Independent News Service Pvt. Ltd. Petitioner v. Mr. Anuraag Muskaan

MANMOHAN SINGH, J.

1. The petitioner has filed the present petition under Section 9 of Arbitration and Conciliation Act, 1996 seeking inter alia, the following relief:

“a) That the respondent be restrained from in any manner engaging or providing services in violation of the terms of the Agreement to any other television channel during the term of the contract i.e till 16th January, 2014 and for a period of one year thereafter i.e 16 January, 2015 either as a presenter, host, anchor, reporter in any other manner in any on-screen role whatsoever or from permitting his name, image, voice or any other personal television channel either for shows or promos or advertising.”

2. The case of the petitioner is that the petitioner is one of the leading media companies in India and broadcasts and operates a 24 hour Hindi news channel by the name INDIA TV which recruits a large number of producers, anchors, reporters, technical personnel, editors, journalists etc. and spends aggressive amounts of monies on promoting the image, persona and personality of the Presenter and the same is categorized as ‘BRAND BUILDING EXPENSE’.

3. Mr. Anuraag Muskaan, respondent in the matter was recruited by INDIA TV. He joined INDIA TV on 16 January, 2012 as a Presenter. He entered into an agreement with the petitioner on the same date. His professional fee was fixed at Rs. 95,833/- per month. The term of the agreement dated 16 January, 2012 was for two years effective from the date of telecast of the 1st show on the channel and renewable in writing with the mutual consent of the parties. He was required to perform his services from various offices of the petitioner throughout India including New Delhi and NCR.

4. After executing the agreement, he was involved in various programmes of INDIA TV including -

• Breaking News

• News specials like Super Fast 200, Top 20 Reporter, Non-Stop Super

Fast, Newsline, Chak De Cricket etc.

These bulletins and programmes are aired in the morning band and also during the Prime Band. He got enormous popularity due to the fact that he was showcased in a prominent manner by the petitioner.

5. It is alleged that on 8 February, 2013 the petitioner received an e-mail from the respondent by which he requested the petitioner to relieve him of his duties with immediate effect. He was informed by the petitioner by mail that in view of terms of agreement, he cannot leave the job, thus his resignation was not accepted but he left the office with a request to accept the resignation alongwith a cheque for an amount of Rs. 5,74,998/- on the table of one of the officials of the petitioner company. It is also alleged that he is now falsely claiming that his resignation was accepted by the petitioner company as the cheque for an amount of Rs. 5,74,998/- left on the table of the official of the petitioner company.

6. The main terms stipulated in the agreement dated 16 January, 2012, are:

• That the term of the agreement shall be 2 years.

• The respondent has to render services as a presenter on INDIA TV on exclusive basis.

• The Presenter does not have any right to terminate the agreement.

• That the entire copyright vests in the petitioner company.

• The respondent shall not engage in any other during the currency of the contract and that the services are exclusively for INDIA TV.

• The Presenter shall not during the validity of this agreement allow his name, image or voice to be associated with any other television channel.

• The Presenter shall not take up any work of similar nature which is in competition with INDIA TV during the validity of the agreement.

• For a period of one year which after the termination of this contract or expiry of this contract the Presenter will not engage in a similar programme having a similar concept on any other television channel.

• The Presenter shall not take up any assignment contrary to the interest of India TV.

• The Presenter shall not take up any part time employment with any other television channel during the validity of the agreement.

• The Presenter shall not solicit, negotiate or engage in any discussion relating to any future engagement at any time prior to the termination of the contract. This obligation of the Presenter would continue for the term of the contract and for any renewal thereof and 30 days thereafter.

• That if the Presenter breaches any terms and conditions stipulated in this agreement, the petitioner company will be entitled to obtain an injunction restraining the Presenter from engaging in such conduct and further also claim and obtain damages for breach of this agreement. Broadly, a perusal of the contract reveals that the respondent is not entitled to, during the term of the contract i.e till 16 January, 2014 engage or be engaged by any other competitive television channel.

