Delhi High Court
Mps Limited vs Mrinal Zalpuri & Anr on 1 July, 2013
Author: Manmohan Singh
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: May 07, 2013
Judgment Pronounced on: July 01, 2013
+ ARB.P. No.406/2012
MPS LIMITED ..... Petitioner
Through Mr.S.Mukerjee, Adv. with
Mr.Vishrov Mukerjee, Adv.
versus
MRINAL ZALPURI ..... Respondent
Through Mr.Sudhir Vats, Adv. with
Ms.Swati Pandit, Adv.
AND
+ O.M.P. No.854/2012 & I.A. No.18523/2012
MPS LIMITED ..... Petitioner
Through Mr.S.Mukerjee, Adv. with
Mr.Vishrov Mukerjee, Adv.
versus
MRINAL ZALPURI & ANR ..... Respondents
Through Mr.Sudhir Vats, Adv. with
Ms.Swati Pandit, Adv.
CORAM:
HON'BLE MR. JUSTICE MANMOHAN SINGH
MANMOHAN SINGH, J.
1. By this common order, I propose to decide both petitions filed by
the petitioner. The petitioner, MPS Ltd. is a public company with its
registered office in Chennai. It is involved in providing publishing
solutions to national and international companies engaged in typesetting
and data digitization services.
2. The respondent No.1 is a former employee of the petitioner, who
has started his own company, which is the respondent No. 2 in this matter.
He was appointed as a Project Leader in the Software Development Group
in 2006. His employment contract required him to maintain confidentiality
regarding proprietary information obtained during the period of his
employment.
3. The respondents are conducting their business in Delhi and reside
in Delhi. The employment contract also gives the Courts of Delhi the
supervisory jurisdiction.
4. It is alleged that the respondent No.1 had started a company which
allegedly provides the same service as that of the petitioner. It was also
alleged that this was done by using the proprietary information of the
petitioner.
5. The employment contract contained an arbitration clause which is
hereinafter reproduced, "If you and MPS Technologies are unable to
informally resolve any dispute arising out of or related to your
employment by MPS Technologies India, you agree that MPS
Technologies may elect, in its sole discretion and at any time, for the
dispute to be mediated and or submitted to a binding arbitration."
6. OMP No.542/2012 is under Section 9 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as „the Act‟) filed by the
petitioner against the respondents wherein the petitioner seeks an
injunction to restrain the respondents from dealing with the allegedly
copied software and to prevent him from approaching the clients of the
petitioner for future business. This Court had granted the injunction vide
order dated 11th September 2012. The present petition is under Section 11
of the Act, requesting the court to appoint an arbitrator to adjudicate the
dispute as well as for consideration of OMP No.854/2012 which is listed
for disposal. Both petitions have been argued by the parties.
Arguments of the petitioner in brief:
7. The petitioner submits that that the employment contract between it
and the respondents clearly prevents the latter from using its proprietary
information for their own benefit. The product of the respondents, which
is promoted on its website, http://www.collab4ideas.com, is alleged to
provide the same service as that of the petitioner‟s company. The website
directly represents its product, StatsClarity as an alternative to MPS
Insight, the product of the petitioner. Further, the respondents had
approached the customers of the petitioner with their product as a cost
effective alternative to MPS Insight, which the petitioner argues to be a
violation of the employment contract as well. The petitioner has also
obtained a demonstration of the respondents‟ product, which, it claims is
exactly similar to its own product.
8. The petitioner argues that due to the loss of business created, there
is irreparable harm; balance of convenience also rests in favour of the
petitioner since failure to grant an injunction would have a harmful effect
on its business. And finally, the petitioner submits that there is a strong
prima facie case in favour of the petitioner since it is a leader in this
particular field.
9. The respondents had also approached a third person, Mr.David
Sommer, who is a consultant in the type of software involved in this
dispute, requesting him to promote his product, who agrees that Stat
Clarity is quite similar to MPS Insight. The petitioner, therefore, argues
that this is a breach of the employment contract, since the respondents‟
product was created by using the confidential and proprietary information
of the petitioner.
10. Finally, the petitioner has also displayed a manifest intention to
arbitrate the matter. Pursuant to the arbitration clause in the employment
contract which is reproduced above, the petitioner has sent a notice dated
5th September 2012 to the respondents in accordance with Section 21 of
the Act, indicating its intention to arbitrate the matter and nominating an
arbitrator to adjudicate the dispute.
11. The petitioner has filed this petition under section 11 of the Act,
requesting this court to appoint the named arbitrator, Mr. Yoginder
Kumar, Advocate at the Delhi High Court to settle the dispute.
12. The respondent No.1 submits that his actions have been in
consonance with the terms of his employment contract with the petitioner.
He argues that the employment contract does not prevent him from
starting up his own enterprise, while it may prevent him from joining the
competitors of MPS Technologies. The respondent No.1 further
challenges the validity of this clause as being violative of Section 27 of
the Indian Contract Act, which prohibits restraint of trade. He further
submits that he has a constitutional right to carry on his chosen profession
under Article 19 of the Constitution.
13. With regard to the similarity of his and the petitioner‟s product, the
respondent submits that they provide two different services. In any event,
he argues that the petitioner himself has created his product by drawing
from the knowledge of his own competitors.
14. While these matters form the substance of the dispute between the
parties, the existence of a valid arbitration clause in the contract would
indicate that this dispute should be referred to arbitration in view of two
different versions of the parties. The dispute relates to the use of
confidential information obtained during the respondent No.1‟s
employment with the petitioner. This would fall within the ambit of
"disputes relating to employment" as mentioned in the contract. Further,
this dispute calls for the appointment of experts to determine whether any
source code has been copied. This requires the appointment of an
appropriate tribunal to adjudicate the dispute.
15. Under these circumstances, both the petitions filed by the petitioner
are disposed of with the following directions :
i) Ms.Prathiba M.Singh, Advocate is appointed as sole Arbitrator to
adjudicate the dispute between the parties.
ii) Both parties will raise their claims and counter-claims before the
learned sole Arbitrator.
iii) The interim order already granted on 11th September, 2012 shall
continue until and unless it is modified or vacated on finding of
application under Section 17 of the Act, if any, filed by the
respondents.
iv) Total fee of `1 lac shall be paid by both parties to the learned sole
Arbitrator in equal proportion. The learned sole Arbitrator is
requested to render the award within the period of 6-9 months, if
possible.
16. No further orders are required to be passed in these matters. The
same are accordingly disposed of.
17. Copy of order be given dasti to the parties. Registry to
communicate the order to the learned sole Arbitrator forthwith.
(MANMOHAN SINGH)
JUDGE
JULY 01, 2013
