I T H S C D A R: N HE Onourable Upreme Ourt OF Ivistan T Adsri

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XXXA

IN THE HONOURABLE SUPREME COURT OF DIVISTAN

AT RADSRI

IN THE MATTER OF

CIVIL APPEAL NO. 1060/2019

DIVIKA ANJANI (REPRESENTED BY HERSELF)…………………………...………

APPELLANT

v.

KULPANI LAW & CO. LTD. (REPRESENTED BY THE MANAGING DIRECTOR)….

RESPONDENT

[Under Article 133 of the Constitution of Divistan read with Order XIX, Rule 1 & 3 of the

Supreme Court Rules, 2013]

Memorial on behalf of the Appellants


TABLE OF CONTENTS

TABLE OF CONTENTS..........................................................................................................iii

INDEX OF AUTHORITIES....................................................................................................iii

STATEMENT OF FACTS......................................................................................................vii

STATEMENT OF JURISDICTION......................................................................................viii

ISSUES FOR CONSIDERATION...........................................................................................ix

SUMMARY OF ARGUMENTS...............................................................................................x

ARGUMENTS ADVANCED.................................................................................................11

1. THE CLAUSES OF EMPLOYEMENT AGREEMENT ARE UNFAIR AND

UNREASONABLE..............................................................................................................11

(i) Non competence clause.........................................................................................11

(ii) Non- Solicitation Clause..........................................................................................2

(iii) Confidentiality and non-disclosure clause...............................................................2

2. UNJUST RESTRAINT BEYOND EMPLOYEMENT..................................................3

3. THE EMPLOYEMENT CONTRACT IS VOID DUE TO VARIOUS REASONS......4

4. NON-ACCEPTANCE OF RESIGNATION IS A VIOLATION OF SECTION 27 OF

CONTRACT ACT.................................................................................................................5

PRAYER....................................................................................................................................7

ii
INDEX OF AUTHORITIES

Cases

; Central Inland Water Transport Corpn. Ltd. v. Brojo Nath Ganguly, (1986) AIR 1571.........6

Atwood v Lamont (1920) All ER Rep 55..................................................................................3

Bank of India vs. K. Mohan Das, (2009) 5 SCC 313.................................................................6

Central Inland Water Transport Corporation v. Brojonath Ganguly, (1986) SCR (2) 278.......5

Desiccant Rotors International Pvt. Ltd. v. Bappaditya Sarkar, (2014) 1 Mah LJ 758.............2

Faccenda Chicken Ltd. v. Fowler, (1986) 1 All ER 617...........................................................2

Herbert Morris Ltd. v.Saxelby, (1916) All ER 617...................................................................3

Horne Coupar v. Velletta & Company,2010 BCSC 483...........................................................6

Lalbhai Dalpatbhai & Co. v Chittarangan Chandulal Pandiya, (1966) AIR Guj 189...............xi

Levison v. Patent Steam Carpet Cleaning Co., (1997) 3 AllER 498,CA...................................5

Niranjan Shankar Golikari v. The Century Spinning and Mfg. Co. Ltd., (1967) 2 SCR 367...xi

Pollock and Mulla, Indian Contract & Specific Relief Acts, thirteenth edn.,pp. 823-826........2

Sandhya Organic Chemicals Pvt Ltd v United Phosphorous Ltd (1997) AIR Guj 177.............3

Sanjay Jain v. National Aviation Company of India Ltd, CIVIL APPEAL NO.10881/2018

(ARISING OUT OF S.L.P.(C) NO.27941/2017)..................................................................6

Satyavrata Ghosh v. Kurmee Ram Bangor, [1954] SCR 310...................................................2

Stephen (1995) 15 OJLS 565....................................................................................................xi

Suprintendence Co of India Pvt Ltd v Krishan Murgai, (1980) AIR SC 1717..........................3

Taprogge Gesellschaft mbH v IAEC India Ltd, (1988) AIR Bom 157.....................................3

VFS Global Services Pvt. Ltd. v. Suprit Roy, 2008 (2) Bomcr 446..........................................2

Statutes

Section 27, Contract Act, 1872................................................................................................11

iii
Other Authorities

Andrei Costin, Security of CCTV and Video Surveillance Systems: Threats, Vulnerabilities,

Attacks, and Mitigations, ACM Digital Library (Sept. 10, 2019)

https://dl.acm.org/citation.cfm?id=2995290..........................................................................5

