Tata Sons Limited vs Mastech Corporation and Others

Govardhan, J.—In A.No.5675 of 1994, the petitioner has stated as follows: The suit is filed against the respondents for restraining them by

means of a permanent injunction from inducing the employees of the plaintiff engaged with the plaintiff''s office of Madras to abandon the service of

the plaintiff in disregard of the subsisting contract of employment. The plaintiff recruits candidates with suitable background and gives extensive

training at the plaintiff''s costs to develop them as Software Engineers and equip them with problem solving techniques. After such training they are

taken into regular service. Several crores of rupees were spent per annum by the plaintiff on training. The trainees receive salary during the period

of training. A trainee has to serve to plaintiff for a period of three years from the date of joining and should undertake that he will not take up

employment with anyone else during that period. An agreement is entered into between the employee and the plaintiff for that purpose. The plaintiff

also deputes employees abroad for training on the job study. The plaintiff spends huge amounts towards travel cots, allowances paid abroad

besides the salary and emoluments paid in India. The persons deputed abroad should execute an agreement undertaking to serve the plaintiff on

return to India for twice the period of deputation abroad. This period will not exceed twenty-four months during the career of the employee. The

first defendant is in the field of Computer/Consultancy in the United States. The second defendant is involved in recruiting personnel for the

projects abroad of the first defendant. Since they do not have any office at Madras, they have engaged the third defendant to recruit the personnel

for them. The defendants who are in need of highly trained and experienced personnel are keen and inducing the employees of the plaintiff to bread

their contractual relations. They are aware of the agreement between the plaintiff and their employees. They are also aware of the undertaking

given by the employees not to take employment with anyone during the period of deputation. But, intentionally and without lawful justification, they

have induced the employees of the plaintiff to commit breach of the service of the agreement. Hence the suit. Since the defendants 1 and 2 are

carrying on business outside the jurisdiction of this Court, leave to sue is sought for.

When this application was moved on the date of the filing of the suit, leave was granted.

The first respondent has filed an application for revoking the leave in A.No.58 of 1995 contending as follows: The leave has been sought on the

basis that a substantial part of the cause of action had arisen within the jurisdiction of this Court. Clause 12 of the Letters Patent provides that a

party could obtain leave only on satisfying the Court with a substantial part of the cause of action against the first respondent had arisen within the

jurisdiction of this Court. On that ground alone, the leave granted should be revoked. According to the plaintiff, the applicants are in dire need of

highly trained and experienced personnel and therefore, they are inducing the employees of the plaintiff to break the agreement which they have

entered into with the plaintiff. The said allegation is not true. The plaintiff has not pleaded that any part of the cause of action arose within the

jurisdiction of this Court. The plaintiff has alleged that the third respondent recruits personnel on behalf of the defendants 1 and 2. The plaintiff has

not pleaded that the defendants 1 and 2 have induced their employees and such inducement has been done within the jurisdiction of this Court. The

suit is, therefore, liable to be dismissed. It is also liable to be dismissed on the ground that notice was not issued to the defendants before leave was

granted. The first defendant is a big organisation with a turnover of over 70 million dollars and having about 1100 employees. They provide

excellent cross platform training. The first defendant has no necessity to induce the employees of the plaintiff. The first defendant company receives

applications from prospective employees apart from oral and personnel enquiries. There is no reason for them to induce the employees of the

plaintiff. The leave granted, therefore, should be revoked.

In the counter, the plaintiff has stated as follows: The suit has been filed contending mat the defendants are inducing the employees of the plaintiff

engaged at Madras to abandon the service of the plaintiff in disregard of subsisting contract of the agreement between the employees and the

plaintiff. Both in the plaint and in the affidavit for leave to sue, it has been specifically mentioned that the inducement which is an actionable wrong,

was being offered at Madras to the employees of the plaintiff employed at Madras. Substantial part of the cause of action had, therefore, arisen

within the jurisdiction of this Court. Since the defendants 1 and 2 do not have any office at Madras, they have engaged the third defendant to

recruit the personnel for them. The second and third defendants are paid Commissions for the work done. The first defendant has induced highly

trained personnel of the plaintiff to break their commitments under the agreement with the plaintiff. The inducement took place at Madras. The

breach of the contractual relations took place at Madras and the harm to the plaintiff took place at Madras. Substantial part of the cause of action

has therefore arisen at Madras within the jurisdiction of this Court. Leave granted, therefore, cannot be revoked and the application is liable to be

dismissed.

