V. Kameswar Rao, J
 By this order, I shall decide the following two applications filed by the plaintiff and defendant No.1.
I.A. 5188/2022
1. This application has been filed under Order XXXIX Rules 1 and 2 read with Section 151 of the Code of Civil Procedure (CPC) by the plaintiff in
the titled suit bearing CS(OS) No. 190/2022 seeking ad interim injunctions against the defendants, restraining the defendants, its associates, business
partners, legal heirs or any person involved with the defendant No. 1 from carrying on any business in contravention of the terms of a Non-Disclosure
Agreement (‘NDA’, for short).
I.A. 6453/2022
2. This application has been filed under Order XXXIX Rule 4 of the CPC by the defendant No. 1 in the titled suit bearing CS(OS) No. 190/2022 to set
aside the Order of this Court dated April 04, 2022 whereby the defendants in the said suit, its associates, business partners and employees were
restrained from carrying on any business in contravention to the aforementioned NDA.
3. For the sake of convenience and brevity, the applicant in IA 5188/2022 shall be referred to as the ‘plaintiff’ and the applicant in IA 6453/2022
shall be referred to as the ‘defendant company’ hereinafter.
4. According to the plaintiff, it is a private limited company incorporated under the Companies Act, 1956, engaged in the business of providing
integrated outsourced technology solutions and field services to Banks and other financial institutions to facilitate the financial inclusion initiative in
India. The plaintiff has over the years developed a unique in-house technology in rural banking services by providing a fully functional and certified
end-to-end system for enabling authentication/e-KYC & payments on UIDAI-Aadhaar Enabled Payments System (AEPS) platform to financial
institutions, as well as providing Gold Loan Sourcing. Defendant Nos. 2-20 in the original suit had been employed by the plaintiff to carry on its
business, and for this purpose, certain important trade secrets, business connections and confidential information had been disclosed to them. The
defendants in the suit were also signatories to an NDA, Clause 11 of which stated that they could not disclose such information to anybody for a
period of two years from the date of their resignation. In December 2020, defendant Nos. 2, 3 and 4 resigned from the plaintiff company. Later, in
March 2021, it was found that they had setup their own firm, i.e., the defendant company and were carrying out similar business as rivals to the
plaintiff company. It is also stated in the application of the plaintiff that defendant Nos. 2, 3 and 4 also lured defendants Nos. 5 to 20, who also
possessed certain information regarding the plaintiff’s business, to join the defendant company. It is the case of the plaintiff that therefore, the
defendants in the suit have violated the terms of the NDA, as a result of which the plaintiff has suffered loss, which is evident from the audit report
submitted by it.
5. Subsequently, the plaintiff came to know that the defendant company had approached ICICI Bank, who was a regular customer of the plaintiff
company and was doing business with it. They had also influenced defendant Nos. 5-20 in the suit to leave the plaintiff company and join them.
Thereafter, on August 18, 2021, the plaintiff company issued a legal notice to the defendant company demanding them stop carrying on any business in
competition with the plaintiff but the defendant company did not reply to it. Subsequent thereto, the plaintiff, alleging that there has been a violation of
the NDA, filed the titled suit on April 01, 2022 seeking a permanent injunction restraining the defendants from making any further use of the
confidential information and trade secrets. During the course of the hearing, this Court, vide order dated April 04, 2022 granted an ex-parte ad interim
injunction to the plaintiff till the next dated of hearing, which position still continues.
6. Ms. Shantha Devi Raman, learned counsel appearing for the defendant No.1 company (and also for some other defendants) has submitted that it
has approached ICICI Bank for the purpose of seeking business with them through its directors, and not through the involvement of defendant Nos. 2
to 20. In any case, the nature of the defendant company’s contracts with ICICI Bank is of an exclusive nature and prohibits the defendant
company from engaging with other companies. Therefore, the question of the defendant company trying to exploit the plaintiff’s contacts by
approaching them does not arise. Moreover, the Service Provider Agreement between the defendant company and ICICI Bank had in no way
affected the relation between the plaintiff and ICICI Bank, which is still providing services to ICICI bank. She has also contended that the defendant
Nos. 5-20 had not been poached; rather they had approached the defendant company out of their own free will without any sort of inducement. It is
also stated that the defendant company is unaware of any previous employment contracts of the impleaded employees, as it is not in its policy to do so.
It has only sought the resignation certificates of the employees wherein it was mentioned that the employees are restrained from disclosing sensitive
information up to a period of one year. She has stated that since the defendant company is not using the clientele or contacts of the employees, the
NDA has not been violated.
7. It is further stated that the plaintiff company had alleged that defendant No. 4 in the suit holds 4,000 shares of the holding company of the
defendant, namely Calance Software Limited, and therefore, he was indirectly controlling it. However, the shares held by defendant No. 4, had been
issued to him by the aforementioned company even before he had joined the plaintiff. The allegation that the defendant No. 4 had mala fide resigned
from the plaintiff company in order to join a rival firm is also baseless.
8. Ms. Raman has stated that there is no privity of contract between the plaintiff and the defendant company, as the plaintiff did not enter into any
contract with the defendant company. Therefore, the plaintiff cannot sue the defendant company for any alleged breach of contract by its ex-
employees. The defendant company, while an employer of some of the ex-employees of the plaintiff, at no point has ever entered into any contract
with it in any fashion. It absolutely is not bound by Clause 11 of the NDA between the plaintiff and its ex-employees. The locus of the plaintiff exists
only with its ex-employees and they can only seek redressal of alleged violation of the NDA against them and not from the defendant company which
is a completely unrelated party. There exists no cause of action in favour of the plaintiff against the defendant company. Therefore, to halt the
functioning of the defendant company due to the contractual stipulations between the plaintiff and its ex-employees not only is prima facie erroneous
but also would cause irreparable damages and loss to the defendant company. She has also opposed the averment by the plaintiff that defendant
company is merely a corporate cloak and that defendant Nos. 2-4 are owners of the business.
9. Ms. Raman has also contested the submission of the plaintiff that signing the NDA was a precondition for the appointment of the defendants in the
plaintiff company, as all the employees except defendant No.3 received the NDA at the date of their joining. Moreover, it is also pointed out that the
employees were compelled to sign the NDA as they had already left their previous jobs. She has relied upon the judgment of the Supreme Court in
Superintendence Company of India v. Krishan Murgai, (1981) 2 SCC 246 to contend that such contracts must be carefully scrutinised.
10. She has further contended that the defendant company has already terminated the services of the defendant Nos. 2 to 20 and therefore, the
working of the company in no way violated the injunction order of April 04, 2022, and as such, it must be allowed to function. That apart, she has
stated that the defendant Nos. 5, 12, 13, 15 and 20 have also filed their own separate applications under Order VII, Rule 11 of the CPC pleading that
they were employed at positions of very low hierarchy, and as such were not privy to any kind of confidential information. In any case, the offer
letters received by defendant Nos. 2,4,8,9,10,11, on the basis of which they had left their previous jobs did not mention any NDA, and as such they
should not be bound by the NDA. Moreover, even during the resignation, some defendants had unambiguously declared that they were joining a rival
company, yet the plaintiff did not advise them against it.
