Punjab-Haryana High Court
Artevis Consulting Pvt. Ltd. And Others vs Preferred Square Analytics Pvt. Ltd. ... on 20 February, 2026
CR-1598-2026 (O&M) -:1:-
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CR-1598-2026 (O&M)
Reserved on :-18.02.2026
Date of Pronouncement:-20.02.2026
Uploaded on:-20.2.2026
Artevis Consulting Pvt. Ltd. and Others
... Petitioners
Versus
Preferred Square Analytic Pvt. Ltd. and Another
... Respondents
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CORAM: HON'BLE MR. JUSTICE VIRINDER AGGARWAL
Argued by :-
Mr. Vikas Chaudhary, Advocate
for the petitioners.
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VIRINDER AGGARWAL, J.
1. The present Civil Revision Petition has been instituted by the petitioners invoking the supervisory jurisdiction of this Court under Article 227 of the Constitution of India, read in conjunction with Section 115 of the Code of Civil Procedure, 1908 (hereinafter referred to as "CPC"). By way of the instant petition, the petitioners lay challenge to the order dated 17.11.2025 (Annexure P-1) passed by the learned Civil Judge, Gurugram, whereby the application preferred by the petitioners under Order VII Rule 11 CPC came to be dismissed.
2. Briefly stated, respondent No.1-plaintiff, along with the proforma respondents, instituted a suit seeking a decree of mandatory injunction and recovery of damages quantified at ₹30 lakhs. Defendant GAURAV SOROT 2026.02.20 18:15 I attest to the accuracy and integrity of this document CR-1598-2026 (O&M) -:2:- Nos.2 and 4 in the main suit were employees of the plaintiff-company, and the action was founded upon alleged breaches of the terms and conditions embodied in their respective employment agreements, including, inter alia, the non-solicitation clause, non-disclosure clause, and the Non- Disclosure Agreement.
2.1. Petitioner No.1 is a duly incorporated company engaged in offshore consultancy services, having its registered office at Delhi. Defendant No.2, who is the founding Director and promoter of petitioner No.1-company, was formerly employed with the plaintiff-company as a Senior Consultant and was subsequently elevated to the position of Principal Consultant. His employment was governed by an employment contract dated 04.04.2023, along with a Non-Disclosure Agreement of even date. Petitioner No.3/defendant No.3, the wife of defendant No.2, is also a founding Director and promoter of petitioner No.1-company. Respondent No.2/defendant No.4, a former employee of the plaintiff- company, was later inducted as a Director in petitioner No.1-company. Defendant No.4 had been promoted as Senior Consultant in plaintiff company with effect from 01.04.2022 and was similarly governed by an employment contract dated 04.04.2023 and a Non-Disclosure Agreement of the same date.
2.3. It is alleged that defendant No.2, in the course of his employment, was granted access to confidential and proprietary information of the plaintiff-company in good faith. Upon conducting a random search on LinkedIn, the plaintiff purportedly discovered that defendant No.2, in association with his wife, had established petitioner No.1-company, which is engaged in a competing line of business. It is GAURAV SOROT 2026.02.20 18:15 I attest to the accuracy and integrity of this document CR-1598-2026 (O&M) -:3:- further alleged that defendant No.4 breached the contractual stipulations by soliciting clients of the plaintiff-company for the benefit of petitioner No.1-company, while consciously concealing his association therewith and misusing his position to access confidential data. 2.4. On 07.01.2024, pursuant to a security audit of the laptop returned by defendant No.4, it was allegedly revealed that he had misappropriated confidential and proprietary information, as well as other resources of the plaintiff-company, for projects of petitioner No.1- company, in collusion with defendant No.2, as detailed in sub-para 14(r) of the plaint. It is further averred that defendant No.4 misused access to a premium ChatGPT account assigned by the plaintiff-company, allegedly uploading a client file to the said platform, downloading the same onto his personal system, and thereafter deleting the chat history. The said file, according to the plaintiff, was the cumulative outcome of contributions made by more than ten employees and pertained to a prominent real estate developer in Saudi Arabia, constituting a significant component of the plaintiff's portfolio, with average monthly billing approximating ₹50,00,000/-. Defendant No.2, in his capacity as Engagement Manager, was actively managing this account.