O.A.No.996 of 1994: The averments in the affidavit of the plaintiff is the same as in A.No.5675 of 1994 except for the prayer in this application

to the effect that an ex-parte order of injunction restraining the respondents from inducing the employees of the applicant to abandon their services

in disregard of the subsisting contract of employment between the employees and the applicant-plaintiff pending disposal of the suit.

The first respondent in their counter contents as follows: The first respondent is not aware of the kind and extend of the training offered by the

applicant to its employees. The plaint is bald as to how the respondent had induced the employees. The first respondent is engaged in the business

of providing highly specialised Software Engineering Services to large Commercial and Government Organisation all over the world with a turn

over of Rs. 200 crores per annum. The first respondent has developed a highly competitive and responsive international organisation. It has

received the United States Government''s Award for excellence in the years 1991 and 1992. The allegation that the first respondent does not have

any training programme as imparted by the applicant is devoid of merits. The first respondent provides excellent cross platform training. The first

respondent had about 1,100 employees engaged in specialised software programmes. The allegation that the first respondent in need of highly

trained and experienced personnel and consequently inducing the employees of the applicant company knowing that the employees have entered

into service agreement for a period of three years with the applicant company is without basis. The first respondent is not aware that 135

employees have left the office of the applicant company. The very allegation would show that there is a dearth of talent and the demand for

qualified professionals is increasing and persons who are qualified go in search of placements which are the most remunerative and there is no

question of anybody inducing them. The feature of professional jumping from one job to another, is a phenomenon which is fast increasing and

qualified personnel are always on the look out for better placements. This respondent has not induced any employee of the applicant company to

commit the breach of contractual obligation. The application is, therefore, liable to be dismissed.

The plaintiff has filed the suit for permanent injunction restraining the defendants and their men from inducing the employees of the plaintiff

engaged at Madras to abandon the services of the plaintiff in disregard of the subsisting contract of employment between them and the plaintiff. In

the plaint, it is alleged that the first defendant is having its office in Pittsburg, Pennsylvania and the second defendant is having its office at Pune and

through the third defendant, who is having his office at Madras, they are inducing the employees of the plaintiff for whom the plaintiff has given

training at heavy cost, to leave the service of the plaintiff and engage them and if the defendants are allowed to induce the employees of the plaintiff

in violation of their service agreement, considerable damage and prejudice will be caused to the plaintiff. Leave has been sought for to file the suit

at Madras on the ground that the defendants 1 and 2 are carrying on their business outside the jurisdiction of this Court. It was also granted.

The defendants who have come forward with an application for revoking the leave so granted, would contend that the leave granted has to be

revoked since there was no notice issued to the respondents. The plaint, the defendants 1 and 2 are carrying on their business outside the

jurisdiction of this Court and through the third defendant who is carrying on business within the jurisdiction of this Court, they are inducing the

employees of the plaintiff at Madras to abandon the employment under the plaintiff at Madras. The inducement given to the employees of the

plaintiff being at Madras, as per the plaint allegations, part of the cause of action arises in Madras and since the defendants 1 and 2 are carrying on

their business outside the jurisdiction, leave has been granted under Clause 12 of the Letters Patent. There is no necessity for giving any notice as in

the case of a leave sought u/s 92 of the Code of Civil Procedure. Therefore, the contention of the learned counsel appearing for the defendants that

the plaint is to be rejected on the ground that leave has been granted without issuing notice to the defendants, is not sustainable. Therefore, I am of

opinion that the defendants have not placed any materials to revoke the leave granted.

The learned counsel appearing for the defendants would also argue that the averments in the plaint as well as in the affidavit are very vague, and

they are not sufficient to grant the injunction as prayed for by the application in O.A.No.996 of 1994 and injunction granted has, therefore, to be

vacated. The allegation in the plaint as well as in the affidavit of the applicant is to the effect that the defendants 1 and 2 are inducing the employees

of the plaintiff at Madras through the third defendant to abandon the employment irrespective of the agreement they have entered into with the

plaintiff to serve the plaintiff for certain period. In the plaint, it is alleged that 135 employees of the plaintiff who had been trained by the plaintiff at

heavy cost, have left the service of the plaintiff, on the inducement of the defendants. It is immaterial whether all the 135 employees who have left

the service of the plaintiff have joined the first defendant in United States. The suit being one for restraining the respondents from inducing the

employees of the plaintiff to abandon their employment inspire of the training they had received and inspite of the agreement entered into with the

plaintiff the question whether the persons who have abandoned their employment, have joined the services of the first defendant or not, need not

be considered at all to grant the relief sought for by the plaintiff or to deny the same. The allegation made against the defendants amounts to

interference by them with the subsisting contract between the plaintiff on the one hand and the employees on the other. In Winfield and Jolowicz on

