Madras High Court
This Application Under Order Xiv Rule 8 ... vs Mastech Corporation And 2 Others ... on 21 November, 2011
Author: Vinod K.Sharma
Bench: Vinod K.Sharma
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 21.11.2011 CORAM THE HON'BLE MR. JUSTICE VINOD K.SHARMA O.A.Nos.808 to 811 of 2011 and A.No.4733 of 2011 in C.S.No.638 of 2011 ORDER
This order shall dispose of Original Applications Nos.808 to 811 of 2011 and A.No.4733 of 2011.
PRAYER IN O.A.No.808 of 2011:
This application under Order XIV Rule 8 of O.S.Rules read with Order XXXIX Rule 1 & 2 of C.P.C. has been filed for the following relief:
"To pass an order of temporary injunction restraining the respondents jointly and severally, their men, agents, assigns, and representatives, subsidiaries or parent companies, from directly or indirectly and in any manner whatsoever infringing the applicant's copyright in the Intellectual property morefully described in Schedule I of the Judges summons including by using of the Intellectual property in the course of their business or trade, or by copying, publication, sale or hire thereof pending disposal of the suit."
PRAYER IN O.A.No.809 of 2011:
This application under Order XIV Rule 8 of O.S.Rules read with Order XXXIX Rule 1 & 2 of C.P.C. has been filed for the following relief:
"To pass an order of temporary injunction restraining the respondents jointly and severally, their men, agents, assigns, and representatives, subsidiaries or parent companies, from directly or indirectly and in any manner whatsoever interfering or obstructing with the applicant's business operations comprised in revenue cycle management services, call centre services and other back office services outsourced to the applicant by customers listed in Schedule II of the Judges summons and performed by the applicant in its office premises at No.12-02, A Block, Tidel Park, No.4, Canal Bank Road, Taramani, Chennai 600 113, including by way of intrusion in its operations, in its websites, information systems or by means of defamation and disparagement of the applicant pending disposal of the suit."
PRAYER IN O.A.No.810 of 2011:
This application under Order XIV Rule 8 of O.S.Rules read with Order XXXIX Rule 1 & 2 of C.P.C. has been filed for the following relief:
"To pass an order of temporary injunction restraining the respondents jointly and severally, their men, agents, assigns, and representatives, subsidiaries or parent company's, from directly or indirectly and in any manner whatsoever soliciting, enticing or inducing the customers listed in Schedule II to the Judges Summons from terminating their contracts with the applicant and/or entering into contracts with or commercially engaging directly or indirectly with the 21st respondent pending disposal of the suit."
PRAYER IN O.A.No.811 of 2011:
This application under Order XIV Rule 8 of O.S.Rules read with Order XXXIX Rule 1 & 2 of C.P.C. has been filed for the following relief:
"To pass an order of temporary injunction restraining the respondents jointly and severally, their men, agents, assigns, and representatives, subsidiaries or parent company's, from directly or indirectly and in any manner whatsoever soliciting, enticing or inducing the employees of the applicant from terminating their contracts with the applicant and/or entering into contracts with or commercially engaging directly or indirectly with the 21st defendant pending disposal of the suit."
PRAYER IN A.No.4733 of 2011:
This application under Order XIV Rule 8 of O.S.Rules read with Order XXVI Rule 9 of C.P.C. has been filed for the following relief:
"To appoint an Advocate Commissioner to enter into the premises of the 21st respondent or any other respondent or any other place where the respondents may have stored the Intellectual Property and all copies thereof, howsoever stored whether electronically on laptops, computers, hand held phones or any other devices, or on paper or otherwise in portable devices including diskettes, hard disk drives, USB devices, or any other form whatsoever, make an inventory thereof, seize and deposit the same before this Court and file a report thereof."
2 M/s.Ajuba Solutions (India) Private Limited, a company registered under the Companies Act has filed a suit for damages claiming a sum of Rs.2,60,00,000/- (Rupees two crores and sixty lakhs only) along with interest till the date of realisation; The prayer is also made for permanent injunction restraining the respondents by way of intrusion in its operation, in its website, information system or by means of defamation and disparagement of the plaintiff; and for permanent injunction restraining the defendants from using the Intellectual property in the course of business or trade or by copying, publication, sale or hire thereof; The plaintiff/applicant also seeks preliminary decree against defendant No.21 for rendering true and proper statement of accounts with regard to their entire business from the date of its incorporation on 12.11.2010 and for final decree to deliver and to pay profits of 21st defendant in the course of business; and for mandatory injunction to the defendants to surrender to the plaintiff, the Intellectual property and all copies thereof.
3 The plaintiff is a leading Business Processing Outsourcing company, wherein the defendants 1 to 17 were employed. The defendants held significant positions in the plaintiff company on account of which they had access, control and indepth knowledge of the plaintiff's proprietary and confidential information. The defendants 18 to 20 were full time consultants with the plaintiff and were earlier employed in regular employment. Therefore, all the defendants had access to the plaintiff's proprietary and confidential information. The defendants 1 to 20 colluded with one another to engage in competing business, in the name and style of M/s.R.Adroit Global Solutions India Private Limited.
4 It is the case of the plaintiff/applicant that the defendants 1 to 20, have stolen the plaintiff's intellectual property for illegal use in the business of the defendant No.21, and that the defendants tortuously interfered with the plaintiff's business, to cause loss.
5 It is the case of the plaintiff/applicant that the defendants are fraudulently inducing the plaintiff's clients and employees to terminate their contract, with the plaintiff and engage themselves with the defendant No.21. They are also indulged in spreading false and defamatory rumours about the plaintiff. This being in violation of binding contracts, between the parties in force. The plaintiff is in business for the last 10 years and during this period, it has developed vast and enviable reputation. Its performance has been lauded in the industry. The plaintiff won the following awards;
(a) Awarded the "No.1 Healthcare Revenue Cycle Management Company" by the Black Book of outsourcing published by John Wiley & Sons in 2006.
(b) Selected in the "Rising Stars" category of the 2007 Global Outsourcing 100 list of the Intellectual Association of Outsourcing Professionals published in the Fortune Magazine.
(c) Featured in the Top 100 outsourcing companies in the world compiled by CMP and Cybermedia.
(d) Selected The Top 100 Offshore Outsourcing Companies in the world by Managing Offshore and New IT in 2005.
(e) Awarded the Employer-Employee Relationship Award 2008-09 by the Rotary Club Madras.
(f) Awarded the Employer Branding Award 2008 by the World HRD Congress.
(g) Ranked in the Top 25 Best Employers in India for 2007 by Hewitt Associates The Economic Time.
(h) Ranked in the Top BPO Employers in India by IDC Dataquest for three years in a row 2005, 2006, 2007.
(i) Recognised as among the "Top 10 Great Places to Work" in 2010 by Great Places to Work Institute India and featured in the rankings of "Top 50 Great Places to Work" over 4 years from 2007 to 2010"
6 The turnover of the plaintiff for the year ended 31.03.2011 was about Rs.80 Crores. The plaintiff has employed 1800 employees in its office at Chennai. It is on account of stringent quality policy and ownership of Intellectual property comprised largely in its vast data/resources which has been collected and analysed in its indegenously developed applications/ systems.
7 It is submitted by the plaintiff that employees working with the plaintiff gain access to information which is sensitive and confidential and know about the customer's financial status, operations, research and resources. They also come to know about patients' medical history and health records which results in entering into a confidential agreements with its customers and any leakage of such information can expose the plaintiff to huge liability.
8 The plaintiff also requires to develop a proper, viable and operable system and process of services delivery management for the customers and therefore the solutions provided to each customer or applications offered vary from one another. The solutions are developed in pursuant to dedicated research and customisation of the existing Intellectual property to suit the requirements of the customers. This requires a very stringent recruitment and training policy. In view of the employees served for six months probation period during which time he/she undergoes rigorous training with the plaintiff. A lot of time and money is spent on training of the employees. During this period, various trade secrets, data and research materials were also shared with the trainees.
9 In view of the special training, the plaintiff enters into contracts with the employees covenants not to divulge or use the confidential information of the plaintiff except in the course of his employment with the plaintiff. The survival of this confidentiality clause is also communicated by the plaintiff in relieving letters issued to employees at the time of leaving services. This was also duly communicated to the defendants 2 to 20. The defendants 2 to 20 during their employment with the plaintiff especially the defendants 4, 5 and 17 have accepted employment offer letters which restrain them from seeking employment with competitors of the plaintiff for a period of three years after termination of their services and also restraining them from soliciting other employees or the plaintiff's clients for a period of six months from the date of termination of the employment.
10 The defendants 6 to 16 and 18 and 20 have executed similar non-solicitation agreements which were to remain in force for a period of one year from the date of termination of the employment. The defendants 2 and 3 though originally covered by employment offer letters which contains covenant restraining them from seeking employment with competitors for a period of one year after termination. They were further restrained from soliciting other employees or the plaintiff's clients for a period of one year after termination of their service.
11. On 01.01.2007, the defendants 2 and 3 were issued fresh appointment letters signed by defendant No.1 without consent of the board of the plaintiff wherein negative covenants were removed. But they are still bound by the plaintiff's manual rules and regulations and code of conduct which contains some negative convenants. The defendants 2 and 3 have also signed and accepted in exit, stipulating non solicitation of plaintiff's employees for a period of one year after separation from the plaintiff's services. They were also restrained from disclosing confidential information except in the course of business of the plaintiff.
12 From 01.01.2011, the defendants 1 to 17 were engaged in senior, supervisory management positions in the plaintiff company and were the key-personnel for the plaintiff. The defendants 18 and 19 earlier employed in plaintiff and on 31.12.2010 terminated the employment agreement and entered into consultancy service agreement under which they work on a full time basis with the plaintiff in the same roles as they were earlier engaged. They were also bound by employment Rules & Regulations and Code of Conduct of the plaintiff which contained negative convenants that survive termination of their service contracts. The defendant No.18 terminated the agreement vide notice dated 15.03.2011 in violation of the terms of the employment whereas defendant No.19 did not even serve any notice and stopped rendering services to the plaintiff. The defendant No.20 was in a regular employment role as Company Secretary and Senior Manager Finance till December 2008. With effect from January 2009, he entered into service contract. The defendant No.20 terminated the Consultancy services with effect from 31.03.2011. He is also said to be bound by confidential clause. The first defendant was one of the co-promoter of the U.S. based parent company of the plaintiff. But subsequently, he sold his entire shareholding in the U.S. based parent company of the plaintiff company to its present shareholders.
13 The defendant No.1 was retained in the position of the President and Managing Director of the plaintiff Company from 2005 till 2011. Initially, the employment was for three years under which he was restrained from engaging in any activities which would directly compete with the plaintiff's business for a period of three years after termination of the employment. His term as President was renewed for another term till 31.12.2013. He was also bound by negative covenants. The first defendant being President and direct control of management had access and knowledge of the customer list, prospective customers list, customer contract details, etc., was also supervising finances and human resources. The information was collected and maintained in electronic form and stored on the company's servers to which the first defendant had unrestricted access and control.
