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HIGH COURT OF JUDICATURE AT BOMBAY
THE HONOURABLE MRS. JUSTICE ROSHAN DALVI
Bombay Dyeing and Manufacturing Co.Ltd.
Versus
Mehar Karan Singh
Notice of Motion No.4248 of 2008 In Suit No.3313 of 2008
Date of Judgment : 24-08-2010
Confidential Information - Breach of Contract - Trade Secrets - Injunction - [Clause 10, Clause 11, Code of Ethics Clause 19] - The Defendant was found to have breached the confidentiality clause of the employment agreement by divulging the Plaintiff's confidential information to a competitor. The Plaintiff sought injunction against the Defendant from disclosing the confidential information and for refund of excess salary paid. The Court held that the Defendant's actions amounted to a breach of confidence and trade secrets, and granted an injunction against the Defendant from divulging the confidential information contained in the manual of the software and the Memorandum of Understanding to any person or company, or utilizing the same for his own use. The Court refused to grant an order in respect of other particulars of the information contained in the Plaintiff's business plans and strategies, and allowed the Plaintiff to separately sue for relief in that regard.
Fact of the Case:
The Defendant, a whole-time Director of the Plaintiff-Company, breached the confidentiality clause of the employment agreement by divulging the Plaintiff's confidential information to a competitor. The Plaintiff sought injunction against the Defendant from disclosing the confidential information and for refund of excess salary paid.
Finding of the Court:
The Court found that the Defendant's actions amounted to a breach of confidence and trade secrets, and granted an injunction against the Defendant from divulging the confidential information contained in the manual of the software and the Memorandum of Understanding to any person or company, or utilizing the same for his own use. The Court refused to grant an order in respect of other particulars of the information contained in the Plaintiff's business plans and strategies, and allowed the Plaintiff to separately sue for relief in that regard.
Issues: Breach of confidentiality clause, trade secrets, injunction against divulging confidential information, refund of excess salary
Ratio Decidendi: The Defendant's breach of the confidentiality clause and divulgence of the Plaintiff's confidential information constituted a breach of confidence and trade secrets, warranting an injunction against the Defendant from disclosing the specific confidential information. However, the Court refused to grant an order in respect of other particulars of the information contained in the Plaintiff's business plans and strategies.
Final Decision: The Court granted an injunction against the Defendant from divulging the specific confidential information contained in the manual of the software and the Memorandum of Understanding to any person or company, or utilizing the same for his own use. The Court refused to grant an order in respect of other particulars of the information contained in the Plaintiff's business plans and strategies, and allowed the Plaintiff to separately sue for relief in that regard.
1. The Defendant was the whole time Director of the Plaintiff-Company appointed under the Agreement of employment dated 22.8.2005, Exhibit-A to the Plaint, for the period 24.7.2004 to 23.7.2009. Under the said agreement, he inter alia agreed not to divulge or disclose confidential information of any nature to any person. The parties agreed that such information shall be the property of the Company. The relevant clauses of the agreement read thus:-
“10. Mr. Singh shall not, except in the proper course of his duties during the continuance of his employment with the Company or any time thereafter divulge or disclose to any persons whomsoever or make use whatsoever for his own purpose or for any purpose of any information knowledge obtained by him during his employment as to the business and/or affairs of the Company and/or the know-how, technology, methods, machines, compositions, knowledge, information and other data, trade secrets, formulate and process of manufacturing of various products by the Company and/or list of companies customers and suppliers (and likewise in relation to the Company’s associated companies) all of which information is or may be confidential with the exception of any information generally made available to the public or make or take copies of the manuals, tracings, blueprints, drawing books, papers containing such confidential information without authority taken prior to making or taking copies, such copies may contain the whole information substantially similar information from the original manual, tracings, drawings, blueprints, papers, books etc. Mr.Singh shall during the continuance of his employment hereunder, also use his best endeavours to prevent any person publishing disclosing such confidential information PROIVDED HOWEVER that any such divulgence or disclosures by Mr.Singh to officers and employees of the Company solely for the purpose of business of the Company shall not be deemed to be a contravention of his clause.
11. All notes, books, papers memoranda and other documents or any trade secrets of confidential information concerning the business of the Company (and the associated companies) which shall be acquired, received or made by Mr.Singh during the course of his employment hereunder and/or incidental to his employment, shall be the property of the and shall be surrendered by Mr.Singh to someone duly authorized on their behalf at the termination of his employment or at the request of the Board (or any other designated persons) at any time during the course of his employment.”
(Emphasis supplied)
2. The Defendant was bound in principle by the Code of Ethics and business of the Plaintiff. He certified compliance thereof in the years following his employment being 2006, 2007 and 2008. The relevant clause of the code of ethics runs thus:-
“19.CONCURRENT EMPLOYMENT
An employee of a WADIA Company shall not, without the prior approval of the Managing Director of the Company, accept employment or a position of responsibility (such as a consultant or a director) with any other company, nor provide free-lance service to anyone. In the case of an Executive/Whole-time Director or the Managing/Joint Managing/Deputy Directors such prior approval must be obtained from the Board of Directors of the Company.”
(Emphasis supplied)
3. The Defendant is stated to have divulged confidential information to a competitor being Dawnay Day India Land Private Limited (DD) by way of forwarding on e-mail a manual of a customised software for real estate business of the Plaintiff obtained by the Plaintiff upon payment of consideration from the software producer Oracle. The Defendant is shown to have taken up initially employment by the directorship and later by way of being an Executive Director on the Board of various Companies being DD Group Companies which has come to be discontinued or terminated by DD.
4. The Defendant’s employment with the Plaintiff no longer subsists. The Defendant claims to have resi
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