Calcutta High Court
Fairfest Media Ltd vs Ite Group Plc & Ors on 8 January, 2015
Author: Soumen Sen
Bench: Soumen Sen
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
Present :
The Hon'ble Justice Soumen Sen
GA No.3174 of 2014
CS No.329 of 2014
FAIRFEST MEDIA LTD.
VERSUS
ITE GROUP PLC & ORS.
For the petitioner : Mr. Ratnanko Banerjee, Sr. Adv.,
Ms. Lopita Banerjee,
Mr. Aditya Kanodia.
For the respondent Nos.1 & 3 : Mr. S.N. Mukherjee, Sr. Adv.,
Mr. Debnath Ghosh,
Mr. Diwakar Maheshwai,
Ms. Anshumala Banerjee,
Mr. Kumarjit Banerjee
For the respondent No.2 : Mr. Moloy Kumar Ghosh, Sr. Adv.,
Mr. Supratim Laha,
Mr. Saroj Tulian,
Ms. Swati Pandey.
Heard on : 29.10.2014, 03.11.2014, 24.11.2014,
08.12.2014, 15.12.2014, 22.12.2014,
23.12.2014, 24.12.2014.
Judgment on : 8th January, 2015
Soumen Sen, J.:- The protection of confidential information, a
branch of law, evolved by judgments, is the core issue raised in this
proceeding.
The genesis of the problem appears to be the fallout of the mutual
non-disclosure agreement (hereinafter referred to as "NDA") entered into
in anticipation of a joint venture agreement.
The petitioner was incorporated in 1988. The petitioner is in the
business of organizing travel trade shows. The petitioner claims that the
petitioner was the first in India to promote travel trade show with direct
interaction between the sellers and buyers in the travel industry. The
petitioner has over the years and at least for the last 20-25 years
organized many travel trade shows all over the country and the name of
the petitioner has become synonymous with such travel trade shows.
In or about 5th March, 2013, the petitioner, through an electronic
mail evinced its intention to enter into a joint venture agreement with the
petitioner. Pursuant to the said e-mail, discussions were held by a
subsequent e-mail dated 15th March, 2013, the respondent No.1 had
expressed its intention to enter into a non-disclosure agreement with the
petitioner. On 15th March, 2013, a mutual non-disclosure agreement
was entered into between the respondent No.1 and the petitioner.
The petitioner states that such agreement was entered into on the
basis of the representations made by the respondent No.1 that:-
i) The respondent No.1 was genuinely interested in entering
into a joint venture agreement or in taking over the
petitioner in connection with the business of travel and trade
shows.
ii) There was no impediment on the part of the respondent No.1
in entering into negotiations with the petitioner or in the
matter of taking over the petitioner or in the matter of
entering into in a joint venture agreement with the petitioner
in connection with such travel trade show business.
iii) The minority holding of the respondent No.1 in the
respondent No.2 would not in any manner have any bearing
on the transactions between the petitioner and the
respondent No.1 and the respondent No.1 was acting for its
own interest in the business of the petitioner.
The petitioner claims that on the basis of such representations, the
petitioner has entered into the said NDA. It is contended that the
confidential information which the petitioner was to disclose under the
agreement was of a nature which would not be available in public
domain and was exclusively available with the petitioner and related to
the business, clients, customers, business practice and trade secrets of
the petitioner and also including commercial, technical, scientific,
operational, administrative, financial and marketing information. The
petitioner would not have under any circumstances parted with such
information to any third party except under the said NDA and only for
the purpose of the proposed joint venture or takeover of the petitioner
itself. The said agreement was to remain valid for a period of six months
after the date of signing. The recipient, namely the respondent No.1 was
required to keep the information confidential and not disclose directly or
indirectly the information for a period of two years after the termination
of the said agreement without the written consent of the petitioner.
Following the aforesaid agreement, the respondent No.1, by an
electronic mail dated 19th March, 2013, requested the petitioner to
provide confidential financial and marketing information. After receiving
the aforesaid electronic mail, the petitioner expressed its concern about
the proposed travel show to be launched by the respondent No.2 from
16th to 18th January, 2014 in arrangement with the respondent No.1 and
sought clarification from the respondent No.1. The petitioner was
assured by the respondent No.1 that the respondent No.1 is genuinely
interested to acquire the petitioner or to enter into a joint venture with
the petitioner and, therefore, any association with the respondent No.2
shall not affect the future course of action between the petitioner and the
respondent No.1.
The petitioner claims that relying on such representations and
believing the same to be true, the petitioner had materially altered its
position by supplying confidential information relating to finance and
marketing to the respondent No.1 on 20th March, 2013. The information
supply related to matters concerning marketing strategy, customer base,
costing and profitability to organization of travel trade show. It is stated
the information is of nature which was not available in the public domain
and was exclusively available with the petitioner. The petitioner claims
that such information was duly received by the respondent No.1 by its
electronic mail dated 20th March, 2013 which was in reply to the earlier
electronic mail of the petitioner.
On 3rd April, 2013, the respondent No.1, while acknowledging
supply of confidential information, made an offer for acquisition of
business of the petitioner. Since the offer made was found to be low and
did not truly and correctly reflect the value of the business of the
petitioner, such offer was declined. The petitioner, however, made a
counter offer in respect of the proposed deal. The petitioner contends
that thereafter several negotiations were held, but the respondent No.1,
on some pretext or the other, delayed finalization of entering into an
agreement with the petitioner. The respondent No.1 at different points of
time stated different reasons for not acquiring the business of the
petitioner. It is, however, stated that during the period of such
negotiations held between the parties from 18th March, 2013 until 18th
April, 2013, the respondent No.1 had never represented that it could not
acquire the business of the petitioner. Confidential information, which
was given by the petitioner on 20th March, 2013, was given only on the
representation that business of the petitioner would be ultimately
acquired. It is claimed that during the course of negotiations, certain
other strategic information was also given by the petitioner to the
respondent No.1.
