Non-Poaching Clauses In B2B Consultancy Contracts: Are They Enforceable Under Indian Contract Law?
- IJLLR Journal
- Jul 23
- 1 min read
Mohak Jotwani, O.P. Jindal Global University, Jindal Global Law College
ABSTRACT
This article critically examines the enforceability of non-poaching clauses in Business-to-Business (B2B) consultancy contracts within the Indian legal framework. While such clauses are commonly employed to protect business interests—particularly against the loss of trained personnel and leakage of trade secrets—they raise significant concerns under Section 27 of the Indian Contract Act, 1872, which renders agreements in restraint of trade void. The analysis highlights how these clauses, though contractual arrangements between firms, effectively restrict the employment rights of third-party employees, thereby implicating constitutional guarantees under Articles 19(1)(g) and 21. Through doctrinal analysis and case law including Wipro Ltd. v. Beckman Coulter, Hi-Tech Systems v. Nikhil Ghosh, and Desiccant Rotors v. Bappaditya Sarkar, the paper underscores the inconsistency in judicial interpretation and the need for legislative clarity. It argues that the indirect use of liquidated damages as a backdoor restraint must be scrutinized, and advocates for a Trade Secrets Protection Act to balance proprietary business concerns with individual employment freedoms. The article concludes by urging courts to adopt a purposive interpretation of Section 27 that prioritizes labor mobility, economic equity, and constitutional values.
Keywords: Non-Poaching Agreements, Section 27 of Indian Contract Act, Anti-Competitive Agreements
