(2) it would be a trade restriction and not in accordance with section 27 of the Indian Contracts Act. While the fact that competition bans bind workers for the duration of their employment is a legally firm position, the position of the laws on the validity of such restrictions for workers after the termination of the employment contract is more controversial and will be decided in court. Foreign investors should take this into account when including employment contracts with their employees in India. In India, the traditional approach of any agreement to restrict trade is that it is on its face of none and can only be applied if, in the current circumstances, it can be duly justified, both in relation to the public interest and by the interest of the parties. However, there are important differences in how the courts judge the question of such adequacy, depending on whether the agreement was concluded in the context of a commercial transaction or in the context of an employment contract. However, whether it is a non-competition clause in a transaction or a contract of employment, there are no fixed rules or parameters defined to determine the extent to which such clauses can be accepted and, therefore, each case depends on its own facts. In India, such a clause is subject to the codified provisions of section 27 of the Indian Contract Act, 1872 (“Contract Act”) according to which any agreement preventing a person from carrying on any legal profession, trade or activity of any kind void on that scale. Indian jurisdictions have more or less complied with the letter of the law and have adopted a consistent view that treats these clauses as a concept of equity rather than a contract. It must be dealt with in a comprehensive manner with regard to public policy.
It is illusory, it is contingent and it is not reliable. It is difficult to indicate the detailed meanings of the word public policy. Definitions of public policy may be extended and updated. The unmasking of the word “economic policy” is the competence of justice. Several instructions from the judiciary to decide what public order is and what is not. Each of these agreements can be articulated, since any agreement aimed at harming the public interest or public health is contrary to public policy. It can also mean that anything that contributes to institutional inequality, restriction of freedom, trade, and human or civil liberties, anything that appears to impede oppression or violation of laws, and anything that goes against reasonable values can be called contrary to public order. Whether or not agreements are contrary to public policy is essentially judicial review. Public order must be the subject of a broad debate. It is illusory, variable and uncertain. It is difficult to define precisely the concept of public policy. The concept of public order is capable of developing and modifying.
It is up to the courts to explain the concept of public order. There are several directives that are given by the courts to determine what public order is and what is not. .