Henry Harvin India Education Llp vs Abhishek Sharma & Ors on 11 December, 2023

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Delhi High Court - Orders

Henry Harvin India Education Llp vs Abhishek Sharma & Ors on 11 December, 2023

$~60
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P.(I) (COMM.) 374/2023
HENRY HARVIN INDIA EDUCATION LLP ..... Petitioner
Through: Mr. Rahul Gupta, Mr. Arav Kapoor,
Ms. Manisha Gupta and Mr.
Raghwendra Pratap Rao, Advocates.
versus

ABHISHEK SHARMA & ORS. ..... Respondents
Through: Mr. Kunal Gosain and Mr. Kartikey
Sikka, Advocates R-5.
CORAM:
HON'BLE MR. JUSTICE SANJEEV NARULA
ORDER

% 11.12.2023 I.A. 22968/2023 (seeking exemption from filing of original, clear copies, legible copies, translated copies of the documents)

1. Exemption is granted, subject to all just exceptions.

2. The Petitioner shall file legible and clearer copies of exempted documents, compliant with practice rules, before the next date of hearing.

3. Accordingly, the application stands disposed of.

O.M.P.(I) (COMM.) 374/2023

4. M/s Henry Harvin India Education LLP, the Petitioner, has filed the present petition under Section 9 of the Arbitration and Conciliation Act, 1996, seeking to restrain the Respondents, their former employees, who O.M.P.(I) (COMM.) 374/2023 Page 1 of 12 This is a digitally signed order.

The Petitioner's case

5. Petitioner is an education-technology firm, offering online and offline professional certification diploma/ degree programmes, with offices across eleven cities in India, the United States of America ["USA"], and United Arab Emirates. They have a customer-base of over 3,00,000 participants, spanning over 97 countries, that are managed by a team of 400 employees and more than 650 consultants. During the course of their business, Petitioner has developed a comprehensive database, containing confidential information pertaining to clients across the world, curriculum modules for various courses and training programs offered by them. This database created by the Petitioner are trade secrets, over which, the Petitioner also asserts rights under Section 2(c) and (o) of the Copyright Act, 1957.

6. The Respondents were employed by Petitioner for different roles, and their engagement was governed by the terms and conditions outlined in their respective Employment Agreements. Petitioner expended significant resources towards training the Respondents, during which period, they were exposed to confidential data of the Petitioner, including their customer database, accounts, course material and modules etc. Pertinently, this information is stored on the computer systems maintained by the Petitioner.

7. It has now been revealed that Respondents No. 2 to 9, during their engagement with the Petitioner, were assisting Respondent No. 1 in establishing a competitive business entity under the name of Learning Saint Pvt. Ltd. In September-October, 2023, all the Respondents left the O.M.P.(I) (COMM.) 374/2023 Page 2 of 12 This is a digitally signed order.

8. Respondents' departure from the Petitioner-firm and establishment of a rival company inter alia defies Clause 7 dealing with Non-Disclosure and Confidentiality, the Non-Compete stipulation in Clause 8, and Clause 9 pertaining to Non-Solicitation, of the Employment Agreements. In addition, by attempting to reverse-engineer and duplicate the proprietary information of Petitioner, Respondents have also breached Clause 10 (Intellectual Property Clause) of the Agreements.

9. When Respondent No. 1 was confronted with the above, he apologized for his mistake and also executed a Memorandum of Understanding on 05th September, 2023["MoU"], whereunder he agreed not to violate any terms of his Employment Agreement. However, he ceased to attend to his duties at Petitioner-firm and continued to develop his own business. Respondent No. 1 has been encouraging Petitioner's existing employees and clients to leave their firm, and instead join Learning Saint Pvt. Ltd. He has thus, been openly contravening the terms of MoU and the Employment Agreement.

10. To buttress the above-noted submission, during the hearing, Petitioner produced the following WhatsApp communication between Respondents No. 1 and 6:

O.M.P.(I) (COMM.) 374/2023 Page 3 of 12

This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 14/12/2023 at 21:56:32 Copy of the above-noted communication is taken on record.

