Negative covenant enforcement fails after contract expiry; ex parte injunction also falls for procedural non-compliance.

A temporary injunction to enforce a negative covenant was refused because the underlying agency relationship had ended and the later arrangement was only proposed, not a concluded enforceable contract. In those circumstances, the restraint was treated as an impermissible restraint of trade, and damages were considered an adequate remedy, so the plaintiff failed to show a strong prima facie case or a favourable balance of convenience. The ex parte injunction was also vacated for non-compliance with the mandatory requirements for prompt service and filing of the compliance affidavit.

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Issues: (i) Whether the plaintiff had made out a prima facie case for interim injunction restraining the defendant from dealing directly with the foreign principals and whether the alleged restrictive covenant was enforceable. (ii) Whether the ex parte interim injunction was liable to be vacated for non-compliance with the mandatory requirements of Order 39 Rule 3 of the Code of Civil Procedure, 1908.

Issue (i): Whether the plaintiff had made out a prima facie case for interim injunction restraining the defendant from dealing directly with the foreign principals and whether the alleged restrictive covenant was enforceable.

Analysis: The agency arrangements with the foreign principals had come to an end, and the arrangement between the plaintiff and the defendant had also expired. The alleged later arrangement of 28 July 1995 was found to be only a proposed or inchoate arrangement, not a concluded and enforceable contract. In the absence of a subsisting contract, the negative covenant relied upon by the plaintiff could not be enforced by injunction. The restraint was also held to be hit by the rule against restraint of trade once the contractual relationship had ended. As a temporary injunction can issue only where the plaintiff shows a strong prima facie entitlement to final relief, and since damages would be an adequate remedy if any breach were ultimately established, the balance of convenience was not in the plaintiff's favour.

Conclusion: The plaintiff was not entitled to interim injunction on merits, and the restrictive covenant was not enforceable against the defendant in the circumstances.

Issue (ii): Whether the ex parte interim injunction was liable to be vacated for non-compliance with the mandatory requirements of Order 39 Rule 3 of the Code of Civil Procedure, 1908.

Analysis: Compliance with Order 39 Rule 3 was treated as mandatory. The affidavit of compliance was not filed in time, and the required copies were not shown to have been duly delivered or sent immediately as required. This procedural default provided an independent ground for vacating the ex parte injunction.

Conclusion: The ex parte interim injunction was liable to be vacated on account of non-compliance with Order 39 Rule 3.

Final Conclusion: The interim protection granted earlier could not be sustained, and the defendant was entitled to have it set aside, with costs against the plaintiff.

Ratio Decidendi: An interim injunction to enforce a negative covenant will not be granted where the underlying contract is no longer subsisting or the alleged covenant is not part of a concluded, enforceable agreement, and such restraint cannot survive the end of the contractual relationship.

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