11. That apart, she stated that the NDA which the plaintiff is using as the basis for its pleadings have not been signed by majority of the defendants
including defendant Nos. 5, 6, 7, 12, 13, 14, 15, 16, 17, 18, 19 and 20, as is evident even from the unsigned NDAs that the plaintiff itself has filed along
with its plaint, and as such, they could not be bound by its terms. It is also stated that the defendant Nos. 14 and 18 have already left the employment
of the defendant No. 1 and rejoined the services of the plaintiff. It is also contended that defendant No. 7 has worked with the plaintiff company for
only 19 days, defendant No. 13 has worked only for 9 months and defendant No. 15 has worked only for 4 months. Defendant No. 17 never joined
defendant company at all. Therefore, the contention of the plaintiff that all these employees were key performers of the plaintiff and had access to
confidential information is false. She has alleged that this misrepresentation and concealment has been done to project before this Court that a number
of employees have left the plaintiff and joined the defendant company so as to artificially balloon the magnitude of the alleged injury.
12. That apart, it is also contended that defendant No. 3 had resigned from the plaintiff company on January 29, 2021 and had joined the defendant
company as a consultant only on February 08, 2022. The resignation certificate of defendant No. 3 was similar to the NDA, however, it stipulated that
the employee is restricted only for a period of one year. It is argued by Ms. Raman that since the Resignation Certificate was issued later, it must
supersede the provisions of the NDA. Therefore, defendant No. 3 had complied with the restrictions mandated by the plaintiff.
13. She has further stated that according to Section 27 of the Indian Contract Act, 1872, (‘Contract Act’, hereinafter) agreements in restraint of
trade are void. Clause 11 of the NDA seeks to impose a restriction upon the defendant Nos. 2-20 to seek further employment in the future. It is her
submission that therefore, this clause should be held as void. It is the case of the defendant company that since the plaintiff had processed all the exit
formalities of the defendants, they had no legal liability to adhere to the non-compete clause of the NDA. According to her, it is settled law that post-
employment restraint on employees is impermissible. In this regard, reliance has been placed on the judgment of the Supreme Court in Percept
D’Mark (India) Pvt. Ltd. v. Zaheer Khan, (2006) 4 SCC 227, and the judgments of this Court in American Express Bank Ltd. (supra), Modicare
Ltd. v. Gautam Bali and Ors., 2019 SCC OnLine Del 10511; EV Motors India Pvt. Ltd. v. Anurag Agarwal, 2017 SCC OnLine Del 12373; and Pepsi
Foods Ltd. v. Bharat Coca-Cola Holdings Pvt. Ltd. and Ors., 1999 SCC OnLine Del 530.
14. It is submitted the plaint and even the present application for ad interim injunction are liable to be rejected, as the same are vague and do not
disclose essential aspects regarding what exactly is the confidential information, what makes such information confidential, how the employees got to
know about it and how the defendant company has used this information. No material has been placed on record to show which piece of information
provided by plaintiff was classified as 'confidential' which has been misused by the defendants. In this regard, she has referred to the judgment of this
Court in the case of Transformative Learning Solutions Pvt. Ltd. and Anr. v. Pawajot Kaur Baweja and Ors., 2019 SCC Online Del 9229.
15. Ms. Raman has also submitted that the information regarding the customer database is not “confidential informationâ€, as has been claimed by
the plaintiff. To buttress her argument, she has relied upon the judgments of this Court in the cases of American Express Bank Ltd. v. Priya Puri,
2006 SCC OnLine Del 638; Tech Plus Media Private Ltd. v. Jyoti Janda and Ors., 2014 SCC OnLine Del 1819 and M/s Stellar Information
Technology Private Ltd. v. Rakesh Kumar and Ors., 2016 SCC OnLine Del 4812. In any case, gold loans are given only for a period of 5-6 months
and most customers do not take gold loans twice. Therefore, the customer lists become stale even before the compilation is completed. So, the
allegation made regarding usage of confidential information is baseless. Her contention is that information which is available in the public domain and
cannot be termed as copyright, confidential information or a trade secret. Moreover, if a party wants to claim that it has copyright over its data, then it
must show who the author of the work is. A company, being a juristic person, cannot be an author; it can only be an owner. She has relied upon the
judgment of this Court in the case of Navigators Logistics Ltd. v. Kashif Qureshi and Ors., 2018 SCC OnLine Del 11321 to submit that if employees
in the course of their employment has come to know about important information without any special effort, they would not be deemed to be holders
of trade secrets or confidential information.
16. The allegation that the defendant company had poached the clients of the plaintiff has been vehemently denied. In the Gold Loan Sourcing
business, all information regarding clients is retained only by the Bank and not by the Direct Selling Agent (‘DSA’, for short), i.e., the plaintiff
company. Even the information regarding the interest rate, gold rate, percentage of loan against mortgage gold and percentage of commission is not
permitted to be retained by the DSA. Therefore, the plaintiff cannot claim that it has confidential information regarding the business with it. In other
words, it is the case of the defendant company that Gold Loan Sourcing does not involve the creation of any confidential information. Moreover,
contrary to what has been averred in the plaint, the plaintiff has not developed any software or technology for the conduct of its business.
17. That apart, it is her contention that there is no uniqueness in the product of the plaintiff as has been claimed. It has been unable to prove that the
defendant company has acquired and has been using the so called confidential information. Mere hiring of ex-employees of the plaintiff does not give
the defendant company access to any confidential information. Moreover, the plaintiff during its inception itself had taken its top managerial personnel
from an established company namely M/s. Fino Pvt. Ltd. Therefore, it cannot be allowed to raise the present claim against the defendant company.
18. It is the submission of Ms. Raman that there is no urgency shown by the plaintiff to warrant any injunction from this Court and there would be no
irreparable loss to the plaintiff by the conduct of defendant company. The plaintiff came to know about the employment of its ex-employees with the
defendant company in March 2021. It was only after five long months from the date of the knowledge that the plaintiff issued a legal notice on August
18, 2021. Finally, it is after a further lapse of seven months, that the plaintiff instituted the present suit on April 01, 2022. Therefore, as per the
judgment of the Supreme Court in M/s Ambalal Sarabhai Enterprise Limited and Ors. v. KS Infraspace LLP Limited and Ors., Civil Appeal No.
7843/2019, no temporary injunction could be granted. Further, the balance of convenience does not lie in favour of the plaintiff as losses, if any, caused
to it by the conduct of the defendant company, can be compensated in monetary terms.
19. It is submitted that the reliance placed by the plaintiff upon the Audited Balance Sheets is completely misfounded as those accounts pertain to the
year 2019-20, which is much before the time when defendant company started its operation (2021-22). Moreover, the Audited Balance Sheets contain
the data of multiple business of the plaintiff and not just the Gold Loan Sourcing business. The plaintiff had already been witnessing a downward
plunge in its businesses much before the incorporation of the defendant company, therefore, the loss cannot be attributed to the defendant company.
20. She has also submitted that the judgment in M/s Gujarat Bottling Company Ltd. & Ors. v. Coca Cola Co., & Ors., 1995 SCC (5) 545, as referred
to in the Order of this Court dated April 04, 2022 is not applicable to the facts of the present case, inasmuch as in paragraph 42 therein on which
reliance has been placed by the plaintiff to pray for grant of an injunction, it was stated that the position in England was that a breach of a negative
covenant would warrant injunction. However, the position in India is different, as here, “an injunction to enforce a negative covenant would be
refused if it would indirectly compel an employee either to idleness or to serve the employerâ€. She seeks prayers as made in her application.
21. Mr. Jayant Mehta, learned Senior Counsel appearing for the plaintiff has submitted that the defendant company has still not complied with the
order dated April 04, 2022 of this Court. It is still continuing to run its business through its associate company M/s Loansi Consultants Pvt. Ltd. This
company has already done a business of approximately ?70 crore with ICICI Bank in the months of May, June and July 2022. It is his submission that
there is an urgent need of restraining the defendant company from continuing on its business in order to safeguard the interests of the plaintiff. He has
placed reliance in this regard on the judgment of this Court in the case of Oravel Stays Pvt. Ltd. v. Kota Hotels Federation, 2020 SCC OnLine Del
2363.