Black’s Law Dictionary, 7th Ed. p. 38.......................................................................................9

HM Seervai, Constitutional Law of India, Fourth Edition,1991................................................5

Law Commission of India, 199th Report, 2006.......................................................................10

M.P. Jain, Indian Constitutional Law, 7th edition.....................................................................3

M.P. Jain, Indian Constitutional Law, 7th edition, p. 423.........................................................1

Sir Jack Beatson & Andrew Burrows, Anson’s Law of Contracts, 30th Edn. P.431..................7

Valerie Steeves & Owen Jones, Surveillance, Children and Childhood, Oxford Human Rights

Hub (Sept. 10, 2019), available at http://eprints.uwe.ac.uk/15963/1/Surveillance%2C

%20Children%20and%20Childhood%202010.pdf...............................................................6

iv
STATEMENT OF FACTS

 Ms. Divika Anjani, a law graduate, received an offer to join the law firm Kulpani Law

& Co. Ltd. [“The Firm”], which specialized in the field of Intellectual Property

rights. The preliminary offer letter was followed by a detailed employment agreement

which stipulated various terms and conditions, including the ones restricting the

employee from competing or soliciting after two years of leaving the job.

 Although the agreement said that it would be appreciated if employee stays for

minimum of two years, Ms. Divika decides to resign within a year and a half and

challenges the validity of the agreement and its clauses.

 After the court decreed in favour of the Firm, Ms. Divika approaches the Supreme

Court.

v
STATEMENT OF JURISDICTION

The Appellant has approached the Honourable Supreme Court of Divistan, invoking its writ

jurisdiction to admit and adjudicate the present matter under Article 133 of the Constitution

of Divistan, 1950 read with Order XIX, Rule 1 and 3 of the Supreme Court Rules, 2013 and

decide accordingly.

vi
ISSUES FOR CONSIDERATION

I. WHETHER THE EMPLOYMENT AGREEMENT AND THE ACTIONS OF THE FIRM ARE

VALID OR NOT?

vii
SUMMARY OF ARGUMENTS

1. THE CLAUSES OF THE EMPLOYMENT AGREEMENT ARE NOT VALID

Firstly, the agreement ambiguously states the condition for the period for which the

employee is mandatorily bound to stay in the firm.

Further, the non-compete, non-solicitation and confidentiality clauses are

unreasonable and unfair and bound the employee even after the termination of

employment.

This amounts to a restraint of trade, thus invoking Section 27 of the Contract Act.

viii
ARGUMENTS ADVANCED

1. THE CLAUSES OF EMPLOYEMENT AGREEMENT ARE UNFAIR AND

UNREASONABLE

A very weak restraint which protects an important interest is unjustifiable if a yet weaker

restraint could do the job.1 Through various case laws, the test of reasonable restraint under

Section 27 of The Contract Act states that the validity of a restraint depends on [A] the

proprietary interests, [B] reasonableness; and [C] public interest.2 A covenant cannot be

considered reasonable unless it is designed to protect the legitimate interests of the

covenantee while at the same time being reasonable for both the parties. 3 In light of this

interpretation, the clauses of the employment agreement have to be analysed.

(i) Non competence clause

a) It was held by the Court that when an act is challenged under the ground of restraint

of trade under Section 27 of the Contract Act, the onus is on the party supporting the

contract to show that the restraint is reasonably necessary to protect of his interests

along with being reasonable and non- harsh on its employees. If the terms are

unconscionable and one sided, it would amount to a restraint of trade. 4 Also, the

restraint is absolute except for the case of sale of goodwill where the parties may

agree not to carry on a similar business.

1
Stephen (1995) 15 OJLS 565
2
Esso Petroleum Co. Ltd. v. Harper’s Garage Ltd. (1967) 1 AllER 699 (HL); Niranjan
Shankar Golikari v. The Century Spinning and Mfg. Co. Ltd., (1967) 2 SCR 367
3
Sir Jack Beatson & Andrew Burrows, Anson’s Law of Contracts, 30th Edn. P.431
4
Niranjan Shankar Golikari v. The Century Spinning and Mfg. Co. Ltd., (1967) 2 SCR 367;
Lalbhai Dalpatbhai & Co. v Chittarangan Chandulal Pandiya, (1966) AIR Guj 189
1
b) Further, it has been held by the court that the livelihood of the employees is supreme

and must prevail,5 and that covenant is void if it restrains the employee from work in

future.6

c) For a professional law graduate, it would not only be unreasonable, but also to an

extent non-feasible, to not work in a law firm or practice law for 2 years following the

termination of his employment contract. Hence, Clause 10.6 of the employment

agreement is uxorious and invalid.

