Was the restraint clause against public policy?

No. The Supreme Court held the restraint reasonable and valid. It protected confidential know-how and was not harsh or one-sided.

Could the employee join a competitor during the contract period?

No. An injunction restraining him during the agreed term was considered reasonable to protect secrecy and training investment.

Do all restraints in employment fail under Section 27?

Not always. Reasonable restraints tied to confidentiality or during employment can be valid. Broad post-employment trade restraints are suspect.

Did the Court find coercion or unconscionability?

No. On facts, the clauses were not unconscionable. The employee had received specialised training linked to confidentiality duties.

niranjan-shankar-golikari-v-century-spinning-and-manufacturing-co-ltd-air-1967-sc-1098

Niranjan Shankar Golikari v. Century Spinning & Manufacturing Co. Ltd. — AIR 1967 SC 1098

Confidentiality + reasonable restraint during employment. Why the Court upheld the injunction and rejected the “unconscionable” argument—explained simply.

Supreme Court of India 1967 AIR 1967 SC 1098 Contract (Restraint & NDA) ~7 min read

Author: Gulzar Hashmi · India · Published: 26 Oct 2025

Quick Summary

A tyre-cord maker shared foreign technical know-how with strict confidentiality. An employee was trained, then tried to join a rival. The employer sought an injunction to stop him from working with the competitor and from divulging secrets during the contract period. The Supreme Court held the restraint was reasonable, not harsh or against public policy.

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Issues

Is the agreement unconscionable or opposed to public policy?
Is the injunction restraining employment with a rival during the term reasonable?

Rules

Reasonable Restraint

A restraint aimed at protecting secrets or training, limited to time and scope, can be valid. It must not be harsh, one-sided, or against public policy.

Confidentiality

Employees may be restrained from sharing know-how and from working for a rival during the contract to safeguard the employer’s interest.

Facts (Timeline)

Timeline of training, confidentiality, resignation and rival job

Know-how pact: Company gets foreign technical know-how for tyre-cord yarn; must keep it secret (plus 3 years post-term).

5 Mar 1963: Appellant signs employment contract with confidentiality & restraint clauses.

Mar–Dec 1963: Employee receives special training on machinery and technique.

Oct–Nov 1964: Absents from work; resigns 23 Nov; employer does not accept resignation.

Later: Employee joins competitor for higher pay.

Suit: Employer seeks injunction restraining disclosure and employment with rival till agreed date.

Arguments

Appellant (Employee)

Clauses are unconscionable, harsh, and against public policy.
Restraint stops livelihood; amounts to invalid trade restraint.
Alleges coercion in execution.

Respondent (Employer)

Limited time-bound restraint to protect confidential know-how.
Employee got specialised training; equity supports protection.
Only seeks restraint during contract term and on secrets, not a blanket ban forever.

Judgment

Gavel and lock icon indicating injunction and confidentiality

Held: Injunction upheld. The restraint was reasonable, aimed at protecting confidential know-how, and not against public policy. The appeal was dismissed with costs.

Scope: Restraint applied during the subsistence of the contract and to confidential information.

Ratio Decidendi

Restraints tied to confidentiality and limited by time and purpose can be valid. When they protect legitimate interests and are not harsh or one-sided, courts will enforce them by injunction.

Why It Matters

Guides drafting of NDAs and non-compete during employment.
Shows when courts view restraints as reasonable vs. void.
Balances trade freedom with protection of know-how.

Key Takeaways

Purpose matters: Protecting secrets is a legitimate aim.
Limits matter: Time-bound, role-specific restraints fare better.
Equity counts: Special training can justify protection.

Mnemonic + 3-Step Hook

Mnemonic: “Keep It R.E.A.L.”

Reasonable scope
Equitable (training/know-how)
Aimed at secrecy
Limited time

IRAC Outline

Issue

Are the restraint and confidentiality clauses valid and is the injunction proper?

Rule

Restraints are valid if reasonable, limited, and not against public policy; secrecy can be protected.

Application

Foreign know-how, training, and time-bound restraint show a narrow, justified restriction.

Conclusion

Injunction sustained; appeal dismissed with costs.

Glossary

Reasonable Restraint: A limited restriction to protect legitimate interests like confidentiality.
Injunction: Court order directing a party to do or stop doing something.
Unconscionable: So unfair or one-sided that a court refuses to enforce it.

FAQs

The case mainly supports restraints during employment and confidentiality. Broad post-employment restraints are generally disfavoured.

Because the employer invested in special training and had to protect foreign know-how under a secrecy pact.

No. It was targeted and time-limited, focused on confidential processes, not an absolute ban on work forever.

Quick Nav

Case Meta

CASE_TITLE: Niranjan Shankar Golikari v. Century Spinning & Manufacturing Co. Ltd., AIR 1967 SC 1098
PRIMARY_KEYWORDS: reasonable restraint, confidentiality, injunction
SECONDARY_KEYWORDS: public policy, employment contract, non-compete during term
PUBLISH_DATE: 26-10-2025
AUTHOR_NAME: Gulzar Hashmi
LOCATION: India
Slug: niranjan-shankar-golikari-v-century-spinning-and-manufacturing-co-ltd-air-1967-sc-1098

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