My colleagues Valerie Demont and Janaki Catanzarite recently answered this question in an article that discusses a recent, relevant decision by the New Delhi High Court. As they state in the article:
[F]oreign companies doing business in India often seek to include confidentiality, non-compete and non-solicitation covenants in their agreements with senior management and employees, as is customarily done in certain foreign jurisdictions. However, Indian courts have consistently refused to enforce post-termination non-compete clauses in employment contracts, viewing them as “restraint of trade” impermissible under Section 27 of the Indian Contract Act, 1872 (the Act), and as void and against public policy.
There are, however, certain exceptions to this general rule. Also, confidentiality obligations may be covered by the rule in certain situations. In the article, Valerie and Janaki discuss situations where Indian courts have found exceptions — which can often be fact-specific. For the full article, click here.
A very interesting insight indeed.
a brief approach on validity of non compete covenants in india:
Agreements that restrain an employee from working with a competitor or carrying out a competing business are called Non-compete agreements. Such agreements, when reasonable are considered to be valid in countries such as USA and UK. However, under the Indian law Non-compete agreements are valid to a very limited extent because agreements in restraint of trade or employment are void under Section 27 of the Indian Contract Act. The section reads as follows:
“27. Agreement in restraint of trade void .– Every agreement by which any one is restrained from exercising a lawful profession, trade or …. to read on, log on to http://www.sinapseblog.com