Non-compete clauses against doctors 'unlawful': Madras HC
Madras High Court
Chennai: Slamming the practice of imposing non-compete and non-solicitation clauses on doctors, the Madras High Court recently made strong remarks, questioning whether hospitals are being run as businesses or as healthcare institutions for patients. The court said that such contracts are unlawful and should not be used against doctors.
The observations came while the Court was hearing a plea filed by a private hospital seeking the appointment of an arbitrator against a Chennai-based doctor who joined another hospital soon after leaving the petitioner's.
Questioning the legality of such conditions in hospital contracts, Single Bench Justice N Anand Venkatesh said these restrictive covenants appear "unlawful on the face of it" and asked how hospitals could enforce such terms against doctors.
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.
"I will ensure that no hospital hereafter comes up with this non-solicitation, non-compete," observed the bench, indicating broader concern about the healthcare sector.
As per latest media report by Bar and Bench, the arbitration petition arises from a professional agreement dated September 8, 2022, between the hospital and the doctor. The hospital has sought the appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996, after issuing a trigger notice in July 2025.
The hospital has alleged that the doctor joined another hospital soon after serving notice, instead of completing the contractual notice period. The hospital clarified that its claim is limited to contractual dues linked to the doctor’s exit.
According to the hospital’s counsel, the doctor was drawing a monthly salary of Rs 7 lakh, and the dispute relates to notice-period obligations under the agreement, amounting to around Rs 42 lakh.
During the hearing, the court raised concerns over the increasing commercialisation of private healthcare.
"Are you running a business? Are you running a hospital? What are you doing? Is this some commercial establishment?" the judge asked.
The Court also criticised the trend of excessive medical testing and said, "If the patient goes in for a fever, he will get tested 350 times, and he will come out as normal."
Expressing distrust towards private healthcare firms, the Judge said, "That is why I am going to the government hospital safely. At least they won’t kill you"
The court further emphasised that the patients have the final say and ultimately decide whom they trust. The Court said, "The client can go to the person whom he trusts."
The matter is currently under consideration before the High Court.
