Parraj Automobiles Private Limited v. Samiran Sinha (Neutral Citation: 2026:CHC-AS:223-DB) was decided by the High Court at Calcutta on 10 February 2026 by a Division Bench comprising Justice Sabyasachi Bhattacharyya and Justice Supratim Bhattacharya. The appeal arose from the Trial Court’s refusal to grant an ad-interim injunction enforcing restrictive covenants contained in an employment agreement after the employee resigned and joined a competing business. The employer sought enforcement of post-employment non-compete, non-solicitation, and confidentiality clauses, citing apprehended disclosure of trade secrets and employee poaching. The High Court held that post-employment non-compete clauses are void as restraints of trade under Section 27 of the Contract Act, 1872, but drew a distinction in respect of non-solicitation and confidentiality obligations, which were held to survive termination and be enforceable through injunction. Accordingly, the Trial Court’s order was modified and a limited injunction was granted restraining solicitation of the employer’s employees and disclosure of confidential information, while enforcement of the non-compete clause was refused.

Legal Issue

Whether post-employment non-compete clauses restraining an employee from joining a rival business are enforceable under Section 27 of the Contract Act, 1872. Whether non-solicitation and confidentiality covenants can be enforced through injunction despite termination of employment. Whether availability of damages bars grant of injunction in employment-related restrictive covenant disputes.

Brief Facts

Employee resigned from the appellant company and joined a competing business immediately thereafter. Employer sought injunction enforcing non-compete, non-solicitation and confidentiality clauses in the employment agreement. Trial Court refused ad-interim injunction holding damages were an adequate remedy. Employer appealed arguing risk of disclosure of trade secrets and employee poaching.

Court’s Reasoning

Section 27 renders agreements restraining lawful profession void except in limited statutory exceptions; post-employment non-compete therefore prima facie unenforceable. Restricting an ex-employee from joining a competing business directly impairs livelihood and falls squarely within restraint of trade.Employee’s resignation was valid; hence he became an ex-employee and protection of Section 27 applied. Non-solicitation covenant is distinct from non-compete, preventing poaching of employer’s staff does not restrict the employee’s own profession. Confidentiality obligations survive termination because protection of trade secrets constitutes legitimate proprietary interest. Negative covenants protecting confidential information are enforceable through injunction under Section 42 of the Specific Relief Act.Damages remedy applies only to notice-period breach; continuing breach of confidentiality and solicitation cannot be adequately compensated monetarily. Mere joining a rival company does not automatically imply disclosure of trade secrets; injunction must be narrowly tailored.

Decision

Non-compete restraint refused as void under Section 27. Injunction granted restraining employee from soliciting employer’s employees, and disclosing confidential information or trade secrets. Trial Court order modified and appeal partly allowed.

Access the Official Judgement here

Case Title

Parraj Automobiles Private Limited v. Samiran Sinha

Neutral Citation

2026:CHC-AS:223-DB

Court

High Court at Calcutta

Bench

Justice Sabyasachi Bhattacharyya

Justice Supratim Bhattacharya

Date of Judgment

10 February 2026