Jcb India Ltd. vs I.P. Address :122.163.98.166 & ...
2008 Latest Caselaw 1432 Del

*                    IN THE HIGH COURT OF DELHI AT NEW DELHI

+                    CS (OS) 1021/2008

                                                        August 25, 2008

1.

I.A. 9011-2008 in CS (OS) 1021/2008

JCB INDIA LTD. ....... Plaintiff

Through : Mr. Pawan Duggal with Mr. Vikas Singh, Advocates

Versus

I.P. ADDRESS :122.163.98.166 & ORS. ...... Defendants

Through : Mr. S.K. Bansal, Advocate for Mr. Abhinav Gupta, Advocate

2. I.A. 9062/2008 in CS (OS) 691/2008

JCB INDIA(PVT) LTD. .................Plaintiff

Through : Mr. Pawan Duggal with Mr. Vikas Singh, Advocates

Versus

ABHINAV GUPTA & ORS. ...... Defendants

Through : Mr. S.K. Bansal, Advocate for defendant No.1.

Mr. A.B. Dial, Sr. Advocate with Ms. Sumati Anand, Mr.Rajiv Nanda and Mr. Pourush Sudan, Advocates for Def. Nos. 2 and 3.

CS (OS) Nos.691/2008 & 1021/2008                                     Page 1
 CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT

1.    Whether reporters of local papers may be
      allowed to see the judgment?

2.    To be referred to the Reporter or not?

3.    Whether the judgment should be reported
      in the Digest?

Mr. Justice S. Ravindra Bhat

1. This common order will dispose off IA No. 9062/2008 in CS (OS) 691/2008

IA No. 9011/2008 in CS (OS) No. 1021/2008 preferred under Order 7 Rule 11 of

the Code of Civil Procedure, 1908 (hereafter 'the CPC') by the applicant-

defendant (hereafter 'the applicant') to the present proceedings.

2. It is averred that the plaintiff is a company duly incorporated under the

Companies Act, 1956 having its registered office at New Delhi. It is one of the

largest construction equipment manufacturers in India and in the course of its

business invested heavily in the innovation and design of construction

equipment. It says that its business is based on confidential trade secrets; it has

constantly taken care that such secrets in the form of data, drawings, designs and

products are secure. These information, it is averred, are products of extreme

hard work, labour, intellect and expenditure of the time and money spent by it. It

is also claimed that these information, data and other related material are

original literary and artistic works within the meaning of section 2 of the

CS (OS) Nos.691/2008 & 1021/2008 Page 2 Copyright Act (hereafter 'the Act') and that the plaintiff is the first owner of such

works under section 17 of the Act.

3. It is stated that in order to carry on its daily business the plaintiff engages

the services of various employees who are specialists in their respective fields. In

August 2006, the plaintiff avers that it employed the services of the applicant in

the capacity of Manager- Design in Product Engineering, in which position he

continued till 14th January 2008. The plaintiff avers that the work profile of the

applicant was such that he was exposed to its confidential information and trade

secrets, including some extremely confidential information about the design

drawing and design details pertaining to manufacture and innovation of some of

the latest products of the company. It is stated that through a letter dated 3 rd

January 2008, the applicant tendered his resignation and was duly relieved on the

14th January 2008, allegedly on the assurance that he would join any company

that was in competition with the plaintiff.

4. It is stated that in March 2008 the plaintiffs became aware of the fact that

the applicant had joined M/s Escorts Construction Equipment Ltd., its direct

competitor. The plaintiff was also notified by its security staff that some

documents, papers containing print outs of email messages pertaining to the

private email account of the applicant being [email protected]

were found. A reading of the documents, it is averred, revealed that they

CS (OS) Nos.691/2008 & 1021/2008 Page 3 contained confidential information pertaining to the intellectual property of the

plaintiff company. The plaintiff, therefore, alleges that the applicant during his

stint in the plaintiff company transferred such confidential information and trade

secrets to the local PC and thereafter on to his personal email id. It is alleged that

an examination of the computer records of the applicant revealed that mails

were being sent frequently to the aforesaid email id and that these contained the

plaintiff's valuable confidential, including drawing for a backhoe bucket, tanks,

fender, post leg etc., all of which were made on Product Lifecycle Management

(PLM), the software used by the plaintiff to store its confidential data.

