Injunctions to perform negative agreement

In one minute

Many contracts have two halves. One half says "I will work only for you". The other half, expressed or implied, says "I will not work for anyone else". A court cannot force a person to work. It can stop him from working for a rival.

Section 42 of the Specific Relief Act, 1963 allows this. The court may enforce the negative promise by injunction even where it cannot enforce the positive one. In exams, you must explain section 42, its proviso, and the limit set by section 27 of the Contract Act.

Legal provision

• Section 42: notwithstanding clause (e) of section 41, a contract may comprise an affirmative agreement to do an act, coupled with a negative agreement, express or implied, not to do an act. The court may be unable to compel specific performance of the affirmative agreement. That does not preclude it from granting an injunction to perform the negative agreement.
• Proviso to section 42: the plaintiff must not have failed to perform the contract so far as it is binding on him.
• Section 41(e): an injunction cannot be granted to prevent the breach of a contract the performance of which would not be specifically enforced.
• Section 27, Indian Contract Act: every agreement by which anyone is restrained from exercising a lawful profession, trade or business is void to that extent.

Meaning and definition

A negative covenant is a covenant not to do a certain act. An affirmative agreement is a promise to do one. Section 41(e) says that no injunction lies where the contract itself could not be specifically enforced. Section 42 carves out an exception for the negative half.

The flowchart shows the questions a court asks.

1. 1. Does the contract contain an affirmative agreement and a negative agreement, express or implied?No: section 42 does not apply.
2. 2. Is the negative covenant lawful, for example because it operates only during the term and is not a restraint of trade under section 27 of the Contract Act?No, it restrains a trade after the term: it is void, and no injunction can enforce it.
3. 3. Has the plaintiff performed the contract so far as it binds him?No: the proviso to section 42 bars the injunction.
4. 4. Is any bar in section 41 present, such as acquiescence or the plaintiff's own conduct?Yes: the court may refuse.
5. 5. All the tests are met.The court may grant an injunction to perform the negative agreement, even though it cannot compel the affirmative one.

Detailed explanation

1. Why the section exists

The court cannot order a singer to sing or a mill hand to work (section 14(c)). Without section 42, section 41(e) would then block any injunction, and the employer would be left with damages only. Section 42 lets the court hold the person to the part of the bargain that the court can supervise: the promise not to act for a rival.

2. The two halves of the contract

The negative promise may be express, such as "shall not serve any other mill". It may also be implied from a positive promise of exclusive service. Courts look at the whole contract.

3. The proviso: clean performance by the plaintiff

The plaintiff must have performed his own part so far as it binds him. A mill owner who has stopped paying wages cannot get an injunction to hold the worker to his negative promise.

4. The English root: Lumley v. Wagner

In Lumley v. Wagner (1852), a singer agreed to sing at one theatre for three months and not to sing elsewhere. The court could not make her sing, but it enjoined from singing at a rival theatre. The idea that equity may enforce the negative promise even when it cannot enforce the positive one is the origin of section 42.

5. During the term: Niranjan Shankar Golikari

In Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Ltd. (1967), a shift supervisor was employed for five years in tyre cord yarn manufacture. He agreed that if he left early he would not serve any competitor for the rest of the period. He resigned after about nine months and joined a rival. The Supreme Court held that a negative covenant that operates during the employment, while the employee is bound to serve his employer exclusively, is generally not a restraint of trade under section 27. It upheld the injunction.

6. After the term: section 27 bars the covenant

A covenant that runs after the contract ends is tested by section 27 of the Contract Act. In Superintendence Company of India v. Krishan Murgai (1980), an employer sought to enforce a two-year restriction against a branch manager whom it had dismissed. The Supreme Court refused. Tulzapurkar and Untwalia JJ. held that the word "leave" in the clause meant voluntary departure, so it did not cover a dismissed employee, and they did not decide the section 27 question. Sen J., concurring, held that a restraint operating after the end of service is void under section 27. In Percept D'Mark (India) Pvt. Ltd. v. Zaheer Khan (2006), the Court held that a right to match third-party offers, enforced after the term, was prima facie void under section 27. An injunction would also be specific performance of a personal service contract, which is barred.

7. A covenant that operates only during the term

In Gujarat Bottling Co. Ltd. v. Coca Cola Co. (1995), a bottler agreed not to deal in other brands during the agreement. The Supreme Court held that a covenant that applies only during the contract and promotes the franchise is not a restraint of trade under section 27. It upheld the interim injunction. It applied section 42.

8. The Act's other bars still apply

Section 42 does not override section 41 as a whole. An injunction may still be refused for acquiescence, for the plaintiff's own conduct, or because equally efficacious relief is available. The court also weighs hardship and public interest.

During the term and after the term

Point	Covenant during the term	Covenant after the term
Section 27, Contract Act	Generally not a restraint of trade	Void to that extent
Injunction under section 42	May be granted	Cannot be granted
Authority	Golikari; Gujarat Bottling	Krishan Murgai; Percept D'Mark
Example	Do not work for a rival while employed	Do not work for a rival for two years after leaving

Don't confuse: section 41(e) and section 42

Students often quote only one of the two sections. They work together.

Point	Section 41(e)	Section 42
Rule	No injunction to prevent the breach of a contract that would not be specifically enforced	The negative promise may be enforced even if the affirmative one cannot be
Role	A bar	An exception to that bar
Condition	None beyond the nature of the contract	Negative agreement and performance by the plaintiff

Common mistakes

• Writing that the court will order a person to perform a personal service. It will not (section 14(c)).
• Forgetting the proviso that the plaintiff must have performed his own part.
• Applying section 42 to a covenant that operates after the term. Section 27 makes it void.
• Forgetting that the negative promise may be implied.
• Treating section 42 as a way around section 41 altogether. The other bars still apply.

Apply it

Leading case laws

• Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Ltd. (1967)

  Facts. A shift supervisor employed for five years in tyre cord yarn manufacture resigned after about nine months and joined a competitor. The trial court and the High Court granted an injunction. AIR 1967 SC 1098.

  Principle. A negative covenant that operates during the employment is generally not a restraint of trade under section 27. The injunction was upheld.

  Why it matters. It is the leading authority on enforcing a negative covenant during service.

• Gujarat Bottling Co. Ltd. v. Coca Cola Co. (1995)

  Facts. A bottler agreed not to deal in any other brand during its agreement with Coca Cola. Its shares passed to Pepsi-linked concerns and the High Court granted an interim injunction.

  Principle. A covenant that operates only while the contract lasts is not a restraint of trade under section 27. The injunction was upheld under sections 41(e) and 42.

  Why it matters. It applies section 42 in a commercial franchise.

• Superintendence Company of India (P) Ltd. v. Krishan Murgai (1980)

  Facts. An employer dismissed a branch manager and then sought to enforce a two-year restriction against him. AIR 1980 SC 1717.

  Principle. The Supreme Court refused to enforce it. The majority held that "leave" in the clause did not cover dismissal. Sen J. alone held that a restraint operating after service is void under section 27.

  Why it matters. It marks the limit of section 42 for post-service covenants.

• Percept D'Mark (India) Pvt. Ltd. v. Zaheer Khan (2006)

  Facts. A sports agency had a three-year agreement with a cricketer and claimed a right to match third-party offers after the term. AIR 2006 SC 3426.

  Principle. A covenant enforced after the term is prima facie void under section 27. An injunction would amount to specific performance of a personal service contract, which is barred.

  Why it matters. It links sections 14(c), 41(e) and 42.

How to write this answer in the exam

Key points to remember

• Section 42: a negative agreement, express or implied, may be enforced by injunction even if the affirmative one cannot be.
• Proviso: the plaintiff must have performed his own part.
• A covenant during the term is generally valid. A covenant after the term is void under section 27.
• Authorities: Lumley v. Wagner; Golikari; Gujarat Bottling; Krishan Murgai; Percept D'Mark.
• The other bars in section 41 still apply.

Quick self-test

Related topics

• Preventive Relief
• Injunctions-Generally
• Specific performance of the contract – As a rule enforced by court
• Immoral agreements and various heads of public policy