I understand that in the agreement there is violation of section 27 of Contract Act which says that a service agreement extended beyond the termination of service is void. Here the agreement is between the Principal employer and the Contractor Security agency and the same is for deployment of forces with a condition that the former should not hire either directly or indirectly (through any other agency) the employees deployed by the latter. I don’t think that in the agreement there will be a mention as to who all should be engaged by the contractor but only the number of security guards or officers would be there. Now, it is upto the contractor to send guards or officers to take care of the principal employer’s men and properties. Then what is the significance of a clause that the principal employer cannot take the employees of the contractor after termination of the contract?
Secondly, here the employees of the earlier Security Agency has every right of joining another organisation whether engaged in the same kind of business activity or not. This is his fundamental right also. Here again the same section 27 of Contract Act will apply. Various Court rulings, like Sandhya Organic Chemicals v. United Phosphorous held by Gujarat High Court, Ambiance India Pvt Ltd vs Naveen Jain, the Supreme Court ruling in Superintendence Co. of India v. Krishun Murgai. AIR 1980 SC 1717 etc say that no employee can be prevented from pursuing similar work if he/she quits the present one, merely on the pretext that it will be detrimental to the previous employer.
As far as (principal) employer is concerned, since he has had no legal relationship with the employees of the contractor who supplies guards or workers to do a certain work, he need not look beyond that. For him the person seeking direct employment with him is a new person and the legal relationship that he is going to build up with the worker/ guard is that of employer and employee. And, in case this guard is getting deployed in the same premises through another agency, there is not going to develop any legal relationship with him and as such why should he be held liable for an invalid clause? Once a contract is terminated, he cannot track where are these guards going or whether these guys come for employment with him or not. That means an agreement which extends beyond its termination is void and not maintainable.
Madhu.T.K