Esha Nath
Published On: January 31, 2022 at 16:17 IST
A Delhi Court observed that if a person deprives another of his Right to Trade, there must be a valid reason behind it. It further stated that the rationale may be the purpose of the work, its geographical location, and the timing of the trade.
Civil Judge Richika Tyagi of Tis Hazari Court was dealing with an Application filed by the Plaintiff under Order 39 Rule 1 and 2 of Civil Procedure Code. The application was against the Defendant to stop him from continuing his Trade, Business and Profession.
Section 27 of the Indian Contract Act states that “Agreement in restraint of trade, void.—Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.”
It is the privilege of a trader in a free country like India to do trade in all matters not contrary to law to regulate his own mode of carrying it, according to his own discretion.
The Court stated in this matter : “There is one exception to this rule-that if the goodwill of a business has been sold, an agreement to refrain from carrying on similar business, if it appears to the Court to be reasonable would be protected and would be enforced”
After further deliberations, the Court mentioned that depriving a person of the right to trade was against the Public Policy and therefore Void. However, the Court was of the view that only in certain circumstances a person can be deprived of his right to trade.
“It is a sufficient justification, if the restriction is reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favor it is imposed, while at the same time it is no way injurious to the public,” the Judge added.
After analyzing all the details, Court noticed that Plaintiff did not mention any reasonable time and geographical area limit and he wanted to permanently restraint the Defendant from making Contracts with its customers.
The Court rejected the pleading of the Plaintiff because the restriction to impose upon the Defendant was of permanent and unlimited nature and was not reasonable.
Also read: Indian Contract Act in Small Businesses