14 The case of the plaintiff is that since December 2010, the defendants 2 to 20 started submitting letters of resignation or termination of consultancy services citing various reasons. The first defendant also sent an e-mail tendering his resignation from the post of President and Managing Director. It was between January 2011 and May 2011, all the defendants resigned from the services of the plaintiff. Some of the resignations were approved and the employees were relieved. In most cases, employees were relieved even before serving the notice period. Most of the defendants were allowed to retain laptop computer on approval by defendants 1, 2 and 3. This according to the plaintiff was done without there being any written policy. The Senior officials in the parent company were made to believe that proper prcedure was being following and there was no threat of loss of Intellectual property.
15 It is pleaded that on coming to know of sudden loss of all information and data, investigations were conducted and discovered that the defendant 1 to 20 had conspired with one another and left the services of the plaintiff. All the defendants joined services of defendant No.21 located in the same IT Park. The said company was incorporated by the defendant No.1 while in service of the plaintiff.
16 It is also pleaded that the defendants not only started competing business, but also soliciting customers of the plaintiff and its parent company. This according to the plaintiff was in direct violation of the employment contract between the plaintiff and the defendants as also Rules and Regulations of the Company.
17 The plaintiff also discovered the defendants 2 to 20 were approaching other employees of the plaintiff and were inducing them to breach their employment contracts and join the defendant No.21. The present employees of the plaintiff were complaining that they are persistently telephoning and attempting to convince them to terminate their employment contracts.
18 It is further pleaded that the defendants while adjusting final settlement dues took laptop computers depreciated value without deleting the datas, applications and software that were stored in laptop computers. The details of the device retained are described in Schedule I of the plaint. Thus, it is claimed that the defendants are in possession of Intellectual Property which is being used for the purpose of conducting business of the defendant No.21.
19 A legal notice was served on the first defendant calling upon him to refrain from soliciting of customers and employees and disparagement of the plaintiff and return of its Intellectual Property. The defendant No.1 refuse to receive notice.
20 In reply to the notice, the defendant No.1 vaguely denied the allegations. The leakage of information by the defendants thereby lead the creation of legal consequences at the hands of its customers. It is submitted that mischievous and malicious conduct of the defendants were unfairly jeoparadising and interfering with the plaintiff's operation and thereby exposing the plaintiff to grave consequences and losses.
21 The plaintiff's U.S. parent company, i.e., M/s.Ajuba International L.L.C. and its ultimate holding company "M/s.Miramed Global Services Inc. initiated a suit Case No.11-12936 on 07.07.2011 before the United States District Court in the Eastern District of Michigan, Southern Division against the first defendant and defendant No.21. The suit filed in U.S.A. however, is restricted to the losses caused to the plaintiff and its parent companies by loss of reputation and loss of clients within the territory of U.S.A. A criminal complaint has also been filed on 09.06.2011 alleging illegal receipt of software and proprietory information. The present suit is claimed to be for the losses suffered in India.
22 It is pleaded that reputation of the plaintiff company has been severely affected due to defamation by the defendants and has resulted in difficulty for the plaintiff to find new recruits. The first defendant has deleted all the copies of some of the said Intellectual property which is affecting the work of the plaintiff's company.
23 The plaintiff has quantified the damages at Rs.2,60,00,000/- (Rupees two crores sixty lakhs only). The reading of the plaint shows that the basic allegation against the defendants, are of removal of stored data claimed to be Intellectual property and taking away of their employees to damage the reputation of the plaintiff on this ground the plaintiff has not only filed a criminal case, but is also claiming damages etc. as noticed hereinabove.
24 Along with the suit, the plaintiff has also filed the interim applications as referred to above.
25 On notice, counter affidavit has been filed by the first defendant and by the defendants 3 to 17.
26 The first defendant oppose the applications by filing counter wherein he denied the averments in the affidavit filed in support of the applications except those which are expressly admitted.
27 The stand of the first defendant in the counter is that in the year 2000, a US company called Ajuba International, Inc. (hereinafter referred to as Ajuba US), was promoted by the first defendant and three other persons (Shakti Singh, Nader Samii and Tony Mira) for the purpose of conducting Business Process Outsourcing (BPO) work in India. All the four were equal shareholders each holding 25% stake in the company. Ajuba US raised capital from outside sources thereby reducing the stake to 17%.
28 It is further stated in the counter that the plaintiff is a wholly owned subsidiary of Ajuba Solutions Mauritius Limited, which is owned by Ajuba US. The first defendant alongwith Nader Samii and Shakti Singh sold their stake in 2005, to Tony Miras promoted company called MiraMed Global Services, Inc.another US company (hereinafter referred to as MiraMed). MiraMed owns all the shares of Ajuba US and MiraMed is in turn owned by one Tony Mira and his wife, both individuals being US citizens and residents.
29 In the counter, it is also stated that for sale consideration, the first defendant entered into a non-compete agreement for three years from the date of sale and this ended on July 7, 2008. On July 8, 2005, after selling shareholdings in Ajuba US, the first defendant entered into a three-year contract of employment. This 2005 contract expired (i.e., the term was completed) on July 7, 2008. This 2005 contract had three restrictive covenants:
(i) non-compete,
(ii) non solicitation of employees and
(iii) non solicitation of customers.
30 It is submitted that in July 2008, the first defendant's 2005 employment ended. He had discussions with Tony Mira about leaving the company. He insisted the first defendant to continue his employment since he was trying to sell his company and said that he required the service of the first defendant for that. Since he did not want to offer any equity stake, the first defendant asked that all restrictive clauses in the employment agreement be removed and compensation structure be changed.
31 The first defendant in the counter submits that the pre-conditions laid down by the first defendant for staying with the company were (i) Removal of all restrictive covenants such as non-compete, and non-solicitation of employees, non-solicitation of customers and (ii) change in compensation. After some negotiation, he entered into a new and completely different employment contract on November 1, 2008 where all the restrictive covenants pertaining to non-compete, non-solicitation of clients and employees had been removed and compensation structure had been changed.
32 The stand taken in the counter is that it is pertinent to emphasise three facts about this 2008 Agreement;
(a) First, unlike the 2005 contract, the 2008 Agreement did not contain any non-compete clause or similar negative covenants. In fact, one of the express conditions for entering into the new 2008 Agreement was that these negative covenants were no longer acceptable or agreed to by the first defendant and this condition was clearly accepted by the plaintiff/ applicant, as is evident from the face of the 2008 Agreement itself;
(b) Second, the 2008 Agreement contained an express clause (clause 7.8), which stated that the 2008 Agreement contained the entire agreement and understanding of the parties and supersede[d] all prior and contemporaneous agreements, arrangements, and understandings relating to the subject matter of [the 2008 Agreement] entered into between the Company [(i.e., plaintiff)], Parent [(i.e., Ajuba US), and the Employee [(i.e., myself)]. (c ) Third, the 2008 Agreement expressly permitted the first defendant in clause 6.5 of the 2008 Agreement, to terminate my employment with the plaintiff for any reason (and without specifying anything more than his desire to terminate the first defendant's employment). The 2008 Agreement only required that the plaintiff was to serve with prior notice of such resignation or termination of employment.
33 The stand of the first defendant is that during February 2011, the first defendant expressed his inability to continue his employment with the plaintiff and gave notice of resignation and terminate such employment during the third week of February 2011. Mr. Tony Mira, as chairman and board member of the plaintiff, accepted his resignation and his employment ended on March 31, 2011. At the time of resignation, consistent with the applicant/plaintiff companys past practice and with Mr. Tony Miras full knowledge and consent, the first defendant purchased the laptop and had been working on from the applicant / plaintiff company.
34 The further stand taken by the first defendant is that Applicants business and Defendant No.21s business is a simple Business Process Outsourcing or BPO operation, where the BPO employees access medical records of patients in the United States through remote logins provided by the clients through dumb terminals and do medical coding and data entry, i.e. filling patient names, addresses and insurance information, follow up on outstanding dues and make related accounting entries. The qualifications required to conduct this work are basic, even computer literacy is not required for many of the functions carried out in this line of work. Just basic typing skills is enough and basic knowledge of English and Maths is enough. Furthermore, it does not involve Intellectual property, research and development, design and innovation, advanced manufacture, secret formulas, trade secrets and such like.
35 It is pleaded in the counter that the Plaintiff has strong data management controls and is certified by external agencies;
(i) In March/April 2011, the Applicant/Plaintiff was audited by certification agencies and its ISO 27001 certification was renewed with specific mention regarding its data security, confidentiality protection and HIPAA regulations. ISO 27001 is a global standard certification that provides a comprehensive approach to security of information needing protection, ranging from digital information, paper documents and physical assets (computers and networks). This certifications fundamental aim is to protect the information of any organisation getting into the wrong hands or losing it forever. Implementation of ISO 27001 by setting up of internal processes ensures necessary precautions are in place to protect sensitive information against unauthorised access and changes.
(ii) The Plaintiff is also a SAS 70 certified entity by Plante Moran, a leading independent specialist from the USA. SAS 70 certification ensures that there are strong internal controls and safeguards over data belonging to their customers.
(iii) Further, as claimed by the Plaintiff on their website, they have strong Business Continuity Processes in place which ensures that all data is securely backed up to handle any disaster.
(iv) That the suit and the applications filed by the applicant are devoid of substance and are liable to be dismissed. It is a clear abuse of process of law. Particularly, OA Nos.810 and 811 of 2011 are not maintainable and without any basis. The applicant/plaintiff has not asked for similar relief in its main prayer in paragraph No.36 of the plaint. Therefore, and for the reasons set out below, the interim injunction granted by the vacation court on 4th October 2011 in OA Nos. 810 and 811 of 2011 is to be vacated immediately.
36 The first defendant free to carry on any trade or business and he have no non-compete agreement with the applicant/plaintiff. The first defendant was not subject to any present contractual or even residual contractual relationship with the applicant/plaintiff. His relationship with the applicant/plaintiff was previously governed by two distinct and separate employment agreements. As mentioned above, the first of these employment agreements, dated July 8, 2005, had a non-compete clause for 3 years after termination. This agreement was not renewed. Instead, the applicant/plaintiff and the first defendant signed a fresh employment agreement on 1st November 2008. Clause 7.8 of this fresh agreement superseded all prior and contemporaneous agreements, arrangements and understandings between the parties (including the 2005 agreement). The 2008 agreement had no non-compete clause and clause 7.8 clearly in express terms brought to an end any residual effect of non-compete clause contained in 2005 agreement. Clause 6.5 of the 2008 agreement enabled me to terminate my employment with the applicant/plaintiff at any time by giving notice in writing. On 24th February 2011, the first defendant sent termination notice by e-mail and informed the applicant/plaintiff that March 31, 2011 would be his last working day under the plaintiffs employment. Mr. Tony Mira, as chairman and board member of the plaintiff, accepted his resignation and he left the plaintiffs employment as of March 31, 2011.