Tort"" (Tenth edition) at page 445 it is stated as follows:

A commits a tort if, without lawful justification, he intentionally interferes with a contract between B and C, (a) by persuading B to break his

contract with C, or (b) by some other act, perhaps only if tortious in itself, which prevents B from performing his contract.

In the above book, the learned Author has stated as follows:

Bowen v. Hall, (1881) 6 Q.B.D.333, and later decisions made it clear that intentionally and without lawful justification to induce or procure

anyone to break a contract, whether of personal services or not, made by him with another is a tort actionable at the suit of that other (But not at

the suit of the contract breaker himself : Boulting v. Association of Cinematograph, television and Allied Technicians, (1963) 2 Q.B.D.606 , Pet

Upjohn, LJ) if damages results to him. This has been said to be based on the principle'' that any violation of legal rights, including rights under

contract, committed knowingly and without justification, is a tortious act.'' Tempertion v. Russel, (1893) 1 Q.B. 715. The allegations in the plaint

are to the effect that defendants 1 to 3 have induced the employees of the plaintiff to abandon their services of the plaintiff and thereby committed

an actionable tortious act

In the Book of ""The Law of Trots"" by Salmond ZNC Heuston at Page 357, the learned Author has stated as follows:

Intentionally and without lawful justification to induce or procure anyone to break a contract made by him with another is a tort actionable at the

suit of that other, if damage has resulted to him.. It was, however, for some time believed that the principles so established were confined to cases

where, (i) the defendant''s action was malicious, and (ii) the contract in question was to render exclusive personal services for a fixed period. But

now it is perfectly well established that the scope of the action is not limited in either of these ways, Indeed, the modern cases indicate that the tort

was become so broad as to be better described as unlawful interference with contractual relations.

The learned Counsel appearing for the applicant would argue that even though the term in the agreement, restraining the employees from leaving

the service of the plaintiff applicant, is considered as a negative covenant, still, it can be enforced since negative covenants operate during the

period of contract of employment when the employee is bound to serve his employer exclusively or generally not regarded as restraint of trade and

therefore, do not fall u/s 27 of the Contract Act. I am in agreement with the learned Counsel appearing for the applicant on this aspect with regard

to the enforceability of the negative covenant in an agreement. The learned Counsel appearing for the respondents would argue that if the

employees of the plaintiff have left the services of the applicant-plaintiff for better prospects, it cannot be stated that it was due to the inducement of

the third respondent at the instance of the respondent 1 and 2 and there is no necessity for any injunction. If really there was no inducement by

respondents 1 and 2 through the third respondent, issuing an injunction restraining them from inducing the employees of the plaintiff to leave the

services of the plaintiff in utter disregard to the service agreement entered by them with the employer will not cause any prejudice to the

respondents. The injunction sought for is restricted to the nature of the employment and to the area and it cannot be stated that it is an

unreasonable or unnecessary one as contended by the learned Counsel appearing for the respondents. The question whether there was real

inducement by the respondents 1 and 2 through the third respondent and whether the plaintiff has actually suffered damage on account of the

inducement has got to be considered in detail only at the time of the trial and suffice it to observe at the present, that there is prima facie case made

out by the plaintiff for getting an order of interim injunction, since it is alleged by the plaintiff that 135 employees of the plaintiff who have received

training under the plaintiff had abandoned their employment with the plaintiff in utter disregard to the agreement of service entered into with the

plaintiff. The plaintiff has, in my opinion, made out a prima facie case for granting injunction and the balance of convenience is also in its favour and

therefore, injunction already granted is made absolute in O.A.No.996 of 1994.

In the result, A.No.58 of 1995 is dismissed. O.A.No.996 of 1994 is allowed making the interim injunction already granted absolute.