Delhi High Court in Varun Tyagi vs. Daffodil Software Private Limited (FAO 167/2025)on June 25, 2025, quashed an interim injunction that had restrained the ex-employee from joining his new employer, who is a client of his former employer. The Trial Court had granted the injunction based on a non-compete clause in the employment agreement, citing risks of disclosure of confidential information. However, the High Court held that any post-employment restriction on trade or profession is void under Section 27 of the Indian Contract Act, 1872, unless it falls within narrow statutory exceptions. It observed that while restrictive covenants may be enforceable during employment, they cannot curtail an employee’s right to livelihood after termination, particularly in the absence of concrete evidence of misuse of confidential information. The Court also observed that the intellectual property in question belonged to the new employer, making the former employer’s concerns speculative and unfounded.
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