37 The first defendant did not breach any confidentiality obligations. The applicant/plaintiff has not come out with any specific case or instance of the alleged breach. It is a bald allegation without any substance. The applicant/plaintiff has not provided even the bare minimum proof that any data was taken. This is because there was no data taken by me or capable of being taken. On the contrary, in April 2011, the applicant/plaintiff was audited by certification agencies and its ISO 27001 certification was renewed with specific mention regarding its data security, confidentiality protection and HIPAA regulations. All of the defendants Nos. 1-20 had given advance termination notices and then terminated their contracts with the applicant/plaintiff at different times before the April 2011 certification. These events taken together clearly show the allegations by the applicant/plaintiff regarding data theft or infringement are completely baseless as the applicant/plaintiff would not have been certified as ISO 27001 compliant in April 2011 if at any point of time, in the preceding three or four months, there had been any data theft or loss or if the Defendants simply walked out with sensitive data as alleged. In addition, the ISO 27001 audit and certification would have been impossible in case of missing data. Whilst getting certified for ISO 27001 does not guarantee that the certified company would be free of information security incidents, it does guarantee that the company would have traceability and would be able to produce and analyse evidence whenever there is a security breach. Any company which is ISO 27001 certified, should be able to produce evidence and computer logs whenever there is a security breach /data theft and ISO 27001 has in-built procedures to trace and take necessary corrective actions. This is a commitment given by an ISO27001 certified company to all its stakeholders.
38 There are no proprietary or Intellectual property rights of the Applicant/Plaintiff. The kind of businesses done by Applicant/ Plaintiff and Defendant No.21 do not require or involve any proprietary process or any Intellectual property on the part of the BPO company. No work is authored in the business model attracting copyright protection. The business is a simple BPO operation, where the BPO employees;
(i) access medical records of patients in the United States,
(ii) do medical coding and data entry (filling patient names, addresses and insurance information),
(iii) follow up on outstanding dues and
(iv) make related accounting entries. There is absolutely no research or customization involved. Work has to be done strictly in accordance with the requirements and instructions of the client. The data and formats are provided by the clients. Instructions contain the format in which the data is to be recorded. Data must be recorded only in such formats. The clients also stipulate the system and hardware requirements. There is simply no copyright or other intellectual property involved. There are no formulas, products, or designs, nor is there any manufacture. There are no methods, applications, research, development or process, etc. There can be no intellectual property in the names or identity of customersthe alleged intellectual property described in schedule 1 simply does not exist.
39 The defendants who were previously employees of the Plaintiff resigned of their own free will and accord. They were properly relieved after due verification by all departments including the Applicant/Plaintiffs human resources and information technology departments. The relieving letters issued by the Applicant/Plaintiff establish this fact. The law does not permit the Applicant/Plaintiff to place any restriction on their employment after termination of their employment contracts with the Applicant/Plaintiff. Therefore, their joining the employment of Defendant No.21 is lawful. In fact the rate of shifting of employees or attrition rate is close to 50% in BPO companies.
40 The applicant/plaintiffs own admission, it has about 1,800 employees. It is absurd on the part of the Applicant/Plaintiff to claim that it has suffered huge loss on account of departure of a few employees. On the contrary and in blatant contrast to its false claims and allegations in the suit and applications, the Applicant/Plaintiff issued a press release on August 29, 2011 (just a few days before the suit was filed in the court) claiming that it will be achieving 25% growth in revenue over the next few years. It goes to the extent of stating that the growth was dormant with at 7 to 8% in the past financial years and that the Applicant has revived itself post the change in senior management and is planning to invest more than $5 million and add more manpower. This clearly will show that the Applicant/Plaintiff has not suffered any loss or damage because of the departure of the Defendants. The only purpose of this suit is to harass the former individual employees and consultants of the Applicant/Plaintiff and to harangue and frighten them into not engaging in any business that competes with the Applicant/Plaintiff.
41 For the above reasons, as well as for the reasons stated below, it is asserted that the Applicant has failed to make out any case, much less a prima facie one. The balance of convenience is clearly in favour of the Defendants. Irreparable harm will be caused to the Defendants if they are restrained from exercising their business, trade and professions and from associating with one another, by the grant or continuance of the interim injunctions applied for. All the applications of the Applicant are therefore liable to be dismissed with exemplary costs to the Defendants.
42 The first defendant filed parawise reply to the averments made in the plaint as under;
43 The contents of paragraph 1 & 2 of the plaint are incorrect and denied. The deponent has not filed the authorization in his favour to depose. The affidavit is without authority and the application is liable to be dismissed.
44 It is false to state that Defendant No.20 was engaged as a full time consultant by the Plaintiff. Defendant No.20 was an employee of a private limited company, M/s. Tejas Accounting and Consultancy Services Private Limited, which had rendered consultancy services to the Plaintiff since January 2009. Therefore, the suit suffers from the vice of mis-joinder of parties. In any event, the dispute between the Plaintiff and the independent contractors is the subject matter of an arbitration clause and therefore, even on that ground, the suit is not maintainable.
45 Defendant No.21 is an independent company. Defendant No.1 is one of the shareholders of Defendant No.21.
46 Defendant No.17, Mr. Gowri Shankar, is not an employee of Defendant No.21 and does not conduct any business in the name or style of Defendant No.21. He is the Director of a facility management company named M/s. Virkoh Facility Management Services Private Limited. Defendant No. 21 is a client of this facility management company for services such as facility/infrastructure management, electrical and UPS maintenance, printing solutions, etc. This facility management company is not even involved in the BPO business for the health care industry. Defendant No.17 is not engaged in any competing business to the plaintiff. Both M/s. Virkoh Facility Management Services Private Limited and M/s. Tejas Accounting and Consultancy Services Private Limited are not parties to this suit and applications. Hence the suit and applications also suffer from the vice of non-joinder of necessary parties.
47 Defendant No.19, Mr. Shiva Ganesh, is an independent website designer and branding consultant. He has been engaged by Defendant No.21 as a consultant. He is not in any way involved in the BPO business for the health care industry. Defendant No.19 is not and cannot be engaged in any competing business to the plaintiff.
48 It is false to state that Defendant Nos.1 to 20 have stolen the plaintiffs intellectual property. There is no intellectual property to be stolen. None of the Defendants have ever taken any data of Plaintiff with them. It is also blatantly false, baseless and mischievous to say that defendants have used illegally any of the plaintiffs intellectual property. Any employee who works for a BPO knows the customers of that company. The plaintiff has not nor has it shown that any of the Defendants have illegally removed any information or data in material form. This is because of the simple fact that no Defendant removed any such data or information in material form whatsoever from the Plaintiffs premises or property. That is the reason why the Plaintiff has not given any details at all.
49 It is false to state that Defendants Nos.1 to 20 are tortiously interfering with the Plaintiffs business to cause loss to it or that they are fraudulently inducing the Plaintiffs clients and employees to terminate their contracts with the Plaintiff and engage with Defendant No.21. Defendants Nos.1 to 20 are not subject to any contractual or other obligations not to compete with the Plaintiff. All that Defendants Nos. 1 to 20 are doing is working for Defendant No. 21 either as employees or as independent contractors. Working for a competitor of the Plaintiff, when there is no legally valid restriction against doing so, cannot by any stretch of the imagination amount to either tortiously interfering with the Plaintiffs business to cause loss to it or to fraudulently inducing Plaintiffs clients and employees to terminate their contracts with the Plaintiff and engage with Defendant No.21. In fact, 90% of the 450 employees of the 21st Defendant have worked with other BPO companies in the past. Many of the Plaintiffs employees have also worked with other BPO companies in the past. Further, it is to be noted that Defendant No. 21 has multiple clients and only one client is a client of Plaintiff also, to the best of our knowledge. Clients in USA choose multiple offshore vendors as part of diversification and this is not any tortious interference.
50 It is false to state that Defendants 1 to 20 are indulging in spreading false and defamatory rumours about the Applicant. This has never been done, nor is there any necessity or reason to do so. The Applicant has provided no specific averment or evidence in support of this blanket and untrue statement. On the contrary, it is the Applicant who is spreading false and defamatory rumours about Defendant No.1 and 21. The Applicant first did this on June 3, 2011 by openly publishing and leaving visible to the public in the reception area of Defendant No.21, a letter purportedly addressed to Defendant No.1, which letter contained various patently false and defamatory statements about Defendant No.1. The Applicant did this again on June 9, 2011, when the Applicant filed a completely false and trumped up police complaint against Defendant No.1 alleging data theft and destruction of computer recordsthe falsehood of which complaint became evident when the Applicant could not produce a single document, computer record or other piece of evidence including a scrap of paper to support its false and trumped up allegations. The police complaint was consequently rejected.
51 It is false to state that the conduct of Defendants No.1 to 20 is wrongful, tortious, illegal and contrary to binding contracts in force between the parties. All conduct of the Defendants has been completely legal. At present there are no binding contracts in force between the Applicant and any of the Defendants. Moreover, there never have been, at any time, any binding contracts between the Applicant and Defendant No.21.
52 The contents of paragraph 3 are wrong and denied. The contents of paragraph 6 of the plaint is misleading and denied. The description of the Applicants business in this paragraph is a hyperbolic glorification and total exaggeration of the work really done by the Applicant. The Applicants business and Defendant No.21s business is nothing more than a simple business process outsourcing or BPO operation, where the BPO employees access medical records of patients in the United States through remote logins provided by the clients through dumb terminals and do medical coding and data entry, i.e. filling patient names, addresses and insurance information, follow up on outstanding dues and make related accounting entries. The qualifications required to conduct this work are basic, even computer literacy is not required for many of the functions carried out in this line of work. Just basic typing skills is enough. As may be seen from the above, this business involves very basic clerical processes and minimal qualifications. Furthermore, it does not involve any of the following: intellectual property, research and development, design and innovation, advanced manufacture, secret formulas, trade secrets and such like.
53 The contents of paragraph 7 of the suit are incorrect and misleading. It is incomplete and misleading to state that the Applicant has developed a vast and enviable reputation for its performance in the BPO business. All of the awards were only won when Defendant No.1 was an employee and because of his efforts, skills and experience. Defendant No.1 was also named in Confederation of Indian Industrys (CII) list of 108 Successful Entrepreneurs in Tamil Nadu in 2007, and conferred with the Entrepreneurs Award from CII-ICICI Venture as part of CONNECT (a premier event for the Information, Communication and Technology industries in India) in 2009. It is an individual achievement for those who have contributed to business in Tamil Nadu though they were from outside of Tamil Nadu.
54 The contents of paragraph 8 are wrong and denied. The reputation allegedly claimed by the Applicant is the result of hard work of Defendant No.1. It is totally false to state that the Applicants success is attributable to ownership of intellectual property comprised largely in its vast data/resources that has been painstakingly collected and analysed and in its indigenously developed application/systems. The Applicant has resorted to vague and generalized statements about its intellectual property and copyright simply because there is no intellectual property or copyright involved in this case. Given the nature of the Applicants and Defendant No.21s business, there is no meaningful or valuable intellectual property or vast data / resources in this BPO work. On the contrary, they are around 41 companies in Chennai alone that do similar type of work as the Applicant and Defendant No.21. The 21st Defendant has 450 employees and there are from more than 41 such companies across the city rendering similar service.
