Delhi District Court
Desiccant Rotors International vs Bappaditya Sarkar on 3 August, 2018
IN THE COURT OF MS. VANDANA JAIN, LD. ADDITIONAL DISTRICT
JUDGE07, SOUTH EAST DISTRICT, SAKET COURTS, NEW DELHI
MORE THAN 10 YEARS
CS no. 9793/16
Desiccant Rotors International Vs Bappaditya Sarkar
In the matter of :
Desiccant Rotors International Pvt Ltd
21 C, Sector18, Gurgaon 122015
................plaintiff
Versus
1. Bappaditya Sarkar
F1162, Chittarranjan Park
New Delhi
2. Munters India Humidity Control Pvt Ltd
Registered office at: A10, Green Park,
New Delhi110016
Also at
201 B, PT Gera Centre
Dhole Patil Road, Pune411001
.............Defendants
Date of institution: 20.02.2008
Date of reserving of order: 27.07.2018
Date of pronouncement of order : 03.08.2018
JUDGMENT
SUIT FOR RECOVERY
1. The brief facts of the present case are that the plaintiff company is dealing in manufacturing of Evaporative Cooling Pads (Ecocool), Evaporative Coolers (Arctic Coolers), Evaporative Cooling Modules for AHU'S and Chillers. Eco Desiccant Rotors International Vs Bappaditya Sarkar 1/14 Cool range of plaintiff's products is used in poultry houses, green houses, industrial manufacturing areas, power plants etc. It is also one of the leading manufacturers of products for energy resources for ventilation, fresh air treatments for maintaining indoor air quality and its products are used in commercial places like hotels, hospitals, super markets, auditoriums etc. and it has a big export market apart from having a grasp over the Indian market.
2. It is further stated that defendant no.2 market and sales, humidification and evaporative cooling components, products and systems, are in direct competition with plaintiff's product. It is also stated that defendant no.2 is a competitor of Bry Air (Asia) Pvt. Ltd, a sister concern of the plaintiff. At the time of filing of plaint defendant no.1 was working with defendant no.2 as a Country Manager.
3. It is averred that defendant no.1 was an employee of the plaintiff company till 18.07.2007 working as Area Sales Manager for evaporative cooling pads and evaporative coolers manufactured by the plaintiff. It is averred that defendant no.1 joined the services of M/s Arctic India Sales, proprietorship concern of Mr. Deepak Pawa on 04.07.1998. With effect from 01.06.2000, the services of defendant no.1 was transferred to Arctic India Engineering Pvt. Ltd. from Artic Sales on the same terms and conditions and thereafter, the name of the Desiccant Rotors International Vs Bappaditya Sarkar 2/14 aforesaid company was changed to the name of the present plaintiff company.
4. It is further averred that the plaintiff had perfected the technology of manufacturing cooling pads with many years research and development and had a fully integrated rotor manufacturing facility with in house capability of coating, synthesizing, winding, metal working and surface finishing and the volume of the business of the plaintiff in the financial year 20062007 in India was around Rs. 40 crores which increased steadily and it is one of the world's third leading manufacturer of Evaportaive Cooling Pads and had also been awarded with several meritorious awards by Engineering Export Promotion Council.
5. Defendant no.1 being in the service of the company since 1998 was a privy to the technical know how used in plaintiff products. On his transfer to the plaintiff company on 22.12.2000, defendant no.1 had entered into confidential agreement with the plaintiff, in addition to his appointment letter, wherein he acknowledged that he was dealing with confidential material of the plaintiff company including technology, know how, trade secrets, inventions, innovations, IPR discoveries, research projects, formulae, methods and processes, machines and manufactures, matters of business like costs, profits, markets, sales, list of customers, accounting methods, business processes, Desiccant Rotors International Vs Bappaditya Sarkar 3/14 competitive data, financial plans and reports etc and would not divulge the same to the third parties.
