The Madras High Court recently made strong oral observations questioning the legality of non-compete and non-solicitation clauses imposed by hospitals on doctors. [MIOT Hospitals v. Dr Balaram Palaniappan].Justice N Anand Venkatesh made the remarks while hearing MIOT Hospitals’ petition seeking appointment of an arbitrator against Chennai-based doctor Balaraman Palaniappan. .Non-compete and non-solicitation clauses are restrictive covenants commonly used in employment or professional agreements. A non-compete clause typically prevents a doctor from joining a competing hospital or starting a similar practice for a specified period or within a particular geographic area after leaving employment. A non-solicitation clause usually bars the doctor from approaching or “poaching” the hospital’s patients, staff or business contacts after exit. .During the hearing, the Court said that such restrictive covenants appear “unlawful on the face of it" and questioned how hospitals could enforce them.The judge went further, indicating broader concern about the healthcare sector, stating, "I will ensure that no hospital hereafter comes up with this non-solicitation, non-compete.".The Court also questioned the commercialisation of private hospitals: "Are you running a business? Are you running a hospital? What are you doing? Is this some commercial establishment?”The Court also criticised the trend of excessive medical testing and said, “If the patient goes in for a fever, he will get tested for 350 times, and he will come out as normal.".Expressing a lack of trust in private hospitals, the judge added, “That is why I am going to the government hospital safely. At least they won’t kill you.”Emphasising patient choice, the Court observed that patients ultimately decide whom they trust: “The client can go to the person whom he trusts.”.The arbitration petition arises from a professional agreement dated September 8, 2022 between MIOT Hospitals and the doctor. The hospital has sought appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996 after issuing a trigger notice in July 2025.During the hearing, the hospital clarified that its claim is limited to contractual dues linked to the doctor’s exit. Counsel told the Court that the doctor earned a monthly salary of ₹7 lakh and that the claim relates to notice-period obligations under the agreement, amounting to roughly ₹42 lakh. .The hospital’s case is that the doctor allegedly joined another hospital soon after giving notice, instead of waiting for the contractual notice period to expire..Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.