(ii) Non- Solicitation Clause

a) A restraint under Section 27 of The Contract Act is valid if it is necessary to have a

clause of that severity to protect the interests of the other party. In other words, it

should be in the proprietary interests, reasonable and in public interest. 7 Further,

merely approaching the customers does not amount to solicitation.8

b) Considering the fact that the non-solicitation covenant of the employment agreement

provides that the employee shall not solicit, take away, or even attempt to call on any

customer of the firm, which he became acquainted to during the term of employment,

it is prima facie, unfair and unreasonable and hence invalid.

(iii) Confidentiality and non-disclosure clause

a) An employer is entitled to protect confidential information which amounts to trade

secret9 or which prevents ‘some personal influence over the customers being

abused’.10 Further, for a restraint to be justifiable, the servant must be one who has

acquired not merely knowledge of the customers, but in addition influence over

5
Desiccant Rotors International Pvt. Ltd. v. Bappaditya Sarkar, (2014) 1 Mah LJ 758
6
Satyavrata Ghosh v. Kurmee Ram Bangor, [1954] SCR 310
7
Pollock and Mulla, Indian Contract & Specific Relief Acts, thirteenth edn.,pp. 823-826
8
VFS Global Services Pvt. Ltd. v. Suprit Roy, 2008 (2) Bomcr 446
9
Faccenda Chicken Ltd. v. Fowler, (1986) 1 All ER 617
10
Pollock and Mulla, Indian Contract & Specific Relief Acts, thirteenth edn., p 838.
2
them.11 Another condition is that the confidentiality restraint would not be valid if it is

nothing more than a method adopted by the business or something available in the

public domain.12

b) As the time of restriction is increased and the space of its operation grows, the onus

on the party imposing them to justify it grows too.13

The confidentiality and non-disclosure clause of the employment agreement [A] provides for

wide and sweeping constrains on the other party without even specifying the time until which

it would be applicable, and [B] uses the phrase “any confidential information or intellectual

property” where it is unclear if the employee is at a position to successfully exploit the

information, or the intellectual property is unique to the firm. Hence, the clause is uncertain

and thus invalid.

1. UNJUST RESTRAINT BEYOND EMPLOYEMENT

Through various cases, it has been well established that in Indian Law, a service covenant

running beyond the terms of the service is void.14 In a fact scenario which resonates with

the present case, there was a clause in the employment contract which said that the

employee could not join any other competitor’s firm for a period of 2 years after he left

the company.15 This covenant was held to be void by the Hon’ble Supreme Court. Similar

position was maintained by the courts in other cases too.16

Since the clauses bind the employee even after the termination of contract for two years,

it can be concluded that they are not valid.

11
Herbert Morris Ltd. v. Saxelby, (1916) All ER 617
12
Supra footnote 32
13
Supra footnote 32; Atwood v Lamont (1920) All ER Rep 55
14
Superintendence Co of India Pvt Ltd v Krishan Murgai, (1980) AIR SC 1717; Supra
footnote 32
15
Id.
16
Sandhya Organic Chemicals Pvt Ltd v United Phosphorous Ltd (1997) AIR Guj 177;
Taprogge Gesellschaft mbH v IAEC India Ltd, (1988) AIR Bom 157
3
2. THE EMPLOYEMENT CONTRACT IS VOID DUE TO VARIOUS REASONS

It is submitted that the employment agreement, is invalid on two counts, namely, [A]

unfair terms in a standard form of contract and [B] violation of Section 27 of the Contract

Act

(i) It is a standard form of contract with unfair terms

Adhesion Contracts or Standard form of Contracts are defined as17:

“A standard-form contract prepared by a standard-form contract prepared by

one party, to be signed by the party in a weaker position, usually a consumer, who has

little choice about the terms. Also termed Contract of adhesion; adhesory contract;

adhesionary contract; take it or leave it contract; leonire contract. Some sets of trade

and professional forms are extremely one-sided, grossly favouring one interest group

against others, and are commonly referred to as contracts of adhesion. From weakness

in bargaining position, ignorance, or indifference, unfavoured parties are willing to

enter transactions controlled by these lopsided legal documents”

It is evident that in this form of contracts, [A] the parties are not at an equal footing

with respect to bargaining power and there is no scope of negotiating over the terms.