7. When the petition was listed first time, this court issued short date notice was to the respondent who upon service filed his short reply in which it was admitted by him that he is now working with India News as a Senior Special Correspondent with effect from 16 February, 2013. He did not deny about the entering of agreement between him and the petitioner. It is admitted by him that after resignation he joined new channel and performing the same services. According to him the prayer made in the petition has become infructuous in view of averments made in the short reply. It is alleged by him that the petitioner being fully aware of the fact that the respondent is now employed with India News on the date of filing of petition who has intentionally not disclosed the true facts. India News is also not impleaded as a party despite of fact that the service of Court notice was effected at his new office. It is also submitted that any restraint order passed against him would directly affect the business of India News who is not a party before the Court. The restrictive covenants mentioned in the agreement are void, unenforceable. The same are extremely harsh and impose an absolute bar on the respondent to take up any assignment with any other television channel, thus the petitioner is not entitled to the relief claimed for.

8. It is further submitted by him that before joining the petitioner-company, he worked with many prestigious organizations. It is on account of the same that the petitioner-company approached him to work with it. At the time of joining the petitioner, he was already a famous anchor and thus one of the reason, he was picked up for employment by the petitioner, it is the petitioner who has benefitted as he had a huge experience of having anchored programmes with Jain TV, E TV (Urdu), Sahara Samay, Star News, Rajya Sabha TV. The reliefs sought by the petitioner even otherwise are violative of the fundamental rights enshrined in Article 19(1)(g) of the Constitution of India which guarantees the respondent to carry on any lawful trade and profession. The arbitration clause is itself void as power to appoint the Arbitrator in a service contract has been given to the employer. The negative covenant as contained in the agreement dated 16 January, 2012 amounts to a restraint of trade under Section 27 of the Contract Act, 1872 apart from being against the public policy as he tendered his resignation on 8 February, 2013 strictly as per one of the clauses of termination of the agreement.

9. Mr. V.P Singh, learned Senior counsel appearing on behalf of the respondent has argued that even if respondent failed to discharge the duties and responsibilities under the agreement for any reason whatsoever, he as per termination clause exercised his option to join other channel, he was to pay an amount equivalent to six months' professional fee which was the condition of termination of contract and what exactly he has done in the present case, he has resigned from the job by termination of contract and left amount equivalent to six months' professional fees. After that he was entitled to join any service with any channel.

10. Mr. Singh's second submission is that it was a determinable contract between the parties within the meaning of Section 14 of the Specific Relief Act, 1963, thus petitioner is not entitled to the relief claimed, i.e not to engage or provide services to any other television channel, under Section 41 of the Specific Relief Act. If the petitioner has any grievance against the respondent, its only remedy lies to claim compensation under the Contract Act. Therefore, the petitioner is otherwise not entitled to any relief. Even otherwise, the petitioner is not entitled to the relief as the petitioner has not come before this Court with clean hands.

Learned Senior counsel has relied upon the decision of the Supreme Court in Superintendence Company of India (P) Ltd. v. Sh. Krishnan Murgal reported in (1981) 2 SCC 246 held as follows:-

“…..employee-covenants should be carefully scrutinized because there is inequality of bargaining power between the parties; indeed no bargaining power may occur because the employee is presented with a standard form of contract to accept or reject.”

It was further held that:-

“…the Courts, therefore, view with disfavour a restrictive covenant by an employee not to engage in a business similar to or competitive with that of the employer after the termination of his contract of employment.”

11. He has also referred another decision where a similar view was taken by this Court in Ambience India Pvt. Ltd. v. Naveen Jain reported in 122 (2005) DLT 421 wherein it was held as follows:-

“….In the present case, nothing has been indicated even as to what trade secrets or technical know-how was revealed to the defendant which should not be divulged to others. In a business house, the employees discharging their duties come across so many matters, but all these matters are not trade secrets or confidential matters of formulae, the divulging of which may be injurious to the employer. If the defendant on account of his employment with the plaintiff has learnt some business acumen or ways of dealing with the customers or clients, the same do not constitute trade secrets or confidential informations, the divulgence or use of which should be prohibited.”

12. Before discussing the rival submissions of both parties, it is necessary to refer following some of the relevant terms and conditions of agreement dated 16 January, 2012. The other relevant clauses would be reproduced at the appropriate place at the time of discussion and their relevancy required.

