Section 27 of the Contract Act – Termination of contract – Interim Injunction in Section 9 AA petition

HELD that the plea that clause 3 of MSA is void can be raised for the first time in section 37 appeal even if it was not raised before Section 9 Court. Non-compete / non-solicitation clause would not operate after termination of the agreement as it would result in restraint of trade prohibited by Section 27 of the Contract Act.   Even if the parties had engaged in some transactions post termination, that by itself would not be sufficient to compel the Company to continue such arrangement in the face of section 27.  An interim injunction order against the appellant based on Clause 3 of the MSA is illegal.

Judgment dated 17.10.2024 of the High Court of Bombay (OS) in Commercial Appeal (Lodging) No.26031 of 2023 of Indus Power Tech Inc.  Vs.  M/s. Echjay Industries Pvt Ltd with connected matter