LexSUPERINTENDENCE COMPANY OF INDIA (P) LTD. versus KRISHAN MURGAI
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12:78 A SlJPERJNTENDENCE COMPANY OF INDIA (P) LTD. B v. KRJSHAN MURGAI May 9, 1980 [N. L. UNTWALIA, V. D. TuLZAPURKAR AND AP .. SEN, JJ.] Covenant in restruiflf of trade-Contract Act, 1872, Section 27, scope of- f- W lzetht:r a post-service restrictive cpvenant. in restraint of. trade in service t1greement b~tween the parties is void-Even if it be valid, whether it could be enfiorceable. as enjoined by ittustrations (c) and (d) ,to Section 57 of th• C Specific Relief Act, 1963. y The- appellant company carries on busine$ as valuers and surveyor! under- taking inspection of quality, weighment analysis, sampling of merchandise and commodities, cargoes, industrial products, machinery, textiles etc. It has established a reputation and gocxlwill in its business by developing its own techniques for quality testing and control and possess trade secrets in the D form of these techniques and clientele. It has its headoffice at Calcutta and a branch at New Delhi and employs various persons as managers and in other c~cities in Calcutta; New Delhi and other pla.ces~ E F G H On March 27, 1971, the respondent was employed by the appellant com- pany as the Branch Manager of its New Delhi office on terms and condi- tions contained in the letter of appointment issued to him on the same date. Clause ( 10) of the terms and conditions of employment placed the respondent under a post service restraint• that he shall not serve any other competitive firm nor carry on business on Q.is own in similar line as that of the appellant company for two Y"'l"' at tho place of his last posting. On November 24, 1978, the appellant company terminated the respondent's semces with effect from December 27, 1978. Thereafter, respondent start- ed his own business under the name and style of "Superintendence and Surveillence Inspectorate of India" at E.-22 South Extension New Delhi on lines identical with or substantially similar to that of the appellant company.' On April 19, 1979 the appellant company brought a suit in the Delhi HighJ Court on its original side, claiming Rs. 55,000/- as dama8"8 on account ofT the b~ch of negative covenant contained in clause ( 10); and for permanent\ injunction restraining the respondent by himself, his servants, agents or other- wise, from carrying on the said business or any other business on Imes similu to that of the appellant conipany or associating or representing any competitors of the appellant company 'before the expiry of two ye;m from December 27, 1978. After filing the suit the appellant company sought an ad interim injuncilon by way of enforcing the aforesaid negative covenant a1*i a Single Judge of the Delhi High O>uft initially granted an ad interim injunction on April 29, 1979 which was confirmed by him on May 25, 1979 after hearing the respondent. On appeal by the respondent, the Division Bench" of the High Court reversed the interim ord~r and hence the appeal by certificate. Dimlissing the appoal, the Court ' I I SUPERINTl!NDBNGB COMP ANY V. KRISHAN MURGA! 12 7 9 HELD: (Per Tulzapurkar l., on behalf of Untwali~ l. and himself). i ... !. Assuming that the negative covenant contained in clause (10) of the service agreement is valid and not hit by section 27 of the Indian Contract Act, it is not enforceable against the respondent at the instance of the appellant company. The appellant company should have taken care to uae appropriate language, while incorporating such reStrictive covenant so as to include every case of 1 cessation of employment arising from any reason whatsoever and not llsed the expression "leave", which normally is synony- pious to the expression "quit" and indicates voluntary act on the part of the employee. [1285 F, 1287 A, B-C] T ,, ~ (2) The word "leave" has various shades of meaning depending upon the context or intent with which it is used. According to the plain gramma- ticel meaning that word in relation to an employee would normally be '\j'coostrued a& meaning voluntary leaving of the service by him and would ~ not iI}.clude a case 'where he is discharged or dismissed or his services are terminated by his employer. Ordinarily, the word connotes voluntary action. [1286-D] (3) In the instant case, having regard to the context in which the expres- sion leave occurs in clause (10) of tho service agreement and reading it alongwith all the other terms of agreement, it is clear that the word
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