55 The contents of paragraph 9 of the plaint are incorrect, misleading and denied. Defendant No.1 did not breach any confidentiality obligations. The Plaintiff/Applicant has not come out with any specific case of breach or violation of IP. It is a bald allegation without any substance. The Defendant No.1 did not take any data belonging to the plaintiff with them. The plaintiff has not provided any proof that any data was taken. On the contrary, in April 2011, by which time all of the Defendants 1-20 had served the notices of termination and terminated their previous contracts with the Plaintiff, the plaintiff was audited by certification agencies and was again awarded ISO 27001 certification with specific mention regarding its data security, confidentiality protection and HIPAA regulations. This clearly shows the allegations by plaintiff are completely baseless as they would not have otherwise been certified as ISO 27001 compliant in April 2011 if in the preceding three or four months the Defendants simply walked out with sensitive data.
56 The contents of paragraph 10 of the plaint are incorrect, misleading and denied. No research and customization is involved. Work is done strictly in accordance with the instructions of the client. Instructions contain the format in which the data is to be recorded. Data must be recorded only in such formats. The client also provides the system and the software, requirements. The Dummy terminal and connected hardware requirements are provided by the 21st Defendant. There is no scope for any innovation or deviation or development. The description use of high-sounding words referring to detailed research and customised solutions is deliberately misleading and false.
(i) Any customer who wants to outsource to India does it for cheap labour.
(ii) The customers provide all instructions, if at all required, which need to be scrupulously followed to do the accounting work for the customers.
(iii) There is no creation or invention in any of the processes involved in rendering the services.
(iv) There are terabytes of information publicly available on the internet about this process. A search for revenue cycle management on Google gives more than 4 million results, which confirms the common and plain nature of the work involved. There are 41 similar companies in Chennai alone and about 2000 companies in the US doing the same business.
57 The contents of paragraph 11 of the suit are incorrect, misleading and denied. It is reiterated that Defendant No.1 did not breach any confidentiality obligation. No trade secret is involved in the BPO business. No research and customization is involved. The Applicant has not come out with any specific case of breach against any of the Defendants. The Plaint and affidavit are deliciously vague. Almost every company in India, whether in the BPO industry or outside, offers a probation period and requires some amount of training for its employees. Training helps the employees to understand the work environment, familiarize themselves with client formats and templates, if applicable, reduce mistakes and increase the productivity.
58 The contents of paragraph 12 of the Plaint are incorrect and misleading. It is established that restrictive covenants do not have any force after termination of employment or consultancy service contracts. They are valid only during the course of such contracts. In this case, admittedly Defendants No.1 to 20 served notices and terminated their contracts (employment or consultancy), with the Applicant and the Applicant had properly relieved them from its services. Therefore, the restrictive covenants contained in their agreements with the Applicant have become redundant and cannot stand the scrutiny of courts of law. Further, it is to be noted that in 2007, Tony Mira tried to sell his Miramed (including Ajuba as its subsidiary). He was expecting a high price for his business and decided to buy out the stock options from the employees at a very low price. Defefendant No.1, who was then, a Board member of Plaintiffs parent Ajuba USA, opposed this move vehemently and said that this was unfair to the employees who had put in so much hard work for so many years. When Defendant No. 1 refused to approve this at the Board level, he was removed from the Board and employees were forced to sell their stock options at a very low price. Defendant No.1 had also indicated at that point that doing will erode employees trust in the management and also take away the golden handcuff by which they were tied to the Plaintiff.
59 The contents of paragraph 13 of the suit are misleading. The decision to change the terms of employment in 2007 for Defendant 2 and Defendant 3 were done after discussions and approval of Tony Mira. He wanted to retain them at all costs in 2007 as he was planning to sell his company. It is shocking that he has brought this up today for the first time after almost five years.
60 The contents of paragraph 14 of the suit are incorrect and misleading. Any restrictive covenant after the term of the contract is not binding on the parties. Therefore, Defendants1 to 20 are not bound by any non-compete restrictive covenant. Restrictive covenant may take the form of any formal agreement, companys rules and regulations, exit interviews etc. Defendant 2 to 20 have not engaged in any solicitation. Defendant No.21 has followed the normal course of recruitment channels while recruiting its employees. Defendant No.21 is not limited to Defendants 1 to 20 only, but has in its employment more than 450 employees recruited through established channels.
61 The contents of paragraph 15 of the suit are incorrect and misleading and in any event, repetitive. The 20th Defendant is not bound by any non-compete restrictive covenant. As stated above, restrictive covenants may take the form of any formal agreement, companys rules and regulations, exit interviews etc. Defendant No.20 has not been involved in any solicitation.
62 The contents of paragraph 16 of the suit are incorrect and misleading. Defendant No.1 is free to carry on any trade or business as he likes and he has no non-compete agreement with Applicant/Plaintiff. The 2008 employment contract, which is the only relevant contract between Defendant No. 1 and the Plaintiff.
63 The contents of paragraph 17 of the suit are wrong and denied. It is plainly false to state that Defendant No.1 had unrestricted access and control of the Applicants servers. Defendant No.1 did not have control over any of the Applicants servers. All access to Applicants servers was controlled by its Technology Department headed by the Director of Technology based on the users need. This will be vouchsafed by the server logs of the Plaintiff. The Plaintiff has deliberately suppressed the same. Had it been produced, it will prove that the first defendant never accessed the operations data.
64 The Applicant was repeatedly certified by the ISO as having a stringent information technology system in place.
65 In any event, Defendant No.1 has no knowledge on how to operate servers or to draw information from servers Defendant No.1 is a businessman, not an information technology specialist.
66 It is false to state that the Defendant No.1 had access and control of the Applicants entire intellectual property, including the software, applications and source code. To begin with, for the reasons stated above, there is no intellectual property held by the Applicant as a BPO. Had the Applicant had any IP to its credit, the same would have been disclosed in the Balance Sheet as required by the Accounting Standards issued by the Institute of Chartered Accountants of India.
67 All software applications such as Microsoft Windows Operating System, and Tally, are licensed to the Applicant and the Applicant has limited user licenses. The makers of the software never provide licensees access to any source code. It is unlikely that the Applicant itself has access to any source codetherefore claiming that Defendant No.1 would have access to something the Applicant itself has no access to is simply absurd and contrary to all practices followed in the BPO industry.
68 It is false to state that Defendant No.1 had access and knowledge of the customers sensitive information such as credit and financial details. Any basic customer information that Defendant No.1 had about the Applicants customer was in the course of his employment. Further, customers use multiple BPOs to provide the same services, and the Applicant is seeking to fog the issue by making false statements about confidentiality and intellectual property.
69 It is reiterated that the BPO business model does not involve any confidential information except the medical records of patients in the USA. The only reason the applicant is seeking appointment of an advocate commissioner is that if appointed, the advocate commissioners can assist the Plaintiff on a fishing expedition to obtain business information of Defendant 21 (such as prices and rates) so that the Plaintiff can use this information to scuttle the business of Defendant 21. This is more so when the Plaintiff has produced no evidence as regards its alleged intellectual property rights or any proprietary data, let alone any evidence of the same being used by the Defendants.
70 The contents of paragraph 18 are wrong and denied. The resignations of all of the employees were accepted by the Applicant and were in accordance with their terms and the reporting roles of the various parties in an organization employing 1,800 people. As mentioned above, there is nothing unusual about the nature or number of resignations in this industry, where the attrition levels are as high as 50%.
71 While some of the resigning employees joined Defendant No.21 other employees who resigned have gone on to join other competitors. The Applicant has always faced the problem of attrition and has lost hundreds of employees as well as clients to many competitors.
72 The Applicant Company had allowed resigning employees, even in the past, to take their laptops provided to them during employment. The Applicant did so, comfortable in the knowledge it has a stringent Information Technology Policy in place, is a certified ISO 27001 compliant company. It has been certified by external authorities after due inspection every year. This is done only after confirming that all key company data, mainly medical and patient records from the US, are stored only in the servers which has limited access and is highly encrypted.
73 In April 2011, by which time all of the Defendants No.1 to 20 had terminated their contracts with the Applicant, the Applicant was audited by certification agencies and ISO 27001 certification was renewed with specific mention regarding its data security, confidentiality protection and HIPAA regulations. This clearly shows the allegations by Applicant are completely baseless as they would not have otherwise been certified as ISO 27001 compliant in April 2011 if in the preceding three or four months any of the Defendants or any other person had walked out with or had tampered with the Applicants data.
74 To the best of my knowledge, every single laptop in the Applicant company is tagged and identifiable. Each time a laptop accesses data I am informed that it leaves an electronic trail. The Plaintiff has not produced a single shred of paper to show that data was copied. Further every laptop that was taken was communicated to the Applicant in accordance with the prevalent practices. Nothing was concealed or sneaked as alleged and no sensitive information of Applicant or of the patients in the US was taken.
75 The allegation that the Defendants 1, 2 and 3 relieved the other employees including the defendants and therefore it proves collusion is absurd to say the least. The second Defendant, Shankar Narasimhan, was Director Finance & HR. Any person being relieved from the Company would have to be perforce cleared by the HR of which the second Defendant was the head. The head of various departments including the second and third Defendants had to report to the first Defendant. No person sub-ordinate to the first Defendant could relieve them. It is not the Plaintiffs case that there were officials other than the Defendants 1, 2 & 3 who could relieve Defendants 4 to 20. The first Defendant himself was relieved by Mr. Tony Mira, Chairman of the Company who followed exactly the same process. The second Defendant in his capacity as Head of HR from September 2006 till March 21, 2011 would have relieved more than 800 persons from employment following the protocols laid down by the Company. It was following the very same protocol that the other Defendants were relieved. There is nothing unusual in it. It is unfortunate that the Deponent is seeing phantoms where none exists.
76 This issue was also examined by the police when the Applicant sought to make a frivolous complaint alleging data theft against Defendant No.1 and one Mr. D. Kumaran (who is not named as a defendant in the present suit). At that time the Applicant could not provide any details. This was because the data theft simply did not occur. A single server log, data log or computer record in support of any of the allegations made was not produced, even when the Applicant was expressly asked to do so by the police.
77 The allegations made in this paragraph 18 are particularly malicious not just because they are completely false, but because they seek to accuse the Defendants No.1 to 20 of criminal acts that none of the Defendants have committed.
78 The contents of paragraph 19 are wrong and denied. It is completely false and malicious to say that servers were blank when the new incumbents came. If this were the case, the Plaintiff would not have been certified ISO 27001 and should have been able to generate server log records showing the alleged deletion of data when asked to do so by the police or at least before this Honourable Court.
79 There was no email ever received by Defendant No.1 from the Applicants chairman asking his assistance for any loss of data from server on March 30, 2011. Mr. Tony Mira, Applicants chairman, emailed Defendant No.1 in late March 2011, while Defendant No.1 was still employed with the Applicant, asking Defendant No.1 if he has any sales template available with him, to which Defendant No.1 had orally informed the Applicant chairman that all sales activities were carried out by Applicants US team and he does not have any templates relating to sales. Defendant No.1 was not involved in sales activities of the Applicant in the US. There was a full team in USA that does so for the Applicant and that team works directly under Applicants Chairman.