5. The plaintiff submits that since these acts have been committed using

computers, networks and the Internet the Information Technology Act, 2000

applies to the present case. It is submitted that acts of the fourth defendant

amount to hacking within Section 66 of the Information Technology Act, 2000. An

FIR bearing No. 86/2000 was filed in Sector 55 before Police Station, Faridabad. It

is alleged that through the aforesaid acts, the applicant has unlawfully

appropriated the plaintiff's trade secrets and confidential information and

moreover, violated the plaintiffs' copyright in the drawings and data. The

applicant, it is averred acted in breach of his contract of employment and his

commitments made at the exit interview that he would not be joining the

plaintiff's direct competitor. Further, the contract also stipulated that all

CS (OS) Nos.691/2008 & 1021/2008 Page 4 intellectual property created during the applicants tenure with the plaintiff would

vest in the latter and that he was obliged not to divulge confidential information

and trade secrets. Therefore, the plaintiff filed CS (OS) No. 691/08 seeking an

order of permanent injunction against the applicant, restraining him from

divulging or using or in any manner handling confidential data and trade secrets

of the plaintiff and also from restraining him from working for any direct

competitor of the plaintiff.

6. Subsequently, the plaintiff filed the present suit where it impleaded the

applicant as the fourth defendant. In the suit it sought an order from the Court

restraining the other defendants from transferring or in any manner handling

confidential information or trade secrets of the plaintiff. Though its did not seek

any specific relief against the applicant in that suit, it sought an order for delivery

up of information and data that the defendants therein had obtained unlawfully,

in violation of the plaintiff's copyright in those designs data.

7. The defendant-applicant moved applications under Order 7 Rule 10&11 of

the CPC in both these suits, which are the subject matter of the present order.

The applicant avers that the suits are barred under section 61 of the Information

Technology Act, 2000 and therefore, the Court lacks jurisdiction to entertain and

try the present suit or to grant any reliefs as claimed. It is averred that the

plaintiff has admitted about its filing a complaint, being F. No. 12(3)/2008/IT/

CS (OS) Nos.691/2008 & 1021/2008 Page 5 2380-81 before the Adjudicating Officer under the IT Act 2000 and which is sub

judice. It is stated that a perusal of this plaint as well as the said complaint would

reveal that the subject matter overlap and are similar. The applicant contends

that the suits pertain to alleged violations by him under the IT Act and the other

alleged causes of action viz. breach of copyrights, service contracts, confidential

information and trade secrets etc., are only ancillary and incidental to the alleged

violations under the IT Act. They cannot, therefore, be adjudicated

independently nor can such other alleged causes of action be severed from the

alleged violations under the IT Act.

8. The applicant, therefore, submits that the present suit in its entirety is

barred by Section 61 of the IT Act. Further, the bar of Section 61 of the IT Act

would also apply to actions to be taken in future in respect of alleged violations

under the IT Act as alleged in the plaint. The applicant also claims that this Court

does not possess territorial jurisdiction to try the suits since the alleged cause of

action has taken place in Haryana and the applicant also resides in Haryana.

Further, it is alleged that the suits are not maintainable since it has been with

malafide intent and is a sham.

9. Mr.Pawan Duggal, learned counsel appearing on behalf of the plaintiff,

contended that the basic issues being agitated in both the suits relate to trade

secrets, confidential information and most importantly copyright violation in

CS (OS) Nos.691/2008 & 1021/2008 Page 6 respect of data and drawings, all of which can be gone into only by a civil court.

He also contends that the reliefs under the suit and adjudicatory proceedings to

the extent of overlapping, do not oust jurisdiction of the Court, especially.

