Gujarat High Court
Arun Rambhai Desai S/O Rambhai Desai vs Deepak Nitrite Limited on 10 June, 2025
NEUTRAL CITATION
C/CRA/242/2024 JUDGMENT DATED: 10/06/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CIVIL REVISION APPLICATION NO. 242 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE SANJEEV J.THAKER
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Approved for Reporting Yes No
Yes
ARUN RAMBHAI DESAI S/O RAMBHAI DESAI
Versus
DEEPAK NITRITE LIMITED
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Appearance:
MR AADITYA KARNAVAT(11777) for the Applicant(s) No. 1
MR. AADIT R SANJANWALA(9918) for the Opponent(s) No. 1
CORAM:HONOURABLE MR.JUSTICE SANJEEV J.THAKER
Date : 10/06/2025
ORAL JUDGMENT
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NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined TABLE OF CONTENTS BRIEF FACTUAL MATRIX ............................................................................ 3 SUBMISSIONS OF PETITIONER - DEFENDANT .......................................12 SUBMISSIONS OF THE RESPONDENT - PLAINTIFF ..............................14 ANALYSIS ................................................................................................... 19 Agreement in restraint of Trade - Section 27 of the Indian CA, 1872 ...20 Negative Covenants in restraint of trade ..................................................... 20 Test of Reasonableness ............................................................................. 25 Consistent interpretation: Negative Covenants post-employment - void ... 29 Leave v. Termination of Services ............................................................... 32 Agreement of Non-disclosure, etc. ......................................................... 35 Order VII Rule 11: Part Rejection of Plaint - Impermissibility .............. 40 CONCLUSION ............................................................................................ 43 Page 2 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined
1. The present Revision Application has been filed challenging the order passed by 27th Additional Senior Civil Judge & A.C.J.M., Vadodara on 06.05.2024 below Exhibit-14 in Special Civil Suit No.23 of 2024 whereby the trial Court had rejected the application filed under Order VII Rule 11(a) (d) of the Code of Civil Procedure.
2. The parties are referred to at their original status as that in the suit. BRIEF FACTUAL MATRIX
3. Brief facts arising in the present Revision Application are that the plaintiff had filed Special Civil Suit No. 23 of 2024 for declaration, damages and injunction on the ground that the plaintiff is a company incorporated under the Companies Act, 1956 and is engaged in production of multiple types of chemicals and that the Plaintiff Company is ISO 9001, 14001, OHSAS 18001 certified company.
4. Further, the plaintiff company is incorporated in the year 1970 and that the plaintiff has manufacturing facility located in the states of Gujarat, Maharashtra and Telangana and that the plaintiff has been investing large sums of money on product development and service and that the plaintiff is dedicated R & P department which helps to Page 3 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined develop advanced intermediate which requires complex chemistry and engineering and innovation. Further, it is case of the Plaintiff that the plaintiff has state of the art pilot facility which acts as a bridge between R & P trials and commercial production, allowing the plaintiff to deliver quality product seamlessly and that the plaintiff has a fully established in-house research team which has been constantly working to improve the needs of the industry.
5. The plaintiff company has also stated that was selected as the prestigious brand of Asia 2019-20 in the chemical manufactures category by BARC Asia and jury panel and that the plaintiff company has been facilitated as Time Icons of Vadodara, 2020 in the category of best chemical intermediates manufacturer. It is best chemical intermediate manufacturer and has been awarded Excellence in Financial Reporting for Financial Year 2021-22 and that the plaintiff has been generated more than 3,000/- crore as net worth in the year 2022-23.
6. It is the case of the plaintiff that the Defendant applied for a job with the plaintiff company. On various representations made by the Defendant for appointment to the post of Assistant General Page 4 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined Manager-Production, the Defendant was appointed by way of letter dated 01.09.2018 and the defendant has also signed and executed Employee Non Disclosure Agreement.
7. The appointment letter of the plaintiff also states that the employment of the defendant will be governed by the terms and conditions specifically mentions:
"While in our employment you must devote yourself fully to our interest and must not engage in any other business (directly or indirectly) or take part time work without the written permission of company. Your shall not engage in any issue that may result in a conflict between your personal interest and the interest of the company in dealing with suppliers, customers and all other organizations or individuals doing or seeking to do business with the Company. Your shall neither disclose nor keep in your possession, either our trade secrets proprietary information, confidential information or those of any of our associate companies or any information relating to our or their business to any person, firm or company whatsoever, either during the currency of your employment or after its termination. You will not utilize any trade secret or confidential or proprietary information or process know- how,knowledge acquired in consequence of your employment for your own benefit or for the benefit of any party Page 5 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined (individual, firm, company, any trade or business). You shall keep confidential any information or manual relating to the Company's compensation and benefits schemes that may come to your professional knowledge as an employee of the Company. You should maintain utmost secrecy with regard to compensation and benefits package and treat it as a highly individual and confidential matter, not to be discussed with any colleague, other than your Reporting Supervisor."