80 As stated above, the issue was also examined by the police when the Applicant sought to make a frivolous complaint alleging data theft against Defendant No.1. The Applicant had not provided and is in no position to provide a single server log, data log or computer record in support of any of the allegations made. If there was any such deletion or manipulation of data, the Applicant should have been able to produce computer records showing deletions or manipulations. Applicant has not provided such records because they do not exist and they do not exist because there never was any deletion or manipulation.
81 The contents of paragraph 20 of the suit are wrong and denied. Defendants No. 1 to 20 resigned from the services of the Applicant on their own free will. This could not have caused any serious damage to the plaintiff as they still continue to run their business as before and still have about 1800 employees by their own admission. Applicant issued a press release on August 29, just few days before the suit was filed in the court, claiming that they are achieving 25% growth in revenue over the next few years and the company was dormant with muted growth of 7 to 8% in the past financial years and Plaintiff has revived itself post the change in senior management and is planning to invest $5 million and add more people. This clearly will show that the Applicant has not suffered any loss or damage because of the departure of the Defendants No.1 to 20.
82 It is false to state that the Applicant discovered that Defendants No. 1 to 20 had conspired with one another and exited the Applicant in pursuance of a concrete plan to cause loss to the Applicant. It is simply entrepreneurship of the first Defendant. The Defendants have nothing to hide and that is why Defendants No.1 to 20 are operating openly in the same premises.
83 Defendant No.21 Company was purchased by Defendant 1 on April 6, 2011. Defendants No. 2 to 20 entered into contracts with Defendant No. 21 of their own free will and because they were free to do so.
84 Defendant No.20 was a Director in a private limited company, which has entered into a contract with Applicant to render consultancy services and joined Defendant No.21 much later, after his company terminated the contract with the Applicant. Defendant No.20 was named as the company secretary of Defendant No.21 only from April 25, 2011. Defendant No.20s association with the Applicant was not exclusive. Since Jan, 2009, Defendant No.20 was rendering independent consultancy services to various other companies also.
85 It is a baseless and false statement made by Applicant, with no supporting evidence, to say that Defendant No.1 had breached the contractual obligation not to engage in similar business. Defendant No. 21 was not doing any business in Healthcare, prior to Defendant 1 acquiring it on April 6, 2011. After the Defendant No.1 left the Applicants employment, there was no such contractual obligation restraining Defendant No.1 from being associated with Defendant No. 21.
86 For the reasons stated above, it is false to state that the Defendants had conspired to fraudulently misappropriate the Applicants intellectual property. There is no intellectual property involved here. The entire allegation regarding intellectual property, to the knowledge of the Plaintiff, is false and is a mere red herring argument. The Applicant has made a patently false and defamatory statement against all of the Defendants and not provided a single shred of evidence in support of this allegation.
87 The kind of business done by Applicant and Defendant No.21 does not require and involve any proprietary process or any intellectual property. No work is authored in the business model attracting copyright protection. The business is a simple BPO (Business Process Outsourcing) operation. The Applicants business and Defendant No.21s business is nothing more than a simple business process outsourcing or BPO operation, where the BPO employees access medical records of patients in the United States through remote logins provided by the Client through dumb terminals and do medical coding and data entry i.e. filling patient names, addresses and insurance information, follow up on outstanding dues and make related accounting entries. The qualifications required to conduct this work are basic, even computer literacy is not required for many of the functions carried out in this line of work.
88 The contents of paragraph 21 of the suit are incorrect and misleading. The Defendants 1 and 21 marketing to clients and hiring employees is well within their legal rights and is an activity that is in the ordinary course of business of any commercial operation. It is the same kind of efforts engaged in by any BPO, or any other business for that matter, when it is seeking to engage with customers or to hire employees. Defendants never employ any unlawful methods such as inducing or influencing the clients/employees to break their contract with anyone including the Applicant or tortiously interfering with any persons contracts and asking such persons to move to Defendant No.21. Applicant has not come out with any specific case, when, where and how, any of the Defendants No.1 to 20 induced or influenced any client/employee to break their existing contract with the Applicant and asked them to shift to Defendant No.21. No such case was reported by the Applicant.
89 The defendants No.1 to 20 were in the BPO industry trade and business for a decade and more and it is only natural that they use their business experience for the same purpose. There are at least 41 companies engaged in this field in Chennai alone, and they are constantly competing for the same businessthis is a natural facet of commerce and healthy competition.
90 Rather than the Defendants No.1 and 21 seeking to ruin the Applicants business, it is the Applicant that is seeking to abuse the courts process and strained resources to circumvent and avoid normal competition and to maliciously ruin the business of Defendant No.21 in the process, as well as the livelihood of the 450 employees and their families that are associated with and depend on Defendant No.21.
91 It is false to state that Defendant No.1 deliberately allowed key contracts to expire. It is up to the customers to renew or extend contracts. Defendant No.1 dedicated his full resources in good faith to the Applicants business while he was under the employment of Applicant. This allegation was never made when the first Defendant was in service of the Plaintiff. On the contrary, the Applicant commended Defendant No.1 for his contribution to the Applicants growth and profit while he was under the employment of Applicant and even tried to retain him after he resigned. All customer contracts and their terms were known to the Applicant. With the global economic downturn, a number of companies have been cutting back on their contracts and renegotiating rates down. Tony Mira was personally involved and responsible for all sales including making decisions on contracts. To hold Defendant No.1 solely responsible for the non-renewal of expiring contracts is not just true, it is absurd and mischievous. With more competition, the Applicant had lost multiple clients to other companies in India in the last few years. Clients move business all the time and this is the nature of competition and commerce.
92 It is false to state that the intention of the Defendants is to ruin the Applicants business. The only intention of the Defendants is to compete fairlynot just with the Applicant but with all the other similar businesses in the BPO industry. Given the relative sizes of the Applicant and Defendant No.21, the Applicants statement is akin to a great white shark feeling threatened by a passing shoal of 20 tuna fish. The applicants parent company is a Rs. 1,000 crore company in value and is using its money power to drain out a small startup like Defendant 21. Tony Mira (via Miramed) has filed a similar law suit in USA and making Defendant 21 incur legal expenses globally.
93 The contents of paragraph 22 of the suit are wrong and denied. It is reiterated that the Defendants marketing to clients and hiring of employees is well within their legal rights and is an activity that is in the ordinary course of business of any commercial operation. It is the same kind of efforts engaged in by any BPO, or any other business for that matter, when it is seeking to engage with customers or to hire employees. Defendants never employed nor are they going to ever employ any unlawful methods such as inducing or influencing the clients/employees to break their contract with anyone including the Applicant and asking them to move to Defendant No.21. Applicant has not come out with any specific case where any of the Defendants No.1 or 21 induced or influenced any client/employee to break their existing contract with the Applicant and asked them to shift to Defendant No.21. No such case was reported by the Applicant.
94 It is false to state that the Defendants No.1 or Defefendant No.21 are persistently telephoning the Applicants employees and harassing them or obstructing them from performing their work. This is simply untrue. Defendant No.21 has hired its employees based on the goodwill of its management team in the market place and by using public and standard channels of advertisement, referral, recruitment consultants, etc. On the contrary, the reverse is happening and this suit is being used as a harassment tool by the Plaintiff.
95 It is false to state that the Defendants No.1 and Def 21 have spread any false rumours about Applicant. Once again, the Applicant has made a bare faced and defamatory accusation without a shred of evidence in support of the same.
96 The contents of paragraph 23 of the suit are wrong and denied. The Applicant signed off on the value of the laptops sold to each of the Defendants based on the prevalent practice of the Applicant. Given the rate of obsolescence and replacement of the systems, it is common practice across industries to sell second hand computers at depreciated book valueeven the government agencies do so, sometimes selling old computers at scrap value, because they are fully depreciated. In fact, none of the consultants were offered any laptops on the termination of their consulting contracts.
97 Each of the Defendants handed over their laptops to the Applicant for inspection and examination before they left their association with the Applicant. The inspection is to be done by the Information Security Department over which the Defendants 1 to 20 do not have any control. The Defendants No.1 to 20 did not take any data belonging to the Applicant with them. The Applicant has provided no proof that any data was taken. On the contrary, as stated above, as late as April 2011, by which time all of the Defendants No.1 to 20 had terminated their contracts with the Applicant, the Applicant was audited by certification agencies and ISO 27001 certification with specific mention regarding its data security, confidentiality protection and HIPAA regulations was renewed. This clearly shows the allegations by the Applicant are completely baseless as they would not have otherwise been certified as ISO 27001 compliant in April 2011 if in the preceding three or four months the Defendants No.1 to 20 simply walked out with sensitive data. To add, if any data had been deleted, the certification process could not have been gone through.
98 The Applicant has not named a single piece of proprietary software or formulas or applications that it has developed or owns and that was allegedly taken by the Defendants 1 to 20. This is because there is no such thing. The Defendants 1 to 20 did not take any of the Applicants licensed software or applications, and there are in fact no formulas or other intellectual property in existence that is proprietary to the Applicant.
99 The Applicants allegations about illegal access and use of the purported intellectual property are false and without merit for the above reasons. The Applicant has no copyright in the data and records listed in schedule 1.
100 The Applicant has provided no evidence of the allegations in this paragraph, but wants instead to use these baseless allegations as a cloak to gain access to Defendant No. 21s business records so that the Applicant can scuttle and maliciously thwart Defendant No.21s business. The Plaintiff, as an entity dealing with American institutions, knows that patient records are highly personal and if any third party or public appointed agency accesses this data with a BPO, the customer contracts of that BPO face a high likelihood of being terminated. This suit itself is a tool to achieve that nefarious object. The Plaintiff wants to scare away employees and clients and paint a bad image of the 21st Defendant in the US.
101 The Applicant is using this suit to spread rumours amongst employees and customers about Defendant No.21. The goal is to hurt Defendant No.21 financially and to hurt its reputation as Defendant 21 is a new company.
102 Definition of Intellectual Property in Schedule 1 by the Applicant is highly vague and almost ridiculous. There is no reference to anything specific that would be considered Intellectual Property by anyone. References to equipment, sales activities, NASSCOM and Madras Management Association membership and lists (just to name a few) as Intellectual Property illustrates our point very clearly.
103 The contents of paragraph 24 are wrong and denied. It is false to state that Defendant No.1 refused to receive the legal notice or that the legal notice was delivered under sealed cover. As Defendant No.1 stated in its reply dated June 7, 2011 to the Applicants letter of May 30, 2011, which the Applicant misleadingly describes as a notice, the Applicant caused the defamatory and baseless allegations against the Defendants No.1 and 21.
104 It is false to state that the response was vague and it baldly denied all allegations levelled by the Applicant. The Applicant has not attached a copy of the response because doing so would show the falsehood of the Applicants allegations. As the response filed herewith would demonstrate, and show detailed reasons and responses were provided to each of the Applicants baseless allegations.
105 The contents of paragraph 25 of the suit are wrong and denied. It is reiterated that the BPO business model does not involve any confidential information except the medical records of patients in the USA. It is not the case of the Applicant that any of the Defendants 1 to 20 disclosed medical records of any particular patient to anyone at any point of time.
