Enforcement Of Non Compete Clause In Employment Contract | Vkeel - Free Legal Advice

Aditya Varun

Pune

I had a query regarding the enforcement of a non compete, my client has resigned from the startup where he was employed for 5 years, the firm accepted his resignation he then joined a new company which is a direct competitor as defined by his earlier employer company. Then after a few months he was served a legal notice asking for compensation for breach of the clause which said, " the employee can not join any direct competitor for a period of 12 months" and pressed charges of breach of the contract, claimed for damages and also return the amount of money which was given to the employee by selling of shares to a tune of few lakhs. 1) Will this come under purview of section 27 of Contract act. 2) There are a lot of judgements of Hon'ble High Courts where the court has preferred livelihood of employees over the non-compete enforcement. 3) The company is based in NCR, and new company which he has joined is based in Mumbai will that make a change.

Expert's Answers(2)

Advocate Anik
Bengaluru, Karnataka

65 Client Ratings

Hi, Indian judiciary has placed higher importance on right to livelihood of the employees over the non-compete enforcement. So getting relief for violation of non-compete clause would be very difficult. The Hon'ble Supreme Court has held that such agreement beyond the period of employement would be void under Sec. 27 of the Contract Act. But you can still get the remedy provided you can prove that the restrain is fair, but it would be difficult. Change in jurisdiction is of no consequence. If you find my answer helpful, please rate me.

May 27, 2021
Advocate Ankur Goel
Bangalore, Karnataka

7 Client Ratings

court has preferred livelihood of employees over the non-compete enforcement. thats the truth,

May 27, 2021