On 5th July, 2013, the respondent No.1 informed the petitioner
that the respondent No.1 had acquired about 28% shares in the
respondent No.2. In the said mail, the respondent No.1 stated that it
was interested in integrating with the respondent No.2 and was
considering a partnership with the respondent No.2. However, by a
subsequent electronic mail dated 15th August, 2013, the respondent No.1
represented that it was interested to go ahead with the proposed
acquisition or joint venture with the petitioner. It is stated that the
apprehension of the petitioner as regards the association of the
respondent No.1 with the respondent No.2 was reduced by such
electronic mail wherein the respondent No.1 represented and assured its
intention to go ahead with the transaction. Since a substantial period of
time had already elapsed and the respondent No.1 did not complete the
proposed transaction for takeover of the petitioner or in entering into a
joint venture, the petitioner sent an electronic mail on 1st April, 2014 and
made enquiries from the respondent No.1 in this regard. In reply, the
respondent No.1 by e-mail dated 2nd April, 2014, stated that because of
certain existing agreement with the respondent No.2 preventing it from
entering into separate agreement with the petitioner without the approval
of the respondent No.2 and the fact that the respondent No.2 has refused
to give consent for entering into any merger or arrangement with the
petitioner, it was not possible for the respondent No.1 to enter into such
joint venture agreement with the petitioner.
The petitioner contends that the petitioner has been induced by
the representations made by the respondent that it would enter into a
joint venture agreement with the petitioner and would not part away with
any confidential information supplied to the respondent No.1 from time
to time, which information has been used by the respondent No.1 to
further its own business interest along with the business interest of the
respondent No.2. The petitioner, in view thereof, called upon the
respondent No.1 by emails dated 2nd April, 2014 and 3rd April, 2014 to
immediately suspend launching any travel show as it was similar to the
one conducted by the petitioner. It is stated that it was obvious that the
respondent No.1 had obtained certain confidential information on the
basis of false representation that it wanted to acquire the petitioner or to
enter into the agreement with the petitioner for takeover. The petitioner,
in paragraph 25 of the petition, has given particulars of fraud alleged to
have been perpetrated by the respondent Nos.1 and 2.
Mr. Ratnanko Banerjee, Senior Advocate appearing with Ms. Lopita
Banerjee, Advocate on behalf of the petitioner, refers to the e-mails
exchanged by and between the parties and submitted that it was on a
specific representation being made by the respondent No.1 that it was
genuinely interested in creating an event in the Indian travel market and
exploring the possibility to launch joint venture or acquire the existing
business of the petitioner that the petitioner had agreed to share and, in
fact, had shared confidential informations of the nature disclosed in the
e-mail dated 19th March, 2013 and subsequently other informations
which are confidential in nature, in good faith and such confidential
informations are now being used and/or parted with and shared with the
respondent No.2. It is submitted that in view of Clause 1 and Clause 14
of the NDA, the respondent No.1 could not have parted with the
information supplied to it by the petitioner to the respondent No.2. It is
submitted that in entering into a partnership with the respondent No.2
and in organizing the travel show at Mumbai on 15th, 16th and 17th
January, 2015, it is obvious that the confidential information supplied by
the petitioner to the respondent No.1 were shared and the said
respondents are trying to make an unlawful gain by utilizing such
information. It is submitted that the respondent No.1 is one of the co-
sponsors as would appear from the brochure published by the said
respondent in relation to the said trade fair. It is submitted that it was
incumbent upon the respondent No.1 to disclose to the petitioner at the
time of negotiation and before entering into the said NDA that the
respondent No.1 is not free to enter into such agreement of joint venture
or acquisition of interest of the petitioner without the consent of the
respondent No.2. This is very material sine the information supplied by
the petitioner to the respondent No.1 was shared in good faith and on a
belief that there is a genuine intent for acquisition and such information
shall be used only for the purpose of the said acquisition and not as a
competitive information. The learned Counsel submits that the objection
as to the jurisdiction of this Court as raised by the respondent No.1 in its
affidavit in opposition is untenable since the English law recognizes that
such an action is possible and the jurisdictional clause on which
reference is made does not prevent the petitioner form instituting an
action in this Court against the respondent No.1. It is stated that the
English courts have time and again held that unless such proceeding is
found to be vexatious or oppressive, the plaintiff would be entitled to
institute the suit in the non-contractual forum. Learned Counsel has
referred to the decision in Deutsche Bank AG and another v. Highland
Crusader Offshore Partners LP and others reported at [2010] 1 WLR
Paragraphs 105 to 107, which states:-
"105. The starting point for considering the effect of a non-exclusive
jurisdiction clause must be the wording of the clause. In
terms of contract law, I cannot see how a party could
ordinarily be said to be in breach of a contract containing a
non-exclusive jurisdiction clause merely by pursuing
proceedings in an alternative jurisdiction. It is conceivable
that a jurisdiction clause which is not fully exclusive may
nevertheless be drafted in such a way as to have the effect of
barring parallel proceedings in certain circumstances, but that
is a matter of individual contractual interpretation. Looking at
the matter in general terms, I agree with Raphael's suggestion
in the Anti-Suit Injunction, para 9.12 that
'where a non-exclusive jurisdiction clause does not
clearly indicate whether prior or subsequent parallel
proceedings in a non-selected forum are permitted or
prohibited, the best interpretation will usually be that, by
contracting for non-exclusive jurisdiction, the parties have
anticipated and accepted the possibility of some parallel
proceedings, and as a result, only foreign proceedings which
are vexatious and oppressive for some reason independent of
the mere presence of the non-exclusive clause will be
restrained by injunction.'
106. Consistently with that approach, when it comes to the
question whether the interests of justice require that an anti-
suit injunction should be granted, I do no consider that it
would be right to start with a general presumption that
parallel proceedings in a non-selected forum are to be
regarded as vexatious or oppressive and that there is a
burden on the party responsible for prosecuting them to make
out a strong case to justify them on grounds of matters
unforeseeable at the time of the contract or other exceptional
circumstances. My reasons are based on principle, practice
and authority.
