Delhi High Court - Orders
Wheelseye Technology India Pvt. Ltd vs Zinka Logistics Solutions Pvt. Ltd & Ors on 8 September, 2021
Author: Sanjeev Narula
Bench: Sanjeev Narula
$~15
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(COMM) 421/2021
WHEELSEYE TECHNOLOGY INDIA PVT. LTD. ..... Plaintiff
Through: Mr Kirti Uppal, Senior Advocate with
Mr. Divyam Agarwal and Mr. Aniket
Aggarwal, Advocates.
versus
ZINKA LOGISTICS SOLUTIONS PVT. LTD & ORS.
..... Defendants
Through: None.
CORAM:
HON'BLE MR. JUSTICE SANJEEV NARULA
ORDER
% 08.09.2021 [VIA VIDEO CONFERENCING]
I.A. 11408/2021 (exemption from filing typed copies of dim documents)
1. Allowed, subject to just exceptions.
2. The Plaintiff shall file typed copies of any document which is dim and on which they may seek to place reliance, at least one week prior to the next date of hearing.
3. Accordingly, the application stands disposed of.
CS(COMM) 421/2021
4. Let the plaint be registered as a suit.
5. Upon filing of process fee, issue summons to the Defendants by all CS(COMM) 421/2021 Page 1 of 13 permissible modes. Summons shall state that the written statement shall be filed by the Defendants within 30 days from the date of receipt of summons. Along with the written statement, the Defendants shall also file an affidavit of admission/ denial of the documents of the Plaintiff, without which the written statement shall not be taken on record.
6. Liberty is given to the Plaintiff to file a replication within 15 days of the receipt of the written statement. Along with the replication, if any, filed by the Plaintiff, an affidavit of admission/ denial of documents of the Defendants, be filed by the Plaintiff, without which the replication shall not be taken on record. If any of the parties wish to seek inspection of any documents, the same shall be sought and given within the timelines.
7. List before the Joint Registrar for marking of exhibits on 26th October, 2021. It is made clear that any party unjustifiably denying documents would be liable to be burdened with costs.
8. List before the Court on 22nd March, 2022 for framing of issues thereafter.
I.A. 11407/2021 (u/O XXVI Rule 9 of the Code of Civil Procedure, 1908 ('CPC') for appointment of Local Commissioner)
9. Issue notice to the Defendants by all permissible modes, upon filing of the process fee by the Plaintiff, returnable on the next date of hearing.
I.A. 11406/2021 (u/O XXXIX Rules 1 and 2 r/w Section 151 of the CPC seeking interim injunction against the Defendants from interfering with the Plaintiff's business and utilizing the Plaintiff's proprietary information)
10. The Plaintiff [hereinafter, 'WheelsEye'] has filed the present suit for CS(COMM) 421/2021 Page 2 of 13 restraining the Defendants' unlawful tortious interference with its business. WheelsEye contends that the Defendants have harmed its business by interfering with their contractual relationships; misappropriating and utilizing WheelsEyes' proprietary and confidential information; and inducing breach of confidentiality and contracts of its vendors and workers.
11. The case as set out by WheelsEye is as follows:
11.1. Defendant No. 1 [hereinafter, 'Zinka'] is a competitor of WheelsEye and engaged in similar business activity. In the course of business, WheelsEye has developed various trade secrets, techniques, technical know-how, business methods, and confidential information [hereinafter, 'Confidential Information'] that has given it an edge over its competitors.
11.2. Defendants No. 2 to 4 are former employees of WheelsEye, and amongst them, Defendants No. 2 and 4 are presently engaged with Zinka.
11.3. Zinka has conspired and set in motion tortious events to disrupt WheelsEye's business operations through collusion with Defendants No. 2-4 by inducing breach of confidentiality and contracts; utilising unlawful means such as deception, defamation, undue influence, false representation; misappropriating WheelsEye's Confidential Information and utilising such misappropriated Confidential Information to cause further interference with subsisting contractual obligations.
