Court caseAIR 1980 SC 1717

Krishan Murgai was the manager of the Delhi branch of a company that carried on the business of inspecting and testing goods for clients. His service agreement provided that for two years after leaving the company he would not serve any competitor or carry on a similar business within ten kilometres of the branch. The company terminated his service, and shortly afterwards he started a similar business in Delhi. The company sued for an injunction to enforce the covenant.

The Supreme Court refused the injunction. The majority decided the case on construction: the clause was intended to bind an employee who left of his own accord, not one dismissed by the employer. A.P. Sen J went further and held that a covenant restraining an employee after the termination of his service, unlike one operating during service (upheld in Niranjan Shankar Golikari), is a restraint of trade void under s. 27, whatever its reasonableness; the doctrine of reasonableness of English law has no place under the section.