10. Mr.S.K.Bansal, learned counsel for the defendant - applicant, argued that

the essence of the cause of action in this suit is unauthorized access and

transmitting of data stored in computers and computer networks, which is an

offence termed as "hacking" under section 66 of the IT Act. The cause of action

against the other defendants in the suits are in the nature of their being service

providers for the emails through which the applicant allegedly unlawfully

transmitted the data and drawings. Such service providers, it was contended

would be liable under section 79 of the IT Act. Further, section 43 of the IT Act,

especially clauses (a) and (b) state that in case a person accesses or secures

access to such computer or computer networks, or downloads copies or extracts

any data from any such computer or computer network without the permission

of the owner or any other person in charge of such system or network, is liable to

pay damages by way of compensation. The cause of action put forth in the plaint,

according to learned counsel would be covered under these provisions. Learned

counsel argued that these provisions must be read with section 46, under which

the power to adjudicate upon instances of contravention of the provisions of the

Act has been exclusively conferred on the Adjudication Officer appointed by the

CS (OS) Nos.691/2008 & 1021/2008 Page 7 Central Government. Section 61 explicitly bars the institution of a civil suit, in

respect of any matter which and adjudicating officer under the Act is empowered

to determine. Therefore, in light of this bar of jurisdiction of the civil court

coupled with the fact that the plaintiff has also preferred a complaint under the

IT Act, learned counsel argued that this Court lacks jurisdiction, and should reject

the suit.

11. Counsel further submitted that the court in respect of copyright violation

and the issue of transmission of confidential information and trade secrets must

await the determination of the adjudicating officer on the issue of unauthorized

access.

12. The relevant provisions of the Act are extracted below:

"43. Penalty for damage to computer, computer system, etc. If any person without permission of the owner or any other person who is incharge of a computer, computer system or computer network,-

(a) accesses or secures access to such computer, computer system or computer network;

(b) downloads, copies or extracts any data, computer data base or information from such computer, computer system or computer network including information or data held or stored in any removable storage medium;

(c) introduces or causes to be introduced any computer contaminant or computer virus into any computer, computer system or computer network;

(d) damages or causes to be damaged any computer, computer system or computer network, data, computer data base or any other programmes residing in such computer, computer system or computer network;

CS (OS) Nos.691/2008 & 1021/2008 Page 8

(e) disrupts or causes disruption of any computer, computer system or computer network;

(f) denies or causes the denial of access to any person authorised to access any computer, computer system or computer network by any means;

(g) provides any assistance to any person to facilitate access to a computer, computer system or computer network in contravention of the provisions of this Act, rules or regulations made thereunder;

(h) charges the services availed of by a person to the account of another person by tampering with or manipulating any computer, computer system, or computer network,

he shall be liable to pay damages by way of compensation not exceeding one crore rupees to the person so affected.

Explanation.- For the purposes of this section,-

(i) "computer contaminant" means any set of computer instructions that are designed-

(a) to modify, destroy, record, transmit data or programme residing within a computer, computer system or computer network; or

(b) by any means to usurp the normal operation of the computer, computer system, or computer network;

(ii) "computer data base" means a representation of information, knowledge, facts, concepts or instructions in text, image, audio, video that are being prepared or have been prepared in a formalised manner or have been produced by a computer, computer system or computer network and are intended for use in a computer, computer system or computer network;

(iii) "computer virus" means any computer instruction, information, data or programme that destroys, damages, degrades or adversely affects the performance of a computer resource or attaches itself to another computer resource and

CS (OS) Nos.691/2008 & 1021/2008 Page 9 operates when a programme, daia or instruction is executed or some other event takes place in that computer resource;

(iv) "damage" means to destroy, alter, delete, add, modify or rearrange any computer resource by any means.

46.Power to adjudicate.

(1) For the purpose of adjudging under this Chapter whether any person has committed a contravention of any of the provisions of this Act or of any rule, regulation, direction or order made thereunder the Central Government shall, subject to the provisions of sub-section (3), appoint any officer not below the rank of a Director to the Government of India or an equivalent officer of a State Government to be an adjudicating officer'for holding an inquiry in the manner prescribed by the Central Government.

(2) The adjudicating officer shall, after giving the person referred to in sub-section (1) a reasonable opportunity for making representation in the matter and if, on such inquiry, he is satisfied that the person has committed the contravention, he may impose such penalty or award such compensation as he thinks fit in accordance with the provisions of that section.

(3) No person shall be appointed as an adjudicating officer unless he possesses such experience in the field of Information Technology and legal or judicial experience as may be prescribed by the Central Government.

