A restrictive covenant in an employment contract that prevents an employee from working with a competitor during the period of his employment is not in restraint of trade and is therefore valid. However, a court can grant an injunction restraining an employee from working with a competitor during the unexpired term of his agreed period of employment, even if the employment contract contains a void restrictive covenant that prevents the employee from working with a competitor even after leaving the employment.

( 1 ) THIS is an application for interim reliefs in aid of an appeal preferred from an interlocutory order passed on the 18th April, 2004, whereby the learned Judge, granted only one part of the prayers of injunction made by the plaintiff/appellant. An order was granted restraining defendants 2 to 7 from divulging secrets, but an order restraining them altogether from working with the first defendant was refused.

( 2 ) THE matter is pending final disposal before the Interlocutory Court and directions for affidavits have been given. However, the matter is due to appear again only in December this year. The appeal has been filed on grounds of urgency. In these circumstances, we propose to dispose of the appeal along with the application for stay and the appeal is, therefore, treated as on the day's list. Since the appeal is from an ad interim order only, it would not be right to keep the appeal pending and to allow subsequent interim order of the Interlocutory Court to wipe out the appellate ad interim order for all purposes while the appeal goes on being in the pending state.

( 3 ) THE grievance of the appellant is in regard to six of its employees who are defendants Nos. 2 to 7 in the suit. They also complain against the defendant No. 1 who is the first respondent and who is a rival manufacturer. The case of the appellant against its erstwhile employees is that they have broken their contract of employment which contained a clause prohibiting them from joining any competitors within five years after they leave service. The complaint against the first respondent is for inducement of breach of contract and for enticing away the said six employees; the appellant urges that the first respondent poached upon its employees.

( 4 ) THE factory of the appellant is situated at Khardah in West Bengal. It produces specialty goods which are ductile iron pipes known in the trade D. 1. pipes. These are produced in the appellant's unit from as raw a material as iron ore. It is said that the ore is converted through a blast furnace into pig iron which is mixed up with certain other metals to form alloys and that the molten alloy is put through a centrifuge to produce the necessary pipes. These are of wide diameter and several meters long, principally put in use for the purpose of underground sewerage systems. The inside of the pipe is coated with a special slurry to prevent the sewage effluents from chemically reacting with the pipes. The outside surface which is under the roads, has, because of special production techniques, a greater stress bearing capacity. It is said that the appellant is practically the sole manufacturer of D. I. pipes in India. It has a large market. Its turnover in the last year is claimed to be above Rs. 700 crore and its export during that year is claimed to be of the order of Rs. 120 crore.

( 5 ) THE complaint is that the respondent No, 1 has set up a factory for producing D. I. pipes at Bhuj in Gujarat. Since the process has a lot of trade secrets and practical knowhow involved in it, allegedly the respondent No. 1 has enticed away the appellant's key workers for the purpose of divulging these trade secrets and knowhow to the respondent No. 1 and this help it in setting up its factory for producing competing goods.

( 6 ) THE employees all left the plaintiff appellant in the months of April and May this year and had put in between 5 and 14 years of service with the appellant. Their salaries ranged between Rs. 6200/- per month and Rs. 26,500/ -. They filled diverse designations such as Engineer, Manager, Supervisor and Sales/market Technician.

( 7 ) IT is complained that the respondent No. 1 though admitting that the employees are now all in their employment has not produced the letters of employment of any one of the employees. The allegation is that these employees have been enticed with larger salary than they were earlier drawing. It appears that the employment of these employees wit