11.4. Defendant No. 4 (Mr. Aditya Puri) occupied a managerial position in WheelsEye's Sales and Operations verticals from 09th January, 2019 CS(COMM) 421/2021 Page 3 of 13 to 01st November, 2020. As such, he possesses complete knowledge and insight into WheelsEye's Confidential Information. He had regular interactions with Defendant No. 2 (Harshwardhan Barute) and they worked together on multiple projects. He resigned from WheelsEye on 1st September 2020, and later joined the services of Zinka.
11.5. On 9th March 2021, Defendant No. 2 resigned from WheelsEye company and was employed with Zinka on 21st April 2021. Two other subordinates of Defendant No. 2 (not impleaded) had also resigned and joined Zinka in February, whose resignation was accepted by Defendant No. 2 during his tenure with WheelsEye.
11.6. On 30th May, 2021, one Mr. Mayank Sharma, an erstwhile employee of WheelsEye also working with Zinka, shared a spreadsheet with WheelsEye, stating the same to be the data of Zinka. The said spreadsheet, placed on record of this Court, contains confidential and private details of more than a thousand workers employed by WheelsEye, with a column containing the words "ready to work", which is indicative of a systematic effort by Defendants for en masse poaching of WheelsEye's employees.
11.7. Defendant No. 3 (Ms. Ananya Suri) tendered her resignation on 2nd August 2021, and while serving on her notice period, copied and misappropriated Confidential Information relating to 4,00,000+ customers and 10,000+ sales executives through collusion with her brother, Defendant No. 4.
11.8. Now in August 2021, Zinka has begun an en masse solicitation of Sales Executives of WheelsEye. It offers special incentives and CS(COMM) 421/2021 Page 4 of 13 bonuses for the employees to breach their notice period obligations;
relies on WheelsEye's proprietary information to expertly negotiate with the employees; and indulges in false representations and defamation of WheelsEye to compel employees to leave. 11.9. Relying upon Confidential Information conveyed by Defendants 2-4 to Zinka, so far, 150+ employees of WheelsEye have been solicited by Zinka, of which 20+ employees operate within Delhi-NCR. 11.10. Zinka has also approached Markon Electronics Corporation Pvt. Ltd.
[hereinafter, 'Markon'], a key vendor supplying proprietary devices to WheelsEye, to breach confidentiality and reveal WheelsEye's know-how. Vide email dated 31st August 2021, Markon has informed WheelsEye that negotiations on behalf of Zinka were led by Defendant No. 2, and that he relied upon Confidential Information of WheelsEye to do so, including, inter alia, a purchase order issued by WheelsEye to another vendor, which amounts to revealing confidential information acquired from WheelsEye. The said e-mail is extracted below:
"Date: 31.08.2021 Subject: Confidential Dear Sir, Vide our letter dated 13.04.2021, we intimated you of the knowledge that Blackbuck is possessing about our arrangement. In addition to that letter, we would like to inform you that, on 23 July 2021, one Mr. Harshwardhan Barute, began negotiations on behalf of BlackBuck. He shared copies of purchase orders made by WheelsEye to other vendors (Pictor Telematics Pvt. Ltd.) seeking supply of similarly configured devices. Said purchase order is attached to this mail.
We consider it our duty to inform you of the above developments for appropriate care, internal security and subsequent actions."CS(COMM) 421/2021 Page 5 of 13
12. Mr. Kirti Uppal, Senior Counsel for WheelsEye, contends that Defendants No. 2-4 are in violation of their contractual obligation to maintain confidentiality of WheelsEye's Confidential Information. Defendants No. 2-4 had signed nearly identical employment agreements with WheelsEye, which contained, inter alia, identical Confidentiality Clauses [Clause 6] and Non-Compete and Non-Solicitation Clauses [Clause 8]. He drew the attention of the Court to these clauses contained in the Employment Agreement dated 09th January, 2019 between WheelsEye and Defendant No. 2, which are reproduced below:
"1.3 "Confidential Information" shall mean and include all Company and third party, (including any client or customer) information which is proprietary and not available to the general public. It shall mean technical data, developments and intellectual property and all technical information including specifications, designs, drawings, algorithms, processes, systems and procedures, computer programs. methods, ideas, Know-how and business information such as sales and marketing materials, customer personal information and data, plans, accounting and financial information, credit information of customers, list or databases containing the names, addresses and business needs of customers, sales reports, price lists, personnel records including the names and addresses of the Company's employees, contractors, sub-contractors and other information which is accessed, created, received, exploited. developed or obtained by the Employee during the course of his employment with the Company whether or not expressly designated as confidential.