8. Moreover, the said terms and conditions also clearly states that the Defendant shall be subject to non-disclosure and non-compete agreement as per norms and the said terms and conditions also mentions that the defendant will not join any person, company or organization either as Employee, Consultant, Advisor or Retainer, which is a competitor of the Company or manufactures similar product produced by the Company for a period of three year from the date of leaving the Company. The employee non-Disclose Agreement also states as under:
"3. NON-DISCLOSURE AND NON-USE BOLIGTIONS:
That at all times, during my employment and thereafter, I will not disclose to anyone outside the Company nor use for any purpose other than for the performance of my Page 6 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined duties for the Company:
(a) any confidential or proprietary technical, financial, marketing, manufacturing, distribution or other technical or business information or trade secrets of the Comapny, including without limitation, concepts, techniques, process, methods, systems, designs, circuits, cost data, computer programs, formulae, development or experimental work, work-in-progress, customers and suppliers,
(b) any information the Company has received from others which the Company is obligated to treat as confidential or proprietary, or
(c) any confidential or proprietary information which is circulated within the Company via written memorandum, internal electronic mail, internet or otherwise.
I also agree not to disclose any confidential or proprietary information to anyone inside the Company except on a "need-to- know" basis. If I have, any doubts as to what comprises such proprietary information or trade secrets, as to whom, if anyone inside the Company, it may be disclosed, I will consult with the head of my department.
4. NON-COMPETE That I will not join any Company or Organization either as Page 7 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined an employee, consultant, Advisor or Retainer, which is a Competitor of the Company or manufacture similar product produced by the Company, for a period of three years from date of leaving the Company.
That after leaving the Company I will not directly or indirectly start any Business or an Industry which directly or indirectly competing with the Business of the Company at least for a period of three years from the date of leaving the Company.
That I will not disclose to anyone outside the Company at any time after my separation with the Company any confidential or Proprietary Information, financial, marketing, manufacturing, distribution or other technical data or business information of the Company. In view of the unique nature of the business of the Company and the need of the Company to maintain its competitive advantage in the industry, I agree and acknowledge that, in the event that I breach any other covenant or obligation set forth herein, a court of competent jurisdiction shall enjoin me for a period of three years, as the case may be, following the issuance of such injunctive order from, directly or indirectly, within India or within any other country, (i) engaging in,
(ii) owning an interest in, (iii) being employed by, or consulting for, or acting as an advisor to, any person or Page 8 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined entity which engages in, or (iv) otherwise participating in any way in, any activity which competes with the Company's Business."
9. An undertaking was also given while retiring from the Plaintiff's Company dated 28.12.2023, wherein also in the said undertaking the Defendant had mentioned that the Defendant shall be bound by the conditions of appointment letter and Non-disclosure Agreement post separation from the plaintiff's company and as the plaintiff came to know that the defendant had joined company carrying on similar business which gave rise to the apprehension of breach of confidentiality, and therefore, the plaintiff has filed Civil Suit with following prayers:
"A) A judgment and decree of permanent injunction restraining the Defendant, his family members, legal heirs, associates, agent, servants, contractors or anybody claiming through or under him from using sharing, passing, transferring or dealing or in any manner transacting with anyone by utilizing, confidential and proprietary information and data, techincal know-how and trade secrets of the plaintiff whether in the form of operations and processes and SOP's including the formulae, chemical Page 9 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined composition, specifications, process, SOP's, raw material consumptions norms, technology, know how, utility norms, and research and development facilities and documents, including those related to the development of process for various products including OBAs, technical data, correspondence and information pertaining to, manufacturing process, marketing plans, offers, pricing, customer list, software, specifications, engineering methods and know-how, consumer grievances, customer solutions, service logs, service history and service feedback pertaining to clients or method of resolving area specific problems, details about the plaintiff company products, plants data, operation data, man power data, sales price, unit costs, overheads, internal business development reports, strategy outlines, new products, new product recipes, norms of raw material, effluent treatment and utilities, key customer data base, customer product basket strategy, product-wise and customer- wise sales data, products information, competitors' data base, various communication details like emial Ids, phone numbers, websites of all internal and external stakeholders, consultants, vendors and suppliers, information about latest innovations, changes, improvements etc. including price information for all products of the plaintiff;
B) A judgment and decree of permanent injunction restraining the Defendant from working, dealing with or Page 10 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined functioning in any manner or capacity, or carry on business, either with its current employer or anybody else or independently, in any area or field as that of the plaintiff for a limited period of 3 years calculated from 02.01.2024 i.e., the date of his release from the plaintiff company;
C) The Hon'ble Court be pleased to grant a permanent injunction restraining the Defendant from breaching the terms and conditions of NDA and Deed of Undertaking executed with the plaintiff;
D) The Hon'ble Court be pleased to direct the Defendant to return the plaintiff confidential and proprietary information and data, technical know-how and trade secrets of the plaintiff which is in its possession including but not limited to information as specified in Prayer A hereinabove;
E) The Hon'ble Court be pleased to hold that the Defendant is liable to pay damage of Rs.4000000/- to the plaintiff;
F) The Hon'ble Court be pleased to award the costs of the present suit to the plaintiff;
G) The Hon'ble Court be pleased to pass such other and further orders as may be deemed fit in the interest of justice."
10. The defendant appeared in the said suit and filed an application under Order VII Rule 11 of the Code of Civil Procedure on the ground that Page 11 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined the Plaint is against the provisions of Indian Contract Act, more particularly, Section-27 of the Indian Contract Act, and therefore, the application was filed under Order VII Rule 11 of the Code of Civil Procedure to reject the plaint being barred by law. The trial Court after hearing the parties has rejected the said application. Hence, the present Revision Application.
SUBMISSIONS OF PETITIONER - DEFENDANT
11. Learned advocate for the defendant has mainly argued that the trial Court could not have rejected the said application. It has been argued that reliefs are sought against the provisions of Section 27 of the Indian Contract Act and Article 21 of the Constitution of India. It has also been argued that the plaintiff has merely stated that defendant is privy to confidential, technical and proprietary information, but the plaintiff has miserably failed to point out how the plaintiff alleged proprietary confidential and technical information is distinct from one in the public domain. It has been argued by learned advocate for the defendant that the plaintiff has similarly apprehends that the defendant will divulge the alleged proprietary confidential and technical information, but the plaintiff has not placed on record Page 12 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined any material/documents or evidence to primafacie prove the said fact. It has also been argued that the plaint is lacking in giving material particulars, and therefore, is bad in the eyes of law. Learned advocate for the defendant has also argued that the plaint deserves to be rejected at threshold as the same is vague and has also argued that there is nothing to show as to how the technical information has been provided to the defendant, and therefore, it has been argued that in absence of any material particulars, only on the basis of signing of Non Discloser Agreement would not give rise to the plaintiff to file the Suit.
12. It has also been argued that even provisions of Section 27 of the Indian Contract Act specifically states that the said agreement is restraining the defendant from exercise of lawful profession, trade or business and hence it has been argued that the plaint is required to be rejected. Moreover, it has also been argued that no basis of calculation of damages of Rs.4/- crore has been explained by the plaintiff in the plaint, and therefore, also the plaint is required to be dismissed. Learned advocate for the defendant has relied on the judgment reported in (2018) SCC OnLine Del 1132 in the case of Navigators Logistics Ltd. v. Kashif Qureshi and others decided on Page 13 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined 17.09.2018. Learned advocate for the defendant has also relied on the judgment reported in (1981) 2 SCC 246 in the case of Superintendence Company of India (P) Ltd. v. Krishan Murgai, (2006) AIR SCW 1751 in the case of Percept D' Mark (India) Pvt. Ltd. v. ZaheerKhan & Another, (2021) LawSuit (Del) 1947 in the case of Chem Academy Pvt. Ltd. v. Sumit Mehta; Anoop Lamba, (2018) SCC OnLine Bom 2187 in the case of Tapas Kanti Mandal v. Cosmo Films Ltd., Aurangabad, AIR 2024 GUJARAT 61 in the case of Shaikh IsmailbhaiHushainbhai (Dead) By L.Rs. v. Vankar Ambalal Dhanabhai.
SUBMISSIONS OF THE RESPONDENT - PLAINTIFF
13. Per contra, learned advocate for the plaintiff has mainly argued that the plaint cannot be rejected looking at the defence of the defendant and only the plaint and the documents annexed with the plaint be considered while deciding the application under Order VII Rule 11 of the Code of Civil Procedure and there is nothing on record to show from the plaint and the documents annexed with the plaint that the suit is barred by law. It has been argued by learned advocate for the plaintiff that the defendant has been appointed by appointment letter Page 14 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined dated 01.09.2018 and the defendant has executed Non Agreement Discloser and subsequent upon attaining the age of 60 years which was retirement age, as per terms and conditions of the defendant's appointment, the defendant's services were extended with the plaintiff's company as Deputy Unit Head for a period of 1 year, and therefore, the defendant became due to retire from the plaintiff's company on 31.05.2023 and further by extension letter dated 31.05.2023, the defendant's services were with the plaintiff's company were further extended for a period of another 7 months i.e. up to 02.01.2024 as Assistant General Manager considering the request of the defendant.
14. It is the case of the plaintiff that the defendant has access to critical proprietary information and confidential data of the plaintiff. The defendant was privy to details about the plaintiff company products, production, plants data, operation data, man power data, sales price, unit cost, overheads, internal business development reports, strategy outlines, new products, new product recipes, norms of raw material, future budgets, effluent treatment and utilities, key customer data base, customer product basket strategy, product-wise and customer-wise sales data, products information, competitors' Page 15 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined data base, various communication details like email IDs, phone numbers, websites of all internal and external stakeholders consultants, vendors and suppliers, having information about latest innovations, changes, improvements etc. including price information for all products.
15. It is also the case of the plaintiff that the defendant was privy to operations and process and SOP's including unrestricted access to proprietary and highly confidential information and data of the plaintiff company including formula, chemical composition, specification, process, raw material consumption norms, technology, know how, utility norms, and research and development facilities and documents, including those related to the development of process for various products including OBAs and it is the case of the plaintiff that access to proprietary and highly confidential information which was required to be confidential by the defendant.
16. It is the case of the plaintiff that the defendant retired from the plaintiff's company on 02.01.2024 and before that executed a deed undertaking dated 28.12.2023 whereby the defendant undertook to be bound and adhere to the conditions of the appointment letter and Non Disclosure Agreement after the separation from the plaintiff's Page 16 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined company. It is the case of the plaintiff that the defendant has joined Khyati Chemicals Private Limited which is engaged in manufacturing of Optical Whitening Agents (OWA) which is also known as OBA and the plaintiff is also engaged in production of OBA which is used in Chemical compound and that the defendant by virtue of his position was privy to all confidential data of production process as the same was carried out under his supervision. It is the case of the plaintiff that the defendant has got confidential information relating to plaintiff's business and the defendant has joined employment of the plaintiff's company and had joined employment of the plaintiff's company, after reading and understanding the terms and conditions of the letter of appointment and Non Discloser Agreement and has not raised any doubt and as the defendant has signed the terms of Non Discloser Agreement, the plaintiff has filed the present Suit.
