Bombay High Court
Yogesh Bagul vs Laxmi Dental Export Pvt. Ltd. And 6 ... on 15 November, 2022
Author: R. I. Chagla
Bench: R. I. Chagla
10-IAL-16135-22.doc
Sharayu Khot.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO. 16135 OF 2022
IN
COMMERCIAL SUIT NO. 243 OF 2022
Yogesh Bagul ...Applicant/Original
Defendant No. 1
In the matter between
Laxmi Dental Exports Private Limited ...Plaintiff
Versus
Yogesh Bagul & Ors. ...Defendants
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Mr. Gaurav Joshi a/w Mr. Amit Jejoo, Mr. Bhargav Kosuru, Mr. Anees
Patel, Mr. Aayu Saxena i/by Indus Law for the Plaintiff.
Mr. Mayur Khandeparkar, Mr. Gaurav Mehta, Ms. Shamima Taly, Mr.
Mukul Taly, Mr. Sehyr Taly, Ms. Sayali Gharpure, Paluck Bengali i/by
S. Mahomedbhai & Co. for the Defendant Nos. 1, 6 and 7.
Mr. Simil Purohit a/w Mr. Abhishek Karnik i/by Mr. Aziz Mohammed
for the Defendant Nos. 2 to 5.
Mr. E.S. Sivakumar, 1st Asst to CR. Present.
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JITENDRA
CORAM : R.I. CHAGLA J
SHANKAR
NIJASURE
Digitally
DATE : 15 November 2022
signed by
JITENDRA
SHANKAR
ORDER :
NIJASURE Date:
2022.11.23 15:07:42 +0530
1. Heard learned Counsel for the parties.1/18
10-IAL-16135-22.doc
2. By this Interim Application, the Applicant is seeking :-
prayer clause (a) vacation and/or setting aside of exparte order dated 28th April 2022 passed in Interim Application No. 12639 of 2022.
3. In prayer clause (b) of the Interim Application, relief is sought for dismissal of the Suit in view of the Suit being afflicted by material falsehood and suppression of facts and documents.
4. It is the contention of the Applicant/original Defendant No. 1 that though in Paragraph 25 of the exparte ad-interim order, this Court on 28th April 2022 had directed the Plaintiff to comply with the provisions of Order XXXIX Rule 3 of the Code of Civil Procedure, 1908 ("CPC") within 14 working days of the Court Receiver/Additional Special Receivers executing their commission, the Plaintiff has failed to comply with the same.
5. The Applicant's advocate had addressed a letter dated 10th May 2022 to the advocates for the Plaintiff wherein it was mentioned that though the Plaintiff had relied upon alleged confidential and proprietary information by producing the Pen/USB drive in a sealed cover being Exh.A-12, no such Pen/USB drive is 2/18 10-IAL-16135-22.doc served on Defendant No. 1 and as such service of copy of Plaint upon the Defendant No. 1 is incomplete. This has been responded to by the Advocate for the Plaintiff by a letter dated 11th May 2022 wherein it is stated that sharing of confidential information with the Defendant No.1 would defeat the very essence of confidentiality which the Plaintiff seeks to guard. In any event this Court accepted the confidential information submitted in a sealed envelope by the Plaintiff as recorded in the order dated 28th April 2022. Therefore, the request of the Defendant No. 1 for such confidential information is stated to be ill-founded, misconceived and denied by the Plaintiff.
6. Mr. Khandeparkar, learned Counsel appearing for the Applicant/Defendant No. 1 has referred to Order XXXIX Rule 3 of the CPC, wherein in the proviso it is provided that where it is proposed to grant an injunction without giving notice of the Application to the opposite party, the Court shall record the reasons for its opinion that the object of granting the injunction would be defeated by delay, and require the Applicant- (a) to deliver to the opposite party, or to send to him by registered post, immediately after the order granting the injunction has been made, a copy of the application for injunction together with ... (iii) copies of documents on which the applicant 3/18 10-IAL-16135-22.doc relies, and ..."
