The Delhi High Court has ruled that employees cannot be forced to choose between working for their previous employer or remaining idle [Varun Tyagi v. Daffodil Software Private Limited]..The Court emphasised that employer-employee contracts with restrictive covenants are viewed strictly because employers have an advantage over employees, who must often sign standard form contracts or face unemployment. The judgment found that non-compete restrictions post termination of a contract violate Section 27 of the Indian Contract Act, which prohibits agreements that restrain lawful professions or trades..While striking down an interim injunction that prevented a software engineer from joining his former company's government client, Justice Tejas Karia held,"An employee cannot be confronted with the situation where he has to either work for the previous employer or remain idle...any terms of the employment contract that imposes a restriction on right of the employee to get employed post-termination of the contract of employment shall be void being contrary to Section 27 of the ICA.".The petitioner Varun Tyagi was a software engineer for Daffodil Software Private Limited from January 2022 to April 2025. He primarily worked on the government's POSHAN Tracker project - which aims to enhance nutritional outcomes for children across the country - through Digital India Corporation (DIC). His employment agreement contained non-compete and non-solicitation clauses restricting him from working with the company's "business associates" for three years after termination. Following completion of his notice period, Tyagi joined DIC directly as Deputy General Manager on April 8, 2025.Daffodil filed q suit seeking to restrain Tyagi from working with DIC and the National E-Governance Division (NeGD), citing breach of the employment agreement. A district judge granted an interim injunction in favour of the company on June 3, restraining Tyagi from working with DIC and NeGD..The High Court examined the case under Section 27 of the Indian Contract Act, 1872, which renders agreements that restrain individuals from exercising lawful professions, trades or businesses void. Justice Karia emphasised that unlike English law, Indian law does not recognise the distinction between partial and absolute restraints on trade."The reasonableness and whether the restraint is partial or complete is not required to be considered at all when an issue arises as to whether a particular term of contract is or is not in restraint of trade, business or profession," the Court explained.The judgment referenced Supreme Court precedents distinguishing between restrictions operative during employment versus those extending beyond termination, noting that post-employment restrictions face stricter legal scrutiny under Indian law..The Court found that the intellectual property rights for the POSHAN Tracker project belonged to DIC, not Daffodil Software."Hence, the apprehension of the Respondent that confidential information or intellectual property shall be shared with DIC is misconceived as the same already belongs to DIC," it held.This finding undermined the software company's claims that Tyagi possessed confidential information that could be misused, as the Court observed that Daffodil's role was primarily to provide manpower services rather than develop proprietary technology..Addressing fundamental employment rights, the Court said that employees cannot be placed in positions where they must choose between returning to former employers or remaining unemployed."Freedom of changing employment for improving service conditions is a vital and important right of an employee, which cannot be restricted or curtailed on the ground that the employee has employer's data and confidential information," the judgment reiterated.In evaluating the balance of convenience, the Court found that Tyagi would face greater hardship if prevented from continuing his employment with DIC, noting that any contractual breach could be addressed through monetary damages if subsequently proven..It thus concluded that the trial court's interim injunction violated established legal principles under Section 27 of the Indian Contract Act. Further, Clause 2.16 of the employment agreement, which restricted work with business associates, constituted an impermissible restraint on trade regardless of its limited scope..Tyagi was represented by Advocates Asav Rajan, Ajay Sharma, Mayank Biyani, Akash Saxena, Kashish Sharma and Devang Shrodriya.Daffodil was represented by Advocates Divyakant Lahoti, Vindhya Mehra, Tanisha Verma, Raghav Saluja and Kartik Lahoti..[Read Judgment]