17. Moreover, the defendant has access and is in knowledge and position of proprietary and confidential information and data, technical know- how, trade secret belongings to the plaintiff and considering the terms of the employment between the defendant and the plaintiff, the defendant have continued for a reasonable period of 3 years could not join a competitor which is engaged in carrying of same/similar as that Page 17 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined of the plaintiff, and therefore, as the defendant has joined another company carrying on same/similar business, the defendant is acting in breach of terms and confidential obligation and after doing work with the plaintiff company i.e. more than 5 years by the time of resignation, the defendant has became aware of the confidential data/information, technical know-how and trade secrets, and therefore, the plaintiff ha filed the suit for an injunction for the reliefs of restraining the defendant from using/sharing/finding/transferring or dealing or in any manner describing with any one by utilizing the confidential and proprietary information and data of the plaintiff. The reliefs that has also been sought by the plaintiff are to restrain the defendant from working/dealing with or manufacturing in any manner or activity for limited period of 3 years calculating from 02.01.2024 and further a relief has been sought to restrain the defendant to commit breach of the terms and condition of the deed executed by the defendant and for a relief to direct the defendant to return the plaintiff's confidential and proprietary information and data, know-how, trade secrets of the plaintiff which is in possession of the defendant and the plaintiff has also filed a suit to hold that the defendant is liable to pay damage Page 18 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined of Rs.4/- crore to the plaintiff.
18. It has also been argued that the only case of the defendant in the application under Order VII Rule 11 of the Code of Civil Procedure is that looking in the provisions of Section 27 of the Indian Contract Act the said is not maintained, but the fact is that the said relief is limited to 3 years and the other relief that has been sought by the plaintiff is to restrain the defendant from committing breach of the terms and conditions of the Non Discloser Agreement and the terms and conditions of application and deed of undertaking which indicate to restrain the defendant from using, sharing, passing, transferring or dealing in any manner, describing in any manner by utilizing the data technical know-how and in corporation of the plaintiff and to return to plaintiff's confidential information and to pay damage of Rs.4/- crore and it is the case of the plaintiff that the said reliefs are in no way barred by law and hence the present Revision Application is required to be rejected.
ANALYSIS
19. Having heard learned advocate for the parties and having considered the plaint and the documents annexed with the plaint. The question Page 19 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined that is involved in the present proceeding is that the defendant has executed letter of appointment which clearly governs the terms and conditions annexed to the appointment letter and consequently, the employment.
Agreement in restraint of Trade - Section 27 of the Indian CA, 1872
20. As regards the non-compete clause as couched in the present Agreement, the same cannot extend beyond the period of employment. It is well settled law that a negative covenant which is in restraint of trade cannot be made applicable to the employee after the course of employment. Naturally, during the term of the contract, a negative covenant preventing the employee from working elsewhere is not a covenant in restraint of trade under Section 27. Negative Covenants in restraint of trade
21. During the period of Contract / employment, there is a rightful expectation of the employer for employee fidelity which translates into a negative covenant. Hence, this has not been barred by law as laid down by the Hon'ble Apex Court time and again. Therefore, this doctrine of restraint of trade never applies during the continuance of the Contract of employment and it comes into play Page 20 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined only when the Contract stands terminated between the parties.
22. This distinction has been well carved by the Hon'ble Apex Court in several judgments starting from Niranjan Shankar Golikari v. Century Spg. and Mfg. Co. Ltd., 1967 SCC OnLine SC 72
17. The result of the above discussion is that considerations against restrictive covenants are different in cases where the restriction is to apply during the period after the termination of the contract than those in cases where it is to operate during the period of the contract. Negative covenants operative during the period of the contract of employment when the employee is bound to serve his employer exclusively are generally not regarded as restraint of trade and therefore do not fall under Section 27 of the Contract Act. A negative covenant that the employee would not engage himself in a trade or business or would not get himself employed by any other master for whom he would perform similar or substantially similar duties is not therefore a restraint of trade unless the contract as aforesaid is unconscionable or excessively harsh or unreasonable or one-sided as in the case of W.H. Milsted & Son Ltd. Both the trial court and the High Court have found, and in our view, rightly, that the negative covenant in the present case restricted as it is to the period of employment and to work similar or substantially similar to the one carried on by the appellant Page 21 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined when he was in the employ of the respondent Company was reasonable and necessary for the protection of the company's interests and not such as the court would refuse to enforce. There is therefore no validity in the contention that the negative covenant contained in clause 17 amounted to a restraint of trade and therefore against public policy.
23. This was elaborated and the position of law was further elucidated by the Hon'ble Apex Court in Superintendence Co. of India v. Krishan Murgai, (1981) 2 SCC 246 (Concurring opinion of A. P. Sen, J.):
18. Agreements of service, containing a negative covenant preventing the employee from working elsewhere during the term covered by the agreement, are not void under Section 27 of the Contract Act, on the ground that they are in restraint of trade. Such agreements are enforceable. The reason is obvious. The doctrine of restraint of trade never applies during the continuance of a contract of employment; it applies only when the contract comes to an end. While during the period of employment, the courts undoubtedly would not grant any specific performance of a contract of personal service, nevertheless Section 57 of the Specific Relief Act clearly provides for the grant of an injunction to restrain the breach of such a covenant, as it is not in restraint of, but in furtherance of trade.
24. Therefore, the position of law was reiterated and it was etched in stone Page 22 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined that a negative agreement can be said be to be in restraint of trade only when the period of employment (i.e., the Contract) has come to an end. Before the same, it cannot be said that there was any application of the restraint of trade doctrine.