22. In reply to the application filed by the defendant company, he stated, it is settled law that such an application is permissible only if in the application
seeking temporary injunction or in the affidavit supporting such application, a party has made false and misleading statements in respect to a material
particular and injunction was granted without notice to the opposite party. This principle was reiterated by this Court in an order dated February 21,
2022 passed in the case of Bank of Baroda v. Union Bank of India and Ors., (CM Appl. No. 4514/2022). No such false/misleading statement has
been pointed out by the defendant company in the present case.
23. Further, he submitted that it was not merely the directors of the defendant who had approached ICICI Bank soliciting business, rather the same
had been done in connivance with and using the confidential information provided by defendants Nos. 2, 3 and 4. Further, the plea taken by the
defendant company that it cannot engage in any other transactions is completely wrong as no proof of the said agreement with ICICI Bank has been
placed on record. Therefore, no inference can be said to be made regarding the nature of work or whether even such an agreement exists.
24. It is also submitted that defendant Nos. 2-4 had convinced the ex-employees of the plaintiff to opt out of the company and join the defendant. He
has referred to an email dated December 23, 2021, wherein, according to him the poaching of the clients of the plaintiffs was mentioned and admitted
by the defendants. Moreover, he has refuted the assertion that defendant No. 3 did not occupy any important position within the company and was
only a consultant, as the affidavit filed by the defendant in its application has been affirmed by him. Upon lifting the corporate veil of the defendant
company, it would also be clear that it is run by defendant Nos. 2, 3 and 4.
25. Further, he has submitted that the defendant company was fully aware about the employment contracts of the impleaded employees and therefore,
their appointment was not done in good faith. He has also contested the submission of Ms. Raman that the defendant has its own technical knowhow
and clientele. He has claimed that the defendant company has directed the ex-employees of the plaintiff to disclose their own trade secrets and
confidential information.
26. Mr. Mehta has stated that the restrictions imposed by the NDA are reasonable as they do not restrict the trade operations of the defendants in the
suit, but are only there to safeguard the plaintiff’s confidential information. Regarding the contention that post-termination restraint is void, he has
stated that even according to the judgments submitted by Ms. Raman, only those restrictions that are too wide are hit by Section 27 of the Contract
Act. He has placed reliance upon the judgment of the Supreme Court in Niranjan Shankar Golikari v. Century Spinning and Mfg. Co. Ltd., (1967) 2
SCR 378, to contend that a negative covenant cannot be taken as a direct restraint on trade unless such a covenant is unconscionable, excessively
harsh or unreasonable. Since in the present case, the NDA imposes only reasonable restrictions on the employees, it cannot be held as void under
Section 27 of the Contract Act. He has also contended that the judgment of the Supreme Court in Percept D’Mark (India) Pvt. Ltd. (supra) relied
upon by Ms. Raman is not applicable as it deals with a right to first refusal while in the present case, there is an NDA clause.
27. Regarding the contention of Ms. Raman that customer lists do not constitute confidential information, Mr. Mehta has stated that confidential
information is anything for which the maker of the document has used his brain and produced a result which can only be produced by someone who
goes through the same process, and would include client lists. To fortify this argument, he has referred to the judgment of the Bombay High Court in
the case of Anindya Mukherjee v. Clean Coats Pvt. Ltd., Mumbai, 2011 (1) Mh.LJ 573. The present case at hand involves data which is not available
in the public domain and is unique inasmuch as it is available with the plaintiff company only. He submitted that therefore, this plea of Ms. Raman
should be rejected. He has sought to distinguish the judgments of this Court in Navigators Logistics Ltd. (supra) and American Express Bank Ltd.
(supra) by stating that in those cases, the information claimed to be confidential was available in public domain. Further, he has relied upon the
judgment in Vogueserv International Pvt. Ltd. v. Rajesh Gosain and Ors., 2013 (137) DRJ 244, to contend that compilation of clients database would
amount to confidential information and that the onus to show that such database is not confidential lies with the defendant, which it has evidently failed
to prove.
28. An affidavit has been filed on behalf of the plaintiff wherein it is stated that the defendants No. 2 to 20 were privy to the following confidential
data:-
i. Customer Data
ii. Agents Data
iii. Contract Data
iv. Employees Data
v. Market Data and Business Plan
29. Mr. Mehta has also contended that defendant Nos. 2-20 resigning in a quite close time frame and receiving offer letters from the defendant
company at the same time is not a mere coincidence. The defendants have deliberately tried to cover their wrongs by shielding the defendant
company as a corporate cloak. He has argued that reliance was misplaced on the judgment in EV Motors India Private Limited (supra), as in that
case, only one Director had resigned and joined a rival company, while here a number of employees have done so in quick succession.
30. It is his submission that according to the judgment of the Supreme Court in K.K. Modi Investment & Financial Services Pvt. Ltd. v. Apollo
International Inc., 2014 SCC OnLine Del 2200, the implied conduct of the defendants extended the privity of the contract to include them also.
Therefore, in this case, the defendant company can also be made privy to the contract as it is merely a corporate cloak which has been used by
defendant Nos. 2-20 to circumvent the contract. He has also alleged that the sole purpose of defendant Nos. 1 to 4 was only extract the knowledge
and experience gained by the employees of the plaintiff company and to develop an identical system for Gold Loan Sourcing.
31. That apart, Mr. Mehta has submitted that the judgments relied by Ms. Raman in Modicare Limited (supra), Transformative Learning Solution Pvt.
Ltd. (supra) and Pepsi Foods Ltd. (supra) are not applicable as the plaintiff’s case is not that the defendants cannot be engaged in another
venture, but only that they cannot be allowed to use the confidential information of the plaintiff. He seeks prayers as made in his application.
CONCLUSION:-
32. Having heard the learned counsel for the parties and perused the record, as these applications are concerning the order dated April 04, 2022 of
which vacation is being sought by the defendant No.1, I deem it appropriate to reproduce the relevant part of the order as under:
“1. The plaintiff, a private limited company, is engaged inter-alia in the business of providing integrated outsourced technology solutions
and field services to Banks and other financial institutions to facilitate the financial inclusion initiative in India. It is contended that the
plaintiff has over the years developed a unique in-house technology in rural banking services by providing a fully functional and certified
end-to-end system for enabling authentication/e-KYC & payments on UIDAI-Aadhaar Enabled Payments System (AEPS) platform to
financial institutions as well as providing gold loan sourcing.
2. As per the plaintiff, defendants No.2 to 20 were its employees and defendants No.2 to 4 resigned from the plaintiff company and setup
defendant No.1 and thereafter, poached some of its employees and defendants No.4 to 20 resigned from the plaintiff company and joined
the defendants.
3. It is contended that defendants are engaged in providing identical services as that of the plaintiff. Reference is drawn to the
Memorandum of Association of defendant No.1 company to show that they are engaged in similar venture.
4. Learned senior counsel for the plaintiff submits that defendants 2 to 20 had all entered into confidentiality agreement at the time of their
employment and they had specifically entered into a covenant that while in service and for a period after two years of termination of
service, they shall not engage in any prohibited activity.
