Negative covenant injunction upheld as in-term contractual restraint survives termination and is outside Section 27

The amended Specific Relief Act, 1963 was treated as shifting the remedial focus toward specific performance and stronger contractual enforcement rather than damages as the default remedy. A negative covenant in the addendum was held enforceable by injunction because it regulated conduct during the contract term and was distinct from compelling affirmative performance; Section 14 did not bar that relief. Section 27 of the Contract Act did not invalidate an in-term exclusivity restraint, and unilateral termination could not defeat it. Threshold objections on territorial jurisdiction were not sufficient at the interim stage, and the fraud allegation did not justify rejection of relief through arbitration.

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Issues: (i) whether, after the 2018 amendment to the Specific Relief Act, 1963, the dispute could be approached on a damages-versus-specific performance footing; (ii) whether the negative covenant in the addendum could be enforced notwithstanding the termination defence and Section 14 of the Specific Relief Act, 1963; (iii) whether Section 27 of the Indian Contract Act, 1872 barred the restraint; (iv) whether the suit could be rejected for want of territorial jurisdiction; and (v) whether the allegation of fraud in the agreements excluded reference to arbitration.

Issue (i): whether, after the 2018 amendment to the Specific Relief Act, 1963, the dispute could be approached on a damages-versus-specific performance footing.

Analysis: The amended scheme was treated as a legislative shift away from treating damages as the default remedy. Specific performance was regarded as the general rule, with discretion curtailed and limited statutory exceptions controlling refusal of relief. The earlier approach that privileged damages over enforcement was held no longer to govern the controversy.

Conclusion: Decided in favour of the appellant: the amended statute supports stronger contractual enforcement.

Issue (ii): whether the negative covenant in the addendum could be enforced notwithstanding the termination defence and Section 14 of the Specific Relief Act, 1963.

Analysis: The relief was characterised as enforcement of a negative covenant, not as specific performance of the affirmative service obligations. On that footing, Section 14 was held inapplicable, and the distinction between compelling performance and restraining prohibited conduct was applied. The Court also held that the covenant operated during the contractual term and its enforcement would not amount to forcing the respondent to remain idle or to perform the affirmative obligations specifically.

Conclusion: Decided in favour of the appellant: the negative covenant was enforceable by injunction.

Issue (iii): whether Section 27 of the Indian Contract Act, 1872 barred the restraint.

Analysis: The restraint was treated as operating during the subsistence of the contractual arrangement and not as a post-contractual restraint of trade. The Court held that Section 27 does not invalidate such in-term exclusivity obligations, and that unilateral termination could not be used to defeat the agreed negative covenant during the promised tenure.

Conclusion: Decided in favour of the appellant: Section 27 did not bar the injunction.

Issue (iv): whether the suit could be rejected for want of territorial jurisdiction.

Analysis: The plaint contained assertions that the infringing content was accessible and viewed in Delhi and that consumers in Delhi were targeted. Those averments were treated as sufficient, at the interim stage, to defeat a threshold objection to territorial jurisdiction, leaving the issue open for trial if necessary.

Conclusion: Decided in favour of the appellant: the suit was not liable to be rejected on territorial-jurisdiction grounds.

Issue (v): whether the allegation of fraud in the agreements excluded reference to arbitration.

Analysis: The respondent's own case was that fraud infected the agreements and the arbitration clause within them. On that premise, the dispute was treated as one in which the arbitration clause could not be relied upon to compel referral. The Court also noted that the learned Single Judge had not dealt with the objection.

Conclusion: Decided in favour of the appellant: the fraud allegation did not justify arbitration-based rejection of relief.

Final Conclusion: The impugned order was set aside and interim injunctive protection was restored so that the appellant's contractual exclusivity and negative covenant protection continued for the remaining contractual period, while the respondent remained free to pursue his profession outside the restrained subject-matter.

Ratio Decidendi: A covenant that operates only during the subsistence of a contract and restrains specified conduct may be enforced by injunction under the Specific Relief Act, 1963, and is not hit by Section 27 of the Indian Contract Act, 1872 merely because the contract is said to have been terminated unilaterally.

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