25. In both Niranjan (supra) and Superintendence (supra), the Hon'ble Apex Court has cited and approved a judgment of the Calcutta High Court in Brahmaputra Tea Co. Ltd. v. Scarth, ILR (1885) 11 Cal 545 in the following manner:
20. It referred to with approval the decision in Brahmaputra Tea Co. Ltd. v. Scarth [ILR (1885) 11 Cal 545] where the condition under which the covenantee was partially restrained from competing after the term of his engagement with his former employer, was held to be bad but the condition by which he bound himself during the term of this agreement, not, directly or indirectly, to compete with his employer was held good, and observed:
"At p. 550 of the Report the court observed that an agreement of service by which a person binds himself during the term of the agreement not to take service with anyone else, or directly, or indirectly take part in, promote or aid any business in direct competition with that of his employer was not hit by Section 27." The Court further Page 23 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined observed:
"An agreement to serve a person exclusively for a definite term is a lawful agreement, and it is difficult to see how that can be unlawful which is essential to its fulfilment, and to the due protection of the interests of the employer, while the agreement is in force."
26. Therefore, the law as it has stood is clear that there is no restraint of trade during the course of employment but only thereafter. In fact, in Superintendence (supra), the covenant was sought to be applied on the employer after termination of the agreement period and hence, the Hon'ble Court held as under:
23. The decision in Niranjan Shankar Golikari case [Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Lrd., AIR 1967 SC 1098 : (1967) 2 SCR 378 : (1967) 2 SCJ 317] is therefore of little assistance to the appellant. It is not seeking to enforce the negative covenant during the term of employment of the respondent but after the termination of his services. The restriction contained in clause (10) of the agreement is obviously in restraint of trade and, therefore, illegal and unenforceable under Section 27 of the Contract Act.
27. In fact Hon'ble Apex Court. In a latest judgment of the Hon'ble Apex Court in Vijaya Bank and Anr. v. Prashant B. Narnaware, 2025 SCC Page 24 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined Online SC 1107, while analysing and reiterating the law as laid down in Superintendence (supra) and Niranjan Golikari (supra) held as follows:
15. In view of these authoritative pronouncements, it can be safely concluded law is well settled that a restrictive covenant operating during the subsistence of an employment contract does not put a clog on the freedom of a contracting party to trade or employment.
16. A plain reading of clause 11 (k) shows restraint was imposed on the respondent to work for a minimum term i.e. three years and in default to pay liquidated damages of Rs. 2 Lakhs. The clause sought to impose a restriction on the respondent's option to resign and thereby perpetuated the employment contract for a specified term. The object of the restrictive covenant was in furtherance of the employment contract and not to restrain future employment. Hence, it cannot be said to be violative of Section 27 of the Contract Act.
Test of Reasonableness
28. A question which naturally arises is that whether the extent or reasonableness of the said restraint of trade will have to be considered by the Court or not.
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NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined
29. Importantly, the concurrent minority view (authored by A. P. Sen, J.) in Superintendence (supra) lays down an important principle as regards the 'reasonableness' of such restraint on trade. The Hon'ble Court held in unambiguous terms as under:
28. The question whether an agreement is void under Section 27 must be decided upon the wording of that section.
There is nothing in the wording of Section 27 to suggest that the principle stated therein does not apply when the rest3raint is for a limited period only or is confined to a particular area. Such matters of partial restriction have effect only when the facts fall within the exception to the section.
52. Neither the test of reasonableness nor the principle that the restraint being partial was reasonable are applicable to a case governed by Section 27 of the Contract Act, unless it falls within Exception I. We, therefore, feel that no useful purpose will be served in discussing the several English decisions cited at the Bar.
30. Therefore, it is pertinent to be noted that there is no scope of enquiry into the extent of reasonableness in the restraint of trade. Indeed, a shadow has been cast on this interpretation by the Hon'ble Apex Court in Gujarat Bottling Co. Ltd. v. Coca Cola Co., (1995) 5 SCC 545 in the following Page 26 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined manner:
23. The said provision was lifted from Hon. David D. Field's Draft Code for New York which was based upon the old English doctrine of restraint of trade, as prevailing in ancient times. The said provision was, however, never applied in New York. The adoption of this provision has been severely criticised by Sir Frederick Pollock who has observed that "the law of India is tied down by the language of the section to the principle, now exploded in England, of a hard and fast rule qualified by strictly limited exceptions". While construing the provisions of Section 27 the High Courts in India have held that neither the test of reasonableness nor the principle that the restraint being partial or reasonable are applicable to a case governed by Section 27 of the Contract Act, unless it falls within the exception. The Law Commission in its Thirteenth Report has recommended that the provision should be suitably amended to allow such restrictions and all contracts in restraint of trade, general or partial, as were reasonable, in the interest of the parties as well as of the public. No action has, however, been taken by Parliament on the said recommendation. [See:
Superintendence Co. of India (P) Ltd. v. Krishan Murgai [(1981) 2 SCC 246 : (1980) 3 SCR 1278] , (SCR at pp. 1291, 1296-98 : SCC pp. 257, 261-63) per A.P. Sen, J.] Page 27 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined
24. We do not propose to go into the question whether reasonableness of restraint is outside the purview of Section 27 of the Contract Act and for the purpose of the present case we will proceed on the basis that an enquiry into reasonableness of the restraint is not envisaged by Section 27. On that view instead of being required to consider two questions as in England, the courts in India have only to consider the question whether the contract is or is not in restraint of trade. It is, therefore, necessary to examine whether the negative stipulation contained in paragraph 14 of the 1993 Agreement can be regarded as in restraint of trade. This involves the question, what is meant by a contract in restraint of trade?
