My ex-company is harassing me over a non-compete clause that’s legally

724 votes

At the outset, it is important to note that under Indian law, particularly Section 27 of the Indian Contract Act, 1872, any agreement that imposes a restraint of trade is void to that extent unless it falls within the limited exceptions recognised by law. The Indian judiciary has consistently held that a clause restraining an employee from engaging in lawful employment after termination of service is not enforceable, as it offends public policy. The Supreme Court and various High Courts have reaffirmed this position, distinguishing between restraints during the term of employment (which may be valid) and restraints after employment (which are generally void). Thus, any clause purporting to prohibit you from engaging with any paper-related business after leaving SPB is, prima facie, void and unenforceable in law. The enforceability of the non-compete clause will also depend on the precise wording of the clause and whether it is narrowly tailored to protect any legitimate proprietary interest of SPB, such as trade secrets, client databases, or confidential processes. If your current role at Roxcel Trading is in a different capacity or does not involve the use of SPB’s confidential information, then SPB would not be able to establish any substantive breach, even if the clause were hypothetically enforceable. Moreover, if Roxcel operates in a separate geographical market or segment of the paper trade than SPB, the allegation of direct competition becomes further diluted. As to the initiation of arbitration proceedings, much will depend on whether the contract contains a valid and enforceable arbitration clause, and what disputes were expressly referred to arbitration therein. You retain the right to challenge the maintainability of such proceedings on grounds of non-arbitrability, especially where the issue pertains to post-employment restraints, which may involve questions of public policy and personal liberty. It may also be argued that the claim does not fall within the jurisdiction of the arbitral forum if the dispute relates to an unenforceable covenant. You are advised to issue a formal reply to the legal notice without delay, specifically denying any breach, asserting the void nature of the non-compete clause, and stating that your present employment does not involve the use or disclosure of any confidential or proprietary information belonging to SPB. You should also consider reserving your rights to seek protective orders if SPB proceeds with coercive measures or attempts to interfere with your current employment. If you are able to share a scanned copy of the employment agreement, the legal notice received, and the arbitration letter or notice from the arbitral institution, I can assist in drafting a detailed legal reply and a procedural response. It would also be useful to have a short summary of the functions you performed at SPB and the nature of your current role at Roxcel, so that a comparison may be made for legal analysis.

Advocate Arka Maiti LawRato