1.4 "Know-how" shall mean any or all information (including that comprised in or derived from information technology of all sectors, electronic intellectual property, manuals, instructions, catalogues, booklets, data disks, tapes, source codes, formula cards and flowcharts relating to the business of the Company and the services provided.
6. CONFIDENTIALITY 6.1 He/ she will not, either directly or indirectly, both during and after the Term, without the Company's prior written permission, disclose, divulge, disseminate, publish, lecture upon, sell or transfer to any person, or permit any person to examine or make copies of, any documents, writings, CS(COMM) 421/2021 Page 6 of 13 drawings, materials or records that contain or are derived from any Confidential Information;
6.2 He/she will comply, and do all things necessary to permit the Company to comply, with all applicable laws and with the provisions of contracts executed by the Company relating to intellectual property or to the safeguarding of Confidential Information, including the signing of any additional agreements on maintaining confidentiality required in connection with the performance of his/her duties and functions;
6.3 He/she shall not copy or reproduce to writing any part of the Confidential Information except as may be reasonably necessary for the discharge of his/her duties under this Agreement and that any copies, reproductions or reductions to writing so made shall be the property of the Company;
6.4 Confidential Information shall be solely and absolutely vested in and owned by the Company, and the Employee shall not have or claim any right, title or interest therein;
6.5 The Company shall not be required to designate the Employee as the author of any developments, Knowhow or intellectual property. The Employee undertakes to promptly disclose all developments, Know-how and intellectual property to the Board and shall, at the Company's request, do all things that may be necessary and appropriate to establish perfect record or document the Company's ownership of the developments, Know-how or intellectual property rights including, but not limited to, the execution of the appropriate copyright or patent applications or assignments the productions of documents and evidence to the appropriate authorities etc.;
6.6 Upon termination of his/her employment, the Employee shall promptly return to the Company all such Confidential Information etc. Any breach of this condition would entitle the Company to take such action as would be appropriate in the circumstances and/ or to claim damages;
6.7 Notwithstanding the disclosure of any Confidential Information by the Company to the Employee, the Company shall retain title and all intellectual property and proprietary rights in the Confidential Information. Nothing in this Agreement shall be construed as granting or conferring any rights by license or otherwise, expressly, impliedly or otherwise in favour of the Employee over any of the Confidential Information disclosed by the Company;
6.8 If the Employee receives in the course of employment any access to customer data and personal information, the Employee shall retain the CS(COMM) 421/2021 Page 7 of 13 confidentiality and privacy of all such data. The Employee shall follow all such policies as required to maintain the integrity of the Company's IT Security systems;
6.9 It is understood and agreed by the Employee that breach of his/her obligations of confidentiality contained in this Clause 6 may cause the Company irreparable loss. Accordingly, and in addition to any other remedy the Company may have at law or equity, the Company shall be entitled to seek injunctive relief against the Employee, to prevent any further or continuing breach of the Employee's obligations or additional damage to the Company in the event such loss is in fact incurred by the Company as a result of the breach or is imminent.
8. NON-COMPETE AND NON-SOLICITATION 8.1 The Employee covenants that he/ she shall not do or indulge in any of the following, without prior written consent of the Company.
