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CS Professional · Intellectual Property Rights - Law and Practice · Protection of Trade Secrets

Nisha, an engineer at Bharat Robotics Pvt. Ltd., signed an employment contract with a clause barring her, for two years after leaving, from joining any competitor anywhere in India. She resigns and joins a rival. Bharat Robotics seeks to enforce the clause, alleging trade secret protection. What is the correct position under Indian law?

The post-termination non-compete is generally void as a restraint of trade under the Indian Contract Act, even for two years. Bharat Robotics can still seek an injunction against misuse of its actual confidential information, because that protection rests on breach of confidence, not on barring employment.

  1. AThe post-termination non-compete clause is generally unenforceable as void under the Indian Contract Act, 1872, but the company can still restrain misuse of its actual confidential informationCorrect
  2. BThe clause is fully enforceable because it is limited to two years
  3. CThe clause is enforceable only if the company registers its trade secrets
  4. DThe clause is enforceable because employees owe no duty of confidence

Explanation

Post-employment restraints of trade are generally void under Section 27 of the Indian Contract Act, regardless of duration. However, the employer may still obtain an injunction against use or disclosure of genuine confidential information, since that rests on confidence, not on barring employment. Duration or registration does not rescue the clause.

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