Negative covenant injunction declined where damages were adequate and balance of convenience favoured the competing business.

A negative covenant in a commercial agreement may be enforceable, but an injunction will issue only where restraint is reasonable and necessary to protect a legitimate interest. Here, the Court found that damages were an adequate remedy, the petitioner already had marketing arrangements in the relevant territory, and the respondent would suffer prejudice if restrained after altering its business position. On that factual balance, the balance of convenience did not support interim relief, so the ex parte ad interim injunction was vacated and the restraint application was refused.

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Issues: Whether a temporary injunction could be granted to restrain the respondent from manufacturing and marketing a competing soft drink under a negative stipulation in the agreement, and whether the ex parte ad interim injunction already granted should be vacated.

Analysis: The agreement was treated as containing a negative covenant capable of enforcement in a proper case, but the governing consideration was whether restraint by injunction was reasonable and necessary for protecting the petitioner's legitimate interest. The availability of damages as an adequate remedy weighed against grant of injunction. The Court also considered the practical position that the petitioner had existing arrangements for marketing its products in the relevant territory, while the respondent faced loss if prevented from carrying on the competing activity and had already altered its business position on that basis. On the facts, the balance of convenience was found to lie against the petitioner.

Conclusion: The injunction was refused, the petitioner's application was dismissed, and the respondent's application for vacation of the ex parte order was allowed.

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