Rakesh entered into a bond with a company to serve for a period of five years. As per the terms of the bond, if Rakesh leaves the job earlier, and joins a competitor within five years, he would be liable to pay damage. A

According to Section 27(1) of the Indian Contract Act, 1872, every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. However, an agreement of service by which a person binds himself during the term of the agreement not to take service with anyone else is not in restraint of lawful profession and is valid. The facts of the given situation are similar to the case of Niranjan Shanker Golikari v. The Century Spinning and Manufacturing Co. Ltd., AIR 1967 S.C. 1098 . In this case, the Supreme Court upheld a similar clause, ruling that a contractual restraint during the term of employment, especially after specialized training, is not void if it protects the employer's legitimate interests. In the given situation, the bond restrains Rakesh only during the employment term and aims to protect the company's investment in his training. Such a clause, being reasonable and in line with the above mentioned ruling, would not be void under Section 27. Therefore, the agreement is valid, and the company may be entitled to damages for breach. In view of the above, it may be said that this agreement is valid as the restraint was necessary for the protection of the company's interests.