(4) Where more than one adjudicating officers are appointed, the Central Government shall specify by order the matters and places with respect to which such officers shall exercise their jurisdiction.

(5) Every adjudicating officer shall have the powers of a civil court which are conferred oh the Cyber Appellate Tribunal under sub- section (2) of section 58, and--

(a) all proceedings before it shall be deemed to be judicial proceedings within the meaning of sections 193 and 228 of the Indian Penal Code;

CS (OS) Nos.691/2008 & 1021/2008 Page 10

(b) shall be deemed to be a civil court for the purposes of sections 345 and 346 of the Code of Criminal Procedure, 1973.

47. Factors to be taken into account by the adjudicating officer. While adjudging the quantum of compensation under this Chapter, the adjudicating officer shall have due regard to the following factors, namely:-

(a) the amount of gain of unfair advantage, wherever quantifiable, made as a result of the default;

(b) the amount of loss caused to any person as a result of the default;

(c) the repetitive nature of the default

61. Civil court not to have jurisdiction.

No court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which an adjudicating officer appointed under this Act or the Cyber Appellate Tribunal constituted under this Act is empowered by or under this Act to determine and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act.

xxxxxxx xxxxxx xxxxxx

66. Hacking with computer system.

(1) Whoever with the intent to cause or knowing that he is likely to cause wrongful loss or damage to the public or any person destroys or deletes or alters any information residing in a computer resource or diminishes its value or utility or affects it injuriously by any means, commits hack:

xxxxxxx xxxxxx xxxxxx

81. Act to have overriding effect.

The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force."

CS (OS) Nos.691/2008 & 1021/2008 Page 11

13. The defendant's motion for rejection here is premised on lack of

jurisdiction of this court, on account of Section 61, which clothes the Cyber

Appellate Tribunal ("the Tribunal") or the adjudicating officer to decide upon the

extent of damage or harm caused by someone's objectionable behavior, judged

from the perspective of provisions of the IT Act. Section 43 enacts the penalty

which can be recovered as compensation for the damage caused by anyone to a

computer resource, etc, exhaustively defined by that provision. Section 46 deals

with the powers, functions and qualifications of an adjudicating officer. Section

61 excludes jurisdiction of the civil court; Section 66 defines hacking. Taken

together, these outline a species of unlawful behavior which can be swiftly

adjudicated and dealt with. Section 43 also sets an outer limit for the amount of

compensation which an adjudicating officer can award.

14. What cannot be ignored by the court is that the nature of jurisdiction

conferred upon the adjudicating authority under the IT Act is extremely

restricted; he is not a special tribunal empowered to decide upon all causes as

between parties, who have disputes including those under the Act. The tribunal is

one of limited jurisdiction. Necessarily, in such case, if there are claims or causes

forming part of the same cause of action, or series of acts, constituting causes of

action, which are not covered by the Act, or are violation of other enactments, or

CS (OS) Nos.691/2008 & 1021/2008 Page 12 infringe other legal obligations, the adjudicating officer would have no power to

decide them.

15. The plaintiff here asserts violation of copyright in data bases and

confidential information; an injunction is sought restraining the defendants from

using them.

16. Under Section 9 of the CPC, the civil courts possess jurisdiction to try and

decide all civil causes, except those excluded. The courts in India, have dealt with

different nuances of this issue, over the last six decades. Far back, in Secretary of

State v. Mask & Co. (AIR 1940 PC 105) the question was considered in connection

with Sea Customs Act (1878). It was held that:

"It is settled law that the exclusion of the jurisdiction of the civil courts is not to be readily inferred, but that such exclusion must either be explicitly expressed or clearly implied.

The Constitution Bench in Dhulabhai v. State of M. P. (AIR 1969 SC 78) said that:

"Where there is an express bar of the jurisdiction of the court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be relevant but is not decisive to sustain the jurisdiction of the civil court.

Where there is no express exclusion the examination of the remedies and the scheme of the particular Act to find out the intendment becomes necessary and the result of the inquiry may be decisive. In the latter case it is necessary to see if the statute creates a special right or a liability and provides for the determination of the right or liability and further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted and whether remedies normally

CS (OS) Nos.691/2008 & 1021/2008 Page 13 associated with actions on civil courts are prescribed by the said statute or not."

