Madras HC – Doctors Not Bound by Corporate-style Non-compete clauses in the professional agreement of the Hospital
judgment dated 23.2.2026 of the Madras High Court in Arbitation O.P. (Com.Div.) No.708 of 2025 of MIOT Hospitals Private Limited Vs. Dr. Balaraman Palaniappan
Clauses of the Professional Agreement between Hospital and Cardio Thoracic Surgeon provide for non-compete, non-solicit and from rejoining rival hospitals or practicing within 15 kms for three yeas.
Madras HC criticized Hospital for importing “cut-copy-paste” non-compete clauses from corporate contracts into medical practice professional agreement with the Doctor
Non-compete and non-solicitation clauses in professional agreement are unenforceable against Doctors.
Madras HC – Arbitration Clause embedded in professional agreement of doctor containing void restrictive covenants’ cannot survive.
Madras HC – Hospitals must respect the professional independence of doctors, disputes must be limited to law obligations like notice periods.
Madras HC strong observations – Hospitals cannot project themselves as “rival businesses” in a way to restrain doctor’s independence.
Madras HC – since restrictive convenants were void and termination of professional agreement was valid, no arbitration dispute of hospital with the doctor remained for appointment of arbitrator.
Madras HC – Doctors Not Bound by Corporate-style Non-compete clauses in the professional agreement of the Hospital
Madras HC Protects Doctor’s Independence – Arbitration Petition of Hospital Rejected
In this section 11 petition for appointment of arbitrator, the dispute was in respect of the professional agreement with the respondent – Consultant Surgeon for three years.
Clause 10.2 provided for three months’ advance notice or professional fees for early termination of the agreement. Clause 2.3 provided for liquidated damages.
Clause 8.3 and Clause 8.3 provided for non-solicitation and non-compete restrictions for a period of three years.
However, before completion of three years period the respondent had resigned and terminated the agreement. Moreover, the respondent did not give three months’ advance notice or professional fees as required by Clause 10.2 of the agreement.
By no stretch, one hospital can treat another hospital as a rival and consequently, non-compete clause never form part of an agreement between a hospital and a doctor.
In so far Clause 8 that has been relied upon by the petitioner is concerned, it deals with confidentiality, non-solicitation and non compete covenants. It is quite unfortunate that a hospital has incorporated such a clause in an agreement entered into with a doctor. Either the above clause is as a result of cut, copy and paste syndrome from an agreement, which is regularly entered into between technology companies with their employees or the petitioner hospital has forgotten the fact that they are running a hospital to serve the patients and that they are indirectly admitting that the organization is nothing short of a profit making entity like any other business entity.
It must be kept in mind that the respondent, who is a doctor by profession, cannot be construed as an employee of the petitioner hospital since, by the very nature of service provided by a doctor, at the best, a hospital can only utilize the services and cannot treat a qualified doctor like a regular employee of an organization.
An agreement entered into by a doctor with a hospital, which contains a non solicitation and/or non compete clause, is certainly opposed to public policy and such an agreement is squarely hit by Section 23 of the Indian Contract Act, 1872. Consequently, it must be held to be unlawful, unenforceable and void ab initio to that extent.
- In other words, doctors can thrive without hospitals whereas a hospital can never exist without doctors supporting such hospitals by rendering their services. Therefore, by no stretch, a hospital can treat a doctor like a workman in a factory or a technical person or a regular employee employed by an organization in the field of technology and other service sectors.
- A careful reading of Clause 8 would show that a doctor, who works with the petitioner hospital, must maintain confidentiality and should not directly or indirectly solicit with the staff/member/worker of the petitioner hospital for a period of three years after the expiry of the period of contract, that the doctor should not join any other hospital, which is treated by the petitioner as a rival hospital or set up any practice within the vicinity of 15 Km from the petitioner hospital and that if there is a breach of any of these conditions, the doctor has to pay liquidated damages.
- The above attitude of the petitioner demeans the stature of a doctor. A doctor is an independent professional, who cannot be stopped from rendering his services wherever he wants to and also cannot be stopped from attending to patients just because those patients were earlier taking treatment in the petitioner hospital. When it comes to running a hospital, there is no question of a rival hospital and each hospital is an independent entity, which is being run to serve the patients and the society at large.
- The above clauses also go against Section 27 of the Indian Contract Act, 1872 since a doctor is restrained from practising his profession and more so, when such restraints are sought to be enforced even after the expiry of the contract.