2.5. The plaintiff asserts that the client file was unlawfully accessed, downloaded, and misappropriated from its server by defendant No.4 in concert with defendant No.2. It is further contended that defendant Nos.2 and 4 have illicitly appropriated confidential and proprietary information developed exclusively by the plaintiff's promoters, with the intent of utilising the same to establish and operate a competing business GAURAV SOROT 2026.02.20 18:15 I attest to the accuracy and integrity of this document CR-1598-2026 (O&M) -:4:- under the aegis of petitioner No.1-company. On these foundational allegations, the suit came to be instituted.
3. The petitioners entered appearance and contested the suit on merits. They further instituted an application seeking rejection of the plaint; however, the said application came to be dismissed by the learned Trial Court vide the impugned order. Aggrieved by the dismissal thereof, the petitioners have invoked the supervisory jurisdiction of this Court by way of the present revision petition.
4. I have heard learned counsel for the petitioners at considerable length and have meticulously perused the entire paper-book and record placed before this Court.
5. Learned counsel for the petitioners has vehemently contended that the impugned order is ex facie unsustainable in law, having been rendered without due application of mind and in complete disregard of the settled principles governing adjudication of an application for rejection of plaint. It is submitted that the learned Civil Judge, while determining the application, has impermissibly relied upon the contents of the reply filed thereto, contrary to the well-established legal position that, for the purposes of deciding such an application, only the averments contained in the plaint are required to be examined and no other pleadings or materials can be taken into consideration.
5.1. It is further urged that the learned Civil Judge has erroneously recorded findings as if the plaint discloses causes of action founded upon torts such as inducement, misappropriation of trade secrets, unlawful interference and conspiracy, whereas, according to the petitioners, no such foundational averments are discernible from a plain reading of the plaint. GAURAV SOROT 2026.02.20 18:15 I attest to the accuracy and integrity of this document CR-1598-2026 (O&M) -:5:- The finding that privity of contract is not a sine qua non for fastening tortious liability has also been assailed as legally misconceived and beyond the scope of the pleadings.
5.2. Learned counsel additionally contends that the learned Civil Judge has failed to appreciate the distinction between rights in personam and rights in rem, and that tortious liability, in the facts of the present case, cannot be invoked in respect of what is essentially a right in personam arising out of contractual obligations. It is argued that the entire substratum of the suit rests upon the alleged breach of employment contracts by defendant Nos. 2 and 4; consequently, if at all, the plaintiff may have a cause of action only against the said defendants in their individual capacities, and none whatsoever against defendant Nos. 1 and 3. 5.3. Reliance has further been placed upon the judgment of the Delhi High Court in R.K.B. Herbals (Pvt.) Ltd. v. Enterprises Advertising Pvt. Ltd.1989 AIR Delhi 253, to contend that a mere breach of the terms of an employment contract cannot be transmuted into a claim in tort, and that the learned Civil Judge has erred in treating the controversy as one involving tortious liability. The relevant extract of the impugned order reads as under:-
6. "As per the version of applicants, defendant Nos.1 and 3 have no contractual privity with the plaintiff. The suit, however, pleads torts of inducement, misappropriation of trade secrets, unlawful interference and conspiracy. Defendant No. I is allegedly the beneficiary of the alleged misappropriation. Defendant No. 3 is allegedly the founding director and wife of Defendant No. 2, actively controlling the operations. Moreover, Privity is not GAURAV SOROT 2026.02.20 18:15 I attest to the accuracy and integrity of this document CR-1598-2026 (O&M) -:6:- required for tortious liability as it is different from contractual liability.
