1.Jet Airways Case

1

CASE 1 Jet Airways (I) Ltd. (plaintiff) vs Mr. Jan Peter Ravi Karnik (defendant)

This case is being discussed in the back drop of legality of object of a contract. Even though the contract law proposes freedom of parties to enter into a contract,  still it is subject to certain rules especially with regards to the subject matter of the contract. The case describes the different aspects of an employment contract, especially the validity and enforceability of a noncompete clause which is often used by companies.  Reference: The given concepts have been discussed from page ! " !# of the prescribed prescribed te$t. %&ertain irrelevant irrelevant parts of the case have been deleted for ease of understanding' un derstanding'

The Plainti!s "rayer #e$re the %$&rt •

The plaintiff seeks an order of permanent injunction1 restraining the defendant from taking; up or continuing any employment until 11th October, 200 !ith any other "irline, including #ahara "irlines for the purpose of operating aircraft on the basis of the endorsement of the licence obtained as a result of the training pro$ided by the plaintiff, that is to say, for  operating % &'& #eries '000000*

•

The plaintiff also seeks money, decree against the defendants for the return of the training cost incurred together !ith interest at the rate of 2 per cent per annum*

'a%ts $ the %ase

The plaintiff carries on the business of "ir transport carrier !ithin +ndia and operates a fleet of  modern "ircraft* The plaintiff commenced operation in ay, 1--'* +t decided to operate and e.pand its fleet based on the latest series of %oeing &'& aircraft in +ndia only the "ircraft &'&/ 200 !as operated* The plaintiff, ho!e$er, introduced the series % &'&/'0000* The plaintiff !as the first "irline to induct these t!o series of aircrafts in +ndia* hen the plaintiff commenced 1 A fnal order o a court that a person or entity rerain rom certain activities permanently or take certain action (usually to correct a nuisance). A permanent injunction is distinguished rom a "preliminary" injunction which the court issues pending the outcome o a lawsuit or petition asking or the "permanent" injunction. injunction.

2

operations, there !ere no pilots in +ndia !ho !ere rated for this type of aircraft i*e* !ho !ere $alid licences endorsed by the irector eneral of 3i$il "$iation (3") to fly this type of  aircraft* The plaintiff, therefore, embarked on a manpo!er plan of recruiting +ndian pilots and training training in the 4irst Officers Officers and 3ommanders* 3ommanders* +n the initial initial year of the "irlines "irlines operation, operation, the "ircraft !ere commanded by foreign instructors !ho !ere training the plaintiff +ndian 5ilots* The defendant !as employed by the 5laintiff after an inter$ie! on '0th "pril, 1--6* 5rior to  joining the plaintiff, the defendant defendan t !as employed by the +ndian 7a$y and thereafter by #pan "ir* hen the defendant joined the plaintiff, he had been flying #uper 8ing "ir 6 2009* +n order to e:uip the pilots for operating %/&'&'0000 series an intensi$e training has to be undertaken* The plaintiff organised the necessary training for the defendant and the other pilots* +n the letter  of appointment dated '0th '0 th "pril, "pril, 1--6 the defendant !as offered the post of o f Trainee 4irst Officer  Officer  on certain terms and conditions* +n consideration of the plaintiff making the arrangement for the training of the defendant, the defendant agreed and undertook that during a period of & years from the date of completion of training in +ndia and abroad and on resuming actual ser$ices !ith the plaintiff as 4irst Officer, he !ould not accept employment, similar in nature, either in full time or part time !ith any other employer* +n the e$ent of the defendant resigning from the ser$ices, he !ould make good to the plaintiff entire cost in respect of training andor damage, if  any* The defendant joined the ser$ices of the plaintiff !*e*f* th ay, 1--6* The total cost of training is appro.imately s* 1 lakhs* "ll the conditions !ere satisfied by the defendant and he !as sent for training to alaysia bet!een 11th ay, 1--6 and 11th et   +irways and perform your duties towards >et +irways. )ou shall agree that during the  said period of seven years you shall not take up employment with any other 

!

 personsorganisationscompanies reuiring you to perform similar duties as reuired to be performed by >et +irways and shall not engage in any similar business or vocation reuiring you to fly any other +ircraft. &lause ;1. +fter confirmation, the company would be entitled to terminate your services without assigning any reason, by giving you three months notice in writing or by payment  of three months salary in lieu of such notice. *n the event of your desiring to leave the  services of the company at any time after confirmation, you shall give to the company three months notice in writing provided that the company may, at its sole discretion, waive such notice. This is subject to provisions of para ?o. ;6.@   3uring this period of ! years you shall not accept employment, similar in nature, either   full time or part time with any other employer. This period of ! years shall be computed   from the period of the completion of the above said training in *ndia and abroad and on resuming actual services with the employer company as a /irst 7fficer.@  Ar&ents $n #ehal $ the Plainti 

r* >ahana$ati, learned 3ounsel for the plaintiff, submits that on reading of 3lause = it clearly sho! that the defendant had agreed to ser$e the company for a period of & years and not to lea$e or terminate his ser$ices till the e.piration of the period of & years* The defendant had also agreed not to accept employment similar in nature either full time or part time !ith any other  employer during the period of & years* This negati$e co$enant is reiterated by the defendant on 2'rd #eptember, 1--6 !hilst e.ecuting the bond* "part from this, there is a complete negati$e co$enant contained in 3lause 22* There is no option gi$en to the defendant to cut short the period of & years* +t is submitted that the plaintiff has spent large amounts of money on training the defendant* ?e cannot no! be permitted to facilitate the competitor in getting unfair and dishonest ad$antage against the plaintiff* +t is, therefore, absolutely necessary that the injunction  be granted* @earned 3ounsel submitted that gra$e and irreparable loss and damage !ill be caused to the plaintiff and the breach cannot be compensated in terms of money* ?e submitted since 6 pilots ha$e left the ser$ices of the plaintiff one after the other and joined #ahara "irlines, it has led to disruption of the plaintiffs schedule* The difficulties e.perienced by the plaintiff  cannot be compensated in terms of money* @earned 3ounsel has relied on t!o judgments of the #upreme 3ourt to submit that in the case of a clear negati$e co$enant the relief of injunction can be granted, restricted of course to



the period of contract* +ndeed all the learned 3ounsel on both the sides ha$e relied on the same  judgments* These are (i) s* ujarat %ottling 3o* @td* $* 3oca 3ola 3ompany and others, , hereinafter referred to as 9the 3oca 3ola case9 and (++) 7iranjan #hankar olikari $* 3entury #pinning and f:* 3om* @td*, , hereinafter referred to as 9the olikari9 case*

r* 3hagla, learned 3ounsel also appearing for the 5laintiff has submitted that the negati$e co$enant contained in 3lauses = and 22 are not in restraint of trade* The breach of the contract is clear* +n terms of 3lause =, an enormous amount of money has been spent on the training of the defendant* The co$enant contained in 3lauses =, 21 and 22 are affirmati$e as !ell as negati$e in nature* ?e submits that the e.cuse gi$en for lea$ing the company is an afterthought* This is a clear case of illegal inducement being offered by #ahara "irlines* The plaintiffs are perfectly !ithin their right in accordance !ith the contract to rationalise the criteria for fi.ation of  seniority* The e.cuse put for!ard by the defendant is baseless and misconcei$ed and has been made only as a prelude to justify the breach of the contract* The seniority list !as in fact duly  published in