8.1.1. COMPETE: During the Term and for a period of one (1) year thereafter, the Employee shall not directly or indirectly carry on, assist, engage in, be concerned or participate in any business/ activity (whether directly or indirectly, as a partner, shareholder, principal, agent, director, affiliate, employee, consultant or in any other capacity or manner whatsoever) which is similar to the business of the Company nor engage in any activity that conflicts with the Employee's obligations to the Company as provided herein.
8.1.2. SOLICIT BUSINESS: During the Term for a period of two (2) years thereafter, the Employee shall not solicit or cause or authorize, directly or indirectly, to be solicited for any competitive business, for or on behalf of any person or customer or otherwise take any action that might divert the business or patronage from any customer from the Company or otherwise damage or alienate the relationship between the Company and any customer, vendor or supplier; and 8.1.3 SOLICIT PERSONNEL: During the Term for a period of two (2) years thereafter, the Employee shall not solicit or attempt to influence any person employed or engaged by the Company (whether as an employee, consultant, advisor or in any other manner) to terminate or otherwise cease such employment or engagement with the company or become the employee of or directly or indirectly offer services in any form or manner to himself or any person or entity which is a competitor of the Company.CS(COMM) 421/2021 Page 8 of 13
8.2 The Parties acknowledge and agree that the restrictions in Clause 8.1 of this Agreement are considered reasonable for the legitimate protection of the business and goodwill of the Company. In the event that such restriction shall be found to be void, but would be valid if some part thereof was deleted or the scope, period or area of application were amended, the above restriction shall apply with the deletion of such words or such amendment of scope, period or area of application as may be required to make restrictions contained in the Clause valid and enforceable. Notwithstanding the limitation of this provision by any law for the time being in force, the Parties undertake to, at all times, and observe and be bound by the spirit of this Clause 8. Provided however, that on revocation, removal or diminution of the law or provisions, as the case may be, by virtue of which the restrictions contained in this Clause 8 were limited as provided herein above, the original restrictions would stand renewed and be effective to their original extent, as if they had not been limited by the law or provisions revoked.
8.3 The Employee acknowledges and agrees that the covenants and obligations with respect to non-compete and non-solicitation relate to special, unique and extraordinary matters, and that a violation of any of the terms of such covenants and obligations will cause the Company irreparable injury. Therefore, the Employee agrees that the Company shall be entitled to an interim injunction, restraining order or such other equitable relief as a court of competent jurisdiction may deem necessary or appropriate to restrain the Employee from committing any violation of the covenants and obligations contained in this Clause 8. These injunctive remedies are cumulative and are in addition to any other rights and remedies that the Company may have at law or in equity."
[emphasis supplied]
13. Mr. Uppal also referred to the letter of intimation dated 13th April, 2021 sent by Markon to WheelsEye, to demonstrate that Zinka approached Markon seeking to enter into commercial arrangements with it to secure supply of similarly configured devices. Markon noted that Zinka had extensive knowledge of WheelsEye's business methods and confidential information. The said communication reads as follows:
"Date: 13.04.2021 Subject: Intimation regarding solicitations by BlackBuck Dear Sir, CS(COMM) 421/2021 Page 9 of 13 This is to inform you that Mr. Gopu, an employee of BlackBuck having a business model substantially similar to yours, has been in touch with our company for the supply of GPS devices. Pursuant to the discussions, we supplied them one lot of our normal model V5 for a month and thereafter, the supply was haulted by citing reason "unavailability of material" as advised by you. However, on 09.04.2021, we were approached by one Mr. Gopu again asking several questions specifically relating to the devices supplied by us to WheelsEye, including queries as to their particular technical specifications. Mr. Gopu seemed to be aware of numerous details, such as the kinds of devices supplied by other vendors to WheelsEye, whether the devices were accepted or rejected, the details of vendors, etc. When we expressed unwillingness to answer such questions, Mr. Gopu was unfazed and continued to pose the same queries. He claimed to have a concrete and reliable source conveying information from within WheelsEye.
We were, and are, surprised by the sheer number and oddly specific nature of the questions asked. The extent of BlackBuck's awareness of our arrangement for the supply of GPS devices to WheelsEye is unsettling in the least, especially in view of our non-disclosure obligations. The services sought from us seem to overlap directly and substantially with our services to WheelsEye. Since such an arrangement could violate our Non-Disclosure Agreement executed with WheelsEye, we would be compelled to reject BlackBuck's generous proposals.
In any case, it appears that BlackBuck is already in possession of considerable knowledge regarding the internal functioning of WheelsEye. We consider it our duty to inform you of the above developments so you may take appropriate actions.
Regards"
14. Mr. Uppal submits that the aforesaid is indicative of the manner in which the Defendants have, thus far, indulged in inducing WheelsEye's employees to breach their contracts in a systematic and en masse manner. Mr. Uppal explains that on 9th August, 2021, Defendant No. 3, merely two days prior to her last day of employment, with a design to obtain and transmit Confidential Information of WheelsEye, gained unauthorised access to Confidential Information pertaining to WheelsEye's sales verticals. The CS(COMM) 421/2021 Page 10 of 13 data was downloaded/ copied without approval; as access to WheelsEye's database of sales personnel containing their contacts, performance metrics, contractual status, locations, and remuneration structures, fell outside her scope of duties. Mr. Uppal submits that since the said data contains Confidential Information, it shall be placed in a sealed cover within a period of three days from today. The system log maintained by WheelsEye mapped Defendant No. 3's digital footprint and revealed that she had, after copying and sharing the downloaded data, deleted such copies on the company issued-laptop in an effort to cover up her tracks. Said actions of Defendant No. 3 are in complete breach of her contractual obligations arising out of her Employment Agreement dated 18th July 2019.
15. On 13th August, 2021, merely few days after Defendant No. 3's exit, thousands of WheelsEye's employees located in various states began receiving multiple calls of offers to join Zinka. These personnel constitute on-ground workforce of WheelsEye. They are fully trained in the functionality of WheelsEye's business and are privy to location specific proprietary information and form crucial component of WheelsEye's business. When the employees blocked the callers, the Defendants' representatives continued to harass and bombard them with repeated calls from different numbers. In some cases, they received offer letters from Zinka, despite rejecting their advances. Defendants are thus, inducing WheelsEye's employees to breach their contract in order to harm WheelsEye. They are also resorting to false misrepresentations and defamation of WheelsEye to convince WheelsEye's employees to join Zinka.
CS(COMM) 421/2021 Page 11 of 1316. Further, Mr. Uppal has also relied upon the transcript of a communication exchanged on 13th August, 2021 between one Mr. Anshul Kumar Singh (Sales Executive of WheelsEye) and Zinka, which is annexed with the Plaint, wherein Zinka offered special bonuses and incentives upon the condition that he leave WheelsEye and join Zinka within two days.
17. From the foregoing, Mr. Uppal demonstrates that the Defendants are soliciting the employees and vendors, inducing them to breach their contractual and confidentiality obligations, and further, Defendants are also misappropriating and unlawfully utilizing Confidential Information with the intent to cause loss to WheelsEye.
18. In view of the above, WheelsEye has established a prima facie case in its favour. The balance of convenience also lies in favour of WheelsEye, and an irreparable loss would be caused to it, in case an ex-parte interim injunction is not granted. Accordingly, till the next date of hearing, Defendants No. 2 to 4 are:
(i) restrained from interfering in the business operations of WheelsEye through en masse solicitation of its employees and from inducing them to commit breach of their employment contracts, and of confidentiality obligations undertaken by them; and
(ii) restrained from soliciting and inducing WheelsEye's vendors, suppliers, and distributors to act in breach of their contracts and confidentiality obligations.CS(COMM) 421/2021 Page 12 of 13
19. The provisions of Order XXXIX Rule 3 of CPC to be complied with within a period of four days from today.
20. List before the Joint Registrar on 26th October, 2021.
21. List before Court on 22nd March, 2022.
SANJEEV NARULA, J SEPTEMBER 8, 2021 nd CS(COMM) 421/2021 Page 13 of 13