106 As stated above, as late as April 2011, by which time all of the Defendants No.1 to 20 had terminated their contracts with the Applicant, the Applicant was audited by certification agencies and was again awarded ISO 27001 certification with specific mention regarding its data security, confidentiality protection and HIPAA regulations. This clearly shows the allegations by Applicant are completely baseless as they would not have otherwise been certified as ISO 27001 compliant in April 2011 if in the preceding three or four months the Defendant simply walked out with sensitive data.
107 Further, as stated above, companies in this industry witness an attrition of about 50% on an averagethis is known to each company and they accordingly put systems in place to deal with the consequences of such high attrition. In the circumstances, it is absurd to allege that the departure of Defendants 1 to 20, out of a team of 1800 employees exposes the Applicant to any grave legal consequences in the hands of its customers. If this were the case, the Plaintiff would not have issued a press release in August 2011 projecting 25% increases in its business growth. Once again, patently false and misleading statements are being made by the Plaintiff in paragraph 25 of the plaint without any supporting documentation.
108 The contents of paragraph 26 are incorrect and misleading. The intention of the Applicant is to harass the Defendant No.1 and 21, make them bleed financially and thwart competition. That is why the Applicant filed the case against Defendant No.1 and 21 in the USA when there is no relationship between Defendant No.1 and 21 with the US. That is why the US litigation repeated the same unsupported and baseless allegations as the present suit. A copy of the US complaint filed by the Applicant as well as Defendants No.1 and 21s response thereto (filed in Typed Set) will show that the Applicants claim in that complaint is not limited to loss of reputation and goodwill, but to the same reliefs sought in the present suit.
109 The Applicant conveniently omitted stating that the police complaint filed against Defendant No.1 was found to be false and baseless and that the Applicant could not, nay, did not produce a shred of evidence to support the ridiculous complaint when asked to do so by the police. The present suit is part of the same pattern of behaviourto abuse the process of the courts and the police to threaten, and browbeat the defendants and basically thwart competition and maliciously harass the Defendants No.1 and 21 out of sheer vindictiveness and spite.
110 The contents of paragraph 27 are wrong and denied. It is specifically denied that Defendants 1 to 21 are indulging in malicious interference in the Applicants business. Departure of Defendants No.1 to 20 from the Applicant was not all of a sudden. Each of the resignations underwent the procedure followed in the Applicants company. It is vehemently denied that Defendants No.1 to 20 conspired to cause loss to the Applicant. It is absurd to claim that an organization that employs 1800 people would be crippled by the departure of the Defendants or that such departure, in an industry that is built to withstand 50% attrition rates, would cause the Applicant severe hardship or that it would require fresh training sessions beyond the norm. If the Applicant was so crippled by all this, then how come they issued a press statement a few days before filing this suit stating that the previous management was not showing good growth and that they expect to show huge growth with the new management. In any event, the Defendants No. 1 to 20 cannot be bound to stay as employees of the Applicant for life merely because the Applicant will have to hire and train new people if the Defendants No. 1 to 20 leave.
111 The contents of paragraph 28 are startling and denied. Once more, the Applicant makes a malicious and false allegation and provides no evidence in support of this allegation. It is specifically denied that any of the Defendants involved in any defamatory or smear campaign against the Applicant. It is another bald allegation by the Applicant without any evidence. The Best Employer award is based on a direct survey of employees conducted by the surveying organization (Great Places to Work) and Defendant No.2, even if he ever wanted to, has no power over the organization to influence the outcome of the employee survey or their decision to award any participating company.
112 The contents of paragraph 29 are wrong and denied. Defendant No.1 had no access to source codes and back-up files on the Applicants servers. It is completely preposterous, false, mischievous, and baseless to allege that Defendant No.1 had deleted copies of the said intellectual property. As stated above, the Applicant conveniently omitted to state that same allegation was made in the police complaint filed against Defendant No.1 and the same allegation was shown to be false and baseless. The Applicant could not produce a shred of evidence to support the ridiculous complaint when asked to do so by the police and the police have rejected the complaint on the ground that there is not even prima facie evidence of any wrongdoing by any of the Defendants. It is false to state that the Applicant suffered any loss (of revenue or otherwise) or delay attributable to the actions of any of the Defendants No.1 to 20. Once again, fanciful and general allegations are made without any evidence or incidents to support the allegation.
113 The contents of paragraph 30 of the suit are wrong and denied. The false and hyperbolic allegations made in this paragraph demonstrate the vindictive, spiteful, baseless and malicious abuse of the courts process by the Applicant in this suit. Using phrases like economic terrorism to describe simple commercial competition defies all logic. There are numerous examples of entrepreneurs who successfully started new businesses in the same line of business as their former employer: i) Narayana Murthy and his other colleagues started Infosys after moving from Patni Systems, ii) Raman Roy and his colleagues started several ventures after moving from one company to another (including Wipro), iii) Ashok Soota and his colleagues started Mindtree and subsequently Happiest Minds after moving from Wipro. Applying the Applicants logic no new company should be permitted to be formed to operate in any industry. Such a logic kills competition and spirit of entrepreneurship. The relief sought by the Applicant is barred by law and opposed to the public policy of promoting competition and free trade reflected in Section 27 of the Contract Act, preamble to the Competition Act, 2002 and enshrined in articles 19(1)(a), 19(1)(c) and 19(1)g) of the Constitution of India. The allegations of losses are clearly false and if any losses are suffered by the Applicant these are totally unrelated to the Defendants No.1 to 20. If anything they have been brought about by the Applicant trying to thwart competition through vexatious and baseless litigation and malicious prosecutions rather than just focusing on conducting its own business. The losses, the basis of their computation and the quantum of losses claimed by the Applicant are illusory, unsupported and opposed to logic and public policy. If anything, it is the Applicant that is directly causing losses and harm to the various individual Defendants by bringing all kinds of baseless suits and actions in India and the United States against the Defendants and by lodging false complaints with the Cyber Crime wing of The Chennai police. The Applicant is not entitled to any damages from the Defendants.
114 The contents of paragraph 31 are wrong and denied. It is reiterated that the kind of businesses done by Applicant and Defendant No.21 do not require and involve any proprietary process or any intellectual property. No work is authored in the business model attracting copyright protection. The business is a simple BPO (Business Process Outsourcing) operation and has been explained in detail above. To reiterate, there is no copyright or other intellectual property involved. It is specifically denied that Defendants No. 1 or 21 have stolen and are illegally retaining and using the intellectual property of the Applicant. It is vehemently denied that Defendants are infringing copyright in the intellectual property. Applicant is not entitled to any order of injunction permanent or temporary against the Defendants for infringing copyright.
115 The contents of paragraph 32 are wrong and denied. It is specifically denied that Defendant No.21 is infringing and using copyright of the Applicant. There is no copyright involved at all. It is vehemently denied that Defendant No.21 misused and exploited the intellectual property of the Applicant. It is reiterated that the BPO business does not require any proprietary or intellectual property. It is driven by the clients instructions. Client normally provides everything including formats in which the data are to be recorded and software & hardware guidance to complete the work entrusted by it. Applicant has no intellectual property. It is stoutly denied that Defendant No.21 illegally earned profits. For the reasons stated in the above paragraphs, Applicant is not entitled to true and proper account of all the business conducted by Defendant No.21. Applicant is not entitled to final decree for profits earned by Defendant No.21 from its date of incorporation. Further, the Applicant refers to a 23rd Defendant in Para 32 which shows the carelessness with which the suit and applications have been filed before the High court.
116 The contents of paragraph 33 are wrong and denied. It is reiterated that the Applicant has no intellectual property. Applicant has no copyright. Applicant has not come out with any specific intellectual property such as name of the software/business process developed by it or name of any literary work authored by its employees during the course of their employment with the Applicant. No specific and particular intellectual property finds mention anywhere in the plaint including in Schedule 1. It is specifically denied that Defendants No.1 to 20 illegally retained and misused the intellectual property for monetary gain in the course of their business. None of the Defendants No.1 to 20 has retained nor could have retained any intellectual property of the Applicant and therefore Applicant is not entitled to seek delivery of the same from Defendants No. 1 to 20.
117 The contents of paragraph 4 are wrong and denied. Defendants No.1 and Defendants 21 have fully responded to these averments in the paragraphs above. Applicant has miserably failed to make out a prima facie case and the balance of convenience in its favour. Applicant has also failed to establish that it would suffer irreparable harm. Applicant is not entitled to interim injunction restraining the Defendants from in any manner interfering and obstructing with the Applicants business and operation.
118 The contents of paragraph 5, 6, 7 & 8 are wrong and denied. Applicant has miserably failed to make out prima facie case, or show any balance of convenience in its favour. The Applicant has also failed to establish that it would suffer irreparable harm. The Applicant is not entitled to interim injunction restraining the Defendants from in any manner interfering and obstructing with the Applicants business.
119 The contents of paragraph 10 are wrong and denied. Applicant has miserably failed to make out prima facie case, balance of convenience in its favour. Applicant has also failed to establish that it would suffer irreparable harm. Applicant is not entitled to interim injunction restraining the Defendants from interfering the Applicants intellectual property as described in Schedule 1.
120 The contents of paragraph 11 are wrong and denied. Applicant has not made out a case for appointment of advocate commissioner. Balance of convenience is not in favour of the Applicant. Applicant has also failed to establish that it would suffer irreparable harm. It is reiterated that the BPO business model does not involve any confidential information except the medical records of patients in the USA. It is for this reason that the applicant is seeking for an Advocate Commissioner. If appointed, it will amount to a fishing expedition. Further, the Plaintiff will use this as a ruse to show that the data is not secure with the 21st Defendant and get the customer contracts cancelled. It is well known that the privacy issues are treated as vital and sacrosanct and a visit by an Advocate Commissioner will be disastrous to the 21st Defendants business. This is more so when the Plaintiff has produced no evidence as regards its alleged intellectual property rights or any proprietary data, let alone any evidence of being used by the Defendants.
121 The Plaintiff had originally filed a criminal complaint on substantially the same allegations. It did not hold water and the police rejected the complaint. The Plaintiff simultaneously moved the District Court, at Michigan, USA on July 7, 2011. Thereafter, it obtained leave before this court in mid-September and moved the court only in October during the vacation sitting. The Plaintiff has exhibited supine indifference and delay in moving the suit and the application. It is trite that delay defeats injunction. Having sought for a decree for money, the Plaintiff concedes that the alleged damage is estimable in terms of money. When injunction is sought for, it must be a situation that is not quantifiable at all. The interlocutory relief sought for exceeds the scope of the suit itself. If granted, it amounts to granting prayers B, C, and E. Further, no evidence worth its name has been produced before the court to show that the Plaintiff has suffered damages to the tune of Rs.2.6 crores. Apart from benefiting the state by paying court fee, there is nothing beneficial in the suit. It is a vexatious proceeding deserved to be dismissed at the threshold. Further, the Plaintiff is well aware that there are several business entities to which contracts have been given by the list of companies set forth in schedule II to the plaint. None of the contracts are exclusive in nature. It is entirely dependent on the choice of the client and by attempting to get an order of injunction as against the 21st Defendant, the Plaintiff is making a non-exclusive contract into exclusive one. This attempt is being made in the absence of the companies annexed in Schedule II being made parties to the suit. Even if there is a confidential information, law does not prevent for an employee from utilizing such information to improve himself. A contract for advancement of trade is permissible and there is no bar post March 31, 2011 for me to engage in a business which is competing with the Plaintiff. The first defendant sincerely and honestly worked with the Plaintiff even after the termination of 2005 agreement and it is sad that after having been the beneficiary of my hard work and dedication for these many years, the Applicant should stoop to the level of accusing persons who were responsible and part of its growth, and treat them as thieves and indentured labour who are bonded to the Plaintiff for life. The Deponent is well aware that there is no intellectual property nor any secrecy involved in the medical billing BPO business. Yet, instead of advising the Plaintiff to put its efforts into concentrating on the 25% growth it has publicly forecast for itself recently, the Plaintiff has decided to divert its attention by filing frivolous complaints and vexatious suits.
