• Regarding non-solicitation clause

Hi,

I was working in company ABC for 1.4 years. During this period of my employment with company ABC, I haven’t worked with any of the client of the company ABC. Now I have got the full time offer from one of the Client of company ABC.

 

The Below NDA states that

“I agree for a period of minimum Six (6) months from the date of separation and relieved of employment with company ABC, not to directly or indirectly employment from any client or customer of the organization (including any potential client of company ABC) that was contacted, solicited, or served by or about which employee received confidential information while employed by company ABC, nor for the same period of time, will not perform services/employment or accept any business, competitive with that of company ABC, directly or indirectly from all the existing clients of company ABC.”

 

Will there be any legal issue in joining the client of the company ABC as full time employee, since I have not worked with any of the client of company ABC?
Asked 5 years ago in Labour

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14 Answers

See on complete reading of the clause what i can gather and can suggest is there will be no problem as you were not directly working with clients nor you were entrusted with any of the confidential information of the client so you are free to work with them.

Though company can file a suit claiming damages and same needs to be contested on this ground.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

Normally there is a “Conflict of Interest” clause in your offer letter which says that you cannot join the client company within six months of leaving TCS.

Mohammed Mujeeb
Advocate, Hyderabad
19299 Answers
32 Consultations

4.7 on 5.0

1) Still you have to wait for 6 months from resignation of ABC company and later on you can join new company whether its client's of ABC company. As per above mentioned NDA.

Ganesh Kadam
Advocate, Pune
12928 Answers
255 Consultations

4.9 on 5.0

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

2) you can after your resignation from company join any other organisation 

 

3) however it is advisable that you do not join competitor for period of 6 months as it is reasonable restriction 

Ajay Sethi
Advocate, Mumbai
94695 Answers
7528 Consultations

5.0 on 5.0

This clause can create problems to you as it clearly bars you to do so for 6 months. But in India rarely any company takes action. If you are honest and assure that you will not harm the earlier cimpaco in any manner I dont think there is any issue. But as per that clause legally you are barred for 6 months

Prashant Nayak
Advocate, Mumbai
31930 Answers
179 Consultations

4.1 on 5.0

Dear Sir,

There will be no legal issue if you join the client company of  the ABC company. Section 27 Indian Contract Act prohibits such agreements, if any.

The Indian courts have been reluctant to restrain the employee from joining a competitor/other employer

Non compete clause, it is prohibited under the Law of Contracts.

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”.                                                                                                       

Exception : One who sells goodwill of a business with a buyer to refrain from carrying on a similar business within specified local limits so long as the buyer, or any person derivingtitle to the goodwill from him, carries on a like business therein provided that such limits appear to the court reasonable, regard being had to the nature of business.

Indian law is therefore very clear and strict on this point, any such non compete agreement shall not be binding on the parties and the same shall be null and void. By using the term void ab initio, for such type of agreements it has shown that it has kept such non compete clause in the agreements beyond consideration. Indian courts have also consistently refused to enforce post termination non compete clauses in employment contracts as “restraint of trade” is impermissible under section 27 of the Indian Contract Act-1872, and have held them as void and against the public policy because of their potential to deprive an individual of his or her fundamental right to earn a living.

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. In the case of ‘Niranjan Shankar Golikari Vs the Century Spinning and Manufacturing Company Ltd.’ , the Hon’ble Supreme Court observed that-“restraints or negative covenants in the appointment or contracts may be valid if they are reasonable”. Further in one case - V.F.S. global services Pvt. Ltd Vs Mr. Suprit Roy, 2008(2) Bom CR 446, the 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. In the case of Mr. Diljeet Titus, Adv Vs Mr. Alfred A Adebare & Ors 2006(32)PTC 609 (Del), Delhi High court held that “The real test was the degree of employment control to determine whether it was a contract of service…” .

Like these there are several other judgements of various High courts which have laid down certain tests or guidelines to check the validity and legality of imposition of restrictions on such non competing agreements. It shows that Indian courts may in certain circumstances enforce confidentiality agreements intended to protect an employer’s proprietary rights.

