Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Ltd Niranjan Shankar Golikari
AIR 1967 SC 1098; (1967) 2 SCR 378 · Supreme Court of India · 1967
PrincipleA negative covenant during the term of employment is valid; post-employment restraints are void under section 27.
Facts
Golikari was employed for five years as a shift supervisor in a tyre-cord plant set up with foreign technical know-how, agreeing not to serve elsewhere or disclose secrets during the term. He left within the term to join a rival company. The employer sought an injunction.
Held
The Supreme Court held that a negative covenant operating during the term of the contract of employment, by which the employee binds himself to serve the employer exclusively, is generally not a restraint of trade and is not void under section 27, unless it is unconscionable or one-sided. The covenant was reasonable and the injunction was granted.
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