Non disclosure agreement
Natasha Khanna
(Querist) 09 May 2012
This query is : Resolved
I wanted to know whether the non disclosure agreement entered by two companies is governed under section 27 of the indian contract Act.
Adv.R.P.Chugh
(Expert) 09 May 2012
Dear Ms.Verma,
Non Disclosure Agreements are not emphatically not covered by S.27 of the ICA.
S.27 - which is a measure of social engineering and seriously restricts the freedom of contract, has been made to ensure free trade/Business/Profession in the society, and agreement by which a person is restrained (partially or absolutely) from engaging in lawful business/trade/profession are statutorily void.
A non disclosure agreement has been consistently held to be not amounting to restrain on the right to carry on trade etc. but infact subserving the very right, and is an enforcement of obligations that come with right to employment.
It does not prevent an employee from working anywhere else, but seeks to prevent breach of obligation of privacy and confidentiality agreement. It seeks to protect own legitimate business interests not to restrict somebody else's.
You may have a look at :
Biswajit v. Sanmar Speciality 2007 HC
Star India v. R.S.Nayak 2003 HC
Zaheer Khan v. Precept D'Mark 2000 SC
R.K Nanda
(Expert) 09 May 2012
I agree with the reply of Bharat chugh.
