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Indian Law/Appointment letter terms and conditions


Dear Sir,

In January month I joined an organization. That time I signed an appointment letter with the organization . Honestly I didnt read the terms and conditions in details . However, while leaving the job they sent me a relieving letter which mentioned a condition from the appointment letter that I shall not reveal any business secrets of the organization to any third parties and for that I cannot join any organization which are in direct or indirect competition with the organization for two years. I asked the HR manager for clarification but he said that I already signed it in appointment letter. That means if I leave the job then I will have to leave the field as well as it is impossible for anyone. I would like to know how liable I am to obey these type of contracts. If I join a competitor organization, can they take any legal action against me or not.


First of all, you have done a gross blunder by not minutely reading the terms and conditions of your appointment -letter.I would advice you not to do such a mistake in future because your whole career is associated with it.Now coming to your main query, my comments are given below:

As long as you are in employment,you are duty bound not to disclose trade -secrets of your employer's business to anybody except when required under law or when specifically mentioned in the Confidential Agreement.

Any agreement in restraint of trade ,business or profession is void under section 27 of the Contract Act subject to certain exceptions.Further,Article 19 of our Constitution provides rights to all citizens to do any occupation,trade or business.

Therefore,the stipulations contained in your relieving letter is a violations of the above provisions of the Act and hence, not applicable.However, if such restrictions relate to intellectual property rights or sale of goodwill of business or such other reasonable restrictions,which are permitted by law, then they are applicable.For a non-compete clause to be upheld by the court, there must be a very specific provision of trade secrets, intellectual property etc.which have come into the possession of the employee by virtue of his position . The employer may even name the competitors who are the threats to his business and joining which may entail the specific restraining order. Now-a -days many companies execute confidential agreements with their employees but in court it is very difficult to prove such violations and very rarely any favourable decisions are given by the court.It entirely depends upon the facts and circumstances of the case.In India cases like Star India Pvt. Ltd. v/s Laxmiraj Seetharam Nayak(2003 (3) Bom CR 563); Gujarat Bottling Co. Ltd. v/s Coca Cola Co., and Jet Airways (I) Ltd. v/s Jan Peter Ravi Karnik 2000(4) BCR 487 are decisions which will influence the Court in consideration of grant of relief to any injunction against an employee from competing or joining any competitor.

In view of the above,apparently, you have nothing to worry about and you can safely join a competitive organisation without any fear but to be on the safe side, please take all actions in consultations with a service law expert.


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Arun Kumar Maitra


Contract Law,Companies Act,Sale of Goods Act,Partnership Act,Negotiable Instument Acts,Constitution of India,Arbitration Act,Consumer Protection Act,Maternity Act,Payment of Gratuity Act,Payment of Bonus Act,Shops & Establishment Act etc.The answer to the grievance of the particular online query depends on the facts of the particular case and law applicable to it.However,my comments relating to the various queries raised through the "All Experts" should not be treated as legal advices and should not at all be relied upon.I do not accept any responsibility for them.They will only give you some ideas about the probable merits of your cases.Ultimate actions/decisions in the matter may please be taken in consultation with the Legal Experts in the relevant fields.My purpose of giving the comments is to increase my own knowledge on the subjects and share it with others.It is purely of academic interest to me. I strongly feel the more knowledge we share,the more we shall be able to learn because there is neither any age nor any end to learning.


I have experience of dealing with matters relating to holdings of board/general meetings,maintenance of statutory registers,filing of necessary returns with the RoC,obtaining licenses for import,replies to Parliament Questions,dealing with the Parliamentary Committees,appearing before various courts to defend my employers,filing affidavits/counter -affidavits,preparing written statements/re-joinder,giving advice to management on complicated legal issues,preparation,drafting and vetting of contracts etc. I have more than 35 years of experiences to deal with the Company Law and Other Commercial Laws of leading Organisations in the country both in Public as well as Private Sectors.

Member,Inst. of Chartered Accountants of India Member,Inst. of Company Secretaries of India; Member,Bar Council of India Member,All India Management Association Member,Delhi Management Association Ex. Vice-Chairman,Durgapore Chapter of the I.C.A.I. Expert ,CA Club India Expert ,Lawyers Club India Expert,AllExperts Ex. Faculty ,I.C.S.I as well as I.C.W.A of India Retd. Co. Secy. & G.M.(Law)/NFL(A Mini-Ratna A Schedule Central P.S.U.),New Delhi Ex.V.P.(Secretarial Dept.),Jaiprakash Associates Ltd. Ex. Co. Secy.,MAMC(A Govt. of India Enterprise),Durgapore



Awards and Honors
Obtained ''A'' Grade Certificate in the Parliamentary Procedure from the Secy. General of Parliament in 1994-95.It was in connection with a training course conducted by the BPE for PSU Executives.

Past/Present Clients
I am presently working as a Company Secretary in Old World Hospitality Pvt. Ltd.located in Delhi.It is engaged in Hospitality Industry.It has Units in India and abroad.It has been given the responsibility to look after operation & Management of ''India Habetat Centre'' located at Lodhi Road,New Delhi.

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