H. Abhinav Srinivasan, Tamil Nadu National Law University, Tiruchirappalli
[(2006) 4 SCC 227]
1. Introduction:
The legal framework of India guarantees many rights and liberties which are always subject to “reasonable restrictions” of some form. The concept of negative covenants are a fragile area in law and the manner in which the same is dealt with, is addressed by the present case. Essentially, negative or restrictive covenants are those which can restrain one of the parties from performing an “otherwise lawful activity”, meaning that they restrain trade in some form.1 It is then that S.27 of the Indian Contract Act, 1872 (ICA) which speaks of “Agreements in restraint of trade” comes into the picture, and the same is seen to have been interpreted strictly to a great extent. Another aspect of importance would be the concept of “course of employment”, something which is of much significance when dealing with negative covenants. Keeping in mind the aforementioned, the case at hand can be interpreted with clarity.
