Percept D'Mark (India) Pvt. Ltd. v. Zaheer Khan

A sports-management company asked a court to stop cricketer Zaheer Khan from signing with another agent. It relied on a right of first refusal in its contract, which had already expired. The Supreme Court held that a clause enforced after the contract ends is prima facie void under Section 27, and that an injunction would amount to specific performance of a personal service contract.

Quick Revision

Read the full judgment: Indian Kanoon (unofficial copy)

Parties

Percept D'Markr (India) Pvt. Ltd. — appellant; a company that does event management, celebrity endorsement and management, sports management and related business. It was the agent under the Promotion Agreement.

Zaheer Khan — respondent no. 1; an Indian citizen and an international cricketer. He was the best fast bowler in the Indian team and a rising star when he signed.

Respondent no. 2 — a company incorporated under the Companies Act, 1956. Zaheer Khan appointed it as his agent from 1 December 2003.

Procedural History

1. On 4 December 2003 the appellant filed Arbitration Petition No. 514/2003 in the High Court under Section 9 of the Arbitration and Conciliation Act, 1996 for an interim injunction against respondent no. 1.
2. The learned Single Judge granted ad-interim (temporary) relief in terms of prayer clause (a) of the petition (10 December 2003).
3. Respondents 1 and 2 filed separate appeals, Appeal Nos. 1109/2003 and 1110/2003. A Division Bench of the Bombay High Court allowed them on 19 December 2003 and dismissed the arbitration petition.
4. The Division Bench directed respondent no. 1 to place the agreement with respondent no. 2 and up to date accounts before the High Court in a sealed cover. It also directed him to place any other contract he might enter within four weeks of 19 December 2003, with four weeks' accounts in a sealed cover.
5. The appellant filed two special leave petitions. This Court stayed the challenged order until further orders. Leave was granted on 27 August 2004.
6. When granting leave this Court declined to stay the Division Bench's order or to restore the Single Judge's order. No injunction has operated since 19 December 2003.

Facts

1. On 1 November 2000 the appellant and Zaheer Khan signed a Promotion Agreement for three years from 30 October 2000 to 29 October 2003, unless extended by mutual consent.
2. The appellant was the sole and exclusive agent to manage, market, negotiate for, execute contracts for, and advise Zaheer Khan on his media affairs, endorsements and advertising.
3. Clause 31(a) required the parties to meet before 1 August 2003 to discuss extension. For sixty days he would negotiate in good faith only with the appellant.
4. Clause 31(b) said that during the term, before the first negotiation period ended, he would accept no offer for endorsement or affiliation. After that he would not accept an offer without giving the appellant written notice of all material terms and the right to match the offer. The appellant had ten days to accept. If it did not, he could contract with the third party.
5. Clause 32(g) provided for arbitration under the Arbitration and Conciliation Act, 1996, by one arbitrator, seated in Mumbai.
6. On 29 July 2003 the appellant sent a letter of intent with draft terms for a five-year extension.
7. On 10 September 2003 Zaheer Khan said he did not want to renew or extend, and that he did not intend to appoint any agent. He said the agreement would end on 20 October 2003 (as written in the judgment). He confirmed that three agreements named in the letter were existing.
8. On 15 September 2003 the appellant wrote that during or after the term he must first offer it the right to match a third-party offer.
9. The appellant says his statement that he did not intend to appoint any agent was misleading. The appellant's letter of 15 September 2003 said the right of first refusal did not apply if the appellant itself managed his media affairs, and otherwise applied during and after the term.
10. On 23 September 2003 Zaheer Khan did not deny that he did not intend to appoint an agent. He said he would honour agreements with third parties that continued beyond the term.
11. The appellant wrote again on 6 October 2003, to which respondent no. 1 sent no reply. It wrote again on 27 October 2003 and 10 November 2003, repeating its position. If the terms offered by a third party changed materially, he had to re-offer them.
12. On 28 October 2003, one day before the term ended, he replied that clause 31(b) was void under the Contract Act. The agreement expired on 29 October 2003.
13. On 18 November 2003 he said he owed no obligation after 29 October 2003 except to honour subsisting third-party agreements and the agreement with Adidas Limited. He called the agreement one-sided and unfair for the first time.
14. He signed an agreement with respondent no. 2 on 20 November 2003 (also given as 22 November 2003), under which respondent no. 2 became his agent for media affairs from 1 December 2003.
15. The appellant learned of this on 1 December 2003 from sources and respondent no. 2's website. It filed the arbitration petition on 4 December 2003.
16. The appellant's petition said the agreement ended by passage of time on 29 October 2003, clause 31 survived expiry, the negative covenant was valid and binding after expiry, and the later agreement was null and void.
17. The agreement guaranteed Zaheer Khan a minimum of Rs 55 lakhs a year. The appellant said he in fact earned Rs 1 crore a year.

Issues Raised

The judgment does not number the issues. The Court dealt with these questions:

1. Is the right of first refusal in clause 31(b), entered into between Percept D'Mark (India) Pvt. Ltd. and Zaheer Khan, void under Section 27 of the Indian Contract Act, 1872 as being in restraint of trade?
2. Does clause 31(b) survive the expiry of the agreement, and can it be enforced after the term?
3. Could the Single Judge grant an interim injunction to enforce the negative covenant under Section 9 of the 1996 Act, given Sections 14, 41(e) and 42 of the Specific Relief Act, 1963?
4. Was the Section 9 petition maintainable when the appellant had not begun arbitration, and against respondent no. 2, who was not a party to the arbitration agreement?

Arguments Contended

For the appellant, by Ashok H. Desai, senior counsel:

• The High Court wrongly read Section 27. An agreement for first option or first refusal is never in restraint of trade. It is merely regulatory and not an independent agreement.
• The High Court wrongly held that clause 31(b) applied only during the contract and that the agreement is a contract of service. The obligation operated after the close of business hours on 29 October 2003.
• The clause did not stop him from accepting offers on his own. If the appellant did not match a third-party offer within ten days, he was free to contract with the third party.
• The Promotion Agreement is a celebrity contract, common in the industry. The agent took the risk of guaranteeing a minimum of Rs 55 lakhs a year and investing in building him as a brand. The right of first refusal was the reciprocal promise. Respondent no. 1 suffered no detriment either way.
• Both sides performed, and he benefited for three years. Only afterwards did he challenge clause 31(b), which is part of the bargain. There was no contention that the agreement was unconscionable, harsh, unreasonable or one-sided.
• Section 27 deals with restraint of trade and not promotion or regulation of trade. He relied on V.N. Deshpande v. Arvind Mills, which was affirmed in Niranjan Shankar Golikari v. Century Spinning. In Deshpande the clause stopped only the divulging of information received as employee, and did not stop the employee from acquiring knowledge that makes him a better employee. Not all negative covenants are in restraint of trade, even after the term.
• He relied on Mahindra & Mahindra Ltd. v. Union of India, citing Brandeis, J. in Board of Trade v. United States. He relied on Gujarat Bottling Co. Ltd. v. Coca Cola Co. citing Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd.
• In Gujarat Bottling the Court quoted Lord Pearce in Esso Petroleum. Somewhere there must be a line between two kinds of contract:
  • Contracts in restraint of trade, whose reasonableness the courts can consider.
  • Contracts that merely regulate the normal commercial relations between the parties.
• It also quoted Lord Wilberforce:
  • A bare allegation that a contract limits a trader's freedom does not put the burden of justification on the party suing.
  • Some sensitive areas, such as employer and employee after employment ends, always need the test of reasonableness.
  • There is no exhaustive test for the kinds of contract outside the doctrine.
  • Judges have excused from justification contracts that have passed into the accepted and normal currency of commercial or conveyancing relations, in the public interest and in the necessity of the development of trade.
• Gujarat Bottling also said that a franchise condition against dealing in competing goods helps distribution and is not a restraint of trade.
• Even if the clause is in restraint of trade, it operates within the term, because the initial term could be extended. In the alternative the test of reasonableness applies, as in Niranjan Shankar Golikari.
• The observations of A.P. Sen, J. in Superintendence Company of India v. Krishan Murgai are a minority view and were not affirmed in Gujarat Bottling. In Gujarat Bottling the Court said it did not go into whether reasonableness of a restraint is outside Section 27, and proceeded on the basis that an enquiry into reasonableness is not envisaged by Section 27.
• The clause is reasonable, because the right of first refusal lets the appellant take the risk on a lesser-known player and pay him well. Courts take a stricter view of employer-employee relationships, but this is agency, and it is not clear which side has the stronger bargaining power.
• Relief under Section 9 was sought only against respondent no. 1. At the time the appellant only had reason to believe he had contracted with respondent no. 2. Section 9 does not confine relief to a party. A third party may be affected.
• Respondent no. 1's submission that the claim is only a prima facie finding is, in Mr. Desai's words, to be stated only to be rejected. He said the Division Bench's decision is a determination on a point of law.
• Respondent no. 1 said the agreement may not be specifically enforced under Section 14 of the Specific Relief Act, so no injunction could be granted under Section 41(e). Mr. Desai answered that this loses sight of Section 42.
• No arbitration has begun only because the Division Bench held clause 31(b) void. Under Section 42 of the Specific Relief Act an injunction can enforce a negative covenant even where specific performance of the affirmative covenant is not possible. The Division Bench decision is a final decision on a point of law.
• The appellant acted promptly. It filed on 4 December 2003, got relief on 10 December 2003, and approached this Court after 19 December 2003.
• Mr. Desai gave a list of dates from 1 November 2000 to 19 December 2003, which is reflected in the Facts and Procedural History.

For respondent no. 1, by Chanderuday Singh, senior counsel:

• The appeal challenges an interim order, and no interim relief has operated for two and a half years. The contract with respondent no. 2 is nearly complete, so there is no cause for interference.
• Sufficient protection would be given if this Court clarified three things:
  • The High Court findings were only for deciding an interlocutory application and do not bind the parties at trial.
  • All contentions are kept open.
  • The interim protection in paragraph 17 of the High Court's order continues until the contract of 20 November 2003 ends.
• The term was limited to three years, unless extended by agreement, and all obligations were to be performed during the term.
• Even if clause 31(b) is valid, an injunction at the interim stage was inappropriate for four reasons. It compelled specific performance of a personal, confidential and fiduciary contract, barred by Section 14(1)(b) and (d). It was also barred by Section 14(1)(a), and the Court has held there is no specific performance of personal services. It amounted to the whole relief at the end of trial. The Single Judge overlooked balance of convenience and irreparable injury.
• The failure to start arbitration between 4 December 2003 and 2 March 2006 is fatal to Section 9 relief. The petition was not maintainable, because the agreement of 20 November 2003 was already in force and respondent no. 2 is outside the arbitration clause.
• The Single Judge made out a new case that was not pleaded. The Division Bench rightly traced the settled law on post-contractual covenants and found clause 31(b) a patent restraint of trade, void under Section 27.
• He relied on Firm Ashok Traders v. Gurumukh Das Saluja on Section 9 proceedings and commencement of arbitration.

For respondent no. 2, by K.N. Bhat, senior counsel:

• Under Section 41(e) of the Specific Relief Act an injunction cannot be granted to prevent breach of a contract that cannot be specifically enforced. This covers both temporary and permanent injunctions.
• The appellant's own letters of 15 September, 6 October, 27 October and 10 November 2003, and paragraph 9 of its petition, show it asserted a covenant operating after the contract ended.
• The Division Bench correctly held the doctrine of restraint of trade does not apply during a contract of employment and applies when it ends. The latter part of clause 31(b) was therefore not enforceable.
• Because of that, the Division Bench rightly did not decide whether the Section 9 petition was maintainable against respondent no. 2, who was not a party to the contract.

Court's Reasoning

The judgment has no numbered paragraphs and one opinion, delivered by Dr. AR. Lakshmanan, J. Both Judges are named on the bench. Steps follow the order of the judgment and are not cited by paragraph.

