, were agreed and
specified; and, (c) the appellant / plaintiff agreed to pay to the respondent /
defendant, retainership of Rs.2,25,000/- per month or the respondent /
defendant‟s share of consultancy charges, whichever was higher, with
adjustments every month. Clauses 8, 9 and 10 of the said Service Contract
and which are relevant for adjudication of the present controversy, are as
under:

“8. In case you are found absent for seven consecutive days,
without any lawful permission or authorization, it shall be deemed
that you have terminated the contract and provisions of clause 10
shall apply.

9. Other Employment / Businesses: During the tenure of your

Contract with the Company, you will not do any Private Practice
anywhere, except at your residence-clinic in Gurgaon. You will not
undertake any employment – full time or part time and not be engaged
in any trade or business during the tenure of your Contract with us.
Any violation of this clause shall mean that you have terminated the
contract and provisions of clause 10 shall apply.

10. Tenure & Cessation of your Contract:

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 a) Your contract is valid from 16.03.2019 till 31.03.2022.
For cession before the above period, a notice period of
three months (or remuneration for three months in lieu
thereof) shall be required from either side.

b) In case the contract is terminated before 31.03.2022,

you shall not practice at any facility / clinic / hospital
within a radius of 5 K.M. of our above facility for a
period of one year from the date of termination of
contract.”

14. The counsel for the appellant / plaintiff argued, that (i) Section 27 of
the Contract Act, relying inter alia whereon the Commercial Court has
declined interim injunction to the appellant / plaintiff, was enacted by the
foreign merchant regulators then ruling India, to benefit their own interest
of free trade within the Indian colony, without factoring the choice, interests
and rights of the natives of India; (ii) in the Partnership Act enacted
subsequently in the year 1932, in Section 54, an exception to Section 27 of
the Contract Act was carved out; (iii) post shift of sovereignty from the
British Monarch to the Indian citizens, the Constitution of India also
restricted the State‟s legislative power to placing only reasonable restriction
qua right and freedom of the citizens of India to practice any trade or
profession and not beyond the public interest; (iv) Section 27 of the
Contract Act, upon coming into force of the Constitution of India, got
moderated to mean that “every agreement by which parties other than the
parties to the agreement were restrained from lawful profession, trade or
business, is to that extent void”; (v) Section 27 of the Contract Act, if read
as absolutely banning from exercising a lawful profession, trade or
FAO(COMM) No.12/2021 Page 9 of 21
business, will become void under Article 13(1) of the Constitution of India;
(vi) under the Service Contract aforesaid, there is no restraint on the
respondent / defendant‟s profession, trade or business and thus Section 27
of the Contract Act is not applicable; (vii) the respondent / defendant, under
the subject Service Contract, is entitled to practice medicine at any place
beyond 5 Kms. and also at her own residence / clinic; (viii) the relationship
of the parties was of an employer-employee and the respondent / defendant
cannot be permitted to exploit the appellant / plaintiff‟s resources /
opportunities in the nature of goodwill; (ix) the respondent / defendant is
duty bound under Section 37 of the Contract Act to perform her promise
under Clause 10(b) of the Service Contract; (x) the restraint of the nature
imposed on the respondent / defendant was imposed by the respondent /
defendant on her own self, in exercise of her fundamental right; (xi) the
respondent / defendant cannot chose to use her fundamental right as per her
own convenience and in breach of the appellant / plaintiff‟s fundamental
right; (xii) the respondent / defendant is taking the plea of fundamental
right, to enrich herself at the cost / exclusion of the appellant / plaintiff;
(xiii) the respondent / defendant having enjoyed her fundamental right of
practicing her profession under the appellant / plaintiff, is bound to perform
her duties under Clause 10(b) of the Service Contract, as a measure of pay-
back and consideration; (xiv) no law can be used to make one‟s act immoral
against the other; (xv) the act of the respondent / defendant, of practicing
medicine within prohibited distance from the appellant / plaintiff‟s hospitals
is an immoral act; (xvi) the Law Commission, in its 13th Report dated 26th
September, 1958, had opined that Section 27 of the Contract Act was
enacted at a time when trade was under-developed and the object