7. Mr. Khandeparkar has submitted that in the present case, the Plaintiff has relied upon the Pen/USB drive alleged containing confidential and proprietary information which is annexed at Exh.A- 12 to the Plaint. He has submitted that this has not been made available to the Defendants by relying upon the confidentiality.
8. Mr. Khandeparkar has thereafter, referred to Order XXXIX Rule 4 of the CPC which provides that "Any Order for an Injunction may be discharged, or varied, or set aside by the Court, on application made thereto by any Party dissatisfied with such order." In the proviso thereto, it is provided that "if in an Application for temporary injunction or in any affidavit supporting such application, a party his knowingly made a false or misleading statement in relation to a material particular and the injunction was granted without giving notice to the opposite party, the Court shall vacate the injunction unless, for reasons to be recorded, it considers that it is not necessary to do so in the interests of justice."
9. Mr. Khandeparkar has accordingly, submitted that in the 4/18 10-IAL-16135-22.doc exparte order dated 28th April 2022, this Court has directed the Plaintiff to comply with the Order XXXIX Rule 3 of the CPC within 14 working days of the Court Receiver/Additional Special Receivers executing their commission. There was no exception made by the Plaintiff insofar as the compliance with Order XXXIX Rule 3 of the CPC was concerned. Accordingly, the Plaintiff has made a misleading statement to the Court by stating that they will comply with the said provision as can be seen from their not making available to the Defendants the information contained in the Pen/USB drive at Exhibit A-12 to the Plaint.
10. Mr. Khandeparkar has referred to the decision of the Supreme Court in A. Venkatasubbiah Naidu Vs. S. Chellappan & Ors.1 and in particular, paragraph 15 thereof, wherein the Supreme Court has considered Order XXXIX Rule 3 Clauses (a) and (b) and the proviso thereto of the CPC. The Supreme Court has held that " But if a party, in whose favour an order was passed ex parte, fails to comply with the duties which he has to perform as required by the proviso quoted above, he must take the risk. Non-compliance with such requisites on his part cannot be allowed to go without any 1 (2000)7 SCC 695 5/18 10-IAL-16135-22.doc consequence and to enable him to have only the advantage of it. The consequence of the party (who secured the order) for not complying with the duties he is required to perform is that he cannot be allowed to take advantage of such order if the order is not obeyed by the other party. A disobedient beneficiary of an order cannot be heard to complain against any disobedience alleged against another party ."
11. Mr. Khandeparkar has also referred to the decision of the Supreme Court in Cdr Amit Kumar Sharma Vs. Union of India & Ors.2, wherein the Supreme Court has noted that non-disclosure of relevant material to the affected party and its disclosure in a sealed- cover to the adjudicating authority sets a dangerous precedent. The elementary principle of law is that all material which is relied upon by either party in the course of a judicial proceeding must be disclosed. The disclosure of relevant material to the adjudicating authority in a sealed cover makes the process of adjudication vague and opaque. The measure of non-disclosure of sensitive information in exceptional circumstances must be proportionate to the purpose that the non-disclosure seeks to serve. The exceptions should not, however become the norm.
2 Civil Appeal Nos. 841-843 of 2022 6/18
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12. Mr. Khandeparkar has submitted that considering the law laid down by the Supreme Court and the findings of the Supreme Court that such disclosure in sealed covers are to be deprecated as it would make the process of adjudication vague and opaque, the Plaintiff has in the present case placed information which it is relying upon in a Pen/USB drive in sealed cover by alleging that the information to be proprietary and confidential. He has submitted that the Pen/USB drive annexed at Exh.A-12 to the Plaint is required to be made available to the Defendant No. 1, in view of its reliance upon the information contained therein by the Plaintiff and by virtue of which exparte ad-interim order of injunction stands granted by this Court.