122 The first defendant further stated that salaries are paid by bank transfer and therefore the question of retaining payroll data is absurd. The details are maintained by the Plaintiff and by its bankers. The Plaintiffs demand for salary history is ludicrous to say the least. It was already replied even before termination of employment with the Plaintff that all the details regarding sales are available with the Plaintiffs sales team in the United States headed by Tony Mira. It is further stated that in the list of companies listed in Schedule II, none of them have offices in India and apart from McKesson Information Solutions, LLC, USA, the rest are not even clients of the 21st Defendant today. That in itself is sufficient to show that the nature of business is non-exclusive and competitive. The process of court is being abused by the Plaintiff and its US parent to thwart a start-up business that is run legitimately and in accordance with law. The Plaintiff in the injunction prayer has not given any specific details but has been very general about storage devices. It is stated that the 21st Defendant has incurred substantial investment in setting up the infrastructure, hiring employees and starting the business. As of today, families of 450 employees are dependent on the success of the 21st Defendant. The Injunction if granted would take the bread away from the mouths of these persons.
123 It is further stated that the above suit as framed is bad in law and liable to be dismissed in limine. Equally all the applications filed by the applicant / plaintiff are not maintainable in law or on facts and hence are liable to be dismissed. The plaintiff has not produced any document to substantiate its allegations. More significantly, the plaintiff has not made out any case to go into. The suit and applications are nothing more than a thinly disguised and faint attempt to harass and inconvenience the respondents / defendants and to have a roving enquiry without any material particulars in support of the allegations. For all of the reasons stated above, it is evident that the plaintiff has not made out a prima facie case for grant of the injunctions sought, the plaintiff has not demonstrated that it would suffer any injury, let alone irreparable injury, if the applications are not granted, and the balance of convenience clearly lies with the respondents in this matter. Moreover, and without prejudice to the foregoing, the reliefs of injunction sought for in the applications are not executable and there is no practical way of enforcing the reliefs even if granted. For all the above reasons, the said applications are liable to be dismissed in limine.
124 The stand taken by the defendants 2 to 17 in the counter is as under;
The averments made in the affidavit filed by the plaintiff/applicant are denied except those that are specifically and expressly admitted therein. The affidavit filed on behalf of the plaintiff without authorization of the company. It is true that the defendants 1 to 17 were employees of the plaintiff and defendants 18 to 20 were independent consultants governed by contracts. However, the allegations as regards collusion, theft of intellectual property and inducement of clients and employees to terminate their contracts are denied as completely baseless, totally devoid of truth and not supported by even a single piece of evidence for any of the allegations. There is no wrongful, tortious or illegal act and on the contrary, the defendants 2 to 17 had served out their accepted notice period and were relieved from their services in a manner known to law.
125 The plaintiff has completely misrepresented the concept of Business Process Outsourcing (BPO) and hence as pleaded about Intellectual property and proprietary information. The BPO business has evolved in the last couple of decades in order to facilitate processing of Back office operations from developed countries to developing countries. Companies providing BPO services operate in all segments relating to the service sector. In the medical field, BPO or more pompously termed as Revenue Cycle Manangement, is a merely involves accessing medical records of patients in the U.S. Doing medical coding and data entry (filing patient names, address and insurance information) in accordance with instructions of and in the formats provided by clients followingup on outstanding dueand making related accounting entries. These processes are handled through dumb terminals in India with internet connection to access the clients' servers in the U.S. Those servers can be accessed only by entering the login and passwords provided by the clients and work is carried on in India with the details provided by the clients in the U.S. The qualifications required to conduct this work are basic, even computer literacy is not required for many of the functions carried outin this line of work. Just basic typing skills are enough. This process involves no copyrights, no proprietary information, or any intellectual property.
126 It is completely, baseless and malicious to say that the defendants induced the applicants clients to terminate their contracts. A company like the plaintiff or the 21st defendant approaches the clients with the statement that it can provide specified services and requests the overseas client to give it a contract. The contracts are often non exclusive. In other words, a given client can have more than one BPO operating in the same field and in fact in the same city itself. There is no room for negotiation and on an average, billing rates ranges from $7 to $9 on hour.
127 It is false and frivolous to allege proper notice period was not given and proper handing over was not done as alleged in paragraph 4. the deponent replaced the defendant No.2 as the Director of Finance & Administration. The defendant No.2 had resigned from the post by letter dated February 23, 2011. The notice period as contemplated by the terms of appointment was duly served. Similar is the situation with all the other defendants who were employees with the plaintiff. The defendant No.2 is a qualified Chartered Accountant and Cost & Works Accountant. He had undergone articleship with prestigious C.A. firm Pricewater housecoopers and thereafter was employed by Sundaram Clayton. Thereafter, he took an overseas employment with M/s.KPMG, Dubai. Subsequently, the defendant No.2 shifted to Spinneys Dubai Ltd. And was working with them till he secured an employment with the logistics giant TNT India. Thereafter, he was working in KPMG India till he joined the plaintiff in 2001. The defendant No.2 was appointed as Director Finance in July 2001 and continued in that position till September 2006. On the resignation of Mr.Daniel Jebasingh, Director HR, The defendant No.2 was called upon to take that portfolio also as additional responsibility and he took charge in September 2006 and continued in that position till he was validly relieved in March 2011.
128 In the year 2006, the defendants came to know that the promoter of the company was proposing to sell the same. At that point, the defendants informed the President that they are not interested to continue on the same terms as their original terms of employment. This is because, the defendants did not want to be restricted the scope of employment by the prosepective buyer of the company. It cannot be denied that from 2007 onwards Mr.Tony Mira had made several attempts to sell the company to third parties. The terms of employment were well within the knowledge of Tony Mira and other directors. It is unfortunate that a new comer should come and state as to what was transpired in 2007. The deponent was then working for a competitor and hence he is incompetent to swear as regards what transpired in 2007.
129 The averments as regards code and intellectual properties are absolutely false. The plaintiff is audited by external auditors and has been certified as complying with ISO 27001 standard and similrly the entire MiraMad Group including the plaintiff has been certified as complaint with SAS 70 norms. Any company which is ISO 27001 certified, should be able to produce evidence and computer logs whenever there is a security breach/data theft and should have built procedures to trace and take necessary corrective actions. The fact that the plaintiff has not produced a single computer log showing the alleged deletion of so-called imaginery "intellectual property" proves beyond doubt that this allegation is completely baseless, untrue and malicious.
130 The description of nature of work carried on by a BPO would have made it clear that there are no intellectual properties involved in the process. There are no formulas, products or designs. There are no methods, applications, research, development or process, etc. It is for this reason that apart from making vague allegations on intellectual properties, the plaintiff has not given any details as to what those intellectual properties are andin what manner they have been infringed. Similarly, the plaintiff has not given any details as to when and in what manner his reputation has been disparaged by the defendants 2 to 17.
131 There are no source codes involved in the process nor is there any loss of revenue or opportunity to the plaintiff. In fact, the plaintiff has 1,800 employees in India. Each and every one were replaced before the contract was terminated or shortly thereafter. The details of which are being filed in the type set of papers and the defendant crave leave to consider the same as part and parcel of the affidavit. It will ot be out of place to point out that the replacement was the deponent and work of the third defendant was taken over by Ms.Donna Perry from U.S.A. All this was done in a transparent manner with the knowledge and approval of Mr.Tony Mira, the Chairman of the plaintiff and its Board of Directors.
132 There is no restrictive covenant between the plaintiff and the defendant. The covenant if at all can bind the defendant the tenue of his employment and not subsequently. The employees of a BPO are known to shift from company to company and the rate of shifting as officially documented is more than 50% a year. During the tenure as the Head of Human Resources, the second defendant relieved more than 800 personnel from the plaintiff on the same terms and conditions as how defendants 2 to 17 were relieved. There is nothing unusual or suspicious in a person leaving one entity and utilizing the expertise in another company.
133 The plaintiff is least qualified to speak about ethics and loyalty. The plaintiff had given stock options to those employees in mangerial cadre. An employee who is provided a stock option has the right to exercise a right to purchase certain number of shares assigned to him, which can then be sold in the market when either the company goes public or when the company is being sold. The plaintiff in an equitable manner, liquidated the options at an extremely low value during June 2007 in favour of its Chairman of the company who wanted to retaini control over the company and garner all the profits for himself at the time of sale. The defendants cannot be expected to be bonded labour of the plaintiff for the rest of their lives.
134 The second defendant is not in possession of any critical information or trade secrets as there are none. As stated above, the contracts are non-exclusive and the rates at which servics are provided to the foreign clients are fixed by the foreign clients. The business is not driven at the option of BPOs, but at the rates specified by the clients. The contracts are normally 'take it or leave it' and as to who and how the contract is to be given are entirely at the discretion of the overseas client.
135 The idea of the litigation is to divert the attention of the defendants 2 to 17 from concentrating on their new employment and to harass the employees. Prior to this suit, the plaintiff had lodged a complaint to the Cyber Crime branch on more or less the same grounds against one Mr.Kumaran Dhanapal, a co employee. The plaintiff unable to give even a shred of evidence of the alleged deletion of data, theft of data, infringement of copyrights or any other intellectual property. The complaint was closed and knowing pretty well that they do not have any case. They deliberately not impleaded the said Kumaran to the suit. To reiterate, there are no systems, formulae, applications or software or even customised solutions. The laptops which have been provided to the employees were sold at the book value rate as has been the wonted custom of the company for the past decade. The relieving orders were issued as per the prevalent protocols and there is nothing new or suspicious about the same.
136 In so far as the defendants 8 and 16 are concerned, notice was issued by the deponent asking on clarification and each and every point thereof was explained and clarified.
137 With respect to defendant 20, he is a director of a private limited company with whom the plaintiff had a contract for consultancy. Like, the defendants 18 and 19, the contract has an arbitration clause and the same cannot be contravened here because they understood that they are not agreeable to adjudication by process of civil suit. All the details that were sought for have been verified and furnished by the deponent himself. In any event, the defendants 4, 8, 10, 13, 17 to 19 are permanent residents outside the jurisdiction of this Court and therefore, leave to sue granted in so far as those defendants are liable to be revoked. The relief for permanent injunction has to be worked out in the jurisdictional court. The suit suffers from non joinder of necessary parties and misjoinder of causes of action.
