Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Name Roll No
Oliver Coelho 10
Mayur Kunder 25
Priyanka Surve 55
Krunal Thakkar 56
Dinu Thomas 57
Devendra Singh 62
Shrikant Chippa 63
What is a Non-Compete Clause-
1)Purpose-
2) Type-
4)Legal Aspects-
1) Distance-
2) Time period-
Facts-
Employees of VPS were restrained from competing after termination of contract
for a specific time period.
VPS duly paid full salary during this period.
Suprit Roy joined another organization and was subsequently sued by VPS.
Judgment-
The Bombay High Court held that a fully paid three-month ‘garden leave’
agreement with a manager did not renew the employment contract and
constituted a ‘restraint of trade’ unenforceable by V.F.S.
It was argued that such a clause is prima facie in restraint of trade and hence void
as per Section 27.
Its aim is to prohibit the employee, after employment, from taking up other
employment during the period of three months. The Court held that such a
practice is “not fair or proper” and unreasonable restraint of trade.
2) Employee bond- V.V. Sivaram and others v. FOSECO India Limited.
Facts-
Employees of Foseco India Limited was restrained, after leaving the job,
from using secrets and confidential information that was gained during the
job, including information about the patent ‘Turbostop’.
After leaving under voluntary retirement VV. Siravaram along with other
collogues started manufacturing similar product as to Turbostop
Injunction in his contract that restrained him from manufacturing and
marketing products similar to ‘Turbostop’
Judgment-
The court failed to believe that Sivaram had not received information
regarding the manufacturing process of Turbostop during the course of
their employment
Issue of enforceability of non-compete obligations was held valid under
Section 27
3) Right of First Refusal- Zaheer Khan v Percept D’marks (India)
Facts-
Zaheer had signed a contract with the company in the year 2000 for a
period of three years with the contract ending in October 2003.
In July 2003 the company sent him a draft agreement for extending the
contract for another five years. Zaheer turned it down saying he was not
interested.
Percept D'Mark then approached the Bombay High Court in December
that year saying Zaheer had been paid huge amounts of guarantee money
every year under the contract and asked for an injunction on his signing a
contract with a third party before fulfilling his obligations under their
agreement.
The company, invoking a clause in the deal, had asked Zaheer to provide
all the details of any contract he intended to sign with a third party and
demanded that it get the first opportunity to offer the contract.
Zaheer had refused to abide saying the agreement was one-
sided and unfair.
Percept D'Mark's appeal was granted by the High Court and
Zaheer and the new company (Adidas) that wished to
represent him filed separate pleas against the judgment.
The matter was then taken to the Apex Court .
Judgment -
The HC then granted Zaheer's petition against the judgment and Percept
brought the matter to the apex court.
The SC bench, while dismissing its plea, said restraining Zaheer from acting
upon the agreement entered into with the new firm would amount to
compelling him to be managed by Percept D'Mark. '‘
Fact-
Company had build up reputation on grounds of technique
for quality control and some Trade Secrete Employee post
service were restrained –
i)Taking up service with a firm in competition with former
firm
ii)Start his own business at the place of his last position for
2 Yrs.
Facts -