Calcutta High Court: Non-Compete After Resignation Not Enforceable, But Trade Secrets Are

The Calcutta High Court has held that an employer cannot stop an employee from joining a competitor after resignation by relying on a post-employment non-compete clause. The Court said such clauses are prima facie void under Section 27 of the Indian Contract Act, because they restrain trade and affect a person’s right to earn a livelihood.

However, the Court also clarified that employers are not left without protection. Clauses that protect confidential information, trade secrets, customer data, and business interests can still be enforced. The Bench drew a clear line between an illegal “blanket restriction” on future employment and reasonable safeguards meant to prevent misuse of proprietary information.

In this case, the Court refused to grant an injunction stopping the former employee from joining a rival company. But it granted limited relief to the employer by restraining the employee from:

• sharing or using the employer’s confidential/proprietary information,
• soliciting the employer’s customers, and
• inducing the employer’s existing employees to leave.

The Court found these restrictions to be reasonable and necessary to protect legitimate business interests, without amounting to a complete ban on employment.

Case: Parraj Automobiles Private Limited v. Mr. Samiran Sinha
Case No.: FMAT No. 460 of 2025