1 mpt IN THE HIGH COURT OF JUDICATURE OF BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 1000 of 2008 IN SUIT NO. 804 of 2008 M/s.Financial Technologies (India)Ltd.. Plaintiff versus Sudhir Gupta .. Defendant ... Mr.S.J. Panicker for the plaintiff. Ms.Padmaja Dholakia i/b Dholakia Law Associates for the defendants. CORAM : D.G.KARNIK, J DATED : 3rd April 2008 P.C.: 1. By consent, the motion is heard finally. 2. By this motion, the plaintiff seeks an interim injunction restraining the defendant from continuing his employment with Asian CERC Information Technology Ltd. (for short the "Asian") and further restraining him from joining any other 2 competitor organisation. 3. The defendant is a diploma holder in computer technology. By a letter of offer dated 22nd May 2006, the plaintiff offered employment to the defendant on the terms and conditions mentioned in the said letter. The defendant accepted the employment and signed a duplicate copy of the letter in token of the acceptance of the terms and conditions. The defendant also signed and delivered to the plaintiff an undertaking that he would not disclose the confidential information which he receives during the course of his employment with the plaintiff and would not do anything to affect the intellectual property rights of the plaintiff company. By clause (4) of the undertaking, the defendant further undertook that during the period of employment with the plaintiff and for a period of one year immediately following the termination or expiry of the employment with the plaintiff he would not directly or indirectly join employment with any competitor of the plaintiff. According to the plaintiff, the defendant left the employment on 28th December 2007 and has thereafter joined the Asian, which is a competitor of the plaintiff. While the fact of termination of the employment is admitted by the defendant in affidavit in reply, he has denied 3 joining the Asian. 4. Learned counsel for the plaintiff submits that the undertaking was given by the defendant to the plaintiff on 22nd May 2006 i.e. on the same date on which he received and accepted the offer of emploment. As such the undertaking should be regarded as a part of the contract of employment. The condition in the undertaking given by the defendant that he would not join the competitor for a period of one year of the termination of his service was a contractual obligation undertaken by the defendant and this negative covenant can be enforced through an injunction. 5. Clause no.7 of the letter of appointment states that either a party shall have a right to terminate the contract of employment by giving to the other party two months notice in writing. The employment was not for any fixed period but was at will that is to say, either party was entitled to terminate the contract of employment by two months notice. The condition in the undertaking that the defendant would not work with any other company for one year after the termination of employment is clearly hit by sec.27 of the Contract Act. In Niranjan Shankar Golikari Vs. Century Spinning and 4 Manufacturing Co. Ltd., AIR 1967 SC 1098, the Supreme Court drew a distinction between a negative covenant in the contract of employment whereby the employee agrees that he would not serve a competitor after the expiry of the contract of employment and any negative covenant operating during the period of employment. While the employer can enforce a negative covenant that the employee shall not join a competitor during the period covered by the contract of employment, such negative covenant cannot be enforced after the period covered by contract of employment. This decision was subsequently followed and applied by the Supreme Court in Superintendence Company of India Vs. Krishan Murgai, AIR 1980 SC 1717. 6. In the present case injunction is sought to rerstrain the defendant from joining a competitor after the period of contract of employment. In view of this clear decisions of the Supreme Court in my view, the plaintiff is not entitled to claim such injunction against the defendant after the period of the contract of employment. In the circumstances, motion is dismissed. (D.G. KARNIK, J)