Post-employment restraint clauses are unenforceable absent a statutory exception, and injunctions need real proof of trade secrets or customer influence.

Delhi HC noted that a post-employment covenant restraining an employee from entering a similar business was prima facie void under Section 27 of the Indian Contract Act, 1872 unless it fell within a recognised statutory exception, and reasonableness could not validate it outside that framework. It also held that a temporary injunction required a concrete prima facie showing of protectable trade secrets or enforceable customer influence; mere familiarity with customers or general knowledge gained in service was insufficient. On the pleaded material, the employer failed to establish either basis, so the injunction could not be sustained.

---

---

Issues: (i) whether a covenant restraining an employee, after termination of service, from engaging in a similar business for two years was enforceable; (ii) whether the employer had shown protection-worthy trade secrets or influence over customers sufficient to justify a temporary injunction.

Issue (i): whether a covenant restraining an employee, after termination of service, from engaging in a similar business for two years was enforceable.

Analysis: Section 27 of the Indian Contract Act, 1872 states the general rule that agreements in restraint of trade are void except within the statutory exceptions. The covenant in question operated only after the employment had ended and was not shown to fall within any recognized exception. A post-service restraint against carrying on a competing business was therefore treated as prima facie void, and reasonableness could not save it outside the statutory framework.

Conclusion: The post-employment restraint was unenforceable and could not support the injunction.

Issue (ii): whether the employer had shown protection-worthy trade secrets or influence over customers sufficient to justify a temporary injunction.

Analysis: A temporary injunction could be granted only if the pleadings and admitted facts disclosed a good prima facie case. The employer did not plead specific secret formulae, processes, or confidential information of the kind that would amount to trade secrets, nor did it show that the employee had acquired such personal influence over customers as to justify restraint after service. Mere acquaintance with customers or general knowledge gained in employment was insufficient.

Conclusion: No sufficient prima facie case was made out on trade secrets or customer influence.

Final Conclusion: The temporary injunction was not sustainable and the appellate court interfered with the order granting it.

Ratio Decidendi: A post-employment restraint on an employee's freedom to compete is void under Section 27 of the Indian Contract Act, 1872 unless it falls within a recognized statutory exception, and an injunction to enforce such restraint requires a concrete prima facie showing of protectable trade secrets or enforceable customer influence.

---