Dr. AR. Lakshmanan, J. (judgment of the Bench)

1. Noted: The appeals are from the common judgment of 19 December 2003 of the Division Bench of the Bombay High Court. It allowed the appeals against the Single Judge's order and dismissed the appellant's arbitration petition.
2. Noted: The central issue is whether the right of first refusal in clause 31(b) of the permission agreement between the appellant and respondent no. 1 is void under Section 27 of the Indian Contract Act, 1872 as restraint of trade. The appellant said it is merely regulatory.
3. Noted: The Court sets out the facts: the appellant's business, Zaheer Khan, respondent no. 2, the agreement of 1 November 2000, the letters, the new agreement and the Section 9 petition.
4. Noted: The Court records that the Single Judge granted ad-interim relief, the Division Bench allowed the appeals, and it gave the directions about sealed covers. It also records the special leave petitions, the stay and the grant of leave on 27 August 2004.
5. Noted: The Court heard Ashok H. Desai for the appellant, Chanderuday Singh for respondent no. 1 and K.N. Bhat for respondent no. 2.
6. Noted: The Court sets out the appellant's arguments at length:
   • The meaning of Section 27 and the cases relied on.
   • The celebrity contract and the list of dates.
   • Section 9 of the 1996 Act and Section 42 of the Specific Relief Act.
   • The claim that the Division Bench decided a point of law finally.
7. Noted: It sets out the arguments of respondent no. 1 on interim relief, Sections 14(1) and 41(e), arbitration delay and the unpleaded case, and the arguments of respondent no. 2 on Section 41(e) and the appellant's own letters.
8. Noted: The Court has considered the lengthy submissions, the pleadings, annexures, and the judgments of the Single Judge and the Division Bench.
9. Noted: The appeal challenges an interlocutory order. The Division Bench itself said it recorded only a prima facie finding that clause 31(b) is void under Section 27.
10. Noted: Since the rejection of the interlocutory application on 19 December 2003, no injunction has been in operation. This Court did not stay the Division Bench order or restore the Single Judge's order when granting leave. The contract of 22 November 2003 with respondent no. 2 has run for two and a half years and is soon to be completed.
11. Held: The appellant now seeks a mandatory interim order two and a half years later, asking the Court to set the clock back. The Court did not grant this.
12. Held: The appellant asks at the interlocutory stage to question the interpretation of restraint of trade in the post-contractual period. That interpretation has been uniform since Madhup Chunder v. Rajcoomar Doss (1874) 14 Beng. L.R. 76. All High Courts followed it, and this Court approved it in Niranjan Shankar Golikari, Superintendence Company of India and Gujarat Bottling. Even if reconsideration were warranted, it should not be done in interlocutory proceedings.
13. Noted: The Division Bench judgment is detailed and well reasoned for the limited purpose of interim relief under Section 9.
14. Noted: The respondents said the appellant did not intend to start arbitration. In Firm Ashok Traders v. Gurumukh Das Saluja the Court said commencement of arbitration does not depend on interim relief. If arbitration is not commenced promptly after a Section 9 application, the interlocutory proceedings cease to be maintainable.
15. Noted: Respondent no. 1 was then the best fast bowler in the Indian team. Under the Promotion Agreement the appellant was sole and exclusive agent to manage, market, consult, negotiate, execute contracts, and give tax and other advice on his media affairs, endorsements and advertising.
16. Noted: The term ran from 30 October 2000 to 29 October 2003, unless extended by mutual consent. It ended on 29 October 2003, as the appellant itself said in the petition.
17. Noted: Respondent no. 1 then signed an agreement dated 22 November 2003 with respondent no. 2, effective from 1 December 2003.
18. Noted: The appellant's Section 9 petition sought enforcement of the agreement after its expiry pending arbitration. The cause of action was the agreement between respondents 1 and 2. The injunction sought was to stop respondent no. 1 from entering into or acting on any agreement with respondent no. 2 or any third party without first complying with clause 31(b).
19. Noted: The petition pleaded that the agreement ran from 30 October 2000 to 29 October 2003, ended by passage of time, clause 31 survived expiry, the negative covenant was valid after expiry, and the later agreement was null and void.
20. Noted: The respondents said there was no pleading that Zaheer Khan was a fledgling, that the appellant took any risk, that endorsement fees exceeded the minimum or reached Rs 1 crore a year, or that the appellant built his reputation. They said there was no pleading about celebrity contracts, that first refusal is common in agency contracts, that the clause is needed to regulate or promote trade, that clause 31(b) offset the appellant's risks, or about mala fides (bad faith).
21. Held: On the pleadings, the appellant sought to enforce a negative covenant that, in its own case, survived expiry. The High Court rightly held this impermissible, since a clause sought to be enforced after the term is prima facie void under Section 27.
22. Noted: The appellant argued that clause 31(b) is not prima facie void because it is an independent contract, the term was extendable and never ended, the words initial term show automatic extension, and the full term was beyond three years.
23. Held: The law on post-contractual covenants is consistent and settled. In construing Section 27, "neither the test of reasonableness nor the principle of restraint being partial is applicable", unless the case falls within the express exception in Section 27.
24. Noted: The Court sets out Section 27: every agreement by which anyone is restrained from exercising a lawful profession, trade or business of any kind is to that extent void. Exception 1 saves an agreement by the seller of goodwill not to carry on a similar business within reasonable local limits.
25. Noted: The Court perused the relevant portions of Niranjan Shankar Golikari, Superintendence Company of India and Gujarat Bottling, extracted by the Division Bench.
26. Held: There is no doubt that the Division Bench rightly reached its prima facie conclusion and set aside the Single Judge's order.
27. Held: "No case is made out by the appellant for compelling respondent No.1 to appoint the appellant as his agent in perpetuity." Because of the personal nature of the service and relationship, a contract of agency or management like this one cannot be specifically performed, and to enforce it would be inequitable.
28. Held: An injunction restraining respondent no. 1 would compel him to be managed by the appellant. It would be in substance and effect a decree of specific performance of an agreement of fiduciary or personal character or service, dependent on mutual trust, faith and confidence.
29. Held: The appellant can be adequately compensated in money if the injunction is refused. An injunction would cause irreparable injury and great injustice to respondent no. 1, who would be compelled to enter a relationship of trust against his will.
30. Noted: The contract term was limited to three years, unless extended by mutual agreement, and all obligations were to be performed during the term. Clause 31(b) was to operate only during the term, from the end of the first negotiation period on 29 July 2003 to 29 October 2003. Respondent no. 1 complied with it.
31. Held: Clause 31(b) may be valid and enforceable so long as it is read as operating from 29 July 2003 to 29 October 2003. The moment it is enforced beyond the term, it becomes prima facie void, as the Division Bench rightly held.
32. Held: If the covenant is enforced beyond the term against the contract of 20 November 2003, which took effect on 1 December 2003, it unlawfully restricts respondent no. 1's freedom to enter fiduciary relationships with persons of his choice. It compels him to enter a fresh contract with the appellant after he fully performed the earlier one. It is a restraint of trade, void under Section 27.
33. Held: Under Section 27, "a restrictive covenant extending beyond the term of the contract is void and not enforceable". The doctrine of restraint of trade does not apply during a contract of employment and applies when the contract ends. As held in Gujarat Bottling, the doctrine is not confined to employment contracts but applies to all other contracts.
34. Held: Even if clause 31(b) were valid, it was inappropriate or impermissible for the Single Judge to grant an injunction at the interim stage, for five reasons:
    • It compelled specific performance of a contract of personal, confidential and fiduciary service, barred by Section 14(1)(b) and (d) of the Specific Relief Act, 1963.
    • It was barred by Section 14(1)(a), and this Court has consistently held there is no specific performance of personal service contracts.
    • It granted the whole relief that could be claimed at the end of trial, which is impermissible. The Court cites Bank of Maharashtra v. Race Shipping (nos. 10-12).
    • The Single Judge overlooked balance of convenience and irreparable injury. Percept could be compensated in money, but respondent no. 1 could not be. The Court cites Hindustan Petroleum v. Sriman Narayan.
    • The principles for injunctions in personal or fiduciary contracts, such as management contracts for sportsmen and performers, are summarised in Page Once Records v. Britton (Chancery Division): breach and damages did not entitle the plaintiff to an injunction. The duties of the manager could not be enforced at the defendants' instance, and enforcing the negative covenants would amount to ordering specific performance of personal services. It would be wrong to put pressure on the defendants to keep as manager and agent, in a fiduciary capacity, someone in whom he had lost confidence.
35. Noted: The Court reproduces clause 31(a) and (b).
36. Held: Clause 31(b) merely requires respondent no. 1 to give the appellant an opportunity to match any offer from a third party. It does not itself stop him from contracting with a third party. It gives the appellant a chance to gain from the marketing and image-building it did.
37. Held: The clause does not restrict his right to accept offers for endorsement on his own or through any party, if the appellant fails to match. It does not restrict his right to appoint an agent of his choice or his liberty to run his affairs as he likes. Any restriction comes from voluntary obligations he undertook, and he cannot go back on promises under the garb of Section 27.
38. Held: Clause 31(b) is an independent clause that survives the expiry of the agreement. Any dispute about its enforceability falls under clause 32(g), which refers claims and controversies to arbitration.
39. Noted: The Court reproduces clause 32(g): arbitration under the Arbitration and Conciliation Act, 1996, by one arbitrator, seat Mumbai, with a final award, and Indian law as governing law.
40. Held: There is no case to compel respondent no. 1 to appoint the appellant as agent in perpetuity when he has no faith or trust in it. An injunction would be, in the Court's words, "in substance and effect a decree of specific performance" of a personal service agreement dependent on mutual trust, which is eroded and non-existent here.
41. Held: The appellant can be adequately compensated in money if the injunction is refused.
42. Held: Clause 31(b) contains a restrictive covenant in restraint of trade. It restricts his future liberty to deal with persons he chooses for endorsements and promotions. A restriction extending beyond the tenure of the contract is hit by Section 27 and is void. The covenant curtails his liberty even after the contract is completed, even to deal on his own.
43. Held: No interim relief was granted to the appellant in two and a half years, during which the contract between respondents 1 and 2 has run, and it is soon to be completed. There is no cause for interference at this late stage.
44. Held: The Court directed, as sufficient protection for the appellant, six matters set out under Judgement.
45. Held: The appeal stands dismissed on those terms, with no costs.

Authorities

• Madhup Chunder v. Rajcoomar Doss, (1874) 14 Beng. L.R. 76 (Sir Richard Couch, C.J.). The interpretation of Section 27 on post-contractual restraint has been uniform since this case.
• Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Ltd., (1967) 2 SCR 378. Relied on by the appellant. It affirmed V.N. Deshpande v. Arvind Mills. The Court said it approved the settled post-contractual interpretation.
• V.N. Deshpande v. Arvind Mills, AIR 1964 Bombay 423. Relied on by the appellant: a confidentiality clause after service ended is not unreasonable. It refers to (1916) 1 AC 688.
• Mahindra & Mahindra Limited v. Union of India, (1979) 2 SCC 529. Relied on by the appellant. It cited Board of Trade v. United States (62 L Ed 231).
• Gujarat Bottling Co. Ltd. v. Coca Cola Co., (1995) 5 SCC 545. Relied on by both sides. It cited Esso Petroleum Co. Ltd. v. Harper's Garage (Stourport) Ltd., (1967) 1 All ER 699. The Court held the restraint of trade doctrine applies to all contracts, not only employment.
• Superintendence Company of India v. Krishan Murgai, 1981 (2) SCC 246. The observations of A.P. Sen, J. are said by the appellant to be a minority view. The Court lists it among the cases that approved the settled post-contractual interpretation. The appellant called the observations of Sen, J. a minority view, not part of the ratio, because the majority expressly gave no view on that issue.
• Firm Ashok Traders v. Gurumukh Das Saluja, (2004) 3 SCC 155. Relied on by respondent no. 1. Arbitration must begin promptly after a Section 9 application.
• Bank of Maharashtra v. Race Shipping, (1995) 3 SCC 257. Cited for the rule that an interim injunction must not grant the whole relief.
• Hindustan Petroleum v. Sriman Narayan, (2002) 5 SCC 760. Cited on balance of convenience and irreparable injury.
• Page Once Records v. Britton, (1968) 1 W.L.R. 157 (Chancery Division). Followed on injunctions in personal and fiduciary management contracts.