Like these there are several other judgements of various High courts which have laid down certain tests or guidelines to check the validity and legality of imposition of restrictions on such non competing agreements. It shows that Indian courts may in certain circumstances enforce confidentiality agreements intended to protect an employer’s proprietary rights.

Kishan Dutt Kalaskar
Advocate, Bangalore
6136 Answers
487 Consultations

4.8 on 5.0

Dear Client,

Non solicitation clause no valid in India, Once you left the job , can join any organization except no discloser of information of previous company.

Yogendra Singh Rajawat
Advocate, Jaipur
22632 Answers
31 Consultations

4.4 on 5.0

A. As per the terms of the agreement (Non Solitiation Clause), you are completely barred to work with ABC's client company. 

B. The main objective of the clause is to protect the company business secret, work method, process, intellectual properties,idea and work modus operandi. Company may have loss or irreparable injury if you joined the client company if they assigned work similar to ABC's company key responsibility area. Therefore, the ABC company may initiate appropriate lega action against you under this clause in the event of joint of ABC's client. And they may seek to injuction or damages claim against you.

C. To be saferside, you need to inform the same to ABC company via email and get NOC in this regard. 

B.T. Ravi
Advocate, Bangalore
943 Answers
96 Consultations

5.0 on 5.0

It is advisable not to join company ABC  for period of 6 months 

 no doubt any agreement in restraint of trade is void.

after your resignation from ABC you can join its client 

 

ABC may sue you on basis of NDA signed by you and claim damages 

 

Ajay Sethi
Advocate, Mumbai
94695 Answers
7528 Consultations

5.0 on 5.0

On above reading of the clause there won't be any proboem you can go ahead and join the job after proper regination and full and final settlement.

Shubham Jhajharia
Advocate, Ahmedabad
25514 Answers
179 Consultations

5.0 on 5.0

Will there be any legal issue in joining the client of the company ABC as full time employee, since I have not worked with any of the client of company ABC?


Non-solicitation clauses are restrictive covenants in contracts. ... A non-solicitation clause is meant to put a restriction on an employee of a company, to prevent him from soliciting the employees or customers of a company, during and post-terminationof employment.

The enforceability of non-solicitation clauses in India is very subjective. Indian courts have consistently refused to enforce post-termination non-compete clauses in employment contracts. These clauses imply a “restraint of trade” that is clearly barred by Section 27 of the Indian Contract Act, 1872. They are also seen as being against public policy because of their potential to deprive an individual of his or her fundamental right to earn a livelihood. The general trend in judiciary is that, the clauses operating during employment are valid and those operating post employment are invalid. The enforceability of the said clause depends on the facts and circumstances of each case.

T Kalaiselvan
Advocate, Vellore
84896 Answers
2191 Consultations

5.0 on 5.0

During my period of employment with company ABC , I haven't handled any confidential information of any client.Also the offer which I have got from the client is through naukri.com portal .

So will there be any problem joining that client as I have not worked with that client and also haven't handle any confidential informant?

The Delhi High Court, allowed an injunction against the plaintiff prohibiting him from soliciting respondent’s customers and suppliers. However the court rejected the plaintiff’s claim to enforce confidentiality obligations on the manager. According to Court, a marketing manager could not be deemed to possess confidential information and that his written declaration to that effect in his employment agreement was meaningless.

Solicitation is essentially a question of fact. The appellant should prove that the respondent approached their erstwhile customers and only on account of such solicitation, customers placed orders with the respondent. Mere production of quotation would not serve the purpose. It is not as if the appellant is without any remedy. In case the Court ultimately holds that the appellant has got a case on merits, they can be compensated by awarding damages.

T Kalaiselvan
Advocate, Vellore
84896 Answers
2191 Consultations

5.0 on 5.0

Dear Sir,

Under Section 27 of Contract Act there is no bar for such employment. 

 

Kishan Dutt Kalaskar
Advocate, Bangalore
6136 Answers
487 Consultations

4.8 on 5.0

You may join ABC.

In light of the facts as told by you, the said clause will not have any effect on you 

Anilesh Tewari
Advocate, New Delhi
18078 Answers
377 Consultations

5.0 on 5.0

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