Much later, in connection with the Industrial Disputes Act, in Premier

Automobiles Ltd. v. Kamlekar Shantaram Wadke (1976) 1 SCC 496 it was pointed

out by the Supreme Court that the civil court will have no jurisdiction to try and

adjudicate upon an industrial dispute, if it concerned enforcement of certain right

or liability created under that Act. This line of reasoning was affirmed in Bata

Shoe Co. Ltd. v. City of Jabalpur Corpn (1977) 2 SCC 472 and Munshi Ram v.

Municipal Committee, Chheharta (1979) 3 SCC 83.

17. In Raja Ram Kumar Bhargava v. Union of India (1988) 1 SCC 681 the

Supreme Court held that:

"[W]herever a right, not pre-existing in common law, is created by a statute and that statute itself provided a machinery for the enforcement of the right, both the right and the remedy having been created uno flatu and a finality is intended to the result of the statutory proceedings, then, even in the absence of an exclusionary provision the civil court's jurisdiction is impliedly barred.."

These were again reiterated by a three judge bench of the Supreme Court, in

Rajasthan SRTC v. Krishna Kant ((1995) 5 SCC 75.

18. The above discussion would show that the provisions of the IT Act are no

doubt special, and to the extent they provide specific remedies, the civil court's

jurisdiction is barred. However, what does not follow from the above decisions,

CS (OS) Nos.691/2008 & 1021/2008 Page 14 as is sought to be urged by the defendant, is that every claim inter parties is

barred. The provisions of the Copyright Act, which confer copyrights upon data

bases, as well as the plaintiffs' rights towards its trade secrets, cannot be subject

matter of jurisdiction of the adjudicating authority. To hold so would be to do

violence with provisions of the IT Act, as Parliament never intended ouster of civil

courts' jurisdiction, and its substitution with a specialized tribunal in that regard.

19. It is quite possible that some disputes or claims may ultimately be found to

be falling outside jurisdiction of this court. However, the court, consistent with

rulings of the Supreme Court in Roop Lal Sathi v. Nachhattar Singh Gill, 1982 (3)

SCC 487 and Raptakos Brett & Co. Ltd. v. Ganesh Property, 1998 (7) SCC 184, that

only a part of the plaint cannot be rejected, cannot view the pleadings piece

meal. It was also observed by the Supreme Court, in Popat and Kotecha Property-

vs-State Bank of India Staff Association 2005 (7) SCC 510) that the averments in

the plaint as a whole have to be seen to find out whether Clause (d) of Rule 11 of

Order 7 is applicable:

"18. There cannot be any compartmentalization, dissection, segregation and inversions of the language of various paragraphs in the plaint. If such a course is adopted it would run counter to the cardinal canon of interpretation according to which a pleading has to be read as a whole to ascertain its true import. It is not permissible to cull out a sentence or a passage and to read it out of the context in isolation. Although it is the substance and not merely the form that has to be looked into, the pleading has to be construed as it stands without addition or subtraction of words or change of its apparent grammatical sense. The intention of the party concerned is to be gathered primarily from the tenor and terms of his

CS (OS) Nos.691/2008 & 1021/2008 Page 15 pleadings taken as a whole. At the same time it should be borne in mind that no pedantic approach should be adopted to defeat justice on hair- splitting technicalities."

20. In this case, even if some of the causes pleaded by the suit are seemingly

barred, yet this court should not reject the plaint on the ground of the relief

being barred in law; that can be gauged only at the final stage, having regard to

the composite nature of the claims in the pleadings. For these reasons, the

application for rejection of plaint cannot succeed. Both the applications, that is,

IA No. 9062/2008 in CS (OS) 691/2008 IA No. 9011/2008 in CS (OS) No.

1021/2008, are accordingly dismissed. In the circumstances, the applicant

defendant shall bear the costs, quantified at Rs. 20,000/- each.

The applications are accordingly disposed off.

CS (OS) 1021/2008 CS (OS) No.691/2008

List on 17th November, 2008 for arguments.

August 25, 2008                                               S.Ravindra Bhat
                                                              Judge




CS (OS) Nos.691/2008 & 1021/2008                                    Page 16