Skip to content


Vinod Chandra Hiralala Gandhi Vs. Vivknanad Mills Ltd. - Court Judgment

LegalCrystal Citation
SubjectService;Contract
CourtGujarat High Court
Decided On
Case NumberAppeal No. 69 of 1963
Judge
Reported inAIR1967Guj255; [1965(11)FLR260]
ActsSpecific Relief Act, 1963 - Sections 42; Specific Relief Act, 1877 - Sections 57
AppellantVinod Chandra Hiralala Gandhi
RespondentVivknanad Mills Ltd.
Appellant Advocate C.T. Daru, Adv.
Respondent Advocate I.M. Nanavati, Adv.
Excerpt:
.....act, 1963 and section 57 of specific relief act, 1877 - question raised in appeal as to how far negative stipulation can be implied in contract of personal service - negative stipulation cannot be implied from existence of affirmative stipulation - affirmative stipulation does not imply negative stipulation to do nothing inconsistent with it - there must be something in contract apart from affirmative stipulation from which negative stipulation can be spelt out by necessary implication - no such thing in present contract - in order to find case for injunction under section 42 there must be negative stipulation - no negative stipulation in contract - consequently plaintiffs cannot obtain injunction against defendant - city civil court erred in granting interim injunction against..........employer during the period of the contract. the plaintiff , however, contended that there was an implied negative stipulation in the contract and they were entitled to enforce that negative stipulation in the contract and they were entitled to enforce that negative stipulation by means of an injunction. it is undoubtedly true that unlike the english law on the subject. section 42 of the specific relief act, subject. section 42 of the specific relief act, 1963 empowers the court to grant an injunction to restrain the breach of a negative stipulation even if the negative stipulation be not express but implied. if therefore, any negative stipulation can be implied in the present contract, it would be open to the court to grant an injunction to restrain the breach of the negative.....
Judgment:

Bhagwati, J.

(1) A very short question arises in this appeal, namely how far a negative stipulation can be implied in a contract of personal service. The plaintiffs own a textile mill and carry on business of manufacturing cotton textiles in the textile mill. Defendant No.1 is a qualified technician an holds a Diploma in Electrical and Mechanical Engineering. By a letter of appointment dated 11th May 1962 the plaintiff s appointed defendant No.1 as Electrical and Mechanical Supervisor in their textiles mill on the terms and conditions contained in the letter of appointment . The main terms and conditions of the appointment were as follows:-

(1) Defendant No. 1 shall join his duties from 14th May 1962 and shall be bound to serve the plaintiff s for a period of five years from the date; and

(2) Defendant No.1 shall look after Electrical and Mechanical Departments in the textile mill in general and his sincerity and devotion will be the main considerations with the plaintiffs.

The appointment was accepted by defendant No. 1 by putting his signature at the foot of the letter of appointment and a contract was thus entered into between the plaintiff and defendant No. 1 Pursuant to the contract defendant No. 1 started working as Electrical and Mechanical Supervisor in the textile mill of the plaintiff . Though the period of the contract had not expired defendant No. 1 by his letter dated 24th June 1963 requested the plaintiffs to accept his resignation and to relieve him with effect from 24th July 1963. The plaintiff, however, declined to accept the resignation and insisted that defendant No. 1 must continue to serve the plaintiff in accordance with the terms of the contract. As defendant No. 1 threatened to leave the service of the plaintiffs and to join service else where, the plaintiff filed suit No. 711 of 1963 in the city Civil Court, Ahmedabad, praying for an injunction to restrain defendant No.1 from serving or engaging himself directly or indirectly for or under any other person, firm or company in India as Electrical and Mechanical Supervisor or in any other capacity whatever and acting in any way contrary to the terms of the contract Immediately after filling the suit, the plaintiffs. Took out a Notice or Motion for an interim injunction pending the hearing and final disposal of the suit and the learned Judge of the City Civil Court who heard the Notice of Motion granted such injunction subject to this modification that it would not prevent defendant No. 1 from taking up some other employment in any capacity other than that of Electrical and Mechanical Supervisor or similar post where he is required to do the same or similar work called by any other name. Defendant No. 1 thereupon preferred the present appeal in this Court.

