Post-term negative covenant in a sports agency agreement was treated as an unenforceable restraint of trade and denied injunction.

A negative covenant in a sports management and agency agreement, continuing after expiry of the contract and giving the manager a right of first refusal, was treated as unenforceable by interim injunction under Section 9 of the Arbitration and Conciliation Act, 1996. The agreement was characterised as personal, confidential and fiduciary in nature, so specific performance would in substance compel continuation of a personal agency relationship after loss of confidence. The post-term restraint was also regarded as a restraint of trade hit by Section 27 of the Indian Contract Act, 1872. Section 42 of the Specific Relief Act, 1963 was noted not to mandate injunction in every case containing a negative stipulation.

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Issues: Whether a negative covenant in a sports management and agency agreement, operating after the contractual term and conferring a right of first refusal, could be enforced by an interim injunction under Section 9 of the Arbitration and Conciliation Act, 1996.

Analysis: The agreement was held to be one of personal, confidential and fiduciary character, involving management of the sportsman's public persona and commercial activities. Such a contract was treated as incapable of specific performance, and the grant of injunction would in substance compel continuance of a personal agency relationship despite loss of confidence. The covenant in question operated after the term of the agreement and restrained the sportsman from dealing with third parties without first offering the petitioner a matching opportunity. A covenant of that nature was held to be in restraint of trade and hit by Section 27 of the Indian Contract Act, 1872. Section 42 of the Specific Relief Act, 1963 was held not to require injunction in every case where the contract contains a negative stipulation; the grant of relief still depends on sound judicial discretion and the circumstances of the case.

Conclusion: The negative covenant was not enforceable by interim injunction, and the application for protection under Section 9 failed.

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