31. After this judgment, Hon'ble Apex Court in Percept D'Mark (India) (P) Ltd. v. Zaheer Khan, (2006) 4 SCC 227 has again clarified the position with the test of reasonableness that the same cannot be applied in an agreement in restraint of trade [see: Para 56].
32. However, whether or not such negative covenant is to be weighed on the scale of reasonableness or not need not be gone into in the present case also. This is for a simple reason. In the present case, admittedly, the Defendant has retired. There is no dispute to the same. Hence, the period of employment and Contract of the Defendant with the Plaintiff has come to an end and there was no subsisting Page 28 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined employment when the suit was filed. Therefore, the agreement for non-compete in the present case is clearly in restraint of trade and hence, void.
Consistent interpretation: Negative Covenants post-employment - void
33. Irrespective of the reasonableness of the negative covenant, Hon'ble Apex Court consistently through its judgment has held that in case of a negative covenant after the term of employment, the same is void without more.
34. As for the background of such interpretation, there lies a deep rooted societal reason. Negative covenants are often signed by the Defendants in eagerness of obtaining employment, etc. Naturally, till the time that the employee enjoys such employment he is bound by the same. However, beyond the period of employment, the fundamental right of livelihood and Section 27 of the employee would take precedence. [See: Superintendence (supra), Para 59 and 60]
35. This undisputedly clear position was first clarified in Page 29 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined Superintendence (supra) in the following terms:
53. Under Section 27 of the Contract Act, a service covenant extended beyond the termination of the service is void. Not a single Indian decision has been brought to our notice where an injunction has been granted against an employee after the termination of his employment.
36. This position is also clarified in the Judgment of Percept D'Mark (India) (P) Ltd. v. Zaheer Khan, (2006) 4 SCC 227 in the following manner:
44. Most importantly, the appellants are seeking at the interlocutory stage to question the interpretation of restraint of trade during the post-contractual period, which interpretation has been uniform, consistent and unchanged for the past several years since the judgment of Sir Richard Couch, C.J. in Madhup Chunder v. Rajcoomar Doss [(1874) 14 Beng LR 76] . The interpretation of Section 27 of the Contract Act which found prima facie favour with the Division Bench is one which has been uniformly and consistently followed from 1874 till 2006 by all the High Courts in India, and which has expressly been approved by this Court in Niranjan Shankar Golikari [(1967) 2 SCR 378 : AIR 1967 SC 1098] , Superintendence Co. of India [(1981) 2 SCC 246] and Gujarat Bottling [(1995) 5 SCC 545] . Even if there were a case for reconsideration of this 132 years old interpretation, Page 30 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined though none is made out by the appellant, such an exercise ought not to be undertaken in the present interlocutory proceedings.
37. The Delhi High Court in Navigators Logistics Ltd. v. Kashif Qureshi and Ors., 2024 SCC Online Del 8244 though while reversing the judgment of the Ld. Single Judge in the said case, held in clear terms as follows:
31.3 Clause 13 of the Contract does not permit Former Employees to carry on their trade or vocation in a similar/competing business and thus, is barred by the provisions of Section 27 of the Contract Act. The Impugned Judgment in this regard, does not suffer from any infirmity.
38. Therefore in the post-contractual period, the interpretation of law is clarified and similar from all the quarters. This being that after the period of employment is over, a negative covenant in terms of the non-compete is an agreement in restraint of trade and hence, the same is void. In unambiguous terms, the following has been laid down:
56. The legal position with regard to post-contractual covenants or restrictions has been consistent, unchanging and completely settled in our country. The legal position clearly crystallised in our country is that while construing the provisions of Section 27 of the Contract Act, neither the Page 31 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined test of reasonableness nor the principle of restraint being partial is applicable, unless it falls within express exception engrafted in Section 27. ...
63. Under Section 27 of the Contract Act: (a) a restrictive covenant extending beyond the term of the contract is void and not enforceable, (b) the doctrine of restraint of trade does not apply during the continuance of the contract for employment and it applies only when the contract comes to an end, (c) as held by this Court in Gujarat Bottling v. Coca-Cola [(1995) 5 SCC 545] this doctrine is not confined only to contracts of employment, but is also applicable to all other contracts.
39. Hence, position of law that negative covenant post contractual period is void is well settled proposition of law.
Leave v. Termination of Services
40. In continuation of the discussion regarding the application of negative covenant, it is important to note one more important aspect. This pertains to the factum of mode in which the services of the employee has come to an end. Hon'ble Apex Court in Superintendence (supra) has categorically held that wrongful termination of service will disentitle the employer from seeking Page 32 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined enforcement of the negative covenant.
55. On a true construction of clause (10) of the agreement, the negative covenant not to serve elsewhere or enter into a competitive business does not, in my view, arise when the employee does not leave the services but is dismissed from service. Wrongful dismissal is a repudiation of contract of service which relieves the employee of the restrictive covenant: General Billposting Co. v. Atkinson [LR 1909 AC 118 : 99 LT 943] .
