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In a landmark decision safeguarding employee rights, the Delhi High Court ruled that companies cannot prevent former employees from taking up new jobs—even with their clients or associates. The judgment declared post-employment non-compete clauses void under Section 27 of the Indian Contract Act, which prohibits any agreement that restrains a person from practicing a lawful profession, trade, or business. Justice Tejas Karia emphasized that forcing an employee to either return to their previous job or remain unemployed is unacceptable, affirming that the right to seek better job opportunities is a fundamental employment right in India.

Delhi HC Lifts Job Ban on Engineer, Says Firms Can’t Block Lawful Employment

The case involved software engineer Varun Tyagi, who had worked on the government’s Poshan tracker project during his employment with Daffodil Software. After completing his notice period in April 2025, Tyagi joined Digital India Corporation (DIC), the government entity that owned the POSHAN project. Daffodil, citing a contract clause that barred Tyagi from working with any “business associate” for three years, obtained a district court order restraining his employment with DIC. Tyagi challenged this order in the Delhi High Court.

The High Court overturned the lower court’s ruling, stating that Tyagi had not developed proprietary software or held any confidential intellectual property. The court noted that all rights to the POSHAN Tracker were with the government, not Daffodil. Therefore, the restriction lacked legal merit. It further ruled that companies cannot use vague, overbroad contract clauses to block employees from taking lawful work elsewhere.

Post-Employment Restrictions Invalid Unless Protecting Proprietary Interests: Delhi HC

Justice Karia also rejected arguments that such clauses are needed to prevent the misuse of confidential information. Post-employment restrictions, the court held, can only be justified to protect genuine proprietary interests—not to curb job mobility. Even in cases of contract breaches, employers can seek damages but cannot legally prevent someone from working.

This ruling clarifies that Indian law does not support post-employment restrictions, except in rare cases involving the sale of business goodwill—an exception explicitly allowed under Section 27. The decision sends a strong message against exploitative employment practices and upholds the constitutional right to work.

Summary:

The Delhi High Court ruled that post-employment non-compete clauses are void under Indian law, affirming employees’ right to seek better job opportunities. Overturning a lower court’s order, it allowed engineer Varun Tyagi to join a government project, stating such restrictions are invalid unless protecting genuine proprietary interests or business goodwill.