6. It is further stated that defendant no.1 resigned from the plaintiff company on 18.07.2007 and before that on 12.06.2007, he signed an obligation agreement after expiry of the employment company alongwith two declarations of even date. By virtue of these aforesaid agreement, he undertook not to compete with the business of plaintiff in any manner for two years after termination of his employment, further undertook not to solicit or disrrupt the relationship between the plaintiff and its customers, suppliers and employers; further acknowledged that he is privy to the confidential information to the plaintiff and also undertook to deliver back all the properties of the company in his possession or under his control including computer disks, tapes, notes, written material etc and will not published any of the above; further undertook not to return the copies of aforesaid properties and will not interfere to the company's detriment.
7. In the declarations he acknowleged his association with various assignments of the plaintiff and the group companies, he being privy to the manufacturing drawings etc. Desiccant Rotors International Vs Bappaditya Sarkar 4/14
8. It is averred that defendant no.1 within three months of his leaving the plaintiff's employment, in breach of the obligation agreement and declaration at the time of termination of his employment, had joined the defendant no.2 as a country manager, which is in direct competition to the plaintiff company and his action amounted to breach of trust and violation of appointment terms of exclusive service.
9. It is averred that the plaintiff contacted the CEO of defendant no.2 in November 2007 to inform about defendant no.1's breach of obligations but defendant no.1 ignored the same which shows that the employment of defendant no.1 has been taken with the sole malafide intent of using and utilizing confidential information and material belonging to the plaintiff, available with defendant no.1. It is further stated that plaintiff's officers had analyzed the laptop being used by defendant no.1 during his employment with the plaintiff company and had discovered that the back up of entire data was taken by defendant no.1 before he left the plaintiff company and has misused it to the detriment of the plaintiff. It is further alleged that defendant no.1 had contacted the suppliers and customers of the plaintiff on behalf of his new employer defendant no.2 which has caused financial losses and damages to the plaintiff and his business.
Desiccant Rotors International Vs Bappaditya Sarkar 5/14
10. The defendant no.1 anticipating some action for breach of his obligation, has written a letter to Mr. Deepak Pawa on 17.01.2008 asking for alleged dues from the plaintiff which was replied to vide letter dated 09.02.2008 calling upon him to return all the confidential information of the plaintiff in his possession.
11. By way of present suit, the plaintiff has sought injunction against defendant no.1 from engaging in any business competing with the business of plaintiff, from using plaintiff's company technology, confidential information and passing off their products as that of plaintiff company. A decree of mandatory injunction also sought to return all the confidential information obtained by defendant no.1 while in the employment with plaintiff company alongwith a decree for rendition of accounts.
12. Summons of the suit were sent and defendants appeared. Defendant no.1 and 2 filed their written statements separately. At the outset, it is stated that defendent no.2 was deleted from the array of parties and therefore, there is no need to deliberate upon the defence raised by defendant no.2.
13. In the written statement of defendant no.1, he averred that the suit is barrred u/s 27 of Indian Contract Act, as the agreements in questions contained Desiccant Rotors International Vs Bappaditya Sarkar 6/14 negative covenants which are expressly barred u/s 27 of Indian Contract Act. It is further stated that the allegations made in the entire plaint are false and fabricated. Merely by getting certain documents signed wherein defendant no.1 had undertaken not to disclose any information, by itself does not amount to defendant no.1 having any access to the confidential information or technical know how of the products of the plaintiff company.
14.It is further averred that the plaintiff has failed to specify or identify as to what is the nature of confidential information or technical know how that has been disclosed to defendant no.1 by the plaintiff during the course of his employment.
15.It is averred that defendant no.1 had always remained in the marketing or sales division of the plaintiff company for about nine years and his job was entirely managerial in nature with limited access to the technical know how and he never been taken to any manufacturing unit to be acquainted with any manner of technical know how or experience in regard to production processes of the plaintiff. He is not having any engineering qualification to understand the technical details. Plaintiff has not maintained any customer database which is otherwise not in public domain.
