The XXXV Additional City Civil and Sessions Judge in Bengaluru has dismissed a permanent injunction suit filed by EOX Vantage Private Limited, which sought to restrain a former employee, Shruthi B.S., from engaging in business activities with rival firms. The court’s decision underscores the limited enforceability of non-solicitation and non-disclosure agreements when they infringe upon an individual’s right to practice a lawful profession. Presiding Judge J.V. Kulkarni ruled that an employer cannot utilize restrictive clauses to effectively bar a former staff member from joining a competitor or leveraging their professional experience, as such constraints conflict with the fundamental principles of the Indian Contract Act.

The litigation stemmed from allegations that Shruthi B.S., a former Assistant Manager of Operations, had breached her employment terms following her resignation in April 2022. The plaintiff company, which specializes in back-office and knowledge process outsourcing, alleged that the defendant had leaked confidential information, solicited existing clients, and poached employees to benefit a competing firm. EOX Vantage claimed that these actions resulted in estimated financial losses exceeding ₹20,00,000, prompting the company to file both a criminal complaint under the Information Technology Act and this civil suit for an injunction.

Failure to Substantiate Allegations of Misconduct

During the proceedings, the court scrutinized the evidentiary basis provided by the plaintiff. EOX Vantage relied heavily on an internal investigation report, marked as Exhibit P-5, which purportedly detailed instances of data exfiltration and illicit communication. However, the court found the evidence insufficient to establish a clear case of professional misconduct or breach of contract. The judge noted that while the company submitted screen captures of WhatsApp messages and emails, there was no direct testimony from the employees allegedly poached, nor were the individuals who performed the forensic audit produced for examination.

Judge Kulkarni pointedly observed that the company’s forensic evidence lacked a robust chain of custody . "The data sharing clients and employee poaching was not conclusively established or corroborated by the evidence available on record," the court noted. Furthermore, the court highlighted that the plaintiff failed to examine key individuals mentioned in the internal report, including the employee supposedly targeted for poaching. The reliance on an FIR, which had not yet progressed to a charge sheet, further weakened the company's position, as the court maintained that speculative assertions of loss cannot form the basis for a permanent injunction .

The court also identified inconsistencies in the timeline provided by the plaintiff. The defendant had received a formal relieving letter from EOX Vantage in February 2023, approximately eight months after her resignation. The judge questioned why a company with a dedicated internal monitoring and IT department would issue a standard relieving document if it had truly identified, at the time of her departure, that the defendant was actively engaged in data theft or misconduct. This discrepancy suggested to the court that the legal action was, in part, an attempt to restrict the defendant's professional mobility rather than a genuine pursuit of redress for verified damages.

Reconciling Contractual Agreements with Statutory Freedom

Central to the court’s ruling was the application of Section 27 of the Indian Contract Act, which governs agreements in restraint of trade. While acknowledging that companies have a legitimate interest in protecting proprietary data, technical know-how, and custom pricing models, the court held that these protections do not grant an employer an indefinite right to monitor or control a former employee's career trajectory.

"Therefore, an employer ordinarily cannot prevent a former employee from joining a competitor or using their general skills, experience and knowledge merely by calling the restrictive confidential clause," the judge observed. The ruling clarifies that whereas a company may validly seek to prevent the disclosure of specific trade secrets , a sweeping injunction against all solicitation or competitive employment constitutes an illegal restraint. The court emphasized that the burden of proving that an employee utilized confidential proprietary knowledge—rather than general skills and ordinary industry experience—rests solely with the employer.

Throughout the cross-examination, the plaintiff’s representative admitted that standard non-disclosure agreements were a universal requirement for all employees, especially those permitted to work from home during the pandemic. The court found that this broad implementation of restrictive covenants, applied without distinction to the sensitivity of the role, suggested that the clauses were designed more as a deterrent to competition than as a targeted measure for protecting critical company assets. By failing to link the defendant’s current activities to a specific breach of identifiable trade secrets, the plaintiff could not satisfy the requirements for discretionary equitable relief.

The defendant, for her part, maintained that her resignation was prompted by medical grounds and that she had acted in full compliance with her professional obligations. She argued that the litigation was initiated in bad faith to inflict mental agony and career damage. Following the analysis of the oral arguments and the submitted documentation, the court concluded that the plaintiff failed to establish any actionable nexus between the defendant’s current employment and the alleged loss of business.

The suit was dismissed with costs, signaling a significant judicial affirmation of the right to work and the limits of corporate non-compete enforcement. By requiring the plaintiff to provide concrete, corroborated proof of breach rather than reliance on internal investigation reports, the court has set a high threshold for companies seeking to restrict the post-employment activities of their former staff. This verdict serves as a definitive rejection of efforts to leverage civil litigation as a tool for restricting the professional mobility of employees in the absence of clear and convincing evidence of wrongdoing.