The Madras High Court has dealt a significant blow to restrictive employment practices in the healthcare sector by declaring that non-solicitation and related non-compete clauses in doctors’ contracts are unlawful and against public policy. The ruling came during a dispute between MIOT Hospitals Private Limited and a cardiothoracic surgeon, Dr. Balaraman Palaniappan, who resigned and later joined another hospital. The court heard that the doctor had served his notice period, but the hospital sought to enforce clauses that would bar him from practising within a specified radius or soliciting patients and staff.
Justice N. Anand Venkatesh dismissed the hospital’s petition for arbitration and imposed ₹1 lakh in costs on MIOT, stating that such restrictive covenants contravene Sections 23 and 27 of the Indian Contract Act by restraining a professional from exercising his lawful trade. The judgment emphasised that doctors are independent professionals, not factory workers or regular employees whose mobility can be curtailed like commercial technicians. It also underscored that hospitals cannot treat medical services as comparable to rival business enterprises when imposing contract restraints.
Legal experts say the ruling underlines a broader judicial pushback against standardised restrictive clauses carried over from commercial sectors into healthcare employment agreements. news as reported
