Non-Disparagement Clauses in India: What You Can and Cannot Silence

A non-disparagement clause stops a party from making negative public statements about the other, most often in a settlement, a severance or separation agreement, or a commercial exit deal. The one thing most people get wrong: they read it as an absolute gag, as if signing it means you can never again say anything critical about the other side, to anyone, for any reason. That is not how Indian law treats it. A non-disparagement clause is a contract term like any other, and Section 23 and Section 28 of the Indian Contract Act, 1872 put real limits on what it can validly cover. A clause that tries to stop you from telling a regulator, a court, or an investigator the truth, or from making a genuine consumer complaint, runs into those limits and risks being read down or struck out on the specific point where it overreaches. This guide (published by Adira, which makes contract review and CLM software, so it has a commercial interest in you understanding contracts well, though this explainer stands on its own) walks through what the clause actually restricts, where Indian law draws the line, and how to spot a version written to go further than the law allows.

Plain meaning

A non-disparagement clause is narrower than it sounds. It does not stop you disagreeing, competing, or telling the truth in the ordinary course of business. It stops you making, or encouraging others to make, public statements that damage the other party's reputation, business, products, or standing, after the relationship that produced the contract has ended or gone wrong. "Public" usually covers press, social media, online reviews, industry forums, and statements to current or prospective clients, employers, or business partners.

It is a cousin of a confidentiality clause but does a different job. Confidentiality stops you sharing specific information. Non-disparagement stops you saying negative things, including your honest opinion, even about things that are not confidential at all. A well-drafted clause restrains manner and venue, not truth itself; a badly drafted one tries to restrain the underlying facts from ever being spoken about negatively, which is a different and much harder thing to justify.

Who it protects and what triggers it

Non-disparagement clauses show up in three common settings in India: employee severance and separation agreements (protecting the employer, sometimes mutual), settlement agreements ending a dispute or litigation (often mutual, sometimes one-sided towards the stronger party), and consumer or vendor settlements, such as a refund given in exchange for the customer dropping a complaint or a bad review.

The trigger is any public statement, written or spoken, that a reasonable reader would take as critical or damaging to the other party's reputation, made after the clause takes effect. Most clauses run for a fixed term, commonly one to three years, though some carry no end date at all, which is itself worth flagging.

What to look for

Five things decide whether a non-disparagement clause is a fair, narrow protection or an overreach:

1. Mutual or one-sided? A mutual clause, where neither party may disparage the other, is far easier to defend as reasonable. A one-way clause binding only the weaker party (an outgoing employee, a consumer, a smaller vendor) while the stronger party faces no reciprocal restriction is the single biggest tell that the clause was drafted to suppress rather than protect a genuine mutual interest.
2. Carve-outs for legal and regulatory disclosure? A properly drafted clause expressly excludes statements to a court, a regulator, law enforcement, or under compelled legal process (a subpoena, a deposition, a tribunal summons). Silence is a red flag, not because the carve-out would not apply anyway (it generally would, see below), but because it signals the clause was written to look absolute even where it cannot legally be.
3. Is truth a defence? Some clauses bar "any statement that could be perceived as negative," with no exception for statements that are simply true. That wording sweeps in honest reviews, honest references, and honest testimony, not just malicious or false ones.
4. What counts as "public"? A clause reaching private conversations, internal company communications, or statements to a new employer's HR team during a reference check is drafted far wider than any legitimate reputational interest requires.
5. What is the remedy? Injunction alone is different from injunction plus a liquidated sum plus clawback of a settlement or severance already paid. Stacking all three onto one disputed statement is disproportionate and worth pushing back on.

A quick test: does the clause explicitly say it does not apply to statements to a court, regulator, or under legal compulsion, and does it say "false or misleading" rather than just "negative"? If either answer is no, treat the clause as broader than it should be, whatever else it says.

The Indian position: Sections 23 and 28, Contract Act 1872

Two provisions of the Indian Contract Act, 1872 do the real work here, and neither is specific to non-disparagement by name; both apply to any contract term that goes too far.

Section 23 makes the object of an agreement unlawful, and the agreement void to that extent, where the object is "of such a nature that, if permitted, it would defeat the provisions of any law", or where "the Court regards it as immoral, or opposed to public policy":

"The consideration or object of an agreement is lawful, unless it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void." Source: Section 23, Indian Contract Act, 1872

A non-disparagement clause that, on its wording, would stop a person reporting a statutory offence, misleading a regulator's inquiry, or giving truthful testimony under summons is an agreement whose object, applied literally, would "defeat the provisions of" the law that creates the reporting duty or the court's power to compel evidence. Courts read such a clause down to exclude that application, rather than treating the whole clause as void, wherever the rest of the clause is otherwise reasonable.

Section 28 does separate, equally important work. It voids any agreement that restricts a party "absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals":

"Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights... is void to that extent." Source: Section 28, Indian Contract Act, 1872

A gag clause worded to stop a signatory from filing a fresh complaint, approaching a consumer forum, or escalating to a regulator over the same or a related grievance runs directly into Section 28, independent of whether Section 23 also applies. This is a different, narrower point than the free-speech argument people usually reach for first, and it is often the stronger one, because it does not require the court to weigh competing interests at all; the restriction on legal recourse is simply void to that extent.

Article 19(1)(a), the right to freedom of speech, is commonly misapplied here. Article 19 restrains the State, not a private employer or counterparty, so a private clause is not "unconstitutional" the way a censorship law would be. What it does is inform "public policy" under Section 23: a term imposed by a party with superior bargaining power, injurious to the public interest, is void under Section 23, and constitutional values including free expression shape how "public interest" gets read. The route to relief runs through contract law, not a direct constitutional claim against a private party.

Two further statutory points matter. A vigil mechanism under Section 177(9) of the Companies Act, 2013, required for every listed company, exists so employees can report genuine concerns; a non-disparagement clause cannot lawfully punish someone for using it. And a heavily one-sided clause in a consumer settlement can be attacked as an "unfair contract" under Section 2(46) of the Consumer Protection Act, 2019, which covers terms causing a "significant change in the rights of such consumer" to their detriment.

This is not a restraint-of-trade problem, worth holding onto. Section 27 voids agreements restraining a lawful profession, trade, or business, the doctrine behind most unenforceable Indian non-compete clauses. Non-disparagement does not stop anyone working, so Section 27 does not touch it; it is tested for reasonableness under Section 23 and legal-recourse interference under Section 28 instead, not struck down wholesale the way a broad non-compete usually is.

A named Indian case: unconscionable, one-sided terms and Section 23

There is no reported Indian judgment yet that rules on a non-disparagement clause by name; the doctrine that governs it comes from a wider line of Section 23 cases on one-sided, unconscionable contract terms. The leading one is Central Inland Water Transport Corporation Ltd v Brojo Nath Ganguly, (1986) 3 SCC 156, AIR 1986 SC 1571.

A government-owned corporation had a service rule, Rule 9(i), letting it terminate a permanent employee's service with three months' notice or pay in lieu, with no reason given and no hearing. Two employees challenged it after being removed under that rule. The Supreme Court held that a term in a standard-form contract, imposed by a party with vastly superior bargaining power on someone with far less, is unconscionable and void under Section 23 as opposed to public policy if it is unfair, unreasonable, and injurious to the public interest, and struck Rule 9(i) down.

The reasoning transfers directly to a non-disparagement clause offered on a take-it-or-leave-it basis, most often in a severance package or a settlement where one side is negotiating from a position of far greater strength. A one-way, indefinite, no-carve-out gag imposed on someone with little real ability to negotiate its terms is exactly the kind of clause Brojo Nath Ganguly says a court can strike down under Section 23, even without a statute naming non-disparagement specifically.

Red flags

Normal	Red flag	Why it matters
Mutual, binds both parties equally	One-sided, binds only the employee, consumer, or weaker party	The clearest sign of an unconscionable term under the reasoning in Brojo Nath Ganguly
Carves out statements to courts, regulators, or under legal compulsion	No carve-out; reads as an absolute bar on any negative statement anywhere	Section 23 and Section 28 both limit how far a gag can reach; silence invites the clause to be read down
Bars false or misleading statements, or malicious statements	Bars any "negative" statement regardless of truth	Removes truth as a defence, sweeping in honest reviews, references, and testimony
Fixed term, commonly one to three years	No end date, or an indefinite restriction	An unlimited gag is harder to justify as proportionate to any legitimate interest
Applies to public statements: press, reviews, social media	Extends to private conversations, internal reporting, or statements to a new employer's HR	Overbroad scope beyond any real reputational interest
Injunction as the primary remedy for a genuine breach	Injunction plus liquidated damages plus clawback of the settlement sum, all for one statement	Disproportionate stacking of remedies for a single alleged breach
Used after a negotiated commercial exit or dispute settlement	Used to make a customer withdraw a genuine consumer complaint or bad review in exchange for a refund	Risks being an unfair contract term under Section 2(46), Consumer Protection Act, 2019, and can attract regulatory attention separately

Bad clause -> better clause

Bad: "Employee agrees that they shall not, at any time, make any statement, written or oral, that could be perceived as negative, critical, or disparaging of the Company, its products, officers, or business practices, to any person or entity whatsoever. Breach of this clause shall entitle the Company to recover the entire severance amount paid, plus liquidated damages of Rs 10,00,000."

What is wrong: one-sided (the company gives nothing back), no time limit, no carve-out for truthful statements or legal and regulatory disclosure, "could be perceived as negative" has no truth defence, and the remedy claws back the whole severance on top of a large liquidated sum for one statement.

