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2005 Supreme(Del) 373

High Court Of Delhi
AMBIANCE INDIA PVT LTD - Appellant
Versus
NAVEEN JAIN - Respondent
Decided On : 03/16/2005

Advocates Appeared:
R.C.CHOPRA, RAJIV K.GARG, SHALABH SINGHAL, SHISHIR SINGH

Headnote:Specific Relief Act, 1963 - Section 41(e) and Contract Act, 1872 — Section 27 — Contract imposing restraint on trade — Termination of contract of employment — Defendant joining one of the customers of plaintiff — Prayer for ad-interim injunction — Nothing to indicate as to what trade secrets were revealed to defendants — Held that the embargo contained in the contract is void and unenforceable.

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, prays 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, 1963 as well as section 27 of the Indian CONTRACT ACT, 1872. 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, 1872. A judgement of this Court in Krishan Murgai v. Superintendence Co. of India; reported in AIR 1979 Delhi P-232 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 s








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