Conflict of interest as per Employment Agreement
I am working with an IT Consulting firm for the last 3 years. Here, we consult with various IT organizations on best processes and practices. Services offered range from 2 days of training to few months of consulting assignments. As per the "Employment Agreement" I had signed, one of the important points stated are as below:
"During the term of the Employee’s employment with the Company and for a period of two (2) years thereafter, the Employee shall not, without the prior written consent of the [Chief Executive Officer] of Company, directly or indirectly, engage in, or encourage or assist others to engage in, any other employment or activity that would, (i) divert from the Company any business opportunity in which the Company would reasonably be expected to have an interest, (ii) directly or indirectly compete with, or involve preparation to compete with, the current or future business of the Company, (iii) otherwise conflict with the Company’s interests or cause a disruption of the Company’s operations or business prospects."
Now, I plan to step out and start a venture of my own in the same field. Points to note are as below:
* One of my "would be" first clients had engaged with my employer company more than 3 years ago, for few days of training (not more than 2 to 8 days).
* Also, currently my employer company is not in the authorized vendor list of my future client company.
* However, I had been presented as a prospective candidate(from Employer company) for an assignment and was interviewed by the client company about 9 months back. But, things had not worked out for some reason.
* I have been offered an assignment for 6 months by the future client company now, but through one of their other registered vendor.
* the client is an MNC with its operations outside India, but has its software development centers here.
* The employer company is a subsidiary of US company.
* Conflicts have to be resolved in Bangalore Court, as per the Employment Agreement.
* (obvious one) will it be considered as violation of law if I indulge with the future client.
* Does this fall under the ambit of CCI regarding abuse of dominant position by enterprise.
Thanks in advance.
Asked in Labour from Bangalore, Karnataka
1) once you leave the organisation you are free to take assignment with any other company
2) under section 27 of indian contract act any agreement in restraint of trade is void
3) Supreme Court of India in Percept D' Mark (India) Pvt. Ltd v Zaheer Khan observed that under Section 27 of the Act a restrictive covenant extending beyond the term of the contract is void and not enforceable.
4) Sandhya Organic Chemicals P.Ltd v. United Phosphorous
The Gujarat High Court held that a service covenant extended beyond the termination of the service is void. It was held that an employee could not be restrained for all times to come to use his knowledge and experience which he gained during the course of employment either with the employer or with any other employer.
1. This is in the nature of a non-compete clause which is ordinarily not enforced by the courts in India in entirety as it makes business subject to unlawful restraints. Furthermore, the clause is vague and not specific. That your employer is not in the authorized vendor list of your future client also makes the clause unenforceable in respect of your association with this client.
2. The remedy for your company is to file a lawsuit for injunction to restrain you from working with your client, which you can contest on receipt of summons from the court.