Arbitration Plea by MIOT International Dismissed
The Madras High Court dismissed an arbitration petition filed by MIOT International against a Chennai-based cardio thoracic surgeon. The Court not only rejected the plea but also imposed a cost of ₹1 lakh on the hospital, directing it to pay the amount to the doctor.
Court Questions Commercialisation of Healthcare
During earlier hearings, the Court had raised concerns about whether hospitals are being run as business entities rather than healthcare institutions. It had orally observed that non-compete and non-solicitation clauses in such agreements appeared “unlawful on the face of it,” signaling serious reservations about restrictive employment terms imposed on medical professionals.
Petition Filed Under Arbitration Law
The hospital approached the Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator. The dispute arose after the doctor resigned and joined another hospital, allegedly violating certain clauses of the professional agreement signed between the parties.
Doctors Are Not ‘Workmen’, Court Observes
Justice N. Anand Venkatesh strongly criticised the hospital’s stand, stating that doctors cannot be treated like factory workers or technical employees. The Court emphasized that while doctors can thrive independently, hospitals cannot function without doctors. Therefore, a hospital cannot equate a qualified medical professional with a regular employee in other service sectors.
Professional Status of Doctors Highlighted
The Bench clarified that by the very nature of medical services, a hospital merely utilizes a doctor’s expertise and cannot treat them as standard employees. The Court stressed that the respondent’s professional status sets him apart from conventional employer-employee relationships.
Background of the Dispute
The dispute stemmed from a professional agreement dated September 8, 2022, appointing the doctor as a Consultant Cardio Thoracic Surgeon. The agreement required him to serve for three years and included overseas assignments, including multiple stints in Fiji. After nearly two years and seven months, the doctor resigned via email on April 21, 2025.
Alleged Breach and ₹42 Lakh Claim
The hospital invoked Clause 10.2, which required three months’ notice or payment in lieu, and Clause 8.3 containing a non-compete restriction. Alleging breach, the hospital demanded ₹42 lakh as liquidated damages. After failed settlement attempts and legal notices, it triggered arbitration proceedings under Clause 12.2 of the agreement.
Court Criticises Restrictive Clauses
The Court took strong exception to Clause 8 dealing with confidentiality, non-solicitation, and non-compete covenants. It noted that such restrictive clauses, commonly used in employment contracts, cannot curtail a doctor’s right to practice, particularly in light of Section 27 of the Indian Contract Act, 1872. Concluding that the dispute was not fit for arbitration, the Court dismissed the petition with costs, reinforcing the professional autonomy of doctors.