13. Mr. Purohit, learned Counsel appearing for the Defendant Nos. 2 to 5 has supported the submissions made by Mr. Khandeparkar. He has submitted that in paragraph 41 of the Plaint, it has been averred that due to the nature of the Defendant No. 1's responsibilities, he was entrusted with the confidential information and sensitive data during the term of engagement with the Plaintiff. He was restricted from divulging such confidential and proprietary information to any third party or use the same outside the scope of 7/18 10-IAL-16135-22.doc work as envisaged under the said agreement. Thus, the Plaintiff's case is that the Defendant No. 1 has such confidential information and sensitive data. Accordingly, there can be no exception to Order XXXIX Rule 3(a)(iii) of the CPC by not making available the information on the Pen/USB drive in sealed cover at Exh.A-12 to the Defendants on the ground of it being proprietary and confidential.
14. Mr. Purohit has further submitted that the alleged proprietary and confidential information is in the public domain and that in order to establish that it would be necessary for the information contained in the Pen/USB drive furnished in the sealed cover at Exh.A-12 to be made available to the Defendants for meeting the case of the Plaintiff. He has by placing reliance upon Order XXXIX Rule 4 of the CPC submitted that a false statement as has been made to this Court by the Plaintiff by non-compliance with Order XXXIX Rule 3(a)(iii) of the CPC although when the said ad-interim order was passed the Plaintiff had not made any exception to such compliance. It is by virtue of the Defendant agreeing to comply with the said provision that the said ex-parte ad-interim order dated 28th April 2022 was passed. Mr. Purohit has further submitted that the Plaintiff's products of aligned and retainer sheets and 3D printing 8/18 10-IAL-16135-22.doc resin with the brand name "TAGLUS" which the Plaintiff has claimed are proprietary was prior used by Defendant No.7 and in fact made available to the Plaintiff by Defendant No. 6, the Sole Proprietor of Defendant No. 7. This is borne out from the Deed of Assignment dated 24th May 2019 at Exh.B to the Plaint. The said Agreement mentioned that the brands were acquired from Defendant No. 6 by the Plaintiff along with goodwill. Accordingly, he has submitted that there is no such confidential information which the Plaintiff can rely upon.
15. Mr. Purohit has submitted that in view of the false statement made by the Plaintiff that he will disclose the documents annexed to the Plaint, an ex-parte order of injunction is mandated to be vacated by the Court, unless for the reasons to be recorded, the Court considers that it is not necessary to do so in the interests of justice. This has been provided for under Order XXXIX Rule 4 of the CPC and in particular, the proviso thereof.
16. Mr. Gaurav Joshi, learned Senior Counsel appearing for the Plaintiff has submitted that the information contained in the Pen/USB drive is confidential and proprietary 9/18 10-IAL-16135-22.doc information and the Plaintiffs are the owners of the said confident and proprietary information. It is well settled that when the documents are of confidential in nature, the Courts have permitted such documents to be submitted in the sealed cover or else, such confidential information would become available in public domain. Mr. Joshi has submitted that the Interim Application filed by the Applicant/Defendant No. 1 is misconceived as reliance has been placed on Order XXXIX Rule 3 of the CPC to contend that such confidential information should have been made available to the Defendants by the Plaintiff and that in the event, the confidential information was not made available, ad-interim temporary injunction granted by this Court is liable to be vacated under Order XXXIX Rule 4 of the CPC. Mr. Joshi has submitted that the Order XXXIX Rule 3 of the CPC refers to the delivery to the opposite party against whom an order granting injunction has been made copies of documents on which the Applicant relies. These, documents are the documents relied upon in the Plaint and there would be an exception made insofar as the confidential documents are concerned. This distinction with respect of confidential information has been made by the Courts and in fact, in respect of such confidential information, a confidential club has been set up by the Courts in order that such confidential 10/18 10-IAL-16135-22.doc information does not come in the public domain.