5. Reference is drawn to one such agreement, particularly, clause 11 thereof, which reads as under:-
“11. While the Second Party is in service of the First Party, and for two years after termination of service, by either party, with or without
cause, voluntarily or involuntarily, the Second Party shall not engage in ""Prohibited Activities"" as defined below. ""Prohibited Activities"", as
used herein, shall mean owning, managing, operating, controlling, being employed by, acting as an independent contractor or agent or
consultant for, participating in or being connected in any manner, with the ownership, management, operation or control of any relating to
or capable of relating to the Business of the First Party or its clients or related business: (a) which attempts to interfere with any existing
client relationship or potential client relationship of the First Party; or which (b) attempts to solicit, divert, or take away, any (i) client
prospect or client of the First Party or (ii) any officer, employee or director of the First Party. For purposes of this paragraph, a ""client"" of
the First Party means any person or entity, which the First Party does or did business during the term of service of the Second Party with the
First Party. The terms ""potential client relationship"" or ""client prospect"" mean any potential client which was identified by any Employee of
the First Party as a prospective client of the First Party during the term of service with the First Party, and some effort was undertaken by
the First Party to solicit that potential client. It is the intention of the parties that the First Party is given the broadest protection allowed by
law with regard to these restrictions. The Second Party's obligation under this Section shall survive the expiration or termination of this
Agreement for an additional two years period.â€
6. Learned senior counsel for the plaintiff also refers to offer of employment given to some of its existing employees purporting as if they
had applied and even appeared for interview. However, it is submitted that said employees had neither applied nor left the services of the
plaintiff.
7. It is contended that the defendants are continuously engaging not only in poaching the employees of the plaintiff, but also soliciting the
identified clients of the plaintiff.
8. Learned senior counsel relies on the judgment of the Supreme Court in M/s. Gujarat Potteling Company Ltd. & Ors. Vs. Coca Cola Co. &
Ors., 1995 (5) SCC 545 to contend that in the matter of grant of injunction, where a contract contains a negative covenant, the breach of it
would be restrained by injunction and injunction is normally granted as a matter of course even though the remedy is equitable and
discretionary one.
xxx xxx xxx
12. I am of the view that plaintiffs have made out a prima facie case for grant of an ad-interim injunction, balance of convenience is also in
their favour and in case injunction is not granted, plaintiffs are likely to suffer irreparable loss and injury. Accordingly, till the next date of
hearing, defendants, its associates, business partners and employees are restrained from carrying out any business in contravention to the
terms of the nondisclosure agreement, particularly, para 11 extracted hereinabove.â€
33. A perusal of the order would reveal that the case set up by the plaintiff in the suit against the defendants herein is on the basis of a stipulation in
the offer of employment with respect to some of the defendants, which stated that for a period of two years of termination of service, they shall not
engage in any ‘prohibited activity’ like solicit, divert or take away client or any client prospect, officer, employees or the Directors of the
plaintiff company. It is the case of the plaintiff that the defendants are not only poaching its employees but also soliciting the identified clients of the
plaintiff.
34. On the other hand, the argument of Ms. Raman in support of her application for vacation of order dated April 04, 2022 are the following:
(i) There is no privity of contract between the plaintiff and the defendant No.1 company, and as such the plaintiff cannot sue the defendant company
for any breach of contract including Clause 11 of the NDA between the plaintiff and its ex-employees.
(ii) The restraint order is causing irreparable loss and damage to the defendant company.
(iii) The NDA which the plaintiff is using as a basis for its case has not been signed by majority of the defendants including defendant Nos.5, 7, 12, 13
and 15.
(iv) The defendant Nos. 14 and 18 are serving with the plaintiff.
(v) Even the defendant No.6, 16, 17 and 19 have not signed the NDA and as such are not bound by it.
(vi) The defendant No.3 has resigned from plaintiff company on January 29, 2021 and had joined the defendant company on February 8, 2022. The
employee is restricted only for a period of one year, which period had since expired.
(vii) In view of Section 27 of the Contract Act, agreements in restraint of trade are void and such a restriction is apparent in this case, as is clear from
clause 11 of the NDA which imposes a restriction upon the defendants who have signed the NDA to seek further employment in future.
(viii) As the plaintiff has processed all the exit formalities of the defendants they had no legal liability to adhere to the non-compete clause of the
NDA.
(ix) No information or material has been placed on record to show what particular information provided by the plaintiff was classified as confidential
which has been misused by the defendants who have signed the NDA.
(x) Information regarding customer base is not confidential information as has been claimed by the plaintiff company.
(xi) Information which is available in public domain cannot be termed as confidential / copyright or trade secret.
(xii) The allegation that the defendant company has poached the clients of the plaintiff is denied as in Gold Loan Sourcing business all information
regarding clients is retained by the bank and not by the DSA, i.e., the plaintiff company.
(xiii) Even the information regarding gold rate, percentage of loan against mortgaged gold and percentage commission is not permitted to be retained
by the DSA. In other words, Gold Loan Sourcing does not involve creation of any confidential information.
(xiv) The reliance on the audited balance sheet is completely misplaced as those accounts pertain to the year 2019-2020 which is much before the
defendant company started its operation in 2021-2022, and the same contains data of multiple businesses of the plaintiff.
(xv) The plaintiff was already witnessing a downward trend in its business much before the incorporation of the defendant company.
35. Having noted the broad submissions made by the learned counsel for the parties, the issue which arises for consideration in these applications is
whether the plaintiff can seek implementation of the NDA against the defendant company or for that matter against other defendants as well, so as to
restrict them from carrying out any business / activity in violation of the terms of NDA, particularly clause 11 thereof which is reproduced hereunder:-
“11. While the Second Party is in service of the First Party, and for two years after termination of service, by either party, with or without
cause, voluntarily or involuntarily, the Second Party shall not engage in ""Prohibited Activities"" as defined below. ""Prohibited Activities"", as
used herein, shall mean owning, managing, operating, controlling, being employed by, acting as an independent contractor or agent or
consultant for, participating in or being connected in any manner, with the ownership, management, operation or control of any relating to
or capable of relating to the Business of the First Party or its clients or related business: (a) which attempts to interfere with any existing
client relationship or potential client relationship of the First Party; or which (b) attempts to solicit, divert, or take away, any (i) client
prospect or client of the First Party or (ii) any officer, employee or director of the First Party. For purposes of this paragraph, a ""client"" of
the First Party means any person or entity, which the First Party does or did business during the term of service of the Second Party with the
First Party. The terms ""potential client relationship"" or ""client prospect"" mean any potential client which was identified by any Employee of
the First Party as a prospective client of the First Party during the term of service with the First Party, and some effort was undertaken by
the First Party to solicit that potential client. It is the intention of the parties that the First Party is given the broadest protection allowed by
law with regard to these restrictions. The Second Party's obligation under this Section shall survive the expiration or termination of this
Agreement for an additional two years period.â€
36. To answer this question, it is necessary to examine the stand of the plaintiff as to what according to it constitutes confidential data / information
which the defendants cannot use while carrying out any business activity.
37. According to Mr. Mehta, the same include customer data, agent data, contract data, employee data, market data and business plans.
38. I may at the outset state here that the plaintiff is not claiming any copyright in the above information. It is only claiming that the data is confidential.
Even if such an argument was to be raised, the question would be whether the above information shall fall within the definition of copyright as defined
under Section 13(1) of the Copyright Act. This Court in a series of judgments including the judgment in the case of Navigators Logistics Ltd. (supra),
has in paragraphs 22 to 35, by referring to the judgment of the Supreme Court in Eastern Book Company v. DB Modak, (2008) 1 SCC 1, held that to
claim copyright, the author must produce the material created with exercise of his skill and judgment, which must not be so trivial that it would be
characterised as a purely mechanical exercise. The Court was of the opinion that the plaintiff therein, being a juristic person is incapable of being the
author of any literary work in which a copyright may exist, though it may be the owner of copyright. As the plaintiff had failed to disclose the identity
of the author, it could not claim any copyright in a list of customers/clients with their contact numbers.
