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ARTICLE · 28 MAY 2025

The Legality Of Post-Exit Non-Compete Clauses

Remfry & Sagar
Remfry & Sagar
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Remfry & Sagar

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Post-employment restraints must be reasonable, narrowly tailored and justified by a legitimate business interest to withstand judicial scrutiny.

IndiaEmployment and HR
Cyril Abrol
Cyril Abrol

Post-employment restraints must be reasonable, narrowly tailored and justified by a legitimate business interest to withstand judicial scrutiny.

In a significant ruling, the Delhi High Court has reaffirmed that unreasonable non-compete clauses imposed on employees or business partners post-separation are unenforceable and that contractual restraints on professional freedom must be reasonable and legally sound (Cigma Events Pvt. Ltd. vs. Deepak Gupta & Ors., C.S. (OS) 1011/2024).

Background

Deepak Gupta was employed by Cigma Events Pvt. Ltd. as a senior executive. As part of his employment contract, Gupta agreed to a non-compete clause that barred him from working in a similar industry or interacting with the company's clients and vendors for two years following his departure. Regardless, after resigning, Gupta launched a competing venture. Cigma Events responded by filing a lawsuit seeking an injunction to restrain him from engaging in similar business

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