Better: "Neither party shall make any false or misleading public statement that disparages the other party's business, products, or reputation, for a period of 24 months from the Effective Date. Nothing in this Clause restricts either party from: (a) making truthful statements to a court, regulator, law enforcement agency, or arbitral tribunal, or under legal compulsion; (b) exercising any statutory right to report a concern, including under a company's vigil mechanism; or (c) making a good-faith consumer complaint or review that reflects the complaining party's genuine experience. The sole remedy for breach of this Clause is injunctive relief and actual proven damages."

What changed: the clause is mutual, time-bound, limited to false or misleading statements rather than any negative one, carries explicit carve-outs for legal process, regulatory reporting, and genuine consumer complaints, and drops the disproportionate financial clawback in favour of an ordinary remedy tied to actual harm.

How it interacts with related clauses

• Confidentiality / NDA. The two are often confused. Confidentiality stops disclosure of specific protected information; non-disparagement stops negative characterisation, including of information that is not confidential at all. A settlement should keep them as separate clauses with separate scopes. See Confidentiality Clauses and NDAs Explained.
• Termination and severance. Non-disparagement is usually one term inside a larger exit package, alongside notice, final payment, and release of claims. A clawback that ties the severance payment to the non-disparagement clause (rather than to the release generally) concentrates too much leverage in one narrow, subjective term. See Termination for Convenience Clauses in India.
• Non-compete. Both are post-relationship restrictions, but they are tested under different sections: non-compete under Section 27 (largely void as restraint of trade in India), non-disparagement under Section 23 and Section 28 (reasonableness and public policy). Do not assume a non-disparagement clause is automatically unenforceable just because a nearby non-compete clause is. See Are Non-Compete Clauses Enforceable in India?.

You can mark up a one-sided or open-ended non-disparagement clause directly in a document, for free, using Weave, before you sign or send it back with comments.

US and global contrast

US practice treats non-disparagement clauses as broadly enforceable, but with specific statutory limits India lacks direct equivalents for. The Consumer Review Fairness Act, 2016 makes it unlawful for a US business to include a clause in a form contract barring a consumer from posting an honest review, and voids such clauses outright. Separately, the SEC has penalised companies whose severance agreements required employees to forgo whistleblower rights or notify the company before contacting the regulator, treating that as impeding a protected right to report under SEC Rule 21F-17.

India has no direct equivalent of the Consumer Review Fairness Act naming gag clauses on reviews specifically. Protection instead comes from general contract doctrine (Section 23, Section 28) and, for consumer contracts, the unfair-contract-terms provision in the Consumer Protection Act, 2019. An Indian court is more likely to read an overbroad clause down to a narrower, valid version than to void it outright the way a specific US statute would, unless the clause is so one-sided that Brojo Nath Ganguly's unconscionability reasoning applies to the whole term.

FAQ

Can a non-disparagement clause stop me from filing a complaint with a regulator? No, not validly. A clause that tries to do that would, to that extent, defeat the law creating the reporting right or duty, which Section 23 of the Indian Contract Act, 1872 makes unlawful, and it may separately be void under Section 28 for restricting recourse to legal proceedings.

Is a one-sided non-disparagement clause enforceable in India? It faces a real risk of being struck down or read narrowly. Following Central Inland Water Transport Corporation Ltd v Brojo Nath Ganguly, (1986) 3 SCC 156, a term imposed by a party with far greater bargaining power that is unfair and one-sided can be held void under Section 23 as opposed to public policy.

Does a non-disparagement clause stop me leaving an honest negative review? A properly drafted clause should not, because it should bar false or misleading statements, not true ones. A clause barring any "negative" statement regardless of truth is broader than courts are likely to enforce in full, and in a consumer contract can also be challenged as an unfair contract term under Section 2(46) of the Consumer Protection Act, 2019.

What is the difference between a non-disparagement clause and a confidentiality clause? Confidentiality stops you sharing specific protected information. Non-disparagement stops you making negative public statements, including your honest opinion, about things that are not confidential at all. A contract can have one, both, or neither, and they should be drafted as separate clauses.

Can my employer claw back my full severance for one social media post? Check the wording. A clawback tied narrowly to a proven, material breach is more defensible than one letting the employer recover the entire severance for any statement it subjectively considers negative; the latter is disproportionate and one of the clearer red flags here.

Does this apply to statements made before I signed the settlement? Generally no. A non-disparagement clause restrains future conduct from the effective date forward; it does not retroactively convert an earlier truthful statement or complaint into a breach unless the agreement expressly says so, which itself would be worth challenging.

This guide gets you to understanding what a non-disparagement clause can and cannot validly do under Indian contract law. It does not tell you whether a specific clause in your settlement, severance, or consumer agreement would survive a challenge in your situation, that depends on the exact wording, the bargaining power involved, and the facts, and is not legal advice. Talk to a lawyer before you sign, rely on, or attempt to enforce a non-disparagement clause in a live matter.