LexNIRANJAN SHANKAR GOLIKARI versus TIIE CENTURY SPINNING AND MFG. CO. LTD.
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NIRANJAN SHANKAR GOLIKARI V. TIIE CENTURY SPINNING AND MFG. CO. LTD. January 17, 1967 [R. S. 8ACHAWAT ANDJ. M. SHELAT, JJ.) Indian Contract Act (9 of 1872), s. 21-Public po/icy-Rt$traint on ultematlvt emp/oymtnt during contracted period of service when justified. 1be appellant joined the service of the respondent company as Shift Supervisor and was given training in the manufacture of tyre cord yarn. The contract was for live years aod it was stipulated that during the said period the appellant would oot work in similar capacity in any other con. cem and would maintain secrecy as to the technical aspects of bis work. HOwt\W, shortly after completing his training tho appellant joined a rival concern a~ hiFer emoluments. The respondent company therenpoo llled a suit for an mjunction against the appellant ratraining him from worki!sg elsewhere as a Shift Supervisor in the manufacture of tyre cord yam <[7 in similar capacity aod from divulging the trade secrets of the respondent company. The injunction was granted. His appeal before the High Court having failed, tbe appellant came to this Court under Art. 136 of the Constitution. It was contended on his behalf that the covenant was agaimt public policy within the meaning of s. 27 of the Indian Contract Act, lhat it was unrea.""1able, and that it was unnecessary for safeguarding the trade interest of the eompnny. HELD: The appeal must fail. (i) Negative covenants operative during the period of cmpl.:>yment when the employee is bound to serve his employer exclusively are not to be regarded is restraint of trade and therefore do not fall under s. 27 of the Contract Act. A negative covenant that the employee would not en- gage himself in trade or business or would not get himself employed by any other master for whom he would perform similar or substallliaDy similar duties is not a restraint Qf trade unless the contract as aforesaid is unconscionable or excessively harsh or unrcasona.ble or one.sided [389 FJ Caselaw considered. In the present case tbe injunction issued against the appellant was res· tricted as to time, the nature of the employment and as to area and could not therefore be said to be too wide or unreasonable or unnecessary for the protection of the interests of the respondent company. [389 G-H] (ii) There is nothing to prevent a court from granting a limited in- junction to the extent that is necessary to protect the employers"s interests where the negative stipulation is not void. The rule against severance applim only to cases where the covenant is bad in law, and it i• only ID such cases that the couri is precluded from severing the good from the bad [390 DI CIVIL APPELLAn: JURISDICTION : Civil Appeal No. 2103 of 1966. Appeal by special leave from the judgment and order dated April 28, 1966 of the Bombay High Court in First Appeal No. 526 of 1965. B c D E ' G H .. • \ N. S. GOLIKARI v. CENTURY SPINNING CO. (She/at, J:) 379' A. A. K. Sen, Ramesl11rnr Dial and A. D. Mathur, for the appel- • ' c D It r G H lant. S. V. Gupte, Solicitor-General, R.P. Bhatt, R. A. Gagrat, G. L Sanglri and B. R. Agarwa/a, for the respondent. The Judgment of the Court was delivered by Sbelat, J. This appeal by special leave is against the judgment and order of the High Court of Maharashtra confirming an order of injunction against the appellant. The respondent company manufactures amongst other things tyre cord yarn at its plant at Kalyan known as the Century Rayon. . Under an agreement dated January 19, 1961 Algemene Kunstzijde Unie of Holland (hereinafter referred to as AKU) and Vereinigte· Ciaozstoff Fabrikan AG of West Germany (hereinafter referred to as ".\'CF) agreed to transfer their technical know-how to the respondent company to be used exclusively for the respondent company's tyre cord yarn plant at Kalyan in consideration of 1,40,000 Deutsche Marks payable to them by the respondent com- pany. Clause 4 of that agreement provided that the Century Rayon should keep secret until the termination of the agreement and during three years thereafter all technical information, know- ledge know-how, experience, data and documents passed on by the said AKU and VCF and the Century Rayon should undertake to enter into corresponding secrecy arrangements with its employees. The respondent company thereafter invited applications for appointments in its said plant including appointments
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