The judgment established the principle that a contract to restrain employment may be void under Section 27 of the Contract Act, and no injunction can be granted when breach of contract can be compensated in terms of money.

Vinod K. Sharma, J.

1. This judgment shall dispose of O.A.Nos.321, 322 and 326 of 2012, as the common question of law and facts are involved in these cases. For the sake of brevity, facts are being taken from O.A.No.321 of 2012.

O.A.No.321 of 2012: The application has been filed for grant of ad-interim injunction, restraining the respondents from disclosing, divulging and misusing the confidential and proprietary information of the applicant either directly and indirectly or in any manner whatsoever to any person and / or entity at all times without the prior written consent of the applicant.

2. In support of the prayer, it is pleaded as under:

“1. I am the Head HR of the Applicant Company and as such I am well acquainted with the facts of the case.

2. The Applicant is a private limited company incorporated under the Companies Act 1956. The Applicant carries on business, inter alia, of providing Online, Real time, electronic transaction processing and switching for financial and non-financial transactions from/to multiple delivery channels and payment systems and co-networks including Automated Teller Machines (ATMs), Point of Sale terminals (PoS), ATM deployment and management, ATM sharing between banks, International and Domestic interchanges such as MasterCard, Visa and others. The Applicant also provides Value Added Services viz., Mobile top-up, Utilities Bills payments etc. as an Application Service Provider (ASP) to various banks and financial institutions. The Applicant would not only license the software products but also provide support services like customization and production support. The Applicant had to offer the software products of the Applicant and other licensed third party software, as a comprehensive package comprising not only of software license and maintenance but also other value additions like on site technical support, customization, production support, etc. As a consequence, the Applicant has employed numerous technical people, trained them on the software, the customer environment, which includes customers hardware, software, system architecture etc., and other technical and/or non technical aspects of the Applicant, which by its very nature confidential and thus created a good knowledge base for providing various services to its customers like on site technical support, customization, production support, etc. Therefore it was necessary that the Applicant had to enter into a Confidentiality and Invention Assignment Agreement with its employees to protect the confidential and proprietary information of the Applicant, licensed third party software products and that of its customers, which mainly includes banks and other companies.

3. The Applicant is a pioneer in the implementation of payment solutions in India. Most of the contracts were / are won by competitive process (Request for Proposal / Expression of Interest / Tender) with strict stipulations for qualification criteria in terms of domain, technical expertise and support capabilities. All the contracts between the Applicant Company and its customers have very stringent confidentiality clauses. If the employees misuse the confidential informations obtained by them during their employment would result in irreparable harm caused not only to the Applicant but also of its customers and other third parties, who have licensed their software products to the Applicant and its customers.

4. Further implementation of the software and provision of the required support services requires detailed understanding of not only the products and services of the Applicant and other third party licensed software products, but also the customer environment including the existing customizations provided by FSS to the customer, system architecture of the customer, and other confidential information of the customers, which the Applicant was legally bound to protect under various agreements entered into with the customers and other third parties for their softwar