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IN THE HIGH COURT OF MADRAS
N. Anand Venkatesh, J.
Amica Financial Technologies Pvt. Ltd. - Appellants
Vs.
Hip Bar Pvt. Ltd. and Ors. - Respondent
O.A. No. 794 of 2021 in C.S. No. 117 of 2021
Decided On : 24-01-2022
Patents Act, 1970 - Section 103(3) - Delhi High Court Original Side Rules, 2018 - Rule 17 – Code of Civil Procedure, 1908 - Section 151 - Credit facilities - Financial services - Case of applicant/plaintiff is that they are engaged in business of providing technology solutions and services by way of digital based platforms for payment and card related processes, offering products and services in relation to savings credit facilities, investment products and financial management to its customers and providing credit facility to customers under its brand name and a variety of financial services - Applicant initiated negotiations with 1st and 2nd respondents to acquire 100% shareholding in 1st respondent Company - Applicant was interested in acquiring 1st respondent Company, as a valid PPI License would have enabled them to carryout business related to payment systems for semi-closed pre-paid instruments - After negotiations, a Term Sheet was executed by applicant and 1st and 2nd respondents - Thereafter, this Term Sheet was superseded by a Binding Term Sheet - According to the applicant, Clauses 10, 11 and 12 of the Binding Term Sheet specifically dealt with confidentiality, exclusivity and binding effect of covenants on the respective parties - Whether defendants have misused uniqueness of trade secret of plaintiff to their advantage and have unjustly enriched themselves. Para 18.
Finding of the Court: There is yet another angle to the issue - While considering grant of an order of interim injunction, even if applicant makes out a good case, an order of injunction will not be granted, as a rule, if a remedy by way of damages is available to plaintiff - In present case, plaintiff has invited this Court to adjudicate on imponderables in form of so-called confidential information - If at a future point of time, this Court permits the confidential information to be brought in by forming a confidentiality club, Court can always assess as to whether defendants have misused uniqueness of trade secret of plaintiff to their advantage and have unjustly enriched themselves - If ultimately this Court finds that confidential information/trade secret has been exploited unlawfully, this Court can always compensate plaintiff in terms of damages - On the other hand, if the defendants are injuncted from carrying on with their business, and it is eventually found that the there is nothing unique in the so-called trade secret/confidential information provided by plaintiff, the comparative hardship that would befall the defendants from the grant of an order of ad-interim injunction would be far than withholding its grant in favor of plaintiff - On this short score, balance of convenience squarely lies in declining injunctive relief - In the result, order of status quo granted stands vacated.
Result: O.A. dismissed.
JUDGMENT :
N. Anand Venkatesh, J.
1. This application has been filed by the applicant/plaintiff seeking for an order of interim injunction restraining the respondents/defendants from undertaking any business in connection with the pre-paid instruments license (hereinafter referred to as "PPI License"), dated 22.08.2016.
2. The case of the applicant/plaintiff is that they are engaged in the business of providing technology solutions and services by way of digital based platforms for payment and card related processes, offering products and services in relation to savings credit facilities, investment products and financial management to its customers and providing credit facility to the customers under its brand name and a variety of financial services.
3. The applicant initiated negotiations with the 1st and 2nd respondents to acquire 100% shareholding in the 1st respondent Company, in August 2021. The applicant was interested in acquiring the 1st respondent Company, as a valid PPI License would have enabled them to carryout business related to payment systems for semi-closed pre-paid instruments. After negotiations, on 12.08.2021, a Term Sheet was executed by the applicant and the 1st and 2nd respondents. Thereafter, this Term Sheet was superseded by a Binding Term Sheet dated 23.08.2021. According to the applicant, Clauses 10, 11 and 12 of the Binding Term Sheet specifically dealt with confidentiality, exclusivity and binding effect of the covenants on the respective parties.
4. The further case of the applicant is that pursuant to the Binding Term Sheet, the applicant disclosed to the 1st and 2nd respondents certain trade secrets which, inter alia, included business plans and objectives of the applicant in respect of the proposed PPI business. According to the applicant, after the execution of the Binding Term Sheet, the parties were required to discharge various obligations which also includes the execution of definitive agreements. The applicant was calling upon the 1st and 2nd respondents to provide updates on the definitive agreements. It is contended that the 1st and 2nd respondents failed to respond or take any steps and that by the end of September 2021, the applicant got an impression that the 1st and 2nd respondents had no intention to adhere to their obligations under the Binding Term Sheet. The applicant was not even provided with the information as to whether the PPI License had been renewed with the Reserve Bank of India (RBI). Ultimately, the applicant was informed by the 2nd respondent on 10.01.2021 that the investment was deferred and by an email dated 12.10.2021, the 2nd respondent informed the applicant that the deal cannot be continued.
5. At this point of time, the applicant learnt that the 5th respondent/5th defendant is going to acquire the 1st respondent Company with a view to engage in the PPI business. Lawyer's notices were exchanged between the parties. Ultimately, the applicant apprehended that the trade secrets that were shared with the 1st and 2nd respondents is being used in breach of the confidentiality clause and that the 5th respondent was hurriedly deciding to acquire the 1st respondent Company in violation of the Binding Term Sheet. This led to the filing of the present suit wherein, the applicant has sought for the relief of mandatory injunction forbearing the respondents/defendants from in any manner violating the Binding Term Sheet dated 23.08.2021 and from undertaking any business in connection with the PPI license dated 22.08.2016 and for the payment of compensation for damages and losses suffered by the applicant and for rendition of accounts.
6. The respondents have filed counter affidavits. They have taken a stand to the effect that the 1st respondent Company is a wholly owned subsidiary of the 5th respondent Company. It is contended that the applicant, without seeking specific performance of the term sheet, has sought for certain consequential reliefs which is not maintainable. They have
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....
The plaintiff's failure to provide specific details of the confidential information allegedly misused by the defendant No. 1 and the vagueness of the averments made by the plaintiff did not establish....
A confidentiality order's necessity must be justified in protecting substantial commercial interests, which was not met by the plaintiffs as the information was widely shared and used by defendants.
The court granted a protective order to shield confidential information during damages assessment, balancing the need for confidentiality with the public interest in open justice.
The court established that injunctive relief requires serious questions to be tried and that damages must be inadequate; the balance of convenience favored the defendants, leading to the dismissal of....
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