138 The defendants 2 to 17 apart from 8 and 16 were not contracted by the plaintiff at any point of time after the termination of their employment contracts. As on today, the defendant No.21 is giving employment to 450 persons. Out of this 450, nearly 90% of them were previously employed in one BPO or the other. The relief sought for is unenfoceable as the list given in schedule 1 is vauge and the prayer sought for is unenfoceable.
139 There are no formulas, products, manufacture, methods, application, know-how, research or development in the plaintiff's business, hence the question of any of the defendants taking any of those items does not arise. With regard to processes of business, the allegation is false and malicious and the same is denied by all the defendants. With regard to source of supplies and materials, all the defendants deny that having ever taken any data relating to source of supplies and materials related to plaintiff's business.
140 As regards the operating and cost data, all the defendants deny having ever taken any operating and cost data of the plaintiff.
141 As regards prospective clients, all sales activities of the plaintiff were handled by the sales team in the US, which worked directly under Tony Mira, the Chairman of the plaintiff and the question of any of the defendants taking any data relating to prosepective clients of the plaintiff does not arise.
142 The defendants deny having ever taken any credit and financial data concerning any of the plaintiff's clients. All sales activities of the plaintiff were handled by the sales team in the U.S., which worked directly under Tony Mira, the Chairman of the plaintiff and hence the question of any of the defendants taking any data relating to client proposal, price lists and data relating to pricing of the plaintiff's company's products or service, sales activities, procedures does not arise.
143 None of the defendants had access to techniques, computer programs, third party licensed programs and data bases and hence the question of any of the defendants taking any of such data does not arise.
144 All the defendants deny having ever taken any data relating to any equipment or methods or improvement related to the plaintiff. All the defendants deny having ever taken data related to accounting and billing procedures, other records of the plaintiff.
145 All the defendants deny having ever taken trade secrets reports, budgets and other financial information of the plaintiff, data relating to acquisition, installation and utilization of equipment and procedures of the plaintiff, data relating to technological development, know-how, computer programs and related documentation of the plaintiff.
146 There is no invention or authorship in the plaintiff's business, hence the question of any of the defendants taking any of these items does not arise. All the defendants deny having ever taken any data relating to current and past employees of the plaintiff including their service records, salary history and payroll related data, training history, skills and capabilities profile documents and employees' contact numbers and addresses, data and materials and templates related to plaintiff with respect to training material developed in-house by the plaintiff.
147 The data related to membership and lists of NASSCOM, AMCHAM and MMA are all available for members of those organisations. It is shocking that the plaintiff should ask for such data from the defendants. In any case, the defendants can become members of these organisations by paying annual dues and get access to all membership benefits very easily.
148 All the defendants deny having ever taken data related to studies and surveys that plaintiff has participated in such as Great places to work, NASSCOM, IDC-Data Quest, Hewitt Associates etc. 149 Since the employments were terminated validly and being contract of service, it cannot be specifically enforced either and the plaintiff cannot seek for an injunction.
150 The business of the defendant No.21 is based on their strength and not by disparaging someone else. The relief with respect to defamation and disparagement is without any proof and thus applications are not maintainable.
151 As regards soliciting and enticing and inducing the customers of the applicant, the contract is driven by the entities in America and those contracts are non-exclusive. The plaintiff wants to convert such contract into exclusive ones, which is impermissible in the absence of those entities.
152 With respect to enticement of employees, the defendants 2 to 17 have not enticed any employees to terminate the contract with the plaintiff. The employees of the plaintiff who have joined the 21st defendant have served their notice period and have joined it only after the same. The process of employment has been by publication of advertisements in newspapers and by engaging consultants in the human resources area. The persons who join with the 21st defendant are out of their own free will and accord and it is not illegal and the same cannot be prevented by an order of injunction.
153 The plaintiff have caused mental damage and loss of reputation to defendants 2 to 17 and the defendants 2 to 17 reserve their right to proceed against them for damages on account of the aforesaid allegations. Therefore, the applications are liable to be dismissed with exemplary cost.
154 The learned counsel for the plaintiff/applicant in support of the applications placed reliance on the employment agreement which had been entered into by the plaintiff/applicant with the defendant No.1. As per the terms of the employment agreement, the contract for employment for a period of three years which restricted the area of U.S.A. and territories of India. The agreement also provided that the employee shall keep confidential information and was not to use directly or indirectly the confidential information in force thereto to the extent that such disclosures were required by law. It was also stipulated that all confidential information shall remain the property of the company and on termination of employee, he was to return all confidential information in his possession, custody or control including any tangible reproductions or copies thereof which was required to be deleted or destroyed all electronically stored copies. It was also undertaken that not to compete during the restricted period with the company. The plaintiff/applicant also reserved the following remedies against the defendant No.1 "VII. REMEDIES The Employee acknowledges that the Company's remedy at law for a breach or threatened breach of any of the provisions of Articles III, IV or V would be inadequate. In recognition of this fact, in the event of a breach by Employee of any of the provisions of Articles III, IV or V, Employee agrees that, in addition to the Company's remedy at law and the Company's rights under Article VIII hereof, the Company shall be entitled to obtain equitable injunction or any other equitable remedy which may then be available and the Company will not be obliged to post bond or othe security in seeking such relief. Nothing herein contained shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach. If any portion of the above restrictions are deemed overbroad or unenfoceable in any respect, the parties agree that the court shall modify such restriction(s) so tht it is reasonable and shall enforce the restriction(s) as so modified."
155 After the expiry of the period, the employment agreement was further extended on 01.11.2008 wherein similar condition was stipulated. The validity of the second agreement was upto the year 2013. The liberty was however given to the defendant No.1 by giving notice of 30 days. It is under this clause of agreement the defendant No.1 terminated his employment.
156 The agreement defines;
"Company Technology"
As ideas, concepts, know-how, works of authorship and inventions, drawings, schematics and improvements and modifications thereof patentable or unpatentable, copyrightable or non-copyrightable known to the empoyee as a consequence of or through the Employee's employment with the company and which relates to the business.
157 The "Confidential Information"
was defined as under:
All information in whatever form regarding the company and the Business and their clients, including without limitation, information relating to (i) the formulas, products, design, manufacture, methods, application, know-how, research development and processes by the business; (ii) sources of supplies and materials; (iii) operating and other cost data, (iv) lists of present, past and prospective clients and credit and financial data concerning such clients; (v) client proposals; (vi) price lists and data relating to pricing of the Company's products or services; (vii) sales activities, procedures, and techniques; (vii) computer programs; (ix) third party licensed programs and (x) data bases.
158 The resignation of the defendant No.1 is however accepted. Similar is the case of the other defendants. After termination of the defendant No.1 incorporated defendant No.21 on 12.11.2010.
159 It was the contention of the learned counsel for the plaintiff, that other defendants be also restrained from either joining competitors or misusing intellectual property of the plaintiff.
160 The learned counsel for the plaintiff/applicant vehemently contended that by joining defendant No.21 and by misusing intellectual property of the plaintiff/applicant, they have committed a tortuous act for which the plantiff is entitled to injunction.
161 The contention of the learned counsel for the plaintiff/ applicant was that the defendant No.1 without lawful justification induced the other employees, to commit breach of contract with the plaintiff, and thus is guilty of committing a tort, which entitles the plaintiff/applicant for injunction as prayed for.
162 In support of the contention of the learned counsel for the plaintiff/applicant placed reliance on the judgment of this Court in the case of M/s.Tata Sons Limited vs. Mastech Corporation and 2 others (1995-2 L.W. 770) wherein this Court was pleased to lay down as under:
"9. The learned counsel appearing for the defendants would also argue that the averments in the plaint as well as in the affidavit are very vague, and they are not sufficient to grant the injunction as prayed for by the application in O.A.No.996 of 1994 and injunction granted has, therefore, to be vacated. The allegation in the plaint as well as in the affidavit of the applicant is to the effect that the defendants 1 and 2 are inducing the employees of the plaintiff at Madras through the third defendant to abandon the employment irrespective of the agreement they have entered into with the plaintiff to serve the plaintiff for certain period. In the plaint, it is alleged that 135 employees of the plaintiff who had been trained by the plaintiff at heavy cost, have left the service of the plaintiff, on the inducement of the defendants. It is immaterial whether all the 135 employees who have left the service of the plaintiff have joined the first defendant in United States. The suit being one for restraining the respondents from inducing the employees of the plaintiff to abandon their employment inspire of the training they had received and inspite of the agreement entered into with the plaintiff the question whether the persons who have abandoned their employment, have joined the services of the first defendant or not, need not be considered at all to grant the relief sought for by the plaintiff or to deny the same. The allegation made against the defendants amounts to interference by them with the subsisting contract between the plaintiff on the one hand and the employees on the other. In Winfield and Jolowicz on "Tort" (Tenth edition) at page 445 it is stated as follows:
"A commits a tort if, without lawful justification, he intentionally interferes with a contract between B and C, (a) by persuading B to break bis contract with C, or (b) by some other act, perhaps only if tortious in itself, which prevents B from performing his contract."
In the above book, the learned Author has stated as follows:
"Bowen v. Hall, (1881) 6 Q.B.D.333, and later decisions made it clear that intentionally and without lawful justification to induce or procure anyone to break a contract, whether of personal services or not, made by him with another is a tort actionable at the suit of that other (But not at the suit of the contract breaker himself : Boulting v. Association of Cinematograph, television and Allied Technicians, (1963) 2 Q.B.D.606, 639-640, Pet Upjohn, LJ) if damages results to him. This has been said to be based on the principle' that any violation of legal rights, including rights under contract, committed knowingly and without justification, is a tortious act.' Tempertion v. Russel, (1893) 1 Q.B. 715. The allegations in the plaint are to the effect that defendants 1 to 3 have induced the employees of the plaintiff to abandon their services of the plaintiff and thereby committed an actionable tortious act"
10. In the Book of "The Law of Trots" by Salmond ZNC Heuston at Page 357, the learned Author has stated as follows:
"Intentionally and without lawful justification to induce or procure anyone to break a contract made by him with another is a tort actionable at the suit of that other, if damage has resulted to him.. It was, however, for some time believed that the principles so established were confined to cases where, (i) the defendant's action was malicious, and (ii) the contract in question was to render exclusive personal services for a fixed period. But now it is perfectly well established that the scope of the action is not limited in either of these ways, Indeed, the modern cases indicate that the tort was become so broad as to be better described as unlawful interference with contractual relations." The learned Counsel appearing for the applicant would argue that even though the term in the agreement, restraining the employees from leaving the service of the plaintiff applicant, is considered as a negative covenant, still, it can be enforced since negative covenants operate during the period of contract of employment when the employee is bound to serve his employer exclusively or generally not regarded as restraint of trade and therefore, do not fall under Section 27 of the Contract Act. I am in agreement with the learned Counsel appearing for the applicant on this aspect with regard to the enforceability of the nagative covenant in an agreