A Bengaluru court has ruled that companies cannot use confidentiality clauses to prevent former employees from joining rival firms. The case involved EOX Vantage, which accused ex employee Shruthi BS of leaking data, poaching staff and diverting clients. The company sought a permanent injunction, claiming losses of over Rs 20 lakh and citing a criminal complaint.
The court acknowledged that employers can legitimately protect trade secrets, proprietary information, pricing details and customer data. However, it stressed that restrictions stopping someone from pursuing a lawful profession or trade are void under Section 27 of the Indian Contract Act. In other words, confidentiality agreements cannot be stretched to block career mobility or the use of general skills and experience.
On reviewing the evidence, the judge found the company’s internal investigation weak. WhatsApp chats and emails were not backed by testimony, forensic investigators were not identified, and electronic records did not prove data theft or poaching. The court also noted that Shruthi had resigned on medical grounds in April 2022, received a relieving letter after scrutiny, and there was no proof she had joined a competitor.
The ruling, as reported by BarandBench.com, highlighted inconsistencies in the company’s conduct, including issuing a relieving letter despite ongoing allegations. It concluded that the suit was speculative, damages were not proven, and dismissed the case with costs.
The judgment reinforces a key principle which HR leaders need to take note of: confidentiality clauses can safeguard sensitive information but cannot be misused to restrict employee careers. The focus must remain on protecting genuine trade secrets while respecting mobility and fair employment practices.