11. Furthermore, Petitioner recently learnt that Respondent No. 1 has been clandestinely and through deceitful means receiving payments from Petitioner's customers by misrepresenting his association with the Petitioner.

12. The courses offered by Respondent No. 1 infringe Petitioner's copyright in the content curated by them for their programmes. While Petitioner has been unable to access all of Respondent No. 1's courses, however, on the basis of information available on their website, it appears that they are verbatim the same as Petitioner's modules. Thus, an injunctive relief should be granted in Petitioner's favour, restraining the Respondents from continuous breach of their Employment Agreements. Reliance is placed upon the judgements in E-merge Tech Global Services P. Ltd. v.

O.M.P.(I) (COMM.) 374/2023 Page 4 of 12

This is a digitally signed order.

13. In light of the specific nature of the relief sought in this petition, the Court deemed it necessary to hear the Respondents before issuing any interim orders. Consequently, no ex-parte order was passed, and notices were issued to the Respondents. On the scheduled returnable date, (07th December, 2023), counsel for Respondent No. 1 cited lack of sufficient time for preparation as the reason for being unable to present his arguments and requested for an adjournment. The Court granted this request and, to facilitate a thorough understanding of the allegations against Respondent No. 1, particularly, regarding the alleged duplication of Petitioner's course material, issued directions for Respondent No. 1 to appear in Court with the course material being used by Learning Saint Pvt. Ltd.

14. However, today, despite repeated calls, no representation was made on behalf of the Respondents, except by Mr. Kunal Gosain, who represents Respondent No. 5. Mr. Gosain contended that Respondent No. 5 [Mr. Karan Joshi] is not affiliated with Learning Saint Pvt. Ltd. Taking into account this submission, the Petitioner's counsel does not press for any relief against Respondent No. 5 at this stage and submitted that the focus of Petitioner's reliefs for now, is primarily against Respondent No. 1.

15. Given the deliberate absence of the Respondents, the Court has proceeded to examine the merits of Petitioner's case to determine the issue 1 Dated 15th December, 2021 passed by the High Court of Madras in C.S. No. 258/2020.

2015 SCC OnLine Cal 23.

O.M.P.(I) (COMM.) 374/2023 Page 5 of 12

This is a digitally signed order.

16. In his role with the Petitioner, Respondent No. 1 held responsibilities related to management of Petitioner's clients in the USA. The Petitioner shared confidential information with Respondent No. 1, and he was expected to adhere to the non-solicit, non-compete, and confidentiality clauses contained in the Employment Agreement and the MoU. For the purpose of clarity, and to facilitate a comprehensive understanding of the issues at hand, the pertinent clauses from these agreements are reproduced below:

In the Employment Agreement Non-Disclosure and Confidentiality 7.1. The Employee agrees that it will protect the confidentiality of the Confidential Information and shall not:

(a) disclose any Confidential Information to any third party without the prior written consent of the Firm;

(b) disclose any Confidential Information to any of the Firm's employees or its subsidiaries, affiliates, directors, officers, consultants, advisors, agents or representatives, except on a need to know basis and to such persons who are by written agreement equally bound to protect the confidentiality of the information and prevent its unauthorized use.

xx-xx-xx 7.3. "Confidential Information" shall mean information of a confidential nature disclosed by Firm to the Employee or received by the Employee during the course of employment with the Firm which information shall include but not be limited to:

(a) any information, data records and books whether in physical or electronic form or in any form whatsoever pertaining to the course material offered by the Firm such as content writing course, GST courses, Six Sigma Courses, marketing analytics course, agile course, bitcoin course, RERA course, the scripts for the course, O.M.P.(I) (COMM.) 374/2023 Page 6 of 12 This is a digitally signed order.

xx-xx-xx

(c) any Information, data, records and books whether in physical or electronic form pertaining to the business methods, business strategy, business transactions, proposals, business policies, internship policies and code of conduct for employees, budget, books of accounts, trade secrets, existing or potential clients, investors, partners, joint ventures; employees, subsidiaries, shareholders and affiliates"

