• Revoking a non-compete employment clause

I have been with a company for over 5 years. About 8 months ago the company asked a bunch of executives to sign a Non-Compete & Non-solicitation agreement. I tried to resist it stating that this gives the company full control over my job & growth prospects, but had to sign it after a month of avoidance.

I understand that this might not be fully-legally enforcible, but prospective employers are apprehensive about considering my candidature due to this contract.

I would like to understand, how I could get this agreement nullified or cancelled without the consent of the company.
Asked 7 years ago in Labour

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4 Answers

any agreement in restraint of trade is void under section 27 of contract act

2)the Bombay High Court held that a restraint

operating after termination of the contract to secure freedom from competition from a person who no longer worked within the contract, was void. The court refused to enforce the negative covenant and held that, even if such a covenant

was valid under German law, it could not be enforced in India. (Taprogge

Gesellschaft MBH v. IAEC India Ltd., AIR 1988 Bom 157)

3) after you resign you are at liberty to join any other organisation

Ajay Sethi
Advocate, Mumbai
95222 Answers
7612 Consultations

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Non-compete provisions for the term of employment are not regarded 'restrictive covenants' under Indian law. However, having such provisions applicable after a person leaves the organisation is against the Indian Contract Act, and, therefore, not enforceable. ... Another clause is the employee bond.

Section 27 of the Indian Contract Act-1872 provides that ”Every agreement by which anyone is restrained from exercising a lawful profession or trade or business of any kind, is to that extent void”.

However considering the developed social, legal, and corporate circumstances, and the required confidentiality and the integrity of the employments, the judiciary has inclined its view towards giving some regard to the non compete agreements.

Bombay High court established the principle that a restraint on the use of trade secrets during or after the cessation of employment does not tantamount to a “restraint on trade” under section 27 of the Act and therefore can be enforceable under certain circumstances.

Delhi High court held that “The real test was the degree of employment control to determine whether it was a contract of service…

Thus the said covenant will take effect only after your resignation.

You may initiate necessary action as per loopholes in law at that time when it is ripe

T Kalaiselvan
Advocate, Vellore
85422 Answers
2239 Consultations

5.0 on 5.0

Agreement in restraint of trade is void

After you leave your current employment you are at liberty join competitor

I have cited judgment of Bombay HC holding that agreement in restraint of trade is void

Ajay Sethi
Advocate, Mumbai
95222 Answers
7612 Consultations

5.0 on 5.0

During this time, i'm entitled to my last drawn Salary. It may / may not be legally enforceable, but it shuns away potential employers. I have already lost a couple of offers. I dont want to lie to my future employers about this contract

You need not inform your new employer about this clause voluntarily.

You can apply for employment on the normal grounds without a necessity to reveal such unwanted things in your application for employment.

If the new employer requires you to furnish such details you may inform about it.

Please remember that such non-compete clauses are not legally enforceable.

How do proceed to get this agreement nullified? Considering I dont have any offer now, how can I protect my current job & ensure that the company doesnot hold any grudge?

You do not hav any option than to file an injunction suit restraining your employer to operate this clause or can seek stay of operation this clause stating that it is ultra vire

T Kalaiselvan
Advocate, Vellore
85422 Answers
2239 Consultations

5.0 on 5.0

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