7. Further, all persons may be joined as defendants where the right to relief arises out of the same act or transaction or series of acts or transactions and common questions of law or fact would arise in separate suits. The acts of incorporation of Defendant No. 1, data misuse, client solicitation and establishment of competing business form a connected series. Common questions include whether confidential information was misused, whether Defendant No. I benefited, and whether the defendants are jointly liable. Hence, Joinder is permissible.
8. Further, Separate employment contracts do not preclude a joint suit when tortious conspiracy and common harm are pleaded. The plaint discloses cause of action against Defendant No. I för unjust enrichment and misappropriation, and against Defendant No. 3 for conspiracy and inducement. The plaint discloses a cause of action against all defendants arising from a series of interconnected acts. No ground for rejection under Order VII Rule 11 is made out."
6. While declining the application for rejection of the plaint, the learned Civil Judge has returned a categorical finding that defendant No.1-company is the direct beneficiary of the alleged misappropriation of trade secrets, and that defendant No.3, being the Founding Director and spouse of defendant No.2, is actively involved in and exercises control over the operations of the said company. It has been further observed that, for fastening tortious liability, strict privity of contract is not an indispensable prerequisite, and that where the right to relief arises out of the same act, transaction, or a connected series of acts or transactions, all GAURAV SOROT 2026.02.20 18:15 I attest to the accuracy and integrity of this document CR-1598-2026 (O&M) -:7:- persons alleged to be jointly involved therein are necessary and proper parties to the proceedings.
6.1. The learned Civil Judge has reasoned that the incorporation of defendant No.1-company, the alleged misuse of confidential data, solicitation of clients, and establishment of a competing enterprise constitute a continuous and interlinked chain of events forming a connected series of transactions. It has been held that the issue as to whether confidential information belonging to the plaintiff-company was misused for the benefit of defendant No.1 is a matter requiring adjudication upon evidence. The Court further observed that the existence of separate employment contracts does not preclude the maintainability of a joint action where tortious conspiracy and common design are specifically pleaded.
6.2. In the factual matrix as pleaded by the respondent-plaintiff, petitioner No.1-company is described as the brainchild of defendant No.2, who, in concert with his wife, defendant No.3, caused its incorporation during the subsistence of his employment with the plaintiff-company, allegedly in breach of the terms and conditions of the employment contract. It is further alleged that defendant Nos. 2 and 3, acting in collusion, established defendant No.1-company to carry on a competing business and, by utilising confidential and proprietary information of the plaintiff-company, secured wrongful gain for defendant No.1. It is also pleaded that defendant Nos. 2 and 4 engaged in active solicitation of the plaintiff's clients for the benefit of defendant No.1-company, of which defendant No.2 is a Founding Director.
GAURAV SOROT 2026.02.20 18:15 I attest to the accuracy and integrity of this document CR-1598-2026 (O&M) -:8:- 6.3. In view of these specific averments, the learned Civil Judge has concluded that triable issues do arise, warranting adjudication upon evidence. As regards the contention that there are no pleadings attributing collusion between defendant Nos. 2 and 3, it has been noted that the respondent-plaintiff has, in fact, made categorical averments in sub- paragraph (g) of paragraph 14 of the plaint, which read as under:-
"It was discovered from random Linked-in search that defendants No.2 and company breach of his employment contract and non- disclosure agreement, which inter alia, obligated him to respect and preserve the confidentiality of plaintiff's propitiatory information, in collusion with his wife i.e. defendant No.3 had started another company. It was also represented in the said profile that defendant No.1 was engaged in a similar business as that of plaintiff."
7. The contention advanced by learned counsel for the petitioner, that the learned Civil Judge has erroneously characterised the matter as one involving tortious liability, and that liability in tort is enforceable only in respect of infringement of a right in rem and not a right in personam, the latter being the nature of rights flowing from an employment contract, does not merit acceptance.
7.1. The reliance placed upon the judgment of the Hon'ble Delhi High Court in R.K.B. Herbals (Pvt.) Ltd. (supra) is, in fact, misconceived and does not advance the petitioner's case. A careful perusal of paragraph 15 of the said judgment unequivocally lays down that where two or more persons act in concert with a common design to cause damage or injury to another, such concerted action constitutes a legally actionable wrong and can be impugned before a court of competent jurisdiction. GAURAV SOROT 2026.02.20 18:15 I attest to the accuracy and integrity of this document CR-1598-2026 (O&M) -:9:- 7.2. Thus, the principle emerging from the aforesaid precedent militates against, rather than supports, the argument canvassed by the petitioner, relevant extract of the judgment is as under:-
"In India, no direct authority has been brought to my notice dealing with such a case of civil tort of conspiracy to injure another person's commercial interest. I see no reason as to why the principles which have been applied, in this regard, for over 90 years in England should not be invoked in this country except that I see no logic as to why any distinction should be drawn between a person acting singly or in concert or combination with another with a view to harm a third person. If a person acts singly or in concert with one or more persons solely with a view to protect its own interest and business then no action in tort will lie against that person or combination of persons even if the fall out of that action may be that it causes loss or damage to another person. But if the motivation for taking the action, whether singly or jointly, is to harm another person then such an action can be challenged in a Court of law."
8. In the case at hand, specific allegations have been levelled that defendant Nos. 2 and 4 engaged in the poaching and solicitation of the plaintiff-company's clients, ostensibly for the benefit of defendant No. 1. Though the plaint may not employ the precise expression "wrongful loss,"
the inevitable and natural consequence of such conduct, namely, diversion of clients and business is demonstrably detrimental to the plaintiff- company and inherently results in pecuniary and reputational harm. 8.1. It has been expressly averred in paragraph 7 of the plaint that the plaintiff seeks recovery of a sum of ₹30 lakhs towards loss of reputation, misuse of confidential and proprietary information, breach of employment contracts and non-disclosure agreements, and disruption of GAURAV SOROT 2026.02.20 18:15 I attest to the accuracy and integrity of this document CR-1598-2026 (O&M) -:10:- the plaintiff's harmonious office environment attributable to the acts of defendant Nos. 2 and 4. The plaint further pleads loss of clients and business arising from the establishment of defendant No. 1-company by defendant Nos. 2, 3 and 4, allegedly in furtherance of a competing business model utilising the confidential and proprietary information of the plaintiff. 8.2. It is also specifically asserted that, owing to the expertise of its promoters and directors, the plaintiff had identified prospective target companies and clients to augment its business portfolio. Defendant Nos. 2 and 4, having had access to such confidential and proprietary data developed exclusively by the plaintiff, are alleged to have misused the same. The plaintiff has further pleaded that it is in the process of quantifying the actual damages suffered and has sought leave of the Court to amend the plaint appropriately upon such quantification. 8.3. In view of these categorical pleadings, the element of loss and injury to the plaintiff-company stands sufficiently articulated in the plaint. Upon a holistic consideration of the averments contained therein, no illegality or infirmity can be discerned in the findings recorded by the learned Civil Judge. The application preferred by the petitioners under Order VII Rule 11 CPC for rejection of the plaint has been rightly dismissed.
8.4. Finding no merit in the present revision petition, the same stands dismissed accordingly.
9. Consequent upon the final adjudication of the principal lis on merits, and in view of the comprehensive determination rendered herein, all ancillary, interlocutory, or pending application(s), if any, presently GAURAV SOROT 2026.02.20 18:15 I attest to the accuracy and integrity of this document CR-1598-2026 (O&M) -:11:- subsisting on the record, shall, by necessary implication, stand disposed of. In light of the conclusions recorded in the main proceedings, no separate or independent orders are warranted in respect of such applications, their consideration having been rendered wholly redundant and academic.
( VIRINDER AGGARWAL)
20.02.2026 JUDGE
Gaurav Sorot
Whether reasoned / speaking? Yes / No
Whether reportable? Yes / No
GAURAV SOROT
2026.02.20 18:15
I attest to the accuracy and
integrity of this document