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2009 Supreme(Del) 854

IN THE HIGH COURT OF DELHI AT NEW DELHI
HON’BLE MR. JUSTICE MUKUL MUDGAL, HON’BLE MR. JUSTICE VALMIKI J.MEHTA, JJ.
Mr. M. Sivasamy ...Appellant.
VERSUS
M/s. Vestergaard Frandsen A/S & Ors. ....Respondents
FAO(OS) 206/2009, FAO(OS) 207/2009 & FAO(OS) 211/2009
CM No. 7554-7555/2009
CM Nos. 7557-7559/2009
CM Nos. 7594-7597/2009
Decided on : August 07, 2009

Advocates appeared
Mr. Chinmoy Pradip Sharma, Advocate
Mr. Sudhir Chandra, Sr. Advocate with Ms. Swathi Sukuman and Ms. Tusha Malhotra, Advocates for R-1 and R-3.

Headnote:Civil Procedure Code, 1908 Order 11 Rules 12 & 14 - Plaintiffs exclusive owners of the trade secrets and confidential information alongwith copyright in a product FENCE, which is an insecticidal netting (disease control textiles) - Discovery and production of documents which are confidential in nature or have proprietary information belonging exclusively to one party and which information such party is interested in ensuring that the same does not come into the hands of the opposite party who is his competitor - Roving and fishing inquiry is not permissible - Impugned order, set aside - Learned Single Judge may first device a procedure to ensure as to how the information, documents, data base etc. of which production is sought and which pertain to the product of the defendants that the same can be kept confidential so as to not prejudice the defendants in any manner.

Judgement Key Points

Key Points: - (!) - (!) - (!) - (!) - (!) - (!) - (!) - (!) - (!) - (!) - (!) - (!) - (!) - (!) - (!) - (!) - (!)

What is the scope and method of discovery and production of confidential or proprietary documents under Order 11 Rules 12 and 14 CPC in a dispute over exclusive ownership of a product and its trade secrets?

What precautions and procedures should be devised to protect confidentiality and prevent prejudice to a party when ordering production of confidential information or trade secrets in such a dispute?

What is the appropriate stage for ordering discovery and production (e.g., at injunction stage) and how do foreign court orders influence Indian proceedings in this context?


JUDGMENT

VALMIKI J.MEHTA, J.

1. By this common order the connected appeals FAO(OS) No.205/2009, FAO(OS) No.206/2009 and FAO(OS) No.211/2009 are being decided. Since the facts of all the appeals are common, being referable to the suit CS(OS) 599/07 pending in the original side of this court, for the purpose of convenience, reference is being made to facts and parties appearing in the appeal FAO (S) No.207/2009.

2. The issue which requires to be addressed in these appeals is : where two parties are claiming exclusive ownership rights in a product and its confidential/proprietary information along with related copyright material, then in such a case whether one party is entitled to seek production of documents with respect to the product of the other party under the provisions of Order 11 Rules 12 and 14 of the Code of Civil Procedure (CPC), 1908. The related issue is if the production of the documents is to be allowed, then, what precautions are to be observed to protect the rights of the party against whom production of documents is ordered. The learned Single Judge by the impugned order has allowed the applications of the plaintiffs and directed the defendants to „discover? in a sealed cover the documents as stated in the order by a direction for production of said documents.

3. The respective cases of the parties are as follows:

The plaintiffs (respondents No. 1 to 3 before this Court) claim to be exclusive owners of the trade secrets and confidential information alongwith copyright in the data base, recepies and the other test data which result in a product “FENCE”, which is an insecticidal netting (disease control textiles)

used in agriculture to surround livestock or crops. The plaintiffs contend that the mosquitoe nets are made from polyester and polyethylene and that the production of yarn and manufacture involves a two step process in which masterbatch recepies are first formed and later mixed with pre-determined number of pure PE pallets and extrusion process of such mixture, through a nozzle of appropriate size, to produce yarn. The plaintiffs claim to have developed this product „FENCE? in September, 2001 and first sale of the product was claimed in mid 2003. The plaintiffs also claim to have developed two other products ZEROFLY (developed in 1996 and sold for the first time in 2001) and PE BED NET (developed in 2001, presently not in sale). The plaintiffs state that the defendant Nos. 4 and 5( appellants No. 4 and 2 before this Court ) were the employees of plaintiff No.1 (respondent No.1) being the Sales Manager and Chief of Production of the plaintiff No.1. The plaintiffs further state that these employees left the employment of the plaintiff No.1 and incorporated in Denmark a company M/s Intection A/S (Danish Intection) which has now been declared bankrupt on 30.01.2006. The plaintiffs further state that the said defendants No.4 and 5 illegally took away the confidential information and trade secrets, proprietary data, etc of the plaintiffs with respect to its products including the product „FENCE? and formed Danish Intection. Since the suits were filed against this company in Denmark, the plaintiffs state that the defendants No.4 to 6 shifted operations to Great Britain and the companies defendants No.7 to 10 (Appellants No.5,1,6 and 7) were formed to further the purpose of Danish Intection and the defendants No.4 and 5. A company was also incorporated in France and which company is defendant No.11(Appellant No.7) and suits were also filed inter alia against this company in France. The plaintiffs claim that defendants No.1 to 3 in India are now carrying out the operations of manufacture and sale of the disputed products in league with the other defendants. The plaintiffs further state that the Local Commissioners were appointed by the Learned Single Judge and cooperation was denied to these Local Commissioners. It is also stated that in the proceedings in U.K., the defendants No.5 and 6 were made to disclose the


















































































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