The rights and obligations of employees under an ESOP Scheme are determined by the specific provisions of the scheme, and allegations of misconduct must be proven with evidence.

JUDGMENT

Sanjeev Narula, J. - I.a. 17608/2021(by the Plaintiff u/O. XXXIX Rule 1 & 2 of the Code of Civil Procedure, 1908 seeking ad interim ex-parte temporary injunction against Defendant No. 1)

1. Defendant No. 1, was employed as 'senior vice-president' in the Plaintiff-company through a Letter of appointment dated 15th June, 2018. In September, 2019, the Plaintiff introduced 'arshiya Limited Employee Stock Option Scheme 2019' for its employees [hereinafter, 'ESOP Scheme'], under which, Plaintiff offered 7,50,000 stock Options [hereinafter 'Options'] to Defendant No. 1 on 30th January, 2020. Each Option entitled Defendant No. 1 to acquire one equity share at a price of Rs. 2/- per share or any other price as determined by the Plaintiff. Defendant No. 1 accepted the Options vide letter dated 30th January, 2021. Consequently 7,50,000 shares were allotted to Defendant No. 1 with the approval of Board of Directors of the Plaintiff company vide Resolution dated 10th February, 2021.

2. Subsequently, Plaintiff allegedly found Defendant No. 1 to be in breach of his terms of employment by being guilty of misconduct. accordingly, his services were terminated vide termination letter dated 8th September, 2021. Since the termination was premised on several grounds relating to his service, inter-alia being poor performance, misconduct and misappropriation of office funds and utilities, Plaintiff asserts that Defendant No. 1 has fraudulently secured the Options, in breach of his employment contract. The vested Options are 'fruits of fraud' - which Defendant No. 1 ought not to be allowed to enjoy. Plaintiff relies upon, inter alia, the legal tenet that 'fraud vitiates all'. additionally, Plaintiff places reliance on Clause 13.4 of the ESOP Scheme that prohibits any employee, whose services are terminated for misconduct, from exercising rights under the vested Options. Reliance is also placed upon Clause 13.6 which provides that exercise of vested Options shall be on hold during the adjudication of the dispute between Employee and the Company.

3. Mr. Jayant Mehta, Senior Counsel for the Plaintiff, relying upon the afore-noted clauses, amongst others, argues that Defendant No. 1's misconduct is manifest from undisputed documents placed on record - all of which show that Defendant No. 1 was acting for other companies, such as one EWYN Services Private Limited [hereinafter, 'EWYN'], during the term of his employment with the Plaintiff-company. He places categorical reliance upon:

(i) Recruitment agency agreement dated 16th October, 2019 signed by Defendant No. 1 on behalf of EWYN.

(ii) Invoices of EWYN containing signatures of Defendant No. 1.

(iii) Description of Defendant No. 1 as part of EWYN's team.

(iv) Defendant No. 1's directorship in various other companies as per MCa Portal.

(v) Paragraphs no. 3(b), 4(g) and 5 of Defendant No. 1's additional written statement dated 26th February, 2022.

4. Mr. Mehta argues that in the course of his employment, Defendant No. 1 was also attending to his personal/family business(es) during office hours. Various customers have levelled serious allegations of misappropriation of monies. Defendant No. 1 has committed fraud upon the Plaintiff-company by attending to other business(es) and other employment(s) (part or full time) - during his employment. He has fraudulently received 7,50,000 Options, which have been converted into shares before such a fraud could be discovered. although Defendant No. 1 has sold 50,000 of the 7,50,000 shares, the remaining 7,00,000 remain unsold. Since the record prima facie manifests that Defendant No. 1 acted in breach of his employment contract, Plaintiff is entitled to an injunction restraining Defendant No. 1 from selling 7,00,000 shares till such time the dispute raised in the present suit is adjudicated as per Clauses 13.4 and 13.6 of the ESOP Scheme.

5. Mr. Mehta emphasises