Desiccant Rotors International Vs Bappaditya Sarkar 7/14
16.It is further averred that defendant no.2 is a leading company in the world and is holding several patents in terms of innovation as well as production. It is further stated that the business of plaintiff and defendant no.2 has a very minimal area in common and the scope of competition is also very low as defendant no.2 caters to the premium group. The averment of any perfecting any technology for manufacturing cooling pads by the plaintiff is also denied. The other averments made in the plaint with respect to having a huge turnover and a leading market are also denied. It is stated that the declarations were signed as was asked to sign them to get his dues clear which amounted to Rs.1 lac but they are not cleared till date and a false suit has been filed against him.
17.Replication to the written statement of defendant no.1 was filed, reiterating the contents of the plaint and dening the averments made in the written statement.
18. After completion of pleading, following issues were framed:
1. Whether the plaintiff is entitled to mandatory injunction against defendant no.1 to return confidential information purportedly obtained by defendant no.1 under the employment of plaintiffcompany? OPP
2. Whether defendant no.1 is liable to render the Accounts of Profits, earned by defendant no.1 by use of confidential information and knowhow of the plaintiff company and by approaching the existing suppliers or customers Desiccant Rotors International Vs Bappaditya Sarkar 8/14 of the plaintiffcompany, and if so, to what amount? OPP
3. Whether the suit is bad on account of lack of territorial jurisdiction?
OPD
4. Relief.
19. The issue no.3 has been dropped by the Ld. Counsel for defendant vide separate statement.
20.Plaintiff examined one Ms. Sonali Dutta as PW1 and Sh. Satpal Madan, Assistant Manager in Plaintiff company as PW2 (inadvertently mentioned as PW3). Both the witnesses were duly cross examined by Ld. Counsel for defendant. Defendant no.1 the examined himself in support of his defence and he was duly cross examined by Ld. Counsel for plaintiff.
21. Ld. Counsel for the plaintiff has argued that defendant no. 1 had worked with the plaintiff company as a Area Sales Manager from 04.07.1998 till 18.07.2007 i.e. approximately for a period of nine years and he had signed the employment agreement, a confidential agreement and two declarations alongwith an obligation agreement where he had undertaken that he was in possession of confidential agreement with respect to the product and technical know how of the product of the plaintiff company dehors this agreement, he joined Desiccant Rotors International Vs Bappaditya Sarkar 9/14 defendant no. 2 and immediately after his joining there were a drastic dip in the sales of the products of the company. It is further argued that he had solicited the customer of the company. It is argued that plaintiff and defendant no. 2 are competitors and due to the conduct of the defendant no. 1, the plaintiff has suffered huge losses but amount is not known therefore, he be directed to render the accounts. Ld. Counsel for plaintiff has also argued that plaintiff company had given exclusive dealership of its products to one Fluidotech at the instance of defendant no. 1 , however, lateron it was revealed that it was a properietorship concern of defendant no. 1. It is argued that defendant no. 1 has deliberately caused wrongful losses to the plaintiff company during his employment.
22.On the other hand, Ld. Counsel for defendant no. 1 has argued that nothing has been proved on record as alleged by the plaintiff in its plaint. It is stated that defendant no. 1 had joined the plaintiff company as a Area Sales Manager and being an employee in the sales devision, there was no occasion to get any information about the technical know how, though he admits his employment with defendant no. 2 however, it is argued that he could not be restrained from joining any another company.
23. I heard the arguments on behalf of both the parties and have gone through the Desiccant Rotors International Vs Bappaditya Sarkar 10/14 records meticulously.
24. Issues are taken up one by one.
Issue no. 1 : Whether the plaintiff is entitled to mandatory injunction against defendant no.1 to return confidential information purportedly obtained by defendant no.1 under the employment of plaintiffcompany? OPP
25. The perusal of the record as well as testimony of plaintiff's witness , PW1 Sonali Dutta reveals that no documents has been filed on record to show as to what technical know how was acquired of the plaintiff company. The status of the company as alleged in the plaint is also not proved. Though, it is mentioned that plaintiff company was exporting its products to over 40 countries however, no such document has been placed on record. The averments with respect to the turn over of the plaintiff company, being 40 crores is also not proved in evidence.