(2) Now obviously there is no express negative stipulation in the contract between the parties prohibiting defendant No.1 from serving any other employer during the period of the contract. The plaintiff , however, contended that there was an implied negative stipulation in the contract and they were entitled to enforce that negative stipulation in the contract and they were entitled to enforce that negative stipulation by means of an injunction. It is undoubtedly true that unlike the English law on the subject. Section 42 of the Specific Relief Act, subject. Section 42 of the Specific Relief Act, 1963 empowers the Court to grant an injunction to restrain the breach of a negative stipulation even if the negative stipulation be not express but implied. If therefore, any negative stipulation can be implied in the present contract, it would be open to the Court to grant an injunction to restrain the breach of the negative stipulation if it otherwise in the exercise of its discretion thinks it fit and proper to do so. But the question is, can a negative stipulation be implied in a contract such as the one we have in the present case. Now in a sense every contract to serve a particular employer for a specified period must necessarily involve the proposition that the employee would not serve a particular employer for a specified period must necessarily involve the proposition that the employee would not serve any other employer during that period., but can it be said that a negative stipulation not to serve any other employer should, therefore, be implied in every case of a contract of personal service? The question is a larger question, for logically it must lead to the conclusion that every affirmative stipulation to do a positive thing must of itself imply a negative stipulation do not to do anything inconsistent therewith. It was a contended on behalf of the plaintiffs that such indeed was the position and support for it was sought to be found in Illustrations (d) to Section 57 of the Specific Relief Act, 1877. That Illustration ran as follows:-

' (d) B. Contracts with A that he will serve him faithfully for twelve months, as a clerk. A is not entitled to a decree for specific performance of this contract. But he is entitled to an injunction restraining B. From serving a rival house clerk'.

On the analogy of this Illustration it was urged that in the present case also a negative stipulation could be implied prohibiting defendant No. 1 from serving any other employer in any capacity whatever and particularly in the capacity of an Electrical and Mechanical Supervisor or any other capacity where he may be required to perform the same r similar duties.

(3) Now there is no doubt that Illustration (d) to Section 57 does seem to suggest that an affirmative stipulation without any thing more would imply a negative stipulation not do anything inconsistent with the affirmative stipulation but in order to understand the true scope and effect of this illustration, it is necessary to refer to the background under which this Illustration came to be introduced in the statute. The Specific Relief Act was passed in 1877 and at that same time the common law as laid down in Montague v Flockton, (1873) 16 Eq 189 held the filed. In that case which was decided in the year 1873 Malins V.C. held that a negative stipulation could be implied from an affirmative stipulation without anything more and on that basis he restrained an actor from playing at a rival theatre though there was no express stipulation on his part that he would not do so. Based on the decision in (1873) 16 Eq 189, the Legislature, when it enacted the Specific Relief Act, 1877 introduced Illustration (d) . But in England about eighteen years later in Whitwood Chemical Cio V Hardman (1891) 2 Ch 416, the Court of Appeal overruled the decision in (1873) 16 Eq 189, and held that an affirmative stipulation does not of itself imply a negative stipulation to do nothing inconsistent with it for if such an implication were to be made and the Court were to enforce such a negative stipulation , the Court would in effect be granting a decree for specific performance. Though the law thus marched forward in England, Illustration (d) to Section 57 remained in the Indian statute. But it must be remembered that an illustration is intended to serve only a limited purpose namely illustrating the principle enacted in the Section and any assumption made by the Legislature in the Illustration cannot make the law, Illustration () Illustrated, the principle enacted in Sec 57 namely that even though the Court unable to compile specific performance of an affirmative stipulation in a contract of personal service, the Court may yet grant an injunction to perform a negative stipulation where the negative stipulation can be implied in the contract and this discharged its function as an Illustration. It, however, assumed that in such a case a negative stipulation can be implied merely from the existence of the affirmative stipulation. That assumption was based on the decision in (1873) 16 Eq 189, but as is clear from the subsequent decision of the Court of Appeal in Whitwood's case 1891-2 Ch 416, it was not well founded. Such an assumption made in the Illustration cannot be given the status of law enacted by the Legislature. As a matter of fact we find legislative recognition of the fact that this assumption was incorrect in the Specific Relief Act, 1963, where Illustration (d) along with other Illustrations has now been omitted. But this apart, the decision of the Bombay High Court in Shree Ambarnath Mills Corporation, Bombay v custodian of Evacuee property. AIR 1957 Bom 119, also shows that an affirmative stipulation cannot by itself imply a negative stipulation not to do anything inconsistent therewith. The question which arose in this case whether a negative stipulation not to sell the property to any person other than the plaintiffs could be spelt out from the affirmative stipulation to sell the property to the plaintiffs. Shah.J., delivering the judgment of the Court rejected the argument that such implication could be made and observed:-

