They can insist, but they can't force you.
In general it's perfectly legal to sign a contract with a new company while still on notice-period as long as the starting date of the new contract doesn't overlap with your notice-period stated in the contract of the current company.
As @dwizum already mentioned in his comment, it's actually in your favour to have a something in writing and signed while still serving your notice period. It guarantees you to have the next job lined up and secured.
Example: You interviewed during your notice period with company X. Now your notice-period ends for example on the 31.03.2020. Company Y want you to sign a contract now where the starting date is defined for the 01.04.2020.
This would be fine since there's no interference with your obligation to your current employer..
Can I enter into another contract before the previous one ends?
You can sign a contract before the current contract ends, but the start-date defined in your new contract must be after the last day of your notice period.