3 months ago
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In a important verdict, the Madras High Court has held backstage hospitals cannot dainty doctors similar workmen successful a mill and see non-compete and non-solicit clauses successful the agreements reached with them. It has besides said rivalry betwixt hospitals is simply a misnomer since they are expected to beryllium service-oriented and not business-oriented institutions.
Justice N. Anand Venkatesh passed the judgement portion dismissing a petition filed by MIOT Hospitals Private Limited for appointing an arbitrator to resoluteness a quality betwixt it and cardiothoracic surgeon Balaraman Palaniappan. The justice besides imposed costs of ₹1 lakh connected the petitioner infirmary and directed the infirmary to the wage the wealth to the surgeon.
The justice recovered the petitioner-hospital and the surgeon had entered into a nonrecreational statement connected September 8, 2022 for a play of 3 years. Clause 8.3 of the statement stated the surgeon shall not articulation immoderate rival infirmary oregon acceptable up practice, successful the vicinity of 15 km from the petitioner-hospital, for a further play of 3 years aft the termination of the contract.
Since the surgeon had terminated the declaration midway successful 2025 and joined Apollo Hospitals, the petitioner infirmary demanded liquidated damages of ₹42 lakh, which was the sum equivalent to his 3 months’ nonrecreational fees, on with involvement and approached the tribunal for assignment of an arbitrator nether the Arbitration and Conciliation Act, 1996.
Shocked by the enactment of the hospital, Justice Venkatesh wrote: “It indispensable beryllium kept successful caput that the respondent, who is simply a doc by profession, cannot beryllium construed arsenic an worker of the petitioner infirmary since, by the precise quality of work provided by a doctor, astatine the best, a infirmary tin lone utilize the services and cannot dainty a qualified doc similar a regular worker of an organisation.”
On clause 8 of the agreement, helium said: “It is rather unfortunate that a infirmary has incorporated specified a clause successful an statement entered into with a doctor. Either the supra clause is arsenic a effect of cut, transcript and paste syndrome from an agreement, which is regularly entered into betwixt exertion companies with their employees oregon the petitioner infirmary has forgotten the information that they are moving a infirmary to service the patients and that they are indirectly admitting that the organisation is thing abbreviated of a nett making entity.”
The justice besides wrote: “Doctors tin thrive without hospitals whereas a infirmary tin ne'er beryllium without doctors supporting specified hospitals by rendering their services. Therefore, by nary stretch, a infirmary tin dainty a doc similar a workman successful a mill oregon a method idiosyncratic oregon a regular worker employed by an organisation successful the tract of exertion and different work sectors.”
Sating clause 8 of the statement demeans the stature of a doctor, Justice Venkatesh observed: “A doc is an autarkic professional, who cannot beryllium stopped from rendering his services wherever helium wants to and besides cannot beryllium stopped from attending to patients conscionable due to the fact that those patients were earlier taking attraction successful the petitioner hospital. When it comes to moving a hospital, determination is nary question of a rival infirmary and each infirmary is an autarkic entity, which is being tally to service the patients and the nine astatine large.”
The justice held a nonrecreational statement entered into by a doc with a infirmary would surely beryllium opposed to nationalist argumentation if it contained a non-solicitation and/or non-compete clause and specified an statement would beryllium squarely deed by Section 23 of the Indian Contract Act, 1872. “Consequently, it indispensable beryllium held to beryllium unlawful, unenforceable and void ab initio to that extent.”
Justice Venkatesh besides recovered clause 10 of the statement stated that the petitioner-hospital could terminate it with anterior written announcement of astatine slightest 1 period oregon by paying 1 month’s nonrecreational fees successful lieu of the announcement play whereas the surgeon could terminate the statement with anterior announcement of astatine slightest 3 months oregon by paying 3 months nonrecreational fees successful lieu of the announcement period.
Though the infirmary claimed the surgeon did not contented 3 months notice, the justice connected going done the records recovered the doc had submitted his resignation missive connected January 29, 2025 and requested the infirmary to relieve him from April 29, 2025. On April 21, 2025 helium had sent a message thanking the infirmary for the opportunities fixed to him but the infirmary had treated that arsenic the resignation letter.
Justice Venkatesh, adjacent earlier going into the merits of the case, had persuaded the infirmary arsenic good arsenic the surgeon to settee the quality amicably. The surgeon instantly came guardant to wage his 1 month’s nonrecreational interest to the petitioner infirmary but the latter, being a large institution, wanted to amusement its “might” against a doc by making him acquisition arbitration proceedings, the justice lamented.
“For each the supra reasons, this tribunal holds that the supra petition is devoid of merits and it has been filed to witch-hunt a doctor, whom the petitioner infirmary expected to creation to their tunes forever,” the justice concluded.