“Terms and conditions

i) From the date of signing of this agreement, for the duration of this agreement including any extensions thereof, at the sole discretion of the Company, the Presenter shall render all services in relation to the Programme and the Presenter shall exclusively work for the Company.

ii) …….

iii) The Presenter shall be paid a sum of Rs. 95,833/- per month as fee by 10 of the following month for presenting the programme which includes all taxes and duties levied by the Government or appropriate authority from time to time during the course of this agreement and subject to deduction of tax as may be required under the Income Tax Act, 1961 or any other applicable law which shall be in force at the time of payment.

iv) ….

v) The Presenter shall also fully cooperate in the production of the show as also promos of the said Programme. The Presenter shall be available for press conferences, events and any other promotional or other publicity requirements for promotion of the Channel or the Programme. The Company is fully entitled to use the Presenter's image, voice and other personal attributes for the promotion of the programmes on India TV, any other channel of the Company and/or in the print/electronic media.

Term

The term of this contract is two years effective from the date of telecast of the 1 show on the channel and renewable in writing with the mutual consent of the parties.”

13. Ms. Pratibha M. Singh, Advocate appearing on behalf of the petitioner countered the arguments of the respondent. She has also referred various clauses of the agreement and e-mails exchanged between the parties before resignation of his service. She argued that in the present case the contract containing the negative covenants is completely enforceable in law. The contractual period has not expired. The negative covenants fully operate during the term of the contract and for one year thereafter. The respondent is not entitled to terminate the contract. The respondent has merely sent his e-mail dated 8 February, 2013 to leave the job with the petitioner in the middle of its term.

14. Her second submission is that in the present case, the conduct of the respondent is in complete violation of the stipulations contained in the contract between the parties as the negative covenants fully apply during the term of the contract and for a period of one year after the period of the contract as contained in the contract itself. As the contractual term is still subsisting and the respondent is not entitled to breach the same and it can be remedied in accordance with law.

15. Her next submission is that the contract itself provides that the petitioner would be entitled to seek an injunction in case of violation, under such circumstances, the respondent cannot be allowed to breach the agreement in this manner as he during the course of his employment was engaged in negotiations with the rival channel which is clearly violation of the duties and responsibilities which he owned to the company. The said conduct cannot be allowed to be given go by allowing the petitioner to breach the contract. Therefore, some interim orders are to be passed against him otherwise, the purpose of executing the agreement would be defeated in every case.

16. Lastly, she argued that the respondent is not entitled to take the benefit of any ground of Section 27 of the Contract Act, 1872 as the doctrine of restraint of trade does not apply during the continuance of the contract for employment and it applies only when the contract comes to an end except in rare cases wherein special exception is carried out by the Court that the contract is totally one-sided and the restrictive covenant extending on the face of it would be beyond the term of contract is void and not enforceable. But, the present case is not covered in the said category due to the reason that the contract between the parties has not come to an end and further the termination clause has to read with other clauses stipulated in the agreement which are binding in nature, coupled with the fact that while examining the same, the Court has to see the conduct of the respondent and the nature of service joined by the party concerned.

17. Both the parties have referred various decisions in support of their argument. It is not necessary to discuss all the decisions as similar proposition of law has been laid down by the courts in various cases. In the case of Wipro Ltd.… v. Beckman Coulter International S.A…. (2006) DLT 681 the decision rendered by the Judge (Sh. Badar Durrez Ahmed, J.) of this Court, the Hon'ble Judge has discussed almost all the relevant decisions in great detail. After reviewing the decisions of Supreme Court and the High Courts including this Court, the Hon'ble Judge has culled out the following points with regard the courts' power to grant an injunction in the case of a negative covenant. The same are:

“i) Negative covenants tied up with positive covenants during the subsistence of a contact be it of employment, partnership, commerce, agency or the like, would not normally be regarded as being in restraint of trade, business of profession unless the same are unconscionable or wholly one-sided;

ii) Negative covenants between employer and employee contracts pertaining to the period post termination and restricting an employee's right to seek employment and/or to do business in the same field as the employer would be in restraint of trade and, Therefore, a stipulation to this effect in the contract would be void. In other words, no employee can be confronted with the situation where he has to either work for the present employer or be forced to idleness;

iii) While construing a restrictive or negative covenant and for determining whether such covenant is in restraint of trade, business or profession or not, the courts take a stricter view in employer-employee contracts than in other contracts, such as partnership contracts, collaboration contracts, franchise contracts, agency/distributorship contracts, commercial contracts. The reason being that in the latter kind of contracts, the parties are expected to have dealt with each other on more or less an equal footing, whereas in employer-employee contracts, the norm is that the employer has an advantage over the employee and it is quite often the case that employees have to sign standard form contracts or not be employed at all;

iv) The question of reasonableness as also the question of whether the restraint is partial or complete is not required to be considered at all whenever an issue arises as to whether a particular term of a contract is or is not in restraint of trade, business or profession.”

In paras 48 and 49 of his decision, Hon'ble Judge came to the following conclusions. The same are reproduced below:

“48. In the light of these principles which have been culled out from the decisions with regard to the scope and ambit of the provisions of Section 27 of the Indian Contract Act, it remains to be considered as to whether the non-solicitation clause in question amounts to a restraint of trade, business or profession. Two things are material. First of all, the contract in which the non-solicitation clause appears is a contract between the petitioner and the respondent whereby the petitioner was appointed as the sole and exclusive Canvassing Representative/Distributor of the respondent for its products in India. Secondly, it is not a contract between an employer and an employee. If one considers the non-solicitation clause, it becomes apparent that the parties are restrained for a period of two years from the date of termination of the agreement, from soliciting, inducing or encouraging any employees of the other party to terminate his employment with or to accept employment with any competitor, supplier or customer of the other party. It is a covenant which essentially prohibits either party from enticing and/or alluring each other's employees away from their respective employments. It is a restriction cast upon the contracting parties and not on the employees. The later part of the non-solicitation which deals with the exception with regard to general advertising of positions makes it clear that there is no bar on the employees of the petitioner leaving its employment and joining the respondent and vice versa. The bar or restriction is on the petitioner and the respondent from offering inducements to the other's employees to give up employment and join them. Therefore, the clause by itself does not put any restriction on the employees. The restriction is put on the petitioner and the respondent and, Therefore, has to be viewed more liberally than a restriction in an employer-employee contract. In my view, Therefore, the non-solicitation clause does not amount to a restraint of trade, business or profession and would not be hit by Section 27 of the Indian Contract Act, 1872 as being void.

49. However, the question that arises is what happens when the respondent has solicited and/or induced or encouraged employees of the petitioner to leave and/or resign from such employment and join the respondent. Can an injunction be granted restraining the respondent from giving employment to such employees? There are only two possible situations. The first is that an injunction is granted and, the second is that an injunction is not granted. If an injunction is granted, it would imply that the respondent cannot employ such employees who have responded to the advertisement which I have already held to be a solicitation. But it would also mean that employees who did not have any such restrictive covenant in their employment contracts, would be barred from taking up employment with the respondent. In other words, we would be reading into their employment contracts a negative covenant that they would not seek employment after termination of their present employment, with the respondent. If such a term were to be introduced in their employment contracts, then, it, in view of the settled legal principles indicated above, would be void being in restraint of trade. Consequently, when such employees cannot be restrained from directly seeking the employment of the respondent they cannot be restrained indirectly by preventing the respondent from employing them. Therefore, an injunction cannot be granted restraining the respondent from employing even those employees of the petitioner company who were allured by the solicitation held out by the respondent in the said advertisement. But, the respondent can be injuncted and restrained from making any such or other solicitation in future during the period of two years w.e.f 31.12.2005 to any other employees of the petitioner. As regards the solicitation already made by the respondent in the advertisement, the petitioner, if it is able to substantiate this in the arbitration proceedings, would be entitled to be compensated by the grant of damages. So, it is not as if a breach of the non-solicitation clause would leave the petitioner without a remedy. The remedy lies in the claim for damages and an injunction against solicitation in future. It does not lie in the grant of an injunction preventing its employees from resigning and taking up employment with the respondent. Accordingly, this application under Section 9 of the Arbitration and Conciliation Act, 1996 is disposed of with the following directions:

1) the respondent is restrained during the pendency of the arbitration proceedings from taking out any other or further advertisements or to do anything to solicit, induce or encourage the employees of the petitioner to leave the petitioner's employment and take up employment of the respondent and/or its agents and/or representatives and/or competitors;

2) the employees of the petitioner would, however, be free to take up employment with the respondent even in response to the said advertisement which has prima facie been held to be solicitation, but, the respondent would be liable to compensate the petitioner for such breach of the non-solicitation clause, if so established in the pending arbitration proceedings.”

18. In order to understand the submissions of the parties, it is necessary to read two clauses, i.e termination of service and confidentiality which are reproduced here in below:

“Termination

The company has right to terminate this agreement by giving 3 months prior notice to the party. The other party does not have any right to terminate this agreement. In the event of the other party failing to discharge the duties and responsibilities under this agreement for any reason whatsoever, the other party shall to liable to pay to the company an amount equivalent to six months professional fee.

Confidentiality

i) …..

ii) The Presenter shall not present any other show for any other television channel during the currency of this contract and the services of the Presenter are being engaged exclusively by the Company. However, the Presenter being a public figure will not have any impediment in giving interviews, as part of his/her profession or occupation.

iii) The Presenter, during the validity of this Agreement shall not allow his/her name, image or voice to be associated with any other Television channel. The Presenter further undertakes not to take up any work, or any similar nature whatsoever, that is in direct competition with, affecting his commitments hereunder and/or detrimental to the said Programme/Channel, during the validity of this Agreement. The Presenter shall further not appear in/hot/anchor or lend his personal attributes for any similar programme, on any channel and through any media, during the validity of this Agreement. The Presenter will not in any manner engage himself/herself in a similar programme having a similar concept on any television channel for a period of one year after the termination of this contract or expiry of this contract.

iv) The Presenter shall not take up any assignment which would be contrary to the interests of the Company/India TV channel or the Programmes which the Presenter may present during the term of the contract.

v) ….

vi) ….

vii) The Presenter agrees that at any point of time prior to the termination of this contract he/she will not solicit, negotiate or otherwise engaging discussion related to offer of future engagement of his/her service with any TV channel. This obligation shall continue during the entire term of the contract and any renewed term of this contract and 30 days thereafter.

viii) The Presenter acknowledges and agrees that in the event of breach of any of the covenants terms and conditions contained in this agreement the Company will be entitled to obtain an injunction restraining the Presenter from engaging in such conduct and further also claim and obtain damages for breach of this agreement.

ix) ….”

19. In the present case, it is the admitted position that despite of termination clause, another clause of confidentiality is stipulated in the agreement with the consent of the parties wherein it was agreed by them that the respondent/presenter shall not present any other show for any other television channel, undertakes not to work in direct competition with, not to engage himself in a similar programme, not to take up any assignment, not to solicit, negotiate and offer of future engagement of his service with any TV channel during the term of the contract otherwise, the petitioner company would be entitled to obtain an injunction against the respondent/presenter from engaging in such conduct. The respondent beyond any doubt acted contrary to the stipulations of the agreement despite of undertaking. He has done just opposite to the terms during the term of the contract.

20. It is settled law that a negative covenant that the employee would not be employed by any other competitor of the petitioner for whom he would perform similar duties is not a restraint of trade. The interpretation of Section 27 has been discussed in detail in the case of Krishan Murgai… v. Superintendence Company Of India (P) Ltd.…., AIR 1979 Delhi 232. Para 9 reads as under:

“9. The Courts in India have approached the construction of S. 27 in the following manner: (A) If a contract of service is valid and the performance of the contract by the employee requires that during the period of service he must not engage in any other work end must not divulge to any person the trade secrets of the employer then under such an agreement, even in the absence of a negative covenant prohibiting the employee from doing so, the employee would be prohibited by law from doing so. For, these acts are inconsistent with the performance of the contract, which would amount to a breach of contract. This conclusion can be based on the contract itself even without invoking S. 27; (B) But any restraint imposed by the employer on the employee would prima, facie be illegal and void as being directly hit by S. 27 if it is to operate after the expiry of the period of service contract.”