39. Even the plea of confidentiality taken by Mr. Mehta is unsustainable, as merely stating that there exists some confidential and secret information
does not convince this Court that such information is, in fact confidential, more so, when the plaint and the pleadings do not disclose the nature of the
information / data of which confidentiality is claimed. I find that no material / document connected with the aforesaid data / information has been filed
by the plaintiff. In fact this aspect has been accepted by Mr. Mehta during his submissions.
40. It is for the first time that the plaintiff, through an affidavit filed on July 21, 2022, sought to refer the aforesaid information as confidential without
filing it. As per its own case, the plaintiff is engaged in providing gold loans. It is the information related to such loans, like customer data, agent data,
contract data, employee data, market data etc. for which confidentiality is being claimed. The plaintiff is not engaged in any research work, the result
whereof can be said to have been achieved through its own skill and judgment. It is an accepted case that many entities are carrying out similar
business activity. It is not pleaded as to how the confidentiality claimed is different from the data of any entity engaged in similar business.
41. It has not been filed nor shown to the satisfaction of this Court, as to what exactly is the confidential information, how it is confidential, and how, if
at all, the defendant company has used such information to the detriment of the plaintiff.
42. In the absence of any material on record, it is difficult for the defendants to meet the case of the plaintiff and for that matter for this Court to
accept the plea of the plaintiff. Based on such vague assertions, interim order as sought for cannot be granted. Even if any such order has been
granted, its continuance cannot be sustained.
43. The Coordinate Bench of this Court in Navigators Logistics Ltd. (supra) has in paragraphs 41 to 47 by referring to various judgments in the cases
of Star India Pvt. Ltd. v. Laxmiraj Seetharam Nayak, 2003 SCC OnLine Bom 27, Ambiance India (Private) Ltd. v. Naveen Jain, 2005 SCC OnLine
Del 367, Stellar Information Technology Private Ltd. (supra) and American Express Bank Ltd. (supra) held as under:
“41. On facts as pleaded in plaint it appeared that there can be no confidentiality about such a list. Just like customers/clients of an
Advocate practicing in the field of acquisition of land and determination of compensation therefor can comprise only of those whose land
has been acquired and whose particulars are contained in the acquisition notification and/or award pronounced by the Land Acquisition
Collector, similarly the list of customers/clients of the plaintiff, carrying on business in the field of logistic and freight forwarding, can only
comprise of businesses/industry requiring carriage of goods and material and none else. Names and contact addresses of such businesses
are easily available in public domain. Any competitor of the plaintiff worth its salt would also know of such businesses/industry and be free
to market his services to them, even if presently employing the service of the plaintiff. I am thus unable to fathom the confidentiality therein
and during the hearing also repeatedly enquired about the same and also enquired about the particulars of other works/databases and in
which also copyright and confidentiality was claimed. No answer was forthcoming. Every customer list cannot qualify as confidential
information or a trade secret unless the confidentiality around such a list is of economic value/business value/commercial value. A thought
also crossed my mind, whether not any employee of the plaintiff, dealing with the customers/clients of the plaintiff on behalf of the plaintiff,
would have knowledge of the said customers/clients and their contact address even in the absence of a list and how could such an
employee, when joining the employment of a competitor, be prevented from marketing the services of the competitor to the employees/clients
at the address on which he was earlier servicing them under employment of the former employer and whether not it would amount to
restraint of trade.
42. In fact today, trade/business directories are available of each trade/business and wherefrom names and addresses of all in a particular
trade/business/industry can be known.
43. In Star India Pvt. Ltd. v. Laxmiraj Seetharam Nayak, 2003 SCC OnLine Bom 2i7t was held that everyone in any employment for some
period would know certain facts and would get to know some information without any special effort; all such persons cannot be said to
know trade secrets or confidential information and that every opinion or general knowledge of facts cannot be labelled as trade secrets or
confidential information. It was yet further held that if such items are called as trade secrets, or secret, would lose its meaning and
significance. It was held that the basic nature of the business dealings of the plaintiff in that case with its advertisers would be openly
known and cannot be called a trade secret or a confidential information; the rates of the advertisements are within the public domain and
every businessman generally knows the rates of his rivals; the concerned people know the rates of the advertisements; unless they are told
the rates and other conditions of the advertisements, no business transaction can be done; such matters are not even open secrets. Similarly
it was held that fixation of rates etc. depends on a number of factors including the popularity, in that case of T.V. serial and the time-slots of
the display of such T.V. serials and mere use of the words ‘strategies’, ‘policy decisions’ or ‘crucial policies’ repeatedly
in all the items does not acquire the position or character of secrecy. It was held that there was nothing on record from which it could be
inferred that the defendant had come to know any trade secrets or confidential information concerning the plaintiff company and its
business especially when the trade secrets and the confidential information were not even spelled out.
44. This Court also, in Ambiance India (Private) Ltd. v. Naveen Jain, 2005 SCC OnLine Del 36h7e ld that written day to day affairs of
employment which are in the knowledge of many and are commonly known to others cannot be called trade secrets. It was further held that
trade secret can be a formulae, technical know-how or a peculiar mode or method of business adopted by an employer which is unknown to
others. It was yet further held that in a business house, the employees discharging their duties come across so many matters but all these
matters are not trade secrets or confidential matters or formulae, the divulgence of which may be injurious to the employer and if an
employee on account of employment has learnt some business acumen or ways of dealing with the customers or clients, the same do not
constitute trade secret or confidential information, divulgence or use of which should be prohibited.
45. This Court again in American Express Bank Ltd. v. Priya Puri, 2006 SCC OnLine Del 638h eld that the plaintiff in that case, in the garb
of confidentiality, was trying to contend that that once the customer of the plaintiff, always a customer of the plaintiff. It was further held
that the plaintiff, a bank in that case, could not restrain its competitor banks from dealing with the customers of the plaintiff bank on the
ground that the plaintiff bank maintained written record of its customers and their financial portfolios which had been acquired by the
competitor bank and so the competitor bank should be restrained even to contact those customers. It was reasoned, that if the competitor
bank without acquiring any information as to with whom a particular person or company is banking, can approach him and canvass about
themselves, even after acquiring information that a particular person of company is banking with a bank is still entitled to approach him
and canvass about themselves and it is for the customers to decide with which bank to bank. It was further held that creating a database of
the clients/customers and then claiming confidentiality about it, will not permit creation of a monopoly about such customers. It was yet
further reasoned that without impleading the customers in the suit, the competitor could not be restrained from dealing with the customers. It
was thus held that details of customers are not trade secrets or property. The argument, on the basis of copyright therein, was also
negatived.
46. The High Court of Bombay again in Bombay Dyeing and Manufacturing Co. Ltd. v. Mehar Karan Singh, 2010 SCC OnLine Bom 1243,
relying on the judgments of the United States of America, Court of Appeals, Tenth Circuit in Rivendell Forest Products Ltd. v. Georgia
Pacific Corporation and Timothy L. Cornwell, 31 USPQ 2d 1472 and Kodekay Electronics Inc. v. Mechanex Corp., 486 F. 2d 449 (10th
Cir. 1973) and held that something which is known outside the business or to those inside the business i.e. the employees and for guarding
which no steps have been taken and for developing which no effort or money has been extended, cannot be a trade secret. Accordingly, it
was held that information relating to ‘strategic business plans’, ‘product mix’, ‘square footage of construction’,
‘capital expenditure’ or ‘revenue budgets’ could not be claimed to be of any confidential nature which no other competitor
would know. Relying on Star India Private Limited supra it was held that a salesman leaving a company and heart surgeon leaving a
hospital cannot be prevented from negotiating with the customers or performing a surgery on the premise that they acquired the skill by
experience and those skills can be carried with the employee. It was yet further held that though the defendant in that case, on amassing
information and knowledge with regard to the plaintiff's plan of operation, could not be injuncted from disclosing those plans to the
competitor if he carried them in his head and the competitor in the market, could not be taken to be driven by the defendant's disclosure
alone.
47. This Court, even in Stellar Information Technology Private Ltd. v. Rakesh Kumar, (2016) 234 DLT 114 held that the names of the
customers seeking data recovery services of the plaintiff in that case were well known and in public domain and the defendants could not
be restrained from approaching the customers only on the allegation that the defendants are aware of the names of the plaintiff's customers.
It was reasoned that the plaintiff, in the name of confidentiality, was seeking a restraint on trade. FAO(OS) (Com.) No. 104/2016 preferred
thereagainst was dismissed on 11th November, 2016.â€
(emphasis supplied)
44. A reading of the above reproduced paragraphs would reveal that not every customer/client list would qualify as confidential information or trade
secret unless the confidentiality about it is of economic/business/commercial value. It is held that in any employment, every employee would get to
know some information without any special effort. All such persons cannot be said to be in knowledge of trade secrets or confidential information and
every knowledge of such facts cannot be labeled as trade secret or confidential information. If an employee on account of his employment has
gathered some business knowledge/acumen or ways of dealing with clients, the same would not be termed as confidential information, disclosure of
which would harm the plaintiff. Unless there is some material on record to show that the defendant had come to know of any confidential information
/ trade secret concerning the plaintiff and its business, no injunction can be granted, more so when such trade secret / confidential information have not
even been spelt out. The learned Single Judge, referring to the decision in American Express Bank (supra) has observed that a competitor even after
knowing which particular entity/an individual/person is currently in business with, can approach such individual/person to canvas about itself, and it is
for the customer to decide which business/entity to choose. Creating a database of clients/customers and then claiming confidentiality on it does not
create a monopoly over such customers. That apart, even if a person has amassed knowledge with regard to the plaintiff’s plan of operation, he
could not be injuncted from disclosing such plans to the competitor, if he has carried such plans in his head and even the competitor could not be said
to be driven by such disclosure alone. I agree with the aforesaid conclusion arrived at by the Coordinate Bench of this Court.
45. One of the pleas of Ms. Raman was that in view of Section 27 of the Contract Act, Clause 11 of the NDA is void. It was the case of Ms. Raman
that this Clause mentioned in the agreement was executed only by some of the defendants and not all. In any case, such a stipulation in the NDA
which restricts the post employment opportunities shall be barred by Section 27 of the Act as held in Percept D’Mark (India) Pvt. Ltd. (supra)
wherein the Supreme Court refused to enforce such post employment restriction on the ground that the same is barred by Section 27 of the Act. The
said Clause attempts to restrict activities with any existing client relationship or potential client relationship or to attempt to solicit, divert, or take away,
any client prospect / client of the plaintiff. So, in effect, the clause puts a restriction on some of the defendants to carry out the activities referred to
above. Such a stipulation is void.
46. In a recent opinion, in Modicare Ltd. (supra) a Coordinate Bench of this Court while considering a similar issue has in paragraphs 24, 29 to 34 and
36 to 41 held as under:
“24. I thus hold the claim of the plaintiff for permanent injunction to prevent the defendants from unlawfully interfering with the business
of the plaintiff by enticing the customers and consultants of the plaintiff to breach their contract with the plaintiff, to be premised on
contract only and not on tort.
xxx xxx xxx
29. Section 27 of the Contract Act makes void i.e. unenforceable, every agreement by which anyone is restrained from exercising a lawful
profession, trade or business of any kind. Thus, even if the defendants or any of them, under their agreement with the plaintiff, had
undertaken not to carry on or be involved in any capacity in any business competing with the business of the plaintiff, even after leaving
employment with/association of the plaintiff, the said agreement, owing to Section 27 supra, would be void and unenforceable and the
plaintiff on the basis thereof could not have restrained any of the defendants from carrying on any business or vocation, even if the one
which the defendant had agreed not to carry on. I find it incongruous that the law, on the one hand would disable a plaintiff from enforcing
a contract where the defendant had voluntarily agreed not to do something, by going to the extent of declaring such contract void, but on
the other hand, enable the same plaintiff to the same relief under the law of tort. To hold so, would make the law look like an ass.
30. Section 27, in Taprogge Gesellschaft MBH v. IAEC India Ltd. AIR 1988 Bom 157, Sharp Business System v. The Commissioner of
Income Tax 2012 SCC OnLine Del 5639, and Pepsi Foods Ltd. supra has been held to have been enacted as a matter of public policy of
India, and does not create any personal right, which can be waived. If it is the public policy of India that there can be no restraint on any
one exercising a lawful profession, trade or business, not even when such person has voluntarily agreed not to, it belies logic that such
public policy would not apply when the mischief sought to be prevented is sought to be practiced invoking law of torts. It is not as if
different reliefs are being claimed, in enforcement of contract on the one hand and invoking the law of torts on the other hand. The reliefs
are the same. In my opinion, what is not contractually enforceable is also not enforceable invoking law of torts.
31. Inspite of specific query, whether there is equivalent in UK, of Section 27 of the Contract Act, no response has come. I find Supreme
Court in Gujarat Bottling Co. Ltd. supra to have held that while under the common law in England, restraints of trade, whether general or
partial, may be good if they are reasonable or reasonably necessary with reference to public policy or for protection of interest of
covenantee, in India, agreements in restraint of trade are governed by Section 27 and the question of reasonableness of restraint is outside
the purview of Section 27. This explains, the law of tort of unlawful interference in business, in UK. However the same, in my view, has no
place in India, at least in the context of present facts. I find the Supreme Court, in Superintendence Company of India (P) Ltd. supra, to
have also held that principles of English Law cannot be imported once the Parliament has codified the said principles in the Contract Act; it
is the language of the statute which alone has to be considered to ascertain its true meaning and scope.
32. Section 27, contained in a legislation of the year 1872, on promulgation of the Constitution of India in the year 1950, conferring the
right to practice any profession or to carry on any occupation, trade or business, the status of a Fundamental Right, under Article 19(1)(g)
thereof, today has a different connotation. Article 19(6) only clarifies that nothing contained in Clause (g) shall affect the operation of any
existing law or prevent the State from making any law, imposing in the interest of general public, reasonable restrictions on the exercise of
right conferred by the said clause. Thus, restrictions, in the interest of general public and if reasonable, to the Fundamental Right to
practice any profession or to carry on any occupation, trade or business, can be imposed only by law. The law of tort of unreasonable
interference in carrying on business, in view of Section 27 of the Contract Act in force since 1872, was not the existing law within the
meaning of Article 19(6) of the Constitution.
33. I have in Independent News Service Pvt. Ltd. v. Sucherita Kukreti (2019) 257 DLT 426, in the context of Section 27 of the Contract Act
held the right saved thereby to be a facet of Article 21 of the Constitution of India. The judgment of the Division Bench of Allahabad High
Court of the year 1930, after the right sought to be curtailed has been conferred the status of a Fundament Right and a facet of Article 21
of the Constitution of India, does not persuade me to hold that such Fundament Right of the defendants can be subject to the law of tort of
enticement to ommit breach of contract or of unlawful interference with business.