Non-Compete

8.1. The Employee shall act as an exclusive and full time employee of the Firm during the subsistence of this Agreement.

8.2. The Employee shall not, during the Term of this Agreement, engage in, carry on, provide services whether as an employee, consultant or otherwise to, or otherwise be concerned with or have any interest in, advise , lend money to, guarantee the debts or obligations of, or otherwise provide financial assistance to, act as an agent of, or permit the Confidential Information or other intellectual property owned by or licensed to the Firm to be used or employed in connection with, any business which is similar or related to the Business carried out by the Firm whether in India or abroad and whether individually or in partnership or in conjunction with any person as principal, employee agent, consultant, supplier, lender, financier, shareholder, or in any other manner whatsoever.

8.3. Upon discontinuance of the Term of this Agreement and for a period of 1 year thereafter, the Employee shall not, engage in, carry on, provide services whether as an employee, consultant or otherwise to, or otherwise be concerned with or have any Interest in, advise, lend money to, guarantee the debts or obligations of, or otherwise provide financial assistance to, act as an agent of, or permit the Confidential Information or other intellectual property owned by or licensed to the Firm to be used or employed in connection with, any business which is similar or related to the Business carried out by the Firm whether in India or abroad and whether individually or in partnership or jointly or through its affiliates or in conjunction with any person as principal, employee, agent, consultant, supplier, lender, financier, shareholder, or in any other manner whatsoever.

O.M.P.(I) (COMM.) 374/2023 Page 7 of 12

This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 14/12/2023 at 21:56:33 Non-Solicitation The Employee shall not during the term of this Agreement, solicit, accept employment of, or render professional services to, any person or organization that is or was an existing or potential client or partner, whether existing or not, of the Firm. Further, the Employee shall not engage or solicit, whether directly or through any organization or entity, the services of any employee, agent, sub-contractor, vendor or other service provider who is or was at any point in time associated with the Firm. The Employee shall not, after the termination of this Agreement. solicit or render professional services to any person or organization that is or was a partner, entity that the Firm is or was working with, in any capacity whatsoever or existing or potential client of the Finn. In the event that the Employee breaches such term, the Firm shall be entitled to be indemnified, in terms of Clause 12 of this Agreement."

In the MoU Terms and Conditions:

xx-xx-xx "4. The party two shall from now onwards cease and desist to solicit the employees and customers of the party one."

17. Now, after leaving the employment of the Petitioner, Respondent No. 1 has prima facie started operating in the same field through Learning Saint Pvt. Ltd., and has been actively targeting Petitioner's clients. The allegation is that Respondent No. 1 is persuading these clients to redirect their payments to Learning Saint Pvt. Ltd.'s bank account, under false pretence of an affiliation between the Petitioner and Learning Saint Pvt. Ltd. Supporting this claim is a crucial piece of evidence - an e-mail communication addressed to a customer of the Petitioner. This e-mail instructs the customer to deposit a specific amount into the bank account of Learning Saint Pvt.

Ltd., a directive that, according to the Petitioner, exemplifies Respondent No. 1's unethical and potentially illegal actions. The same is reproduced O.M.P.(I) (COMM.) 374/2023 Page 8 of 12 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 14/12/2023 at 21:56:33 below:

O.M.P.(I) (COMM.) 374/2023 Page 9 of 12

This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 14/12/2023 at 21:56:33

18. The Petitioner asserts that "Mr. Eric Smith" is a pseudonym used by Respondent No. 1. The afore-extracted e-mail exchange demonstrates that Respondent No. 1, Mr. Abhishek Sharma, has been in contact with the Petitioner's clients. The situation, as portrayed by the Petitioner, raises serious concerns about potentially fraudulent activities that could harm the Petitioner's business and mislead their clients. There is thus, urgency in the matter to protect innocent customers from being misled by such deceptive tactics.