64. The restraint may not be greater than necessary to protect the employer, nor unduly harsh and oppressive to the employee. I would, therefore, for my part, even if the word "leave" contained in clause (10) of the agreement is susceptible of another construction as being operative on termination, however, accomplished of the service e.g. by dismissal without notice, would, having regard to the provisions of Section 27 of the Contract Act, 1872, try to preserve the covenant in clause (10) by giving to it a restrictive meaning, as implying volition i.e. where the employee resigns or voluntarily leaves the services. The restriction being too wide, and violative of Section 27 of the Contract Act, must be subjected to a narrower construction.
41. Therefore, the mode of exit and the effect thereof would depend on the situation and would vary on case to case basis. This however, would Page 33 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined not detain this Court in the present case as admittedly, here the Defendant has retired and hence, the Contract of employment has come to an end. Hence, in the present situation, it would not matter whether or not the clause contains the word "leave", which in fact it does.
42. In view of the aforesaid position of law, the following becomes clear:
i. A negative covenant pertaining to non-compete or employment with other entities is a reasonable clause till the time that the employee is in employment of the employer.
ii. Post the contractual period, the negative covenant becomes an agreement in restraint of trade in terms of Section 27 of the Contract Act and hence, is void.
iii. Till the time that the employment period or contractual period persists, the negative covenant can be enforceable; however not beyond the same. [See: Superintendence (supra) (Para 20)] iv. In Indian jurisprudence, there can be no Application of test of reasonableness on the agreement in restraint of trade once the contractual period comes to an end. Page 34 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025
NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined
43. Hence, in the present case, insofar as the question of enforcement of non- compete is considered, the same is void since admittedly, the Defendant has retired and there is no contractual / employment period in subsistence.
Agreement of Non-disclosure, etc.
44. Having discussed the position regarding the law on non-compete clause which creates a hinder on the employment of the Defendant, I now proceed to note the position on other clauses of the Agreement and prayers thereof.
45. It is trite law that Agreement for non-disclosure etc. stands on a different footing that non-compete and the same can often be enforceable depending on the facts and circumstances. It requires proof from either side and is a contested question of fact which is required to be tried.
46. In the present case, the terms and conditions clearly stipulate non-
disclosure of the trade secrets and proprietary information, confidential information and to have utmost secrecy with regard to same. Moreover, the non- disclosure agreement also states that the defendant during his employment and thereafter shall not disclose Page 35 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined outside the company, nor use of any purpose other than for the purpose of performance of the defendant's duty with the plaintiff and the ownership of the confidential and proprietary information will always remain that of the plaintiff.
47. Moreover, even in the undertaking that was signed by the Defendant on 28.12.2023, the Defendant had categorically stated that Non- Disclosure Agreement will be binding on him, and therefore, the suit that has been filed by the plaintiff is for the purpose of the Non- Disclosure Agreement as well. It is the case of the plaintiff that the defendant has confidential information know-how, technical trade secrets of the plaintiff.
48. Unlike non-compete clause, there is no bar on the non-disclosure clause in a blanket form. This is also consistent with logic since in many situations as the present, there could be Research and Development, etc. trade secrets involved, which require protection. Disruption or reading down of such clauses would have grave impact on the commercials of a business. In any way there is no basis in law to do so.
49. In Percept D'Mark (India) (P) Ltd. v. Zaheer Khan, (2006) 4 SCC 227 Page 36 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined
18. Mr Desai then argued the scope and effect of Section 27 of the Contract Act, 1872. According to him, Section 27 deals with restraint of trade and not with promotion or regulation of trade. The language of the section makes this abundantly clear and the development of the case-law in India also supports this. In support of this contention, he relied on V.N. Deshpande v. Arvind Mills Co. Ltd. [AIR 1946 Bom 423 : 48 Bom LR 90] In the said case, the High Court of Bombay was considering a clause relating to confidentiality of information and stated as follows: (AIR pp. 428-29) "Clause 9 of the agreement prevents the appellant from divulging any secret information of the nature mentioned in that clause after the termination of his service. As pointed out in Herbert Morris Ltd. v. Saxelby[(1916) 1 AC 688 : (1916-17) All ER Rep 305 (HL)] the defendant is not prevented from acquiring knowledge which makes him a better employee for the public for future employment. It only prevents him from divulging information which he has received as respondents' employee to another party. It is, therefore, clear that the clause as worded is proper and an injunction granted in terms thereof is not unreasonable or of wider latitude than justified in law."
20. Arguing further learned Senior Counsel submitted that all negative covenants are not in restraint of trade. This is true even though the negative covenant may have an Page 37 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined impact at a stage after the term of the contract. Thus, for example, a requirement of maintaining confidential information after the period of employment is not void although it may be subject to the qualification that an employee has a right to improve himself.
50. Therefore, there is no legal bar on enforcement of such a contract subject to other legal restrictions. Hence, it cannot be said that non-disclosure clause or it enforcement thereof is also required to be nipped in the bud at the threshold and in fact, the same is impermissible in law.
51. The Defendant has placed reliance on the judgment reported in (2018) SCC Online Del 1132 in the case of Navigators Logistics Ltd. v. Kashif Qureshi and others decided on 17.09.2018. However, the Learned advocate for the defendant has not drawn attention of this Court to the fact that the said judgment has been overruled on 20.11.2024 by the Division Bench of that Court.