34. After the coming into force of the Constitution of India, the restriction if any on the fundamental right to carry on any trade or business
or to practice any profession can be imposed only by making a law i.e. a law prohibiting unlawful interference in business and enticing
another to commit breach of existing contractual obligations, and the constitutionality of which law if challenged would be tested on the
anvil of Article 19(6) of the Constitution of India.
xxx xxx xxx
36. Else, I find a Full Bench of the High Court of Hyderabad to have in Holloor Gopal Rao v. War Nasi Shiv Ramiah AIR 1953 Hyd 1 held
that a suit for establishing exclusive right to ‘purohitgiri’ in a village, axiomatically prohibiting others from acting as purohits, could
no longer continue after coming into force on 26th January, 1950 of the Constitution of India. It was held that any order declaring the
exclusive right of the plaintiff would amount to laying a restraint upon others to carry on the same profession in the village.
37. In fact, during the hearing on both days, I have also been asking the senior counsel for the plaintiff, that even if the argument of the
senior counsel for the plaintiff were to be accepted, where should the Court draw the line, between what constitutes enticement to commit
breach of contract and unlawful interference in business on the one hand and competition on the other hand. Any new entrant in the
market, to be able to create a niche for itself, in spite of the existing players, has to compete with the existing players, by approaching the
same customers and the same cache of employees who over the years have acquired expertise in that particular field. When launching the
same product/service, the new entrant to the business cannot possibly create a new set of customers for that product or service. Thus, the
consumers to be approached by the new entrant would be the same who were earlier having contractual relationships with the existing
players. Similarly, a new entrant cannot possibly compete if does not have the requisite expertise/finesse, required for launching a
particular product or service and to be able to provide the same class or quality of service, has to necessarily have with it, hands which
have been making the subject product and/or providing the said service in the past, may be under contract with the existing players. In my
view, it is practically impossible to draw a line between such persons, on their own approaching the new entrant, and the new entrant
approaching them. The process is quite complex and no precise rules can be made with respect thereto. The Courts would not lay down the
law in the name of being a matter of evidence, in respect of matters which are incapable of determination by Courts.
38. Attention of the senior counsel for the plaintiff has also been drawn to the widespread business of headhunters and employment
brokers, who sometimes are approached by employees/customers and sometimes by the new entrant and also sometimes on their own make
the two meet. I have enquired from the senior counsel for the plaintiff, whether it will make any difference, that the new entrant in the
market approaches a headhunter for hiring employees with the specialty and instead of the new entrant, it is the headhunter who
approaches employees having contracts with existing players. It is virtually impossible, even if evidence were permitted to be led to draw a
line, as to what caused the employee to breach an existing contract of employment and enter into a new contract i.e. whether it was on own
violation or on being enticed by the new entrant in the market.
39. No line which can be drawn in this respect has been suggested.
40. A new entrant obviously has to offer better terms to employees having expertise and having contract with other players, to woo them to
itself. I have wondered, whether offering such better terms would amount to the tort of enticement to commit breach of contract and
unlawful interference with the business of an existing player. Again no clarity has emerged.
41. I thus hold that a claim founded on unlawful interference with business or of enticement to commit a breach of contract with the plaintiff
is not enforceable in a court of law, neither contractually nor invoking the law of tort. Such a claim is thus not required to be put to trial.â€
47. A perusal of the above would show that the Court has opined that the right saved by Section 27 of the Contract Act is a facet of Article 21 of the
Constitution, and such right of the defendants cannot be defeated by stating, they are enticing the clients or interfering with the business. It is held any
new entrant in the market, to be able to create a name and niche for itself, will have to compete with the existing prayers by approaching the same
customers and the same cache of employees who have gained knowledge and experience in the field concerned. No line can be drawn between such
employees/customers approaching the new entrant and the new entrant approaching them. It would be virtually impossible to determine what caused
the breach of the existing contract between an employee and his employer, for him to enter into a new contract with the competitor, i.e., whether it
was on his own volition or on being enticed by the new entrant. Ultimately, it was held that a claim founded on unlawful interference with business or
breach of contract with the plaintiff would not be enforceable in a Court of law.
48. I am of the view the issue which arises for consideration in the application under Order XXXIX Rule 4 CPC is squarely covered by the above
judgment, inasmuch as the ground of unlawful interference with the business or breach of contract with plaintiff is not enforceable and the injunction
sought by the plaintiff as granted by this Court on April 04, 2022 is liable to be vacated.
49. Now coming to the judgments relied upon by Mr. Mehta, insofar as the judgment in Oravel Stays Pvt. Ltd. (supra) is concerned, the suit therein
was filed for injunction against the defendant No.1 and its officers including defendant Nos.2 and 3 for deliberately, unlawfully and wrongfully causing
interference with the plaintiff’s business. I find that despite notice, the defendants were not represented and were proceeded ex-parte.
50. The facts in that suit are that the plaintiff by way of an agreement was permitted by the hotelier/service provider to have full control over pricing
and any booking brought in by the hotel. The agreement also gave the plaintiff full authority to determine and publish room tariffs on its website and/or
mobile application as per dynamic pricing module. Through the agreement, the service provider/hotelier agreed to abide by the standard quality of
rooms and promised services to its guests. The agreement also allowed both the parties to address issues arising under the contract and to amicably
resolve the same. The defendant No. 1 was a federation claiming to represent the interest of the hoteliers based in Kota, Rajasthan who were also
associated with various online booking portals including the plaintiff. It was the case of the plaintiff in the suit that the hotel owners who entered into
the agreement with the plaintiff had connived with defendant No.1 and were not accepting bookings made through the plaintiff’s online
platform/mobile application, thereby failing to abide by the contract and amicably resolve the issues. The hoteliers had neither terminated the
agreement nor had they sought any modification of the terms. Defendant No.1 and its officers were emboldening and persuading the hoteliers to
boycott the plaintiff and refuse to honor the bookings made through the plaintiffs' portal. It was their case that the defendant No.1 was also colluding
with other associations and encouraging them to come forward to protest against the plaintiff to fulfill their unwarranted, illegal demands thereby
bringing plaintiffs business to complete halt.
51. The Court was of the view that on the basis of the documents enclosed with the plaint along with the necessary certificate, the plaintiff had clearly
made out a case for grant of injunction in terms of prayer (a) and (c) as the defendants had not only caused considerable loss to the plaintiff's business
but also caused inconvenience to public at large and prejudice in the mind of the consumers. Accordingly, the prayers in terms of prayer (a) and (c)
was granted.
52. This Court is of the view that the judgment being ex-parte has no applicability on the facts of the present case, more so in view of my findings in
paragraphs 37 to 47 above.
53. The defendant company and other defendants cannot be restrained from carrying out the activities / trade similar to the one being carried out by
the plaintiff.
54. Insofar as the judgment in the case of Niranjan Shankar Golikari (supra) is concerned, the said judgment was considered by the Coordinate Bench
of this Court in Navigators Logistics Ltd. (supra) and in paragraph 53 had held as under:
“53. A two Judge Bench of the Supreme Court, as far back as in Niranjan Shankar Golikari v. Century Spinning & Manufacturing Co.
Ltd., AIR 1967 SC 1098 was concerned with a suit for injunction to restrain the employee, who had agreed to serve the employer for a fixed
period, from during the said period, even after ceasing to be the employee of the plaintiff, joining employment of a competitor of the
plaintiff. It was unanimously held that considerations against restrictive covenants are different in cases where the restriction is to apply
during the period after the termination of the contract, than those in cases where it is to operate during the period of contract of
employment. In the facts of that case, it was found that the employee was privy to the special process invented/adopted by the plaintiff and
of which the employee was trained and had acquired knowledge. The employee who had left employment prior to the contracted period was
thus restrained from joining employment of a competitor for the remaining period for which he had contracted with the plaintiff in that
case.â€
It is clear from the above that this Court held it was in the facts of that case that the Supreme Court restrained the employees who were trained and
acquired knowledge be restrained from joining the competitors. The judgment is clearly distinguishable.
55. Similarly, insofar as the judgment in the case of Anindya Mukherjee (supra) relied upon by Mr. Mehta to counter the submission of Ms. Raman
that customer list does not constitute confidential information and that the maker of the documents has used his brain and that the data is not available
in public domain and is available with the plaintiff company, is not appealing and is misplaced, as nothing has been placed on record for this Court to
consider and ascertain whether such information is available in the public domain or not.
56. Suffice to state, in Navigators Logistics Ltd. (supra) the Coordinate Bench of this Court in paragraph 30 has held as under:
“30. I have in Tech Plus Media Private Ltd., relied upon by the counsel for the defendants and against which no appeal is found to have
been preferred, in the context of a list of names and address of visitors to the new portals of the plaintiff in that case or the comments of
such visitors, held that the plaintiff could not be said to be the author or composer or having contribution in the same. Burlington Home
Shopping Pvt. Ltd. and Diljeet Titus, Advocate supra were noticed but it was further held (i) that both the said judgments are of a date prior
to the pronouncement of the Supreme Court in Eastern Book Company v. D.B. Modak, (2008) 1 SCC 1, laying down (i) that to claim
copyright in a compilation, the author must produce the material with exercise of his skill and judgment which may not be creativity in the
sense that it is novel or non-obvious but at the same time it is not a product merely of labour and capital; and, (ii) that the exercise of skill
and judgment required to produce the work must not be so trivial that it could be characterized as a purely mechanical exercise.
Accordingly, it was held that copy edited judgments would not satisfy the copyright merely by establishing amount of skill, labour and
capital put in the inputs of the copy edited judgments as the original or innovative thoughts for the creativity are completely excluded.
Notice in Tech Plus Media Private Ltd. was also taken of Emergent Genetics India Pvt. Ltd. v. Shailendra Shivam, 2011 (47) PTC 494.
Reliance in Tech Plus Media Private Ltd. was also placed on Dr. Reckeweg & Co. GMBH v. Adven Biotech Private Ltd., 2008 (38) PTC 308
(Del), wherein, dealing with the issue of copyright in a compilation in a brochure, of nomenclature of drugs, the listing of the medicines in a
particular fashion, the description and the curative effect, the principle of law enunciated by the Supreme Court in Eastern Book Company
supra was applied. It was held that no copyright subsists therein in the absence of employment of any skill judgment and labour in
compilation thereof. It was further held that without specifically averring as to the manner/technique/criteria employed in such
sequencing/collection and the originality in the same, the plaintiff could not succeed in its claim. It was yet further held that the compilation
in that case was a derivative work in the sense of being a collection of sequencing of already existing information and did not satisfy the
standard of creativity required to qualify as a work in which copyright subsists. It was explained that the standard of creativity required in
such derivative work is higher than the standard required in cases of primary works. Resultantly, the plaint in Tech Plus Media Private Ltd.
was rejected.â€
(emphasis supplied)
57. I agree with the conclusion of the Court that a client list cannot be construed as confidential information to claim any right. The judgment relied
upon has no applicability.
58. Similarly, the reliance placed by Mr. Mehta on the judgment in Vogueserv International Pvt. Ltd. (supra) is also misplaced in view of the clear
conclusion of the Coordinate Bench of this Court in Navigators Logistics Ltd. (supra) with which I concur.
59. Insofar as the judgment in the case of K.K. Modi Investment & Financial Services Pvt. Ltd. (supra) is concerned, the same was relied upon by
Mr. Mehta to contend that the defendant company can also be made privy to the contract as it is merely a corporate cloak being used by the
defendants to circumvent the contract. In other words, it is his plea that the sole intent of the defendant Nos.1 to 4 was only extract the knowledge
and experience gained by the employees of the plaintiff company and to develop an identical system for Gold Loan Sourcing. This plea is not at all
appealing. There is nothing on record to show that the defendants have approached the plaintiff’s customers or they are using any propriety
information of the plaintiff. The defendants also cannot be prevented from using the experience and knowledge gained by them during the course of
their employment with the plaintiff.
60. That apart, the nature of functions being discharged by the defendant Nos.2 to 20 does not appear to be technical in nature. In other words, they
were not involved in technical operation which they would have removed or copied through a technical process. In any case, the prima facie the
plaintiff has not been able to establish or indicate any propriety right on the above data / information which is said to being used by the defendants.
Though, an argument is taken that the restriction to carry business based on confidential information, the alleged confidentiality is for a limited time and
the same is enforceable is also not acceptable. There is nothing in the wording of Section 27 to suggest so.
61. Suffice to state, a contract in restriction of trade is void unless a particular contract can be distinguished and brought within the Exception 1 to
Section 27 of the Contract Act, to show that there is no scope for the prohibition.
62. Insofar as the reliance placed by Mr. Mehta on the judgment in M/s Gujarat Bottling Company Ltd. & Ors. (supra) is concerned, I agree with the
submission made by Ms. Raman that the said judgment shall not be applicable in the facts of this case, inasmuch as in paragraph 42 therein, it was
stated that the position in England was that a breach of negative covenant would warrant injunction. However, the position in India is different as here;
an injunction to enforce a negative covenant would be refused if it would indirectly compel the employee either to idleness or to serve the employer, as
has been noted by this Court in paragraph 31 of Modicare Ltd. (supra).
63. A plea was also raised by Mr. Mehta in support of his submission that the interim order granted by this Court in favour of the plaintiff on April 04,
2022 should not be vacated as no false / misleading statements have been pointed out by the defendant company in the present case. The said
submission is totally misplaced. It is erroneous to say that only if false / misleading statements have been made by the party to get an interim order,
shall the same be vacated. It goes without saying that if the interim relief sought by a party is contrary to the settled position of law, even if the same
has been granted, it can be vacated. It is one such case herein, as is clear from my conclusion above that the plaintiff has not made out any case for
continuance of the interim order granted on April 04, 2022. Though in support of his submission, Mr. Mehta has relied upon an order in the case of
Bank of Baroda v. Union Bank of India and Ors., CM APPL. 4514/2022, but no such order has been placed on record by the plaintiff to enable this
Court deal with the same.
64. I may also state that Mr. Mehta has placed on record the judgment of the Calcutta High Court in the case of Lindsay International Pvt. Ltd.
(supra). However it is not clear for what proposition of law/ argument the said judgment has been relied upon, as I find no reference to the said
judgment in the plaint, application or written submissions.
65. In the end, I must state that Mr. Mehta has contested the applicability of all the judgments so relied upon by Ms. Raman. In view of my above
conclusion, the judgments relied upon by Ms. Raman have applicability to the facts of this case. Hence, the contention needs to be rejected.
66. The reliance placed by Ms. Raman on Pepsi Foods Ltd. (supra), Superintendence Co. of India (supra) and EV Motors India Pvt. Ltd. (supra),
may not be gone into, in view of my discussion above, both on facts and in law.
67. In view of my above discussion, this Court is of the view that the application filed by the defendant No.1 (and argued by Ms. Raman who
appeared for some other defendants) being I.A. 6453/2022 needs to be accepted. The interim order dated April 04, 2022 is liable to be vacated. The
application filed by the plaintiff being I.A. 5188/2022 is dismissed. It is ordered accordingly.
68. List the pending applications for hearing on December 12, 2022.