@ Amit Kishore,
You have touched a very important discussion by your post, which I wanted to avoid since it involves legality, and I being not a lawyer I am not the right person to comment.
However, here are some view of legal fratinity below, from my library chest, which I hope will be useful to all readers who have interest on the subject:
Quote
That not only all Indian courts have struck down non-compete clauses which completely restrains an employee after termination of employment but also struck down argument and the principal of partial restraint with respect to post-employment non-compete clause.
Having said that, Post-employment restrictive covenants are considered to be prima facie void, but it is important to note that one void clause in an agreement does not automatically render the entire agreement void and unenforceable. The remaining valid clauses may continue to be enforced.
Therefore, even though such negative covenants do not operate after the
termination of the contract and have been held void by the courts of India, it
is still common practice to include such covenants in an employment
agreement to serve as a deterrent.
Unquote
Based on above, company still include the clause, as we have seen few employees; post termination trade with the compannies secret like Programing code, research materials, Business margins with client, poaching high networth clients by illegal means etc, which I feel can be contested in court of law for grievance.
Hope to you hear from you and other Sr professional in the subject.
Ukmitra