Post-termination restraint of trade held unenforceable where foreign law was not reliably proved and contract limited the restriction to a brand.

A post-termination covenant restraining dealings in PVP-I was treated as a restraint of trade and found unenforceable because it was unreasonable and contrary to section 27 of the Indian Contract Act, 1872. The foreign-law affidavit relied on to support Swiss law was considered too unclear and incomplete to prove foreign law reliably, so Indian contract law applied. On construction of the amended contract, the restraint was confined to the Mundidone brand of PVP-I rather than PVP-I generally, but that interpretation did not save the covenant. The application was dismissed with costs.

---

---

Issues: (i) Whether the post-termination covenant restraining the respondent from dealing in preparations containing PVP-I was enforceable; (ii) Whether, on the amended contractual documents, the restraint extended to PVP-I generally or only to the Mundidone brand of PVP-I.

Issue (i): Whether the post-termination covenant restraining the respondent from dealing in preparations containing PVP-I was enforceable.

Analysis: The restraint was examined as a covenant in restraint of trade. The governing test was whether such a restraint was reasonably necessary and legally sustainable under the Indian contract law applicable in proceedings before the Court. The foreign-law affidavit relied on by the petitioner was found too obscure and incomplete to establish Swiss law with confidence. In the absence of reliable proof of foreign law, and having regard to the statutory prohibition against restraint of trade, the post-termination restriction was held to be unreasonable and unenforceable.

Conclusion: The post-termination restraint was not enforceable and was against the respondent.

Issue (ii): Whether, on the amended contractual documents, the restraint extended to PVP-I generally or only to the Mundidone brand of PVP-I.

Analysis: The wording of the agreement and the amended annexures was read with the defined expressions used in the contract. The amendment substituted the earlier product reference with the Mundidone brand of PVP-I, showing that the parties intended the restraint to be tied to that specific brand rather than to PVP-I in the abstract. The surrounding correspondence also reflected the same understanding.

Conclusion: The contractual restraint was confined to the Mundidone brand of PVP-I and not to PVP-I generally, but this did not aid the petitioner.

Final Conclusion: The application failed because the restrictive covenant could not be enforced after termination, and the petition was dismissed with costs.

Ratio Decidendi: A post-termination covenant restraining trade will not be enforced where it is unreasonable and contrary to section 27 of the Indian Contract Act, 1872, and the alleged applicable foreign law is not proved with reliable evidence.

---