107. In principle, there are a number of reasons why I do not think
that it would be right to adopt such a presumption. First, it is
equivalent or at least comes close to treating a non-exclusive
clause as an exclusive jurisdiction clause once proceeding are
commenced under it, whereas there is an important
difference. An exclusive jurisdiction clause creates a
contractual right not to be sued elsewhere, although the court
has a discretion whether to enforce it (and may refuse as in
Donohue v Armco Inc [2002] I All ER 749). In the case of a
non-exclusive clause, either party is prima facie entitled to
bring proceedings in a court of a competent jurisdiction.
Duplication of litigation through parallel proceedings is
undesirable, but it is an inherent risk where the parties use a
non-exclusive jurisdiction clause."
The learned senior Counsel has referred to e-mails dated 20th
March, 2013, 3rd April, 2013, 2nd April, 2013, 2nd April, 2014 and 24th
April, 2014 and submitted that the contents of the said e-mails would
show that the respondent No.1 has received informations which are
confidential in nature and the said respondent No.1 has confirmed that
the details of the discussions held in connection with the said NDA
would remain confidential and no commercial information was shared
with the respondent No.2. The respondent No.1 has never claimed that
the informations supplied by the petitioner were in the public domain or
available otherwise. It is submitted that the stand taken by the said
respondent No.1 that such informations are in public domain is
dishonest and clearly establishes that such informations were shared
with the respondent No.2 in connection with the proposed travel show at
Mumbai. It is submitted that when the NDA was entered into neither the
respondent No. 2 nor the respondent No.1 was not in competition with
the plaintiff in organizing similar travel trade show. Even when offer was
made by the respondent No.1 on April 3, 2013, the respondent No.2 or
the respondent No.1 were not in competition with the plaintiff. It is only
on April 2, 2014, the respondent No.1 had revealed that it would need
the required consent and approval of the respondent No.2 to further
proceed for any agreement with the said NDA. On 24th April, 2014, the
respondent No.1 admits that the respondent No.2 is going to launch a
travel trade show which would be in direct competition with the plaintiff
and, therefore, the alleged anti-compete Clause between the respondent
No.1 and respondent No.2 would not permit the respondent No.1 to
associate further with the plaintiff. It is, thus, submitted that it is now
obvious that proposed travel trade show launched by the respondent
No.1 and respondent No.2 jointly is in competition with the plaintiff and
is the kind and like of travel trade show organized by the plaintiff. The
learned Counsel has also criticized the stand taken by the respondent
No.1 in relation to the respondent No.2. It is submitted that in
Paragraph 2(p) of its affidavit the respondent No.1 has alleged that it is
only a free lance agent and the respondent No.2 is the organizer of the
travel trade show. The respondent No.1 has no control over the conduct
or promotion of such show. Moreover, the defendant No.1 has contended
in the e-mails dated 24th April, 2014 that the respondent No.2 has
proceeded to launch their travel trade show without the respondent
No.1's agreement. The respondent No.1 is only a minority partner of the
respondent No.2, whereas the brochure of the travel trade show at pages
75, 76 and 78 of the Petition and Paragraphs 24 to 30 of the Affidavit-in-
reply to respondent No.1's affidavit would clearly show that the
respondent No.1 is a lead organizer of such travel trade show. It is
submitted that the respondent No.1 and the respondent No.2 are also
passing off the mark used by the plaintiff to advertise its travel trade
show (in the form of globe with silhouettes) for advertising its own travel
trade show. The attention of the Court is drawn to the brochure and
particularly Pages 76 and 77 for the plaintiff's mark and the brochure
published by the respondent No.1 and respondent No.2. It is submitted
that the evidence on record would clearly establish that the respondent
No.1 in collusion with the respondent No.2 has received confidential
information from the plaintiff with regard to the exhibition business and
have used such information to launch their travel trade show.
It is submitted that the Court may take into consideration the
following factors constituting a prima facie case to grant an injunction:-
i) Admitted supply of confidential information by the plaintiff
to the respondent No.1.
ii) Respondent No.1 promising not to supply such confidential
information to the respondent No.2.
iii) Respondent No.1 and respondent No.2 together are
organizing the travel trade show which is in competition with
the plaintiff after the plaintiff passed on such confidential
information.
iv) The respondent No.1 and the respondent No.2 are using the
same globe mark for launching their travel trade show.
v) The respondent No.1 and respondent No.2 are organizing the
travel trade show in January just before the plaintiff would
organize its travel trade show.
vi) The respondent No.1 and respondent No.2 are using the
same venue as the plaintiff in Bombay to organize travel
trade show.
vii) The respondent No.1 and respondent No.2 have enticed away
the same media partner of the plaintiff, namely, "TRAVTALK"
for their travel trade show.
viii) Similar programmes are being used by the respondent No.1
and respondent No.2 as has been used by the plaintiff in
their travel trade show.
ix) The contrary stand of the respondent No.1 in e-mails,
affidavit and the actual brochure.
x) Respondent No.1's denial of its association with respondent
No.2 in organizing the travel trade show.
It is submitted that the plaintiff has not only made out a strong
prima facie case, the balance of convenience is also in favour of the
plaintiff as the travel trade show has not yet been held and in the event
the said show is allowed to be held by using the confidential information
obtained by the plaintiff other than the plaintiff would suffer irreparable
injury. It is argued that by reason of the stand taken by the respondent
No.1 in its affidavit, namely, Paragraph 2(p) that it is a free lance agent
with regard to the travel trade show being organized by the respondent
No.2, the respondent No.1 cannot resist an order of injunction against
the respondent No.1 from organizing such travel trade show.
It is argued that the plaintiff has made a claim for losses and
damages suffered by the plaintiff as a result of breach of the agreement
by use of confidential information by the respondent No.1 and
respondent No.2. The losses and damages have been quantified as a loss
of business. This loss and damage is in addition to the relief for
injunction. The plaintiff is entitled to claim such reliefs under Clause 9
of the NDA and also by Section 40 of the Specific Relief Act.
The learned senior Counsel has referred to the decision of the
Hon'ble Supreme Court in Firm Sriniwas Ram Kumar Vs. Mahabir
Prasad & Ors. reported at AIR 1951 SC 177 , Chancery Bench decision
of the State of Delaware in Martin Marietta Materials, INC., Vs.
Vulcan Materials Company dated 4th May, 2012 the decision of the
Supreme Court of the State of Delaware dated 10th July, 2012 (corrected
on 12th July, 2012) affirming the decision of the Court of Chancery and
the decision of the Queen's Bench Division in Personal Management
Solutions Limited, Personal Group Benefits Limited Vs. Brakes
Bros. Limited, Gee 7 Group Limited, Gee 7 Wealth Management
Limited, Mark Eaton reported at (2014) EWHC 3495 (QB) for the
proposition that the Courts will be more willing "to give a remedy to
protect people from being taken advantage of by those they have trusted
with confidential information".
The plaintiff has relied upon a decision of the Bombay High Court
in Urmi Juvekar Chiang Vs. Global Broadcast News Ltd. & Anr.
reported at (2007) 109 (2) Bom LR 981 for the proposition that the
breach of confidence is a broader right and that a person who has
obtained information in confidence is not allowed to use it as a spring
board for activities detrimental to the person who made the confidential
communication.
Mr. S.N. Mukherjee, the learned senior Counsel appearing on
behalf of the respondent No.1 and the respondent No.3 submits that he
would like to address this Court on the merits of the controversy having
reserved his right to deal with the jurisdictional issue at the time of trial.
I consider the said submission to be fair and, accordingly, invited the
learned senior Counsel to address the Court on merits reserving the right
to raise the jurisdictional issue at the trial.
Mr. Mukherjee submits that a bare reading of the petition would
show that the allegations made against the respondent No.1 and
respondent No.3 are vague. The petition does not disclose the nature
and particulars of the confidential information alleged to have been
supplied by the plaintiff to the said respondents. The allegations against
the respondent No.1 and the respondent No.2 are grave in nature, that
is, the allegation of fraud has been made without disclosing the
confidential information which was given. The plaintiff has failed to
make out a prima facie case that any such information has been used in
breach of the NDA. It is incumbent upon the plaintiff at this
interlocutory stage to disclose the nature of the confidential information.
It is argued that such disclosure is necessary since allegation of fraud is
made against the defendant No.1 and the defendant No.2 which is grave
in nature. For any order of injunction to be effective, the Court must
know what the confidential information is, that is being used, otherwise
any order would remain vague, requiring the determination of what
confidential information was given and used to be postponed for decision
in a contempt proceedings which is not desirable and the respondent
No.1 must know what this information is that is being relied upon by the
plaintiff so that it can adequately put forward its defence including the
defence that such information when given by the plaintiff to the
respondent No.1 was in the public domain and subsequently is in the
public domain. It is submitted that Clauses 4.1 and 4.2 of the NDA
permits the respondent No.1 to take such defence.
The learned senior Counsel has referred to Ocular Sciences Ltd.
& Anr. Vs. Aspect Vision Care Ltd. & Ors. reported at (1997) R.P.C.
289 at Pages 359 and 360 and CMI-Centers for Medical Innovation
GmbH and Another Vs. Phytopharm Plc reported at (1999) F.S.R. 235
at paragraphs 25, 26 and 45 for the proposition that it is obligatory on
the part of the plaintiff to succeed in a breach of confidence action that
he need to and had to identify clearly what was the information he was
relying on.
It is submitted that as far as the respondent No.3 is concerned,
there is no agreement between the plaintiff and the respondent No.3 and
as such, no complaint can be made against the respondent No.3 for
breach of agreement. The respondent No.1 has all throughout asserted
in its several e-mails that there has not been disclosure of any
confidential information passed by the plaintiff to the respondent No.1.
The plaintiff has also not been able to produce any evidence to show any
information that is confidential in nature and have been used by the
respondent No.1 or the respondent No.2 or the respondent No.3 in
relation to the proposed travel trade show. The documents disclosed by
the plaintiff seem to suggest that all that was disclosed to the respondent
No.1 was financial information relating to the plaintiff. It is not the use
of any financial information which is, however, complained of in the
Plaint and Petition. It is submitted that the business model of the
plaintiff, namely, B2B and B2C has been adopted by the respondent
Nos.1 and 2. However, no disclosure has been made as to the
information relating to such business model which was given in
confidence to the plaintiff. On the contrary, the disclosure made by the
respondent No.1 itself show both direct consumers/client and the
business stakeholders in the travel business have attended travel shows
of the respondent No.1. It is submitted that the impression sought to be
created by the plaintiff that information was obtained surreptitiously by
the respondent No.1 is baseless since in the communication of 5th
March, 2013 that is prior to NDA it was disclosed to the plaintiff that the
respondent No.1 had a stake in the respondent No.2. In fact, the plaintiff
was aware of the exact relationship and recognized the respondent No.1
and the respondent No.2 to be partners which would be borne out from
e-mails of the plaintiff dated 20th March, 2013, 3rd April, 2013, 29th
March, 2014 and 1st April, 2014. The contents of the said e-mails would
clearly establish that prior to disclosure of any alleged confidential
information to respondent No.1, the plaintiff was aware that the
respondent No.2 is an associate of the respondent No.1. It is submitted
that the respondent No.1 could not have even discussed the contents of
the NDA in terms of Clause 15 of the NDA is not tenable since the
plaintiff would have to assume that in pursuing its transaction with the
plaintiff, the respondent No.1 would also have to act with utmost good
faith towards the respondent No.2.
The learned senior Counsel has placed reliance upon the decision
of the Hon'ble Supreme Court in Needle Industries (India) Ltd. & Ors.
Vs. Needle Industries Newey (India) Holding Ltd. & Ors. reported at
1981 (3) SC 333 paragraphs 47 and Dean Vs. Macdowell reported
at 8 Chancery Division 345 at Pages 350 and 351 for the proposition
that the respondent No.1 being a stakeholder in respondent No.2 is
required to act in utmost good faith and there is to the extent a fiduciary
relation between the parties. Therefore, before acquisition of the plaintiff,
the respondent No.1 would have to obtain permission of the respondent
No.2. In dealing with the submission with regard to the unauthorized
use of logo it is submitted that no case has been made out of
infringement of any trademark or passing off of any trademark or
infringement of copyright in any artistic work and, accordingly, no relief
can be granted. It is submitted that an interim relief can only be made
in aid of the final relief. As final relief has not been claimed, the plaintiff
would not be entitled to claim any relief in this regard. In any event, no
order of injunction can be passed as damages have been quantified by
the plaintiff.
Mr. Mukherjee has referred to the e-mail dated 3rd April, 2013 in
which the plaintiff has quantified as INR 3,000 lakhs as the value of its
50% stock of the plaintiff and claimed Rs.50 crores as the loss of
business. The learned senior Counsel has referred to an unreported
judgment of this Court being Suit No.290 of 1994 dated 26th June,
1995 (The Industrial Gases Ltd. & Anr. Vs. The Kamrup Industrial
Gases Ltd. & Anr.) and the decision of the Appeal Court confirming the
same reported at 1996(2) CLT 483 (HC) affirming the said decision for
the proposition that a suit for perpetual injunction would not lie unless
there exists no standard for ascertaining the actual damage caused or
likely to be caused. This is not to say that a plaintiff cannot claim
damages in lieu or in addition to such injunction. But where the plaintiff
himself assesses the amount, the Court cay rely upon such statement at
least at the interlocutory stage to hold that the injury, if any, caused to
the plaintiff can be compensated by damages and that itself would be a
sufficient ground for denying the grant of injunction to the plaintiff.
The learned senior Counsel has distinguished the decision in
Delaware (supra) in submitting that in the said decisions it was admitted
that confidential information had been imparted and there was an
express bar of using such confidential information for a hostile takeover.
JDA and NDA in that agreement specifically provided that in case of
breach of agreement, i.e., using of confidential information of hostile
takeover, monetary relief could not be claimed, but a party would be
entitled to both injunction and specific relief. It was the law in the State
of Delaware that if an agreement makes such provision, it meant that a
case of irretrievable injury had been made out and in case of breach any
confidentiality agreement injunction would follow. In the instant case,
the plaintiff has failed to adduce any evidence to show what was the
confidential information, how it was used and the manner of its use in
organizing the travel trade show. The agreement itself does not bar a
claim for damages, it only provides that in a situation where damages
would not be an adequate remedy equitable relief may be pursued. It is
also not the law in India that the provisions of Specific Relief Act can be
overridden by agreement and in particular, Section 38(2) of the Specific
Relief Act which applies the provisions of Part-II of the Specific Relief Act.
Therefore, where damages is an adequate relief, no injunction should be
granted. It is argued that this is more so as in these proceedings the
claim for damages has proceeded on the basis that by reason of the
travel trade show, the plaintiff has lost its entire business and, therefore,
is entitled to the value of the entire business being computed and
assessed at Rs.50 crores.
The decision in Personal Management (supra) specifically
recognizes that specific performance of a confidentiality agreement is a
discretionary remedy and it is not to be granted if damages are an
adequate remedy. It is submitted that the Court was declined to pass
any interim order by taking into consideration the fact that the plaintiff
has failed to make out any case for passing off or infringement. The
plaintiff has failed to disclose the confidential information alleged to have
been supplied or has been used for travel trade show. There is no
uniqueness about B2B and B2C model in travel trade show and the
information supplied by the plaintiff is in public domain. However, at the
conclusion Mr. Mukherjee on instruction produced before this Court a
communication dated 22nd December, 2014 in which the respondent
No.2 has agreed to discontinue the usage of image presently used on the
cover page of its brochure for 2015 IITT event, i.e., the image with the
seven wonders of the world around the circle.
Mr. Moloy Kr. Ghosh, the learned Counsel appearing on behalf of
the respondent No.2 submits that the plaint does not disclose any cause
of action against the respondent No.2. It is submitted that the plaintiff
was aware after March, 2013 that the respondent No.2 would be
launching Travel Show in Mumbai from 16th to 18th January, 2014 in an
arrangement with the respondent No.1. The respondent No.1 informed
the plaintiff in its e-mail dated 29th March, 2014, inter alia, that the
respondent No.2 had set upon a Travel Industry launch and the
respondent No.1 had assisted the respondent No.2 as much as possible
and one of the directors of the respondent No.1 attended the said event.
The respondent No.2 had successfully launched a Travel Show in
Mumbai from 16th to 18th January, 2014. The plaintiff has filed the
instant suit on 2nd September, 2014. The plaintiff alleged in Paragraph
32 at page 25 of the Petition that the plaintiff has further come to learn
from Volume I Issue 12 of Wanderlust, a business Travel Magazine
published on 4th September, 2014 that the respondent Nos. 1 and 2 in
furtherance of the breach of confidential information are jointly
purporting to organize a Travel Trade Show on and from 15th January,
2015 to 17th January, 2015 in Mumbai Exhibition Centre. The
allegations made in Paragraphs 32 to 47 of the instant application are
based on the advertisement published in the business travel magazine on
4th September, 2014, i.e., two days after 2nd September, 2014 on which
date the plaintiff filed the plaint in the present suit was verified. The
allegations made in Paragraph 32 onwards of the application are beyond
the scope of the suit. The information pertaining to Travel Show are
already in various books/journals and websites and alleged claim of the
plaintiff regarding its alleged exclusive right to such information does not
have any basis whatsoever. The respondent No.2 has relied upon print
out downloaded from the website of the plaintiff regarding lay out floor
plan of the venue of the Travel Exhibition/Travel Trade Show to be held
by the plaintiff on 4th January, 2015 to 6th January, 2015 at Mumbai
Exhibition and Convention Centre (Hall-I) Mumbai and the participation
package of the plaintiff, inter alia, relating to its Travel Exhibition/Travel
Trade Show to be held on 4th February, 2015 to 6th February, 2015 at
Mumbai.
It is submitted that none of the alleged confidential information as
mentioned in the e-mail dated 19th March, 2013 is actually a confidential
information and the plaintiff is not entitled to claim any relief. The e-
mails of the respondent No.1 dated 2nd April, 2014 and 24th April, 2014
clearly show that no commercial information or any confidential
information provided by the plaintiff has been shared by the respondent
No.1 with the respondent No.2.
There is no specific legislation in India to protect trade secrets and
confidential information. Nevertheless, Indian Courts have upheld trade
secret protection on basis of principles of equity, and at times, upon a
common law action of breach of confidence, which is in effect amounts a
breach of contractual obligation. The remedies available to the owner of
trade secrets is to obtain an injunction preventing the licensee from
disclosing the trade secret, return of all confidential and proprietary
information and compensation for any losses suffered due to disclosure
of trade secrets.
In India, a person can be contractually bound not to disclose any
information that is revealed to him/her in confidence. The Indian courts
have upheld a restrictive clause in a technology transfer agreement,
which imposes negative covenants on licensee not to disclose or use the
information received under the agreement for any purpose other than
that agreed in the said agreement.
The e-mails exchanged between the plaintiff and the respondent
No.1 would show that the respondent No.1 was interested in creating an
event for the Indian travel market and were assessing whether
respondent No.1 should decide to launch joint venture or acquiring an
existing business. In furtherance of that object, NDA was entered into.
The plaintiff knew at the time of entering into the said NDA that the
respondent no.1 has some interest in the respondent No.2. The
communications that had taken place between the parties are primarily
for joint venture or acquisition. The NDA was entered into in
anticipation of a future agreement or arrangement. The NDA records
that the plaintiff would be required to disclose certain information
relating to the transaction so that an evaluation might be made of the
transaction. The term "transaction" has not been defined in the NDA.
The disclosures made in the e-mail dated 19th March, 2013 apparently
shows that the respondent No.1 was trying to evaluate the worth of the
plaintiff. On 20th March, 2013, the plaintiff shared certain informations
which the plaintiff claims to be confidential. The plaintiff cautioned the
respondent No.1 that such information shall not be shared with the
partner of the respondent No.1, namely, respondent No.2 or any of their
representatives and such information is shared in good faith with the
genuine intent for acquisition and such information should be used only
for the purpose of the said acquisition and not as competitive
information. The nature of the e-mail suggests that certain informations
were furnished by the plaintiff to the respondent No.1 which could be
used as a competitive information. The respondent No.1 also does not
deny that the information supplied by the plaintiff to the respondent
No.1 in the said e-mail and/or in subsequent disclosure are not
confidential in nature. The defendant No.1 also admits that such
informations are commercial in nature and would not be shared with any
one including the respondent No.2.
The adjective "confidential" means anything spoken or given in
confidence. It is a very private matter. It is suggestive of intimacy and
contemplates entrustment with another secret affairs. (The New Collins
Conscise Dictionary)
Some of the facts relevant for determination whether a given body
of information is confidential, the extent to which the information is
known outside the business of the owner, the value of the information to
him and the competitors and the ease or difficulty with which the
information could be properly acquired or duplicated by others. If a
person is proved to have used confidential information directly or
indirectly obtained from the plaintiff without the consent expressed or
implied of the plaintiff, he would be guilty of an infringement of the
plaintiffs' rights. The essence of this branch of law whatever the origin it
may be, is that a person who has obtained information in confidence is
not allowed to use it as a spring board for activities detrimental to the
person who made the confidential communication. Protection to
confidential information proceeds and depends on the principle of equity
that he who has received information in confidence shall not take unfair
advantage of it. The confidant must not make use of it to the prejudice
of him who gave it without obtaining his consent. It is well-settled that
information imparted in confidence would be protected. If ideas and
informations were acquired by a person in such circumstances that it
would be a breach of good faith to publish them and he has no just
cause or excuse for doing so, the Court shall grant injunction against
him. (Law of Copyright and Industrial Designs, P.Narayanan, 4th
Edition)
In Personal Management (supra) the development of law of
confidential information was narrated. The history of law which protects
confidential information was reviewed by Lord Griffiths in the famous
Attorney General Vs. Guardian Newspapers Ltd. (No.2) (1990) IAC
109, who said that it was judge-made law, reflecting the willingness of
the judges "to give a remedy to protect people from being taken
advantage of by those they have trusted with confidential information."
The exposition of law by Griffiths in relation to confidential information
as referred to in Personal Management (supra) is stated below:-
"Although the terms of a contract may impose a duty of confidence
the right to seek a remedy was not dependent on contract: it existed
as an equitable remedy.
165 Lord Griffiths said that the duty of confidence is, as a general
rule, also imposed on a third party who is in possession of
information which he knows is subject to an obligation of confidence:
(see Prince Albert v. Strange (1849) 1 Mac. & G. 25, and Duchess of
Argyll v. Duke of Argyll (1967) Ch.302.
"If this was not the law the right would be of little practical
value..." (ibid.)
166 Moreover,
"When trade secrets are betrayed by a confidant to a third
party it is usually the third party who is to exploit the information
and it is the activity of the third party that must be stopped in order
to protect the owner of the trade secret." (ibid.)
167 Lord Griffiths said that the task of the judge is to balance,
"....the public interest in upholding the right to confidence,
which is based on the moral principles of loyalty and fair
dealing, against some other public interest that will be served
by the publication of the confidential material."
...
"I have no doubt, however, that in the case of a private claim to confidence, if the three elements of quality of confidence, obligation of confidence and detriment or potential detriment are established, the burden will lie upon the defendant to establish that some other overriding public interest should displace the plaintiff's right to have his confidential information protected." (ibid.) 168 In the same case, Lord Goff, at p.28, said that he had resisted the temptation to "embark upon an exegesis of the law relating to breach of confidence" but he went on to make the following observations.
"A duty of confidence arises when confidential information comes to the knowledge of a person (the confidant) in circumstances where he has notice, or is held to have agreed, that the information is confidential, with the effect that it would be just in all the circumstances that he should be precluded from disclosing the information to others....I of course understand knowledge to include circumstances where the confidant has deliberately closed his eyes to the obvious. The existence of this broad general principle reflects the fact that there is such a public interest in the maintenance of confidences, that the law will provide remedies for their protection. I realise that, in the vast majority of cases, in particular those concerned with trade secrets, the duty of confidence will arise from a transaction or relationship between the parties - often a contract, in which even the duty may arise by reason of either an express or an implied term of that contract. It is in such cases as these that the expressions 'confider' and 'confidant' are perhaps most aptly employed. But it is well settled that a duty of confidence may arise in equity independently of such cases...."
169 Lord Goff then said that there were three qualifications to the general principle:
(1) The principle of confidentiality only applies to information to the extent that it is confidential. In particular, once it had entered the public domain, as a general rule, the principle of confidentiality could have no application to it. (2) The duty of confidence applies neither to useless information, nor to trivia.
(3) Although the basis of the law's protection of confidence is that there is a public interest that confidences should be preserved and protected by the law, nevertheless that public interest may be outweighed by some other countervailing public interest which favours disclosure. It was this third 'limiting principle' which may require a court to carry out a balancing operation, weighing the public interest in maintaining confidence against a countervailing public interest favouring disclosure."
Determining whether information is confidential is dependent upon several factors. In Saltman Engineering Co. v. Campbell Engineering Co. Ltd reported at 1963 (3) All ER 413 the Court of Appeal held that the "confidential" information: "must not be something which is public property and public knowledge. On the other hand, it is perfectly possible to have a confidential document, be it a formula, a plan, a sketch, or something of that kind, which is the result of work done by the maker on materials which may be available for the use of anybody; but what makes it confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process".
The existence of irreparable harm is an essential consideration for a court in determining whether to award an injunction. Plaintiff would commonly claim that when confidential information is disseminated or trade secrets are lost, so too will be its competitive advantage. It will have gone through an extended period when its product or services are not longer unique in the marketplace. Such a situation may not be compensable by an award of damages.
The dissemination and/or sharing of any confidential information is liable to cause harm which does not involve proof of actual harm or special damage. In Martin Marietta (supra) it was stated that "contractual stipulations as to irreparable harm alone suffice to establish that element for the purpose of issuing......injunctive relief."
The "contractual stipulation" in Clause 9 of the NDA contemplates that in case of breach of the said clause award or damage would not be an adequate remedy and the disclosure (plaintiff) shall be entitled to seek injunctive or other equitable relief in relation to any such breach. Prevention of harm before it may happen is an obvious reason for litigation (Personal Management (supra)).
In Saltman Case (supra) it was held that the maintenance of secrecy, according to the circumstances in any given case, either rests on the principles of equity, that is to say the application by the court of the need for conscientiousness in the course of conduct, or by the common law action for breach of confidence, which is in effect a breach of contract.
Equity may afford remedy where the disclosure was in course of negotiations that never produced contract (Seagar Vs. Copydex; 1967 (2) All ER 415, Lac Monarch Vs. International Corona; (1990) F.S.R. 441). In such a situation, where injunctive or other equitable relief is sought in the exclusive jurisdiction, the plaintiff need not show legal remedies to be inadequate. Equitable remedies are, however, susceptible of adjustment to the particular case in a way. The law does not envisage by, for example, the imposition of terms on a successful plaintiff and equity has its own scheme of defences, for example, unclear hands and delay, which may defeat equity. Under a system of free competition, it is to the advantage of a trader to obtain as much information as possible concerning the business of his rivals and to let him know as little as possible of his own. The information could be a trade secret or a business secret. It may relate to financial arrangement, the customer list of a trader and some of the informations in this regard would be of a highly confidential nature as being potentially damaging if a competitor obtained such information and utilized the same to the detriment of the giver of the information. Business information such as cost and pricing, projected capital investments, inventory marketing strategies and customer's list may qualify as his trade secrets. The Court need to find out if the germ of the idea shared by the plaintiff with the respondent No.1 was the spring board which enabled the respondent No.2 to organize the trade fair with the assistance to the respondent No.1.
Mr. Mukherjee, the learned Senior Counsel appearing on behalf of the Respondent Nos.1 and 3 submitted that the rules relating to furnishing of particulars in pleadings apply to breach of confidence actions as they apply to all other proceedings. In Ocular Sciences Ltd. (supra) it was stated that the Courts would be careful to ensure that the plaintiff gives full and proper particulars of all the confidential information on which he intends to rely in the proceedings failing which the Court may infer that the purpose of the litigation is harassment rather than the protection of the plaintiff's rights and may strike out the action as an abuse of process. When the allegations are of a grave character against both the respondents, charging the respondent No.1 in improperly divulging trade secretes and the respondent No.2 improperly procuring such informations and using the same in relation to its proposed travel show, the requirement of furnishing particulars of the nature of the confidential information divulged is essential. There cannot be any doubt that if the plaintiff imputes conduct of a gravely improper character, it calls for clear particularization. The normal approach of the Court as one could find from the decided cases is that if a plaintiff wishes to seek relief against the respondent for misuse of confidential information, it is his duty to ensure that the respondent knows what information is in issue. This is not only for the reasons set out by Edmund Davies L.J. in John Zink but for at least two other reasons. First, the plaintiff usually seeks an injunction to restrain the respondent from using its confidential information. Unless the confidential information is properly identified, an injunction in such terms is of uncertain scope and may be difficult to enforce. Secondly, the respondent must know what he has to meet. He may wish to show that the items of information relied on by the plaintiff are matters of public knowledge. His ability to defend himself will be compromised if the plaintiff can rely on matters of which no proper warning was given. This principle was reiterated in Ocular Sciences Ltd. (supra).
In CMI-Centres (supra) Lord Justice Laddie stated that in order to succeed in a breach of confidence action, the plaintiff is required to address four matters at least, namely:-
(1) He has to identify clearly what was the information he was relying on;
(2) He has to show that it was handed over in circumstances of confidence;
(3) He has to show that it was information of the type which could be treated as confidential; and (4) He has to show that it was used without his licence or there was a threat to use it.
As regards item (1) he has to be precise even in interlocutory proceedings. The defendant is entitled to be told what it was he who was accused of misusing. As regards items 2 to 4 he has to show at the interlocutory stage that he had at least a seriously arguable case in relation to each of them.
In Paragraph 16 of the petition, it is stated by the plaintiff that the petitioner has supplied confidential information relating to finance and marketing to the respondent No.1 on March 20, 2013. The information supplied relating to matters concerning marketing strategy, customer base, costing and profitability to an organization of travel trade shows. The information is of nature which was not available in the public domain and was exclusively available with the petitioner. In dealing with the said paragraph, the respondent No.1 made bald denial. The essence of the defence appears to be that no information was supplied by the petitioner regarding finance and marketing on March 20, 2013 or any other date and that any information supplied by the petitioner in relation to marketing strategy or strategy of profitability are available in public domain and it cannot be said that they are exclusive to the petitioner.
There cannot be any doubt that the cause of this litigation is the refusal of the part of the respondent No.1 to enter into a JDA with the plaintiff. The defendant No.2 may not have as much presence as that of the plaintiff in relation to the travel trade show but the reputation and the goodwill of the respondent No.1 worldwide in organizing trade and travel shows cannot be doubted. The respondent No.1 has explicitly stated in the e-mail dated 5th March, 2013 that it was intended to acquire any existing business or to have a joint venture with an Indian Company. It does not appear from the materials-on-record that the respondent No.1 was an active collaborator in the earlier travel trade show organized in Mumbai. However, having regard the disclosures made by the defendant No.1 with regard to interest of respondent No.2, the plaintiff was aware of the existence of a relationship between the respondent No.1 and respondent No.2 and the fact that the respondent No.2 is also engaged in similar business. The plaintiff did not pray for any injunction restraining the respondent No.2 from holding its travel fair in January, 2014. By that time the validity period of NDA for six months had expired. Except for exchange of e-mails, no formal agreement was executed. The plaint does not show that the respondent No.2 has organized the said travel fair with the information supplied by the plaintiff to the respondent No.1. The plaintiff does not allege that the respondent No.1 has shared any confidential information with the respondent No.2 in relation to the travel trade show held in Mumbai in January, 2014. In 2014, the e-mails exchanged between the plaintiff and the respondent No.1 would show that the plaintiff was expressing its unhappiness about the conduct of the respondent No.1 in not executing an agreement with the plaintiff. In January, 2014, the respondent No.2 made a travel industry launch and the respondent No.1 appears to have assisted the said respondent No.2 in launching the said show. The experience of the respondent No.1 in the travel trade show and/or similar kind of show cannot be doubted. However, at the same time it cannot be said that the information supplied by the plaintiff to the respondent No.1 are not confidential in nature which could have been used by a competitor. The respondent No.1 did not deny the said fact. Initially, the respondent No.1 submitted that they were in no way connected with the proposed travel show to be held in Mumbai in January, 2015. However, it reveals that they are one of the co- sponsorers of the events. In fact, event was organized jointly by the respondent No.1 and the respondent No.2. In fact, the brochure published by the respondent Nos. 1 and 2 also depicts the logo used by the plaintiffs for the last several years. The respondent No.1 and respondent No.2 has failed to explain the use of the said logo. If the respondent No.1 is correct in his contention that his name has been misprinted or it is a fair organized by the respondent No.2 in that event the name of the respondent No.1 could not have appeared so prominently in the brochure along with the respondent No.2. The plaintiff in this proceeding cannot be asked to disclose the nature of the informations more than what has been stated at Paragraph 16 as such disclosures in detail would make such informations public and would no more remain as confidential or secret. Such informations on the basis of the own admission of the respondent No.1 are confidential. The Court is required to assess the confidentiality of such informations on the basis of the materials on record. There cannot be any doubt that informations have been shared by the plaintiff with the respondent No.1 in confidence and under the circumstances which established confidentiality, that is to say, the plaintiff has reposed faith and trust on the respondent No.1 in sharing such information with the respondent No.1 relating to acquisition of business. However, the factor which is against the plaintiff is that the plaintiff in spite of knowing fully well that the respondent No.1 is a stake holder in the respondent No.2 did not prevent the respondent No.2 in launching such travel show in Mumbai in the year January, 2014 although circumstances might create a reasonable and genuine apprehension in the mind of the plaintiff that the respondent No.1 could have been shared or divulged to the respondent No.2 such confidential informations having regard to the nature of relationship between the respondent No.1 and the respondent No.2. The respondent No.1 could have parted with the said information with the respondent No.2 and more so since during the initial period of six months under the NDA that expired in September, 2013 no agreement as contemplated under NDA has been reached or executed. In such circumstances holding of travel fair individually by the respondent No.2 with its own resources cannot be stopped. In balancing the equities and the comparative hardship, I pass the following order:-
a) The image presently used on the cover page of the brochure for 2015 IITT event, i.e., the image with the seven wonders of the world around the circle should be removed.
b) The name of the respondent No.1 shall not be mentioned in any brochure and publicity materials as joint organizer for the travel show, i.e. 2015 IITT event.
c) Injunction restraining the defendant No.1 to share any information concerning marketing strategy and customer base received from the plaintiff till September 30, 2015.
d) On fulfillment of the aforesaid conditions, the respondent No.2 shall be permitted to hold the travel show.
This interlocutory application is, accordingly, disposed of. Urgent xerox certified copy of this judgment, if applied for, be given to the parties on usual undertaking.
(Soumen Sen, J.)