19. In addressing the issue of potential imitation of the Petitioner's course materials, counsel for Petitioner brought to the Court's attention Clause 7.3 of the Employment Agreement. This clause explicitly prohibits the disclosure of confidential information, including course materials and lists of existing or potential clients. To substantiate the claim of imitation, Petitioner has presented a detailed comparison of five courses offered by the Petitioner - SAP MM Training (Power Use Program), SAP FICO Training (Power User Program), Post Graduate Program in Cyber Security, SAP HANA Training and SAP Basis Training, and Post Graduate Program in Data Science - with corresponding courses offered by Learning Saint Pvt.

Ltd., namely SAP MM (Material Management), SAP FICO (Finance and Controlling), Cyber Security Masters Certification, SAP Basis Administration and HANA, and Advanced Program in Data Science.

20. This comparative analysis, which the Court has taken on record, reveals significant similarities in the structure of these modules. Additionally, the Petitioner provided evidence demonstrating the marked difference in the training structure for ERP SAP PP (Production Planning) Training Course Content and Syllabus of a third-party business operating in O.M.P.(I) (COMM.) 374/2023 Page 10 of 12 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 14/12/2023 at 21:56:33 the same field. This contrast further accentuates the alleged similarities between the Petitioner's and Learning Saint Pvt. Ltd.'s courses and raises questions about the originality and confidentiality of the content offered by Learning Saint Pvt. Ltd.

21. For the foregoing reasons, the Court must strike a balance between granting necessary interim relief to protect the Petitioner's interests and adhering to the legal principles governing non-compete clauses. The prima facie evidence presented by the Petitioner, particularly regarding the alleged duplication of course materials and the improper solicitation of clients, necessitates judicial intervention to prevent potential harm to the Petitioner's business interests. Therefore, the Court finds it appropriate to grant interim relief that specifically targets these areas of concern. This would involve prohibiting Respondent No. 1 from using any confidential information or course materials allegedly obtained during his employment with the Petitioner, and from contacting the Petitioner's clients for competitive purposes.

22. Moreover, the Court must stress the significance of maintaining the integrity of the judicial process, especially in light of Respondent No. 1's non-compliance with the Court's directive to produce course materials. This non-compliance not only warrants an adverse inference against Respondent No. 1, but also justifies interim measures to prevent further potential breaches of confidentiality. However, in line with the legal precedents, the Court is mindful that the enforcement of non-compete clauses post- termination of employment must be carefully assessed. Therefore, the interim relief granted will not extend to an outright prohibition of Respondent No. 1's professional activities, but will rather focus on O.M.P.(I) (COMM.) 374/2023 Page 11 of 12 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 14/12/2023 at 21:56:33 preventing the specific alleged actions that directly impact the Petitioner's proprietary information and client relationships.

23. The interim relief is thus circumscribed to address the immediate risks identified in the Petitioner's case, without impinging upon the broader legal considerations associated with post-employment restrictions.

24. The counsel for Petitioner has submitted a comprehensive list of clients, along with detailed information about their fee payments and any outstanding balances, for the Court's examination. Accordingly, until the next scheduled hearing, the Court imposes the following interim restraints on Respondent No. 1:

24.1. Respondent No. 1 and any one acting on his behalf is prohibited from using or disclosing any confidential information belonging to the Petitioner.

This includes, but is not limited to, course materials, modules, business templates, and strategy, which were accessible to him during his employment with the Petitioner.

24.2. Respondent No. 1 and any one acting on his behalf is also barred from contacting, soliciting, or engaging with any existing clients of the Petitioner, who are currently enrolled in a course and have pending balance payments. This restriction specifically applies to courses that are similar to or identical with the courses offered by the Petitioner.

25. Reply, if any, be filed within four weeks from today. Rejoinder thereto, if any, be filed before the next date of hearing.

26. Re-notify on 19th February, 2024.

SANJEEV NARULA, J DECEMBER 11, 2023/as O.M.P.(I) (COMM.) 374/2023 Page 12 of 12 This is a digitally signed order.

The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 14/12/2023 at 21:56:33

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Delhi High Court - Orders