[B] One of the parties may be completely unfamiliar with the complex language,

terms and conditions employed by the other.

These are pre-printed contracts with unilateral terms offered on a take it or leave it

basis, where the big corporations could abuse their power under the garb of free will. 18

Employment contracts are also included within this category of contracts.19

17
Black’s Law Dictionary, 7th Ed. p. 38
18
Law Commission of India, 199th Report, 2006
19
Id.
4
In these cases, if the party has signed the contract, it becomes important determine

whether the clauses could be given contractual effect. In various cases, contracts have

been struck down as void for imposing restrictive and unreasonable conditions. 20

Since fairness and reasonableness are highly relevant for the enforceability of these

contracts, and the same are clearly absent in the present case, the contract is void.

(ii) Restraint of Trade

Section 27 of the Contract Act states that every agreement by which any one is

restrained from exercising a lawful profession, trade, or business of any kind, is to

that extent void.21 It is clear that the covenants restraining the appellant from [A]

practising her profession, either individually or as a part of a firm, and [B] prohibiting

her from competing with the firm is a clear violation of Section 27 of the Contract

Act.

3. NON-ACCEPTANCE OF RESIGNATION IS A VIOLATION OF SECTION 27 OF

CONTRACT ACT

(i) The clause 10.4 of the employment agreement is ambiguous as it fails to signify

whether there is a compulsion on the employee to not to leave or simply a negative

obligation, this is because of the fact that it has been constructed in a non-restrictive

manner with the use of the ambiguous term “appreciate”.

(ii) According to Black’s Law Dictionary, contra proferentem is:

“Used in connection with the construction of written documents to the effect that an

ambiguous provision is construed most strongly against the person who selected the

language.”

20
Central Inland Water Transport Corporation v. Brojonath Ganguly, (1986) SCR (2) 278;
Levison v. Patent Steam Carpet Cleaning Co., (1997) 3 AllER 498,CA
21
Section 27, Contract Act, 1872
5
c) It is a principle which is generally used for the interpretation of ambiguous clauses

when they have more than one meaning and the implication is not the same for both

the parties.22 This assumes that the party putting forward the wording must have

looked after its interests while doing so. The party has no right to induce the other to

make a contract on the supposition that the words mean one thing, and then to argue

for a construction to their advantage.23

d) The judges have adopted a similar line of reasoning in case of contracts and the

principle has been applied in various cases. 24 Applying it in present case would meant

that even though there is an obligation, there is no restriction and hence the employee

could leave at will which is a matter of his right.25

In the case of Sanjay Jain v. Aviation Company of India Ltd, it was held by the

Hon’ble Supreme Court that an employee cannot be forced to serve in case he is not

willing to do so unless there is a stipulation to the contrary.

Thus, it can be concluded that in the present case, with the absence of any restriction,

the appellant is free to leave and the decision of the firm to not accept the resignation

and release the original documents is clearly a violation of Section 27 of the Contract

Act.

22
See Sir Jack Beatson & Andrew Burrows, Anson’s Law of Contracts, 30th Edn. P. 195
23
Id.
24
Bank of India vs. K. Mohan Das, (2009) 5 SCC 313; Central Inland Water Transport
Corpn. Ltd. v. Brojo Nath Ganguly, (1986) AIR 1571; Horne Coupar v. Velletta &
Company,2010 BCSC 483
25
Sanjay Jain v. National Aviation Company of India Ltd, CIVIL APPEAL NO.10881/2018
(ARISING OUT OF S.L.P.(C) NO.27941/2017)
6
PRAYER

Therefore, in the light of facts stated, issues raised, arguments advanced and authorities cited,

it is most humbly prayed before this Honourable Supreme Court of Divistan that it may be

pleased to:

1. Declare the impugned clauses of the employment agreement of Kulpani Law Co. as

void and direct the firm to pay damages to the employee for acting in restraint of

trade.

And pass any other order in favour of the Appellant which this Court may deem fit in the

ends of justice, equity, and good conscience.

All of which is most humbly and respectfully submitted

Date: September 14, 2019, Counsel for the

Appellant

S/d__________

Counsel No. -021

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