'It is true that the liability (disability) of the Court to compile specific performance of an affirmative convenant does not preclude the Court from enforcing a negative covenant contained in the agreement. The negative covenant need be express; it may be implied from the tenor of the agreement. But the covenant to be negative must be one by which a party to the agreement undertakes either expressly or by necessary implication not to act in a particular manner. Whether an agreement is affirmative or negative is a matter of substance and not of mere from, and the negative stipulation , whether it is express or implied must be distinct: and an affirmative agreement does not by itself imply a negative agreement not to do something inconsistent therewith. Otherwise, of every affirmative agreement a breach would be restrained by an injunction even if the Court is unable to compel specific performance of that affirmative convenant. An agreement to sell property to a certain person does not necessarily imply a negative agreement that it will not be sold to another person. If breach of an agreement to sell property is to be restrained by an injunction, reliance cannot be placed upon the negative implication of the affirmative covenant to sell the property. There must be something in the agreement, apart from the affirmative agreement, which shows that the promisor has expressly or by necessary implication agreed not to sell the property to any person other than the purchaser. There is no such covenant in this case and we do not think that the agreement to sell or allot the properties to the plaintiff implies an agreement that the properties will not be sold to other persons ... ' This decision exposes the incorrectness of the assumption made by the Legislature in Illustration (d) in Section 57 and brings the Indian Law in law with the decision in Whitwood's case, 1891-2 Ch. 416.

(4) It is, therefore, clear that in order to found a case for an injunction under Section 42, there must be a negative stipulation. The negative stipulation cannot be implied merely from the existence of the affirmative stipulation; the affirmative stipulation does not of itself imply a negative stipulation to do nothing inconsistent with it. There must be something in the contract apart from the affirmative stipulation from which the negative stipulation can be spelt out by necessary implication. There is no such thing in the present contract. As a matter of fact when we asked Mr. I.M. Nanavati to point out if there was any provision in the contract which could lead to the implication of a negative stipulation, he frankly stated that beyond the affirmative to serve the plaintiffs for a period of five years, there was no other provision in the contract from which such implication could be made. But as we have pointed out above, a mere affirmative stipulation is not enough to raise the implication. We cannot, therefore, read the contract as containing by necessary implication a negative stipulation on the part of defendant No. 1 not to serve any other employer in any capacity whatever or even in the limited capacity of Electrical and Mechanical Supervisor as contended for on behalf of the plaintiffs.

(5) The result, therefore, is that there is no negative stipulation in the contract and consequently the plaintiffs cannot obtain an injunction against defendant No. 1. The learned Judge of the City Civil Court was clearly in error in granting interim injunction against defendant No. 1. We, therefore, allow the appeal, set aside the order of injunction passed by the learned Judge of the City Civil Court and dismiss the notice of motion with costs. The plaintiffs will also pay the costs of the appeal to defendant No. 1.

(6) Appeal allowed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //