Ambiance India Pvt. Ltd. vs Shri Naveen Jain
2005 Latest Caselaw 497 Del

JUDGMENT

R.C. Chopra, J.

1. The plaintiff seeks an ad interim injunction till disposal of the suit to restrain the defendant from continuing in the employment of M/s. Indigo Orient Limited and to divulge information, know-how and trade secrets which the defendant has acquired during his employment with the plaintiff-Company.

2. The facts relevant for the disposal of this application, briefly stated, are that the defendant was employed by the plaintiff-Company as a Fabric Technologist. Vide an Agreement dated 30th August, 2003, he was appointed as a Client Executive considering his efficiency and work. According to the plaintiff, the Agreement between the plaintiff and defendant provided that during the continuance of his employment, the defendant shall not engage directly or indirectly in any other occupation, business or employment or any similar business or occupation and would not divulge anything which may adversely affect the business of the plaintiff-Company. It was also provided that during his tenure and for three years thereafter, the defendant shall not reveal any trade information of the plaintiff and for a period of two years after the termination of the service, he would not directly or indirectly take any employment or deal with the plaintiff's present or past customers, vendors, importers, agents, prospective customers, etc.

3. According to the plaintiff, on 19th June, 2004, the defendant left the plaintiff's Company terminating the Agreement but on 10th of June, 2004, itself, he had joined one of the customer's of the plaintiff, namely, M/s. Indigo Orient Limited of U.K. with whom the plaintiff had an agreement to supply goods from 17th July, 2001 for a period of three years. This act of the defendant is alleged to be in violation of the Agreement dated 30th August, 2003. It is alleged that the defendant with a view to make illegal personal gains and cause wrongful loss to the plaintiff had clandestinely persuaded the aforesaid client of the plaintiff to open an office in India and joined it in violation of the Agreement dated 30th August, 2003. The plaintiff, therefore, pays for a permanent injunction against the defendant restraining him from dealing with its customers, clients, directly or indirectly and taking any benefit from them. The application under consideration is also on same grounds.

4. The defendant has filed written statement and reply in which he has disputed the plaintiff's prayer for ad interim injunction on the ground that the suit filed by the plaintiff is hit by Section 41(e) of the Specific Relief Act as well as Section 27 of the Indian Contract Act. According to the defendant, the Agreement between the parties was determinable in nature and could be terminated by either of the parties by giving one month's notice or one month's salary in lieu thereof. According to him, the defendant was not even allowed to read the said Agreement and had no option but to sign it as he had no bargaining power and was in need of employment. According to him, the Agreement dated 17th July, 2001, between the plaintiff and M/s. Indigo Orient Limited has not been renewed by M/s. Indigo Orient Ltd. and the defendant has not misused nor would misuse his position to cause any loss to the plaintiff. According to him, he did not acquire any confidential information from the plaintiff and as such all the allegations against him are false and frivolous.

5. I have heard learned counsel for the plaintiff and learned counsel for the defendant.

6. The law is well-settled that all contracts in restraint of trade are void and hit by Section 27 of the Contract Act. A judgment of this Court in Krishan Murgai v. Superintendence Co. of India; succinctly deals with the law on this point. An employee, particularly, after the cessation of his relationship with his employer is free to pursue his own business or seek employment with someone else. However, during the subsistence of his employment, the employee may be compelled not to get engaged in any other work or not to divulge the business/trade secrets of his employer to others and, especially, the competitors. In such a case, a restraint order may be passed against an employee because Section 27 of the Indian Contract Act does not get attracted to such situation. It is also to be added that a trade secret is some protected and confidential information which the employee has acquired in the course of his employment and which should not reach others in the interest of the employer. However, routine day-to-day affairs of employer which are in the knowledge of many and are commonly known to others cannot be called trade secrets. A 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.

7. In the present case, nothing has been indicated even as to what trade secrets or technical know-how was revealed to the defendant which should not be divulged to others. 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. If the defendant on account of his employment with the plaintiff has learnt some business acumen or ways of healing with the customers or clients, the same do not constitute trade secrets or confidential informations, the divulgence or use of which should be prohibited.

8. After considering the pleadings of the parties and particularly Clauses (6),(7) and (8) of the Agreement dated 30th August, 2003, this Court is of prima facie view that the Agreement between the parties prohibiting the defendant for two years from taking employment with any present, past or prospective customer of the plaintiff is void and hit by Section 27 of the Indian Contract Act. This stipulation was prima facie against public policy of India and an arm twisting tactic adopted by an employer against a young man who was looking for a job. The contract between the plaintiff and M/s. Indigo Orient Limited has already come to an end and as such no prima facie case remains in favor of the plaintiff to restrain the defendant from remaining in the employment of the said Company. The employment contract between the plaintiff and defendant was determinable in nature and as such the defendant was entitled to determine the same and seek another employment. Everybody has a right to strive for progress in career. The restrictions imposed upon the defendant in the Agreement, therefore, were void and unconscionable.

9. Moreover, Section 41(e) of the Specific Relief Act also stands in the way of the plaintiff inasmuch as even if this Court restrains the defendant by an ad interim injunction from continuing with M/s. Indigo Orient Limited, the defendant may join someone else or otherwise keep on passing on the secrets, if any, to them. An injunction which cannot be specifically enforced and supervised by the Court should not be granted. Section 14(c) and (d) of the Specific Relief Act also prohibits grant of such injunctions. This Court, therefore, is of the considered view that in case the plaintiff feels that the defendant is in breach of Agreement, the plaintiff may sue him for damages in accordance with law.

10. Accordingly, this Court finds no prima facie case in favor of the plaintiff. The balance of convenience is also more in favor of the defendant who has to make his livelihood by seeking employment in the trade in which he has some experience. No irreparable loss/injury would be caused to the plaintiff as its contract with M/s. Indigo Orient Limited, with whom the defendant is working, has already come to an end by efflux of time and it is not pleaded that the same has been renewed. The plaintiff can be adequately compensated in terms of money and may claim damages for the breach, if any.

11. Accordingly, IA No.4894/2004 stands dismissed.

12. Nothing stated herein shall be taken as an expression of opinion on the merits of the suit pending before the Court inasmuch as the observations made herein are tentative only.