IN THE HIGH COURT OF CALCUTTA
Soumen Sen, Ajoy Kumar Mukherjee, JJ.
Dr. Sudipta Banerjee And Others - Appellant
Versus
L.S. Davar & Company And Others - Respondent
FMAT 735 of 2021, FMA 1265 of 2021 and CAN 1 of 2021
Decided On : 05-04-2022
Confidential Information - Employment Dispute - Indian Contract Act, Section 27 - Technology Transfer Agreement - Breach of Confidence - Injunction - Trade Secrets
Fact of the Case:
The case involves an employment dispute where former employees are alleged to have divulged confidential information and trade secrets acquired during their employment, in breach of a confidentiality agreement. The plaintiff firm sought an injunction to restrain the defendants from disclosing or utilizing the confidential information.
Finding of the Court:
The court found that the former employees were bound by the confidentiality obligations during their employment and granted an ad interim order of injunction to restrain them from disclosing or utilizing the confidential information. The court also considered the validity of the confidentiality and non-compete clauses in the employment contracts.
Issues: The issues involved the breach of confidentiality, the enforceability of the non-compete clause, and the jurisdiction of the court to grant the injunction.
Ratio Decidendi: The court upheld the protection of trade secrets and confidential information based on principles of equity and breach of confidence. It considered the validity of the non-compete clause under Section 27 of the Indian Contract Act and modified the ad interim order of injunction to clarify the scope of restraint.
Final Decision: The court modified the ad interim order of injunction to restrain the defendants from disclosing or sharing confidential information until the disposal of the injunction application on merits. The defendants were directed to file their affidavit in opposition, and the injunction application was to be disposed of by a specified date.
ORDER
Soumen Sen, J. (Oral). - Three separate appeals along with connected applications involving similar questions of law and fact are taken up together and disposed of by this common order.
2. Dr. Sudipta Banerjee and Dr. Indira Banerjee are well qualified patent professionals. They were working in L.S. Davar and Company, a reputed Intellectual property firm since 1st June, 1994 and 1st September 1994 respectively until their resignations in June 2020. Arpita Ghosh was working as an office assistant of L.S. Davar & Company since 2010 until she resigned on 22nd January, 2021. All of them joined another firm by the name of P.S. Davar and Company, after their resignations were accepted by their erstwhile employer.
3. On the allegation that the appellants are divulging the confidential information and trade secrets acquired during their course of employment in L.S. Davar & Company, in clear breach of the confidentiality agreement, L.S. Davar and Company filed a suit being T.S. No. 534 of 2021 before the learned 4th Civil Judge (Senior Division), Alipore praying inter alia for declaration that the defendants namely, Dr. Sudipta Banerjee, Dr. Indira Banerjee and Arpita Ghosh and each of them in express breach of their contractual obligation with the plaintiff arising out of their terms and conditions of service with the plaintiff have and are still using, divulging, passing on confidential and crucial electronic records, documents, data and information inclusive of proprietary drafts of precedents, agreements, forms presentation, petitions, confidential documents, legal opinions, legal action plans and strategies, computerised data base containing client information, proprietary client list, fee schedules, proprietary potential client list and other related information for themselves and/or any other entity including its data or any other information relating to any aspect of the business of the plaintiff.
4. In the suit the plaintiff has filed an application for injunction in which the ad interim order of injunction was passed on 14th July, 2021 and subsequently extended from time to time. The learned Trial Judge after taking into consideration that the defendant nos. 1 and 2 namely Dr. Sudipta Banerjee and Dr. Indira Banerjee are the former senior patent attorneys of the plaintiff firm associated with the business since its incorporation in 1994 held that they were bound by the policies of the plaintiff firm during their course of employment, which included the confidentiality to be maintained with regard to all information, documents or materials gathered during the course of employment, granted an ad interim order of injunction by which the defendants/appellants were restrained from acting or continuing to act from disclosing, divulging or utilizing confidential, electronic records, data and information regarding various activities of the plaintiff company including trade secrets in any manner whatsoever to anybody else by themselves or through their men or agents till 10th August, 2021.
5. Separate appeals have been filed by which the ad interim order of injunction passed on 14th July, 2021 was extended from time to time.
6. The learned Trial Judge has also taken into consideration that on 29th March, 2019 the plaintiff firm implemented a revised organisation policy bearing no. LSD/MOPIO1A119-20 applicable to all the employees with effect from 1st April, 2019 containing different terms and conditions including a confidentiality and non competition clause and the said policy was formed as part of the terms and conditions of service which apparently were duly signed and accepted by the defendant no. 1 and 2 and a similar policy was implemented in the year 2020-21 which was duly signed by the defendant no. 3.
7. Plaintiff claimed that the defendant no.3 was a former employee of the plaintiff firm since 2010.
8. The plaintiff has alleged that by virtue of the senior position held by the defendant no. 1 and 2 in the plaintiff firm, severa
Niranjan Shankar Golikari vs. Century Spg. And Mfg. Co. Ltd. reported at AIR 1967 SC 1098
Percept D'mark (India) (P) Ltd. vs. Zaheer Khan & Anr. Reported at (2006) 4 SCC 227
The case established the importance of protecting trade secrets and confidential information, upheld the validity of non-compete clauses under Section 27 of the Indian Contract Act, and emphasized th....
Post-service restrictive covenants are prima facie void and unenforceable under Section 27 of the Contract Act, 1872, unless they fall within one of the exceptions specified in the statute.
Customer lists are not copyrightable works, and non-compete clauses in employment contracts are void under Section 27 of the Contract Act.
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