Also cited in footnotes: the judgment has no footnotes.

Provisions

• Section 27, Indian Contract Act, 1872, with Exception 1: an agreement restraining a lawful profession, trade or business is void to that extent, except for a seller of goodwill within reasonable limits.
• Section 14(1)(a), (b) and (d), Specific Relief Act, 1963: contracts not specifically enforceable, including contracts of a personal or fiduciary nature.
• Section 41(e), Specific Relief Act, 1963: no injunction to prevent breach of a contract that cannot be specifically enforced.
• Section 42, Specific Relief Act, 1963: an injunction may enforce a negative agreement even where the affirmative agreement cannot be specifically enforced, if the plaintiff has not failed to perform.
• Section 9, Arbitration and Conciliation Act, 1996: interim measures by a court before, during or after arbitral proceedings, including interim injunction, receiver, preservation of property and any other just measure. An application may be made at any time after the award but before it is enforced under Section 36.
• Clause 31(a) and (b) and clause 32(g) of the Promotion Agreement.

Judgement

1. The appeal is dismissed on the following terms. There is no order as to costs.
2. All observations and findings of the High Court were for the limited purpose of deciding an interlocutory application and will not bind the parties at trial.
3. All contentions raised by all parties are expressly kept open.
4. The interim protection in paragraph 17 of the High Court's order continues until the conclusion of the contract dated 20 November 2003.
5. This Court expresses no opinion on the merits of the rival claims. Its observations are only for finding a prima facie case.
6. The appellant may proceed against the respondent for breach of the contractual terms before the appropriate forum in accordance with law.
7. Liberty is reserved to the appellant to invoke clause 32(g) of the agreement.

Legal Principle / Ratio

A negative covenant that restricts a person's dealings after the contract ends is prima facie void under Section 27. A court will not use an injunction to enforce a personal service or management contract in effect. Key holding: under Section 27, "a restrictive covenant extending beyond the term of the contract is void and not enforceable".

Critical Analysis

Analysis based on the judgment text.

• The Court says clause 31(b) is an independent clause that survives expiry. It then holds the same clause void when enforced beyond the term. The judgment treats both as consistent with its prima facie finding.
• The Court says the clause does not by itself restrict the cricketer and only gives the appellant a chance to match. It later says the clause is a restraint of trade. The text does not reconcile these two statements.
• All findings are prima facie and for the interlocutory stage. The Court expressly keeps the merits open for trial or arbitration.
• The text has small inconsistencies, such as the dates 20 November 2003 and 22 November 2003 for the second agreement, and clause 32(g) and clause 31(g) for the arbitration clause. The list of directions skips item (v).

Significance

• The case applies the settled rule that post-contractual restraints are void under Section 27, with no test of reasonableness.
• It confirms that the restraint of trade doctrine is not limited to employment contracts.
• It shows that courts will not grant an injunction that amounts to specific performance of a personal or fiduciary management contract.
• It reminds a party who files a Section 9 petition to begin arbitration promptly.

Exam-Important Points

• Rule first: a restrictive covenant that operates after the contract ends is prima facie void under Section 27. The test of reasonableness does not apply.
• A restraint during the term may be valid. The doctrine applies fully only once the contract ends.
• Section 27 covers all contracts, not only employment (Gujarat Bottling).
• No specific performance of personal service or fiduciary contracts. Section 14(1) and Section 41(e) bar the injunction.
• Trap: all findings were prima facie, at the interim stage. The Court left all contentions open.
• Section 9 petitioner must start arbitration promptly (Firm Ashok Traders).
• Directions: appeal dismissed on terms, no costs, liberty to invoke clause 32(g).

Prepared from the full text of the judgment. Paragraph numbers follow the official Supreme Court judgment text; law reports may number the same paragraph differently.