BAKELITE HYLAM LIMITED Vs. S J HASAN

JUDGEMENT

(1.) The main question for consideration in this appeal is whether Rule 15 of the Managerial Staff Gratuity Fund Rules of the Defendant-company constitutes a restraint of trade within the meaning of S. 27 of the Contract Act (Act 9 of 1872) and if so is it valid.

(2.) The defendant is the appellant. The sole respondent-plaintiff filed a suit for recovery of Rs. 25,000.00 the sum due towards gratuity from the defendant-company wherein he worked as a manager till he resigned on 4/10/1976. The plaintiff avers that on 4/10/1976, he submitted his resignation and the same was accepted by the defendant on 3/12/1976, but when he demanded payment of the gratuity, the defendant instead that he should give an undertaking or confirmation in terms of Rule 15 of the companys gratuity scheme, which is wholly unnecessary, and the defendant failed to pay the gratuity due to him though he has not engaged himself or has not done any act prejudicial to the interests of the company and hence the suit. The defence is that no gratuity would be payable if any member acted prejudicially against the interests of the company either during the service of the company or engaged himself without prior consent for such an activity within a period of three years from his retirement and that the technical know how was important for the successful running of the defendant-company and the plaintiff was sent abroad and given training in sophisticated companies and plaintiff should not part with his knowledge to competitors without their prior sanction and hence they insisted that the plaintiff should give an undertaking not to act prejudicially to its interest and consequently the withholding of the gratuity is justified when the plaintiff refused to give such undertaking.

(3.) On this controversy the trial Court found that on a true construction of Rule 15 of the above rules the defendant cannot insist that the plaintiff should give an undertaking, and there is no evidence that the plaintiff has contravened Rule 15 and that the defendant has no right to restrain the plaintiff from carrying on a competitive business in view of S. 27 of the Contract Act and consequently decreed the suit. Against the said judgment and decree, the above appeal is filed.