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Home / Contracts & Documents / Non-Compete & Restrictive Covenants
Last updated: 2 October 2026
Many businesses rely on non-compete clauses that Indian courts will not enforce. Expertvuw’s team drafts restrictive covenants that work under Indian law — confidentiality, non-solicitation, in-term exclusivity and sale-of-business non-competes — so your protection holds up.
Section 27 of the Indian Contract Act, 1872 makes void every agreement by which anyone is restrained from exercising a lawful profession, trade or business. Indian courts have consistently held that post-employment non-compete clauses in employment contracts are void, regardless of how “reasonable” they appear — as reaffirmed by the Delhi High Court in 2025.
What is enforceable: restrictions during the term of employment or a contract (exclusivity), confidentiality obligations and protection of trade secrets that continue after exit, and — in many cases — reasonable non-solicitation of clients and employees. The main statutory exception is the sale of goodwill: a seller of a business can agree not to carry on a similar business within specified local limits for a reasonable period.
In shareholder and business transfer contexts, non-competes on selling founders are often upheld when linked to the sale of goodwill. Competition law may also scrutinise non-competes in larger transactions.
Basis: Indian Contract Act, 1872 (section 27 and its exception for sale of goodwill); judicial precedent including Delhi High Court (2025); Competition Act, 2002 for transaction-related restraints. Last updated: 27 September 2026.
Agreements restraining trade are void, subject to exceptions.
Post-employment non-competes are generally void.
Exclusivity during the term is enforceable.
Can continue after exit.
Reasonable non-competes on sellers are allowed.
Often enforceable if reasonable.
Relying on unenforceable clauses leaves businesses exposed.
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Restrictive covenants connect with these services.
Employment contracts.
Confidentiality agreements.
Structured exits.
Founder and investor restrictions.
Assess existing clauses.
List what really needs protection.
Prepare enforceable covenants.
Add practical controls.
Update templates and agreements.
Revisit as case law develops.
Protection also depends on practice.
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Share your query and our team will reply during business hours.
Post-employment non-competes in employment contracts are generally void under section 27; restrictions during employment are enforceable.
Confidentiality, trade secret protection and reasonable non-solicitation clauses.
Yes, within reasonable limits, under the sale-of-goodwill exception.
Yes. They can survive termination.
Restrictions during the employment term, including notice, are generally enforceable.
ACS – Director, Expertvuw Management Pvt Ltd
Agreements and policies are drafted by Expertvuw’s team for your review and negotiation. Where you need a legal opinion, dispute advice or representation, it is provided by independent advocates. Expertvuw is a corporate services company, not a law firm.