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underlying Section 27 of the Contract Act was to protect trade from
restraints; but today, trade in India does not lag far behind that in England
and USA and there is no reason why a more liberal attitude should not be
adopted by acknowledging such restraints as are reasonable not only
between the parties to the agreement but also as regards general public, and
had recommended for amendment of Section 27 of the Contract Act, by
substituting the words “is to that extent void, except insofar as the restraint
is reasonable having regard to interest of the parties to the agreement and of
the public” in lieu of words, “is to that extent void”; (xvii) post the
amendment with effect from the year 2018 of the Specific Relief Act, (a)
specific performance of the contract has to be enforced by the Court, subject
only to Section 11(2), 14 and 16 thereof; (b) compensation, as a relief can
be in addition to and not in substitution of specific performance of contract;
(c) the discretion earlier vested in the Court whether to enforce specific
performance or not has been taken away and contract has been given
primacy; (d) State interference in private disputes, where the State has no
stake, has been fully removed; (e) ease of doing business has been
introduced; (xviii) the respondent / defendant, under Section 37 of the
Contract Act, is obliged to perform her obligations under Clause 10(b) of
the Service Contract; (xix) Clause 9 of the Service Contract contains a
negative covenant and as per the dicta in Niranjan Shankar Golikari Vs.
Century Spinning and Manufacturing Co. Ltd. AIR 1967 SC 1098, Clause
10(b) cannot be hit by Section 27, during the tenure of one year spread over
5 Kms.; (xx) the State is not empowered to encroach into private / personal
choices and on the contrary is mandated to enforce private choice as part of
its duty to secure justice and can only impose reasonable restriction in

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enjoyment of people‟s right; (xxi) the respondent / defendant, by
successively entering into contracts with the appellant / plaintiff in the years
2015 and 2016 for one year at a time, in the year 2017 for two years at a
time and in the year 2019 for three years and nine months, very well
understood her arrangement with the appellant / plaintiff; (xxii) the
respondent / defendant, in her e-mail dated 29th October, 2020 of
resignation, did not give any reason whatsoever; (xxiii) the respondent /
defendant, in the five and a half years she worked with the appellant /
plaintiff, was sharing the fee received from the patients and had bound
herself with the terms and conditions of the Service Contract; (xxiv) the
appellant / plaintiff has spent large sums of money in marketing its services
and the appellant / plaintiff maintains a full marketing team and the
respondent / defendant cannot be permitted to, after availing the benefit of
such marketing including to her benefit, breach her Service Contract with
the appellant / plaintiff; and, (xxv) once the terms of the Service Contract
between the parties are enforced, it is the Medical Council which will
govern the performance of the respondent / defendant and no supervision by
the Court in this respect will be required.

15. To test the claim of the appellant/plaintiff, that the

respondent/defendant had benefited from the services of the marketing team
of the appellant/plaintiff, we enquired from the counsel for the
appellant/plaintiff, whether the appellant/plaintiff was entitled to so market
its services and drew the attention of the counsel for the appellant / plaintiff
to Regulation 6.1 of the Indian Medical Council (Professional Conduct,

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Etiquette and Ethics) Regulations, 2002, which prohibits a physician from
advertising.

16. The counsel for the appellant / plaintiff, faced therewith, immediately
withdrew the argument to the aforesaid extent and which though made
vociferously during the hearing, is not part of the written note of arguments
of the counsel for the appellant / plaintiff.

17. The counsel for the respondent / defendant argued, that (i) the interim
relief has been denied to the appellant, owing to the clause in the Service
Contract, in enforcement of which interim relief was claimed, having been
found to be prima facie void under Section 27 of the Contract Act; (ii) the
Commercial Court has also found the Service Contract between the parties
to be a contract which by its very nature was determinable and Section 14
of the Specific Relief Act, even post amendment of the year 2018, provides
that such contracts are not specifically enforceable; and, (iii) the matter in
controversy is fully covered by Arvinder Singh (DB) supra, Independent
News Service Pvt. Ltd. Vs. Sucherita Kukreti 257 (2019) DLT 426,
Superintendence Company of India (P) Ltd. Vs. Krishan Murgai (1981) 2
SCC 246, Percept D’Mark (India) (P) Ltd. Vs. Zaheer Khan (2006) 4 SCC
227 and Indian Oil Corporation Ltd. Vs. Amritsar Gas Service (1991) 1
SCC 533.

18. The counsel for the appellant / plaintiff, in rejoinder, referred again to
Clauses 8 and 10(b) of the Service Contract and contended, that (i) in none
of the judgments aforesaid, the amendment of the Specific Relief Act has
been considered; (ii) the appellant / plaintiff is not seeking specific
performance of a contract, the performance of which involves the
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performance of a continuous duty, which the Court cannot supervise or a
contract which is so dependent on personal qualification that the Court
cannot enforce specific performance of its material terms inasmuch as the
said part will be enforced by the Medical Council; (iii) such contracts are
the contracts as of an artist engaged to perform; and, (iv) the respondent /
defendant would not be sitting idle and can either continue to work with the
appellant / plaintiff or can work beyond 5 Kms.; within 5 Kms. also, she is
free to work at her clinic-cum-residence.

19. Though notice of the appeal was issued on the contention that on
amendment with effect from the year 2018 of the Specific Relief Act, the
Service Contract of the appellant / plaintiff with the respondent / defendant,
which as per the judgments of prior thereto was not enforceable, had
become enforceable, but on further consideration it is found that the
question for adjudication is not of enforceability of the restraint clause
contained in the said Service Contract but of validity of the said restraint
clause, whereunder the respondent / defendant agreed with the appellant /
plaintiff not to practice medicine in any facility/clinic/hospital within a
radius of 5 Kms. of the facilities / hospitals of the appellant / plaintiff, for a
period of one year from the date of premature termination of the Service
Contract.

20. What falls for determination is, whether Clause 10(b) aforesaid of the
Service Contract, whereunder the respondent / defendant agreed not to
practice medicine for a period of one year at any facility/clinic/hospital
within a radius of 5 Km. of the appellant / plaintiff‟s hospital in the event of

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termination of the Service Contract prior to 31 st March, 2022, is void under
Section 27 of the Contract Act.

21. The said question is no longer res integra. One of us (Rajiv Sahai
Endlaw, J.) sitting singly, in Dr. Lal Pathlabs Pvt. Ltd. Vs. Dr. Arvinder
Singh 2014 SCC OnLine Del 2033, granted an interim injunction
restraining the defendants therein from carrying on
business/profession/practice as a Pathologist / Radiologist in the city in
which they were earlier carrying on the said vocation and for the period for
which they had agreed with plaintiff therein, invoking the exception to
Section 27 of the Contract Act. However the Division Bench, while
allowing the appeal vide Arvinder Singh supra relied by the counsel for the
respondent / defendant, held that injunction restraining the defendants
therein from carrying on their profession as Pathologist / Radiologist, would
be contrary to Section 27 of the Contract Act.

22. We have no reason to take a different view from that taken by the Co-
ordinate Bench in the said judgment.

23. Once it is so, the amendment of the Specific Relief Act of the year
2018, is of no avail. Pursuant to the said amendment, only an agreement
which is valid, can be specifically enforced and not an agreement which, by
virtue of Section 27 of the Contract Act, is void in law. What is void in law
cannot be specifically enforced. The Clause in the Service Contract
whereunder the respondent / defendant agreed not to practice medicine
within a radius of 5 Kms. of the hospitals of the appellant / plaintiff for a
period of one year from the date of premature termination of the Service

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Contract, is found to be in the teeth of Section 27 of the Contract Act and
void and is thus unenforceable. It matters not, whether it is by way of
affirmative agreement or by way of negative agreement. What is void in
law, remains void and non-existent, whether stated positively or by way of a
negative covenant.

24. As far as the arguments of the counsel for the appellant / plaintiff qua
Section 27 of the Contract Act are concerned, (i) the recommendation of the
Law Commission remains a recommendation and the fact of the matter is,
that Section 27 has not been amended in spite of the said recommendation
and thus there is no occasion to interpret Section 27 differently; (ii)
wherever the legislature required, that an exception qua the ambit of Section
27 to be carved out, it has so carved out, as in Section 54 of the Partnership
Act; (iii) Section 27, though enacted prior to coming into force of the
Constitution of India, and being an existing law, is not inconsistent with the
provisions of Part-III titled “Fundamental Rights”, of the Constitution of
India; (iv) rather, Article 19(1)(g) of the Constitution of India confers the
status of a fundamental right to the right of the citizens of India to practice
any profession or to carry on any occupation, trade or business; (v) Article
19(6) saves from the ambit of Article 19(1)(g) only such existing laws
which impose reasonable restrictions on the exercise of the right to practice
any profession or to carry on any occupation, trade or business; (vi) owing
to Article 19(6), the exception to Section 27 of the Contract Act may be
saved and we are unable to understand, how the counsel for the appellant /
plaintiff contends that the operation and ambit of Section 27 is restricted;
(vii) rather, one of us (Rajiv Sahai Endlaw, J.) sitting singly, in Modicare

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Ltd. supra has held, (a) that Section 27 has been enacted as a matter of
public policy of India and does not create any personal right, which can be
waived; (b) that the question of reasonableness of the restraint is outside the
purview of Section 27; (c) that Section 27, though 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, today has a
different connotation; (d) 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 of India; (e) that the right saved by Section 27, is a facet of
Article 21 of the Constitution of India; (viii) the action of the respondent /
defendant in violation / breach of an agreement, which the law declares
void, can never be immoral; (ix) the words “..... anyone is restrained....” in
Section 27 cannot be read as meaning anyone other than the parties to the
agreement inasmuch as who is not a party to the agreement, is not bound
thereby; and, (x) even otherwise, the test to be applied by the Courts is of
legality and not of immorality, especially when the two are pitted against
each other.