17. Mr. Joshi has relied upon the decision of this Court in Pfizer Inc. Vs. Unimark Remedies Limited3, wherein this Court has considered confidential information relied upon by the Petitioners in that case and has considered it necessary for a confidential club to be established and which would be by an agreement signed between the parties to the proceedings including the Defendants and the party from whom the evidence and testimony is sought to be collected in order that the confidential information may be collected pursuant to executing the Letters Rogatory to be only seen by a limited number of people on each side (usually almost entirely consisting of professionals, technical and foreign legal advisors as the case may be). All of these people are bound by confidentiality and undertakings in relation to the information/documents as stipulated thereunder.
18. Mr. Joshi has also relied upon the decision of the Delhi High Court in Telefonaktiebolaget LM Ericsson Vs. Xiaomi 3 2016 SCC OnLine Bom 8599 11/18 10-IAL-16135-22.doc Technology4. In that case the Delhi High Court observed that confidentiality clubs have been constituted in cases involving patents, trade, etc. and in disputes involving FRAND issues it is legitimate for the Courts to constitute the confidentiality club with a view to ensure the sanctity and confidentiality of business and commercial sensitive information/material, filed by a party is maintained. Thus, he has submitted that the Courts have taken cognizance of the sanctity of confidential information and for prevention of such confidential information being disclosed provided safeguard including establishing confidentiality clubs.
19. Mr. Joshi has also relied upon the decision of this Court in Acko General Insurance Vs. Yogesh Agrawal & Ors. 5 where this Court has safeguarded confidential information submitted by the Plaintiff, under sealed cover and called upon the Defendants to file their Affidavit addressing the issue of whether the Plaintiff has made out a case for grant of interim / ad-interim relief on the pleading as they stand in the Plaint by reserving their right to file further Affidavits, if and when access to confidential information is permitted 4 2017 SCC OnLine Del 11069 5 High Court Order dated 10th August 2020 12/18 10-IAL-16135-22.doc by the Court.
20. Mr. Joshi has submitted that the decisions cited by Mr. Khandeparkar on behalf of the Defendant No. 1 namely Cdr Amit Kumar Sharma (supra) has itself noted that though the documents provided in sealed cover makes the process of adjudication vague and opaque, the measure of non-disclosure of sensitive information in exceptional circumstances must be proportionate to the purpose that the non-disclosure seeks to serve. Further, there are the exceptions in disclosures of such information, in particular to prevent confidential information coming into Public domain. He has submitted that it is the case of the Plaintiff that the confidential information of which the Plaintiff has claimed proprietary rights is proportionate to the purpose that non-disclosure seeks to serve. Further, to establish that there has been misuse by Defendant No. 1 and in breach of the non- compete and non-solicitation clause in the Agreement.
21. Mr. Joshi has submitted that the Interim Application which seeks vacation of the exparte ad-interim order is misplaced and on an improper reading of Order XXXIX Rule 4 of the CPC, wherein it is provided that any order for an injunction may be 13/18 10-IAL-16135-22.doc discharged, or varied, or set aside by the Court, on an application made thereto by any party dissatisfied with such order. He has submitted that the word used is may and thus it is discretionary and to be determined in accordance with merits of such Application. He has submitted that proviso in Order XXXIX Rule 4 is inapplicable as there has been no false and/or misleading statement made by the Plaintiff. In fact, it is the order of the Court which directs the Plaintiff to comply with the Order XXXIX Rule 3 of the CPC within 14 working days of the Court Receiver/Additional Special Receivers executing their commission. He has submitted that in view of the confidential nature of the documents, the proviso under Order XXXIX Rule 3 of the CPC is inapplicable to Exhibit A-12 to the Plaint.
22. Having considered the rival submissions, in my view, there is much merit in the submissions of Mr. Joshi on behalf of the Plaintiff. It is the case of the Plaintiff that there is confidential and proportionate information stored in the Pen/USB drive at Exh.A- 12 and thus requires to be protected from coming into the public domain.
23. In the said order, though there is a direction for 14/18 10-IAL-16135-22.doc the Plaintiff to comply with the provisions of Order XXXIX Rule 3 of the CPC within 14 working days of the Court Receiver/Additional Special Receivers executing their commission, in my view, this would not be applicable to the such confidential information in Exhibit A-12 which requires protection. There is a prima facie finding in the said order dated 28th April 2022 that the Plaintiffs are the owners of the confidential and proprietary information. Further, there is the prima facie finding that the Defendant No. 1 being Division Head of the Plaintiff is not only in breach of his confidential obligations, but is as also directly involved in a competing business and soliciting the Plaintiff's customers, vendors, etc. in breach of Clauses 3, 10 and 11 of the Agreement. These findings are recorded in paragraph 13 of the said order. Further, this Court has in the said paragraph recorded that "I am conscious of the fact that this being an ex-parte ad-interim application, minimal relief ought to be granted, however, I also cannot lose sight of the fact that the relief granted ought to be sufficient to protect the Plaintiff's rights in its said Confidential and Proprietary Information."
24. Accordingly, this Court has found that a prima facie case has been made by the Plaintiff for grant of exparte ad- 15/18
10-IAL-16135-22.doc interim relief and has granted ad-interim relief in terms of prayer clauses (a), (b) and (c)(ii).
25. The decision relied on behalf of the Defendant No.1 namely A. Venkatasubbiah Naidu (supra) would be inapplicable in the present case, in view of aforementioned findings of the information being proprietary and confidential in nature. Such information/documents are to be distinguished from other documents which the Plaintiff relies in the Plaint and which requires disclosure under the proviso Order XXXIX Rule 3 Clause (a) and (b) of the CPC. Further, the Supreme Court in the decision relied upon on behalf of the Defendant No.1 viz. Cdr Amit Kumar Sharma (supra), has considered the non-disclosure of relevant material and/or disclosure in a sealed-cover to the adjudicating authority sets a dangerous precedent. However, there are exception as mentioned in paragraph 28 of the said order and in particular, where non- disclosure of sensitive information in exceptional circumstances may be allowed, which must be proportionate to the purpose that the non-disclosure seeks to serve. It is further held that the exceptions should not, however, become the norm.
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26. I have considered the decisions relied upon by Mr. Joshi on behalf of the Plaintiff and in particular, the decision of this Court in Pfizer Inc. (supra), Telefonaktiebolaget LM Ericsson (supra), where this Court and the Delhi High Court has considered that such confidential information requires to be safeguard by setting up of confidential clubs. In Acko General Insurance (supra), this Court was mindful of confidential information being tendered in sealed cover and has safeguarded such information by directing the Defendants to file Affidavit in Reply addressing the issues as to whether the Plaintiff had made out a case for grant of any interim/ad-interim relief on the pleading as they stand in the Plaint.
27. In my prima facie view, the confidential documents cannot be treated in the like manner as other documents relied upon by the Plaintiff which requires delivery to the opposite party under Order XXXIX Rule 3 of the CPC. Further, case has been made out by the Defendants for invocation of Order XXXIX Rule 4 of the CPC, particularly, as I do not find any false or misleading statement in relation to a material particular made by the Plaintiff for vacation of temporary ex-parte injunction granted. In view thereof, this Court under Order XXXIX Rule 4 has a discretion to discharge, 17/18 10-IAL-16135-22.doc vary or set aside an order for injunction on an application made by a party dissatisfied with the order. In the present Application no case has been made out be the Defendants for the exercise of such discretion by the Court. Accordingly, the relief sought for in the Interim Application is not granted.
28. Interim Application (L) No. 16135 of 2022 is accordingly, disposed of.
29. Ad-interim relief granted by ex-parte order dated 28th April 2022 which is operation till today shall continue to operate till the hearing and final disposal of Interim Application (L) No. 12639 of 2022.
30. Interim Application (L) No. 12639 of 2022 shall be placed on 5th December 2022 for hearing.
[R.I. CHAGLA J.] 18/18