52. In fact, the Judgment of Division Bench of the Delhi High Court in Navigators Logistics Ltd. v. Kashif Qureshi and Ors., 2024 SCC Online Del 8244 lays down in categorical terms as follows:
The Supreme Court in Dahiben case while examining an Application under Order VII Rule 11 CPC, found that Page 38 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined there was a delay of 5½ years in filing the plaint, and held that the suit was barred by limitation and rejected under Order VII Rule 11(d) of CPC. However, the only provision that the plaint in the present case is stated to be barred by, is Section 27 of the Contract Act. This provision is not of such a nature as would constitute a bar so as to reject the entire plain as a whole.
53. Learned advocate for the defendant has also relied on (2022) 12 SCC 641 in the case of Rajendra Bajoria and other v. Hemant Kumar Jalan and Others, in the said case, that will have no bearing on the facts of the present case and in the said case there was no claim of restraining the person from divulging the confidential trade secrets and know-how.
54. Learned advocate for the defendant has also relied on AIR 1986 SC 1571 in the case of Central Inland Water Transport Corporation Ltd. and another Brojo Nath Ganguly and another, in the said case, that case will have no bearing on the facts of the present case and in the said case there was no claim of restraining the person from divulging the confidential trade secrets and know-how.
55. Learned advocate for the defendant has also relied on (2021) LawSuit (Del) 1947 in the case of Chem Academy Pvt. Ltd. v. Sumit Mehta; Page 39 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025
NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined Anoop Lamba in the said case, that case will have no bearing on the facts of the present case and in the said case there was no claim of restraining the person from divulging the confidential trade secrets and know-how.
56. Learned advocate for the defendant has also relied on (2018) SCC OnLine Bom 2187 in the case of Tapas Kanti Mandal v. Cosmo Films Ltd., Aurangabad, in the said case, that case will have no bearing on the facts of the present case and in the said case there was no claim of restraining the person from divulging the confidential trade secrets and know-how.
Order VII Rule 11: Part Rejection of Plaint - Impermissibility
57. A bare perusal of the Plaint and the prayers thereof (as reproduced above) would show that the prayers as prayer for in the Plaint are multifold. Not only they are different prayers, even their cause of action from which they arise are different as pleaded.
58. It is pertinent to be noted that assuming that the Agreement as regards the non-compete as averred by the Defendant is barred by law. However, the Agreement does not contain non-compete clause only. There are several rights which flow from the said and Agreement and Page 40 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined it is not (and cannot be) the case of the Defendant that each and every right and obligation flowing from the said Agreement is barred by law, especially by Section 27 of the Act.
59. In fact, even a bare perusal of the prayers as made in the present suit would show that apart from non-compete there are several other prayers which have been made by the Plaintiff in the suit. It cannot be said by any stretch that each and every prayer arising from the Agreement (including non- disclosure as signed later) is barred by law.
60. Hon'ble Apex Court has time and again clarified that there cannot be a part rejection of Plaint and even if a single prayer is maintainable, the suit as whole must go to trial. In Sejal Glass Ltd. v. Navilan Merchants (P) Ltd., (2018) 11 SCC 780
8. We are afraid that this is a misreading of the Madras High Court judgment. It was only on the peculiar facts of that case that want of Section 80 CPC against one defendant led to the rejection of the plaint as a whole, as no cause of action would remain against the other defendants. This cannot elevate itself into a rule of law, that once a part of a plaint cannot proceed, the other part also cannot proceed, and the plaint as a whole must be rejected under Order 7 Page 41 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined Rule 11. In all such cases, if the plaint survives against certain defendants and/or properties, Order 7 Rule 11 will have no application at all, and the suit as a whole must then proceed to trial.
61. Further, recently in Vinod Infra Developers Ltd. v. Mahaveer Lunia and Ors., 2025 SCC Online SC the Hon'ble Apex Court held as follows:
In this context, we may place reliance on the judgment in Central Bank of India(supra), wherein, this Court while examining the jurisdiction of civil courts in disputes involving immovable property and proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, held that a plaint cannot be rejected in its entirety merely because one of the prayers or reliefs sought is legally untenable, so long as other reliefs are maintainable and based on independent causes of action.
62. Currently, the suit is at the stage of hearing and the reliefs with respect to restraining the defendant from divulging the confidential information and revision the confidence that the defendant has with him cannot be said to be barred by law and the reliefs that have been Page 42 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined prayed for flow from distinct causes of action. The cause of action pertaining to the Non-disclosure Agreement is distinct from the cause of action for non-compete clause for restraining the defendant from joining any company or organization which is competitor of the company for a period of 3 years.
CONCLUSION
63. There are several reliefs prayed for in the present suit based on the Non- Disclosure Agreement seeking injunction of the defendant from disclosing the confidential and proprietary information that the defendant possessed during his employment. Consequential claim for damages is also a distinct cause though flowing from the same agreement. Hence, there are several causes which flow from the agreement which have been pleaded and prayed for the in the Plaint.
64. In view of thereof, despite the clause for non-compete being void, it cannot be said that Plaint is liable to be rejected as being barred by any law. There are multiple reliefs and multiple causes of action pleaded in the Plaint which will require a trial. Hence, the present Page 43 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025 NEUTRAL CITATION C/CRA/242/2024 JUDGMENT DATED: 10/06/2025 undefined Plaint cannot be rejected under the provisions of Order VII Rule 11. Consequently, the present Civil Revision Application must fail and is hereby rejected. No order as to costs.
(SANJEEV J.THAKER,J) Manoj Kumar Rai Page 44 of 44 Uploaded by MANOJ KR. RAI(HC01072) on Tue Jun 10 2025 Downloaded on : Wed Jun 11 00:58:41 IST 2025