21. The said decision was taken to the Apex Court by the respondent who ruled that under Section 27 of the Contract Act, 1872 as service covenant extended beyond the termination of the service is void. However, in para 58 of the judgment reported in the case of Superintendence Company Of India (P) Ltd. v. Krishan Murgai., (1981) 2 SCC 246 it was held as under:

“58. The drafting of a negative covenant in a contract of employment is often a matter of great difficulty. In the employment cases so far discussed, the issue has been as to the validity of the covenant operating after the end of the period of service. Restrictions on competition during that period are normally valid, and indeed may be implied by law by virtue of the servant's duty of fidelity. In such cases the restriction is generally reasonable, having regard to the interest of the employer, and does not cause any undue hardship to the employee, who will receive a wage or salary for the period in question. But if the covenant is to operate after the termination of services, or is too widely worded, the Court may refuse to enforce it.”

22. There is no prima- facie evidence available on record to show that the contract executed between the parties is not enforceable and it is against the practice followed in this trade. Rather, in the present case incase, both the clauses of termination and confidentiality are read together, the combined effect is to put restriction on the respondent to work with the petitioner at least for two years and he would not join the competitor in violation of the terms of the agreement. There are indeed various clauses which are necessary to incorporate in order to maintain discipline and on the reason of service's duty of fidelity. Thus, the final conclusion on this aspect cannot be determined in the present proceedings as to whether that contract is unconscionable or excessive or one sided and suffers from inequality of bargaining except while reading the clauses the Court has to take the prima facie view as to whether the present case is covered under the exception of Section 27 of the Contract Act, 1872 as service covenant extended beyond the termination of the service is void or not.

23. The question before this court is what nature of interim order which would be required to be passed in view of the peculiar facts and circumstances of the present case. Is the petitioner entitled to the relief claimed to the effect that during January, 2014 and for a period of one year thereafter i.e 16 January, 2015 the respondent be restrained to be a presenter, host, anchor, reporter in any other manner in any on-screen solo to provide his service, this Court is of the view that the said relief as it is sought by the petitioner cannot be granted due to the reason that the respondent has already joined his new service with India News after his resignation.

24. He cannot be directed to leave the new employment and rejoin the join the petitioner. The same would be compelling a person to work with a particular employer which is impermissible. The said order would be contrary to the provisions of Sections 14 and 41 of the Specific Relief Act, 1963. Any interim order passed of such nature would have a direct impact to his service and future. The respondent might have joined the petitioner earlier because of attractive service and future offered by the petitioner though he had a experience with other channels as an anchor, which is not disputed by the petitioner, thus there is no justification to pass such order of injunction sought by the petitioner. Thus, status-quo-ante cannot be passed as it is a determinable contract between the parties, the petitioner in such breach if so established may be entitled for compensation in the arbitration proceedings. The respondent cannot be compelled to rejoin the petitioner under these circumstances.

25. Learned counsel for the petitioner laid great stress that some directions of interim nature are required to be issued as the respondent has cleverly escaped the valid contract despite agreeing to all the stipulations contained therein. It has been argued that the respondent may not be allowed to go completely scot-free from the valid contract and some impediment may be imposed so that he may refrain himself from violating the contract of this nature in future after knowing fully about the consequences. This will also give effect to stipulations in the contract. It has been argued that incase, the respondent is allowed to get away from his such deeds without any pinch, wrong message would also go to the similar situated employees who may do the same without any fear and fairness. In normal case, such argument would not have been considered but in the present case it is evident from the entire gamut of the matter, the respondent had been negotiating with the competitor of the petitioner during the terms of the agreement. Further, the modus operandi adopted by him at the time of termination of contract was not straight and frank. Rather in his e-mail dated 13 February, 2013 he asked the petitioner not to resort to manipulating tactics and reserved his right to take action against the petitioner for damages and loss.

26. Therefore, considering the overall facts and circumstances of the instant case, in order to give him a correct message, it has become necessary to pass some interim directions, the respondent is restrained for the period of seven days between 12 April, 2013 to 18 April, 2013 from any manner engaging or providing services either as a presenter, host, anchor, reporter or in any other manner on-screen solo of television in any channel including in the channel where he has been recruited.

27. With these directions, no further orders are required to be passed. The petition is accordingly disposed of. No costs.