25. No merit is found also in the other arguments of the counsel for the
appellant / plaintiff. Merely because the restraint undertaken by the
respondent / defendant upon herself was from practicing medicine within a
radius of 5 Kms. from the hospitals of the appellant / plaintiff and for a
period of one year only, would not make the said restraint reasonable and
even if makes the same reasonable, Section 27 of the Contract Act as

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aforesaid, makes all contracts / agreements in restraint of profession, trade
or business void and does not permit of restraint of any degree. As far back
as in Madhub Chunder Poramanick Vs. Rajcoomar Doss
MANU/WB/0020/1874 it was held that the words “restrained from
exercising a lawful profession, trade or business” in Section 27 do not mean
an absolute restriction, and are intended to apply to a partial restriction, a
restriction limited to some particular place. Similarly, though Section 37 of
the Contract Act obliges the parties to the contract to perform their
obligations thereunder but “unless such performance is dispensed with or
excused under the provisions of this Act, or of any other law”. Once
Section 27 declares the part of the agreement in restraint of profession, trade
or business as void, the party which has so agreed, not to practice,
profession, trade or business, stands discharged from performing the
obligation under that part of the agreement. Though the appellant / plaintiff,
at the time of entering into the Service Contract with the respondent /
defendant is deemed to be aware of law and accordingly, of Clause 10(b) in
the Service Contract being unenforceable, but even otherwise, if the
appellant / plaintiff has paid any consideration to the respondent / defendant
in consideration of the respondent / defendant having so agreed, the same
will still not entitle the appellant / plaintiff to enforce the restraint and will
only entitle the appellant / plaintiff to claim compensation and which the
appellant / plaintiff has claimed in the suit.

26. We would be however failing in our duty if do not refer to the recent
pronouncement in Association of Medical Super Speciality Aspirants and
Residents Vs. Union of India (2019) 8 SCC 607, concerned with the

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validity of the notifications issued by the government imposing condition of
execution of compulsory bond at time of admission to post graduate courses
and super speciality courses in the field of medicine. It was inter alia the
contention of the petitioners that the service bonds got executed from them,
fell foul of Section 27 of the Contract Act and were in restraint of lawful
profession, trade or business and that the condition imposed for rendering
compulsory service in the army was violation of Articles 19(1)(g) and 23(1)
read with Section 21 of the Constitution of India. While dismissing the said
claim, it was held (i) the compulsory bond executed at the time of
admission into post graduate and super speciality courses did not violate the
right to carry on profession inasmuch as the said right started on the
completion of the course; there is no right to receive higher education;
violation of a right guaranteed under Article 19(1)(g) does not arise in a
case pertaining to admission to the college; execution of bonds was part of a
composite package; (ii) the government was not enforcing the service bonds
and the service bonds did not fall foul of Specific Relief Act; and, (iii) a
contract to serve the government for a few years under reasonable terms
cannot be described as one in restraint of trade. The said judgment however
has to be read in the context of public employment. Supreme Court, in
State Bank of India Vs. S.N. Goyal (2008) 8 SCC 92 reiterated that there is
a clear distinction between public employment governed by statutory rules
and private employment governed purely by contract. It was held that while
a contract of personal service is not enforceable, where the contract is
governed by statutory rules, the same shall prevail.

FAO(COMM) No.12/2021 Page 19 of 21

27. From reference by the counsel for the appellant / plaintiff, in his
written arguments, to Niranjan Shankar Golikari supra, the argument of
the appellant / plaintiff also appears to be, that since the respondent /
defendant has not terminated the Service Contract, the Service Contract
subsists and the respondent / defendant, during the subsistence thereof is not
entitled to serve elsewhere. Though the counsel for the appellant / plaintiff
during the hearing has not pressed the said argument, but we may state, that
as per Clause 8 of the Service Contract, upon the respondent / defendant
absenting without permission or authorization, for seven consecutive days,
the respondent / defendant is deemed to have terminated the Service
Contract, kicking in the provisions of Clause 10. It is the case of the
appellant / plaintiff itself that the respondent / defendant stopped reporting
for work / duty and which as aforesaid would amount to termination of the
Service Contract by the respondent / defendant. It is thus not open to the
appellant / plaintiff to contend that the Service Contract is subsisting.

28. The counsel for the appellant / plaintiff, along with his written
arguments has filed copies of a large number of other judgments, but to
which no reference was made in the hearing and to which no reference was
made in the written note of arguments either. We thus do not deem it
necessary to deal therewith.

29. No merit is found in the appeal. The impugned order is found to be

in accordance with law and in lawful exercise of discretion vested in the
Commercial Court in the matter of grant / non-grant of interim relief.

FAO(COMM) No.12/2021 Page 20 of 21

30. Dismissed, with costs of Rs.50,000/- to the respondent / defendant, to
be recovered from the amounts deposited by the appellant / plaintiff in this
Court.

31. The balance amounts deposited in this Court, together with interest
accrued thereon, be refunded to the appellant / plaintiff.

RAJIV SAHAI ENDLAW, J.

AMIT BANSAL, J.
MAY 21, 2021
„gsr‟..

FAO(COMM) No.12/2021 Page 21 of 21