26. The averments with respect to winning award by the plaintiff company for outstanding export performance has also not been proved. The record further reveals that the defendant no. 1 was appointed in Arctic India Sales in the year 1998 and the appointment letter did not contain any confidential clause. He Desiccant Rotors International Vs Bappaditya Sarkar 11/14 was transferred, from Arctic India Sales to Arctic India Engineering Ltd and even at the time no confidentiality agreement was signed. This Arctic Engineering Ltd was changed to Desiccant Rotors International (plaintiff company herein). However, no documents has been produced in order to show that during the course of his employment, any such agreement was signed. One confidential agreement was got signed for the first time in year 2000 and all the other obligations agreement and declarations have been got signed on 12.06.2007 i.e. a month prior to leaving the services of plaintiff company by defendant no. 1. Though, the signature on the same by defendant no. 1 have not been disputed, however, the plaintiff has failed to explain as to how these agreement even if presumed to be valid and legally enforceable were violated.
27. PW1 has produced the entire customer database of the plaintiff company but it is not proved on record as to which customer was solicited and approached by defendant no.1. It is verbally stated in the cross examination that verbally and written complaints were received from the customers of the plaintiff company which showed that defendant no. 1 had approached the customers of plaintiff company. But no such complaint has been filed and proved on record. Further, there is no document on record to show that the sales of the plaintiff company dipped in the year 20072008 after defendant left the plaintiff company. It is not proved on record as to how many employees have left the company in that Desiccant Rotors International Vs Bappaditya Sarkar 12/14 year. Though, in the argeement, obligation agreement , declaration etc, it is mentioned that defendant no. 1 was having not access to the confidential information, however, during the evidence, it was not proved as to what confidential information was in the knowledge of defendant no. 1 and what he had divulged to defendant no. 2 which has proved harmful to plaintiff company and had resulted in losses or dipped its sales figure. Further, it is not proved on record that even being on the profile of sales department, defendant no. 1 had any access to technical know how.
28. As regards, Fluidotech, plaintiff has not been able to prove that defendant no. 1 was in any way associated with Fluidotech. It is only in the year 2010 that he has been shown to have association with this company, which is 3 years after he left the services of plaintiff company.
29. Therefore this court is of the considered view that the plaintiff had miserably failed to prove that any confidential information was in the knowledge of defendant no. 1. Therefore, question was returning the same does not arise. Issue no. 1 is decided against the plaintiff and in favour of defendant no. 1.
30.Issue no. 2. Whether defendant no.1 is liable to render the Accounts of Profits, earned by defendant no.1 by use of confidential information and Desiccant Rotors International Vs Bappaditya Sarkar 13/14 knowhow of the plaintiff company and by approaching the existing suppliers or customers of the plaintiffcompany, and if so, to what amount? OPP
31. In view of findings in issue no. 1, the defendant can not be asked to render any accounts, this issue is also decided against the plaintiff and in favour of defendant no. 1.
32. Relief A and B have not been pressed in view of order dated 14.07.2009 passed by Hon'ble High Court of Delhi.
33. Relief C to G : In view of the findings given in issue no. 1 , reliefs claimed in clause no. C to G are declined.
34. Suit of the plainitff is dismissed.
35.Decreesheet be prepared.
Digitally signed by
36. File be consigned to Record Room. VANDANA VANDANA JAIN JAIN Date:
Announced in the open court 2018.08.04
16:47:50
+0500
on 03.08.2018
(VANDANA JAIN)
ADDITIONAL DISTRICT JUDGE07/
SOUTH EAST DISTRICT/SAKET COURTS/
NEW DELHI/03.08.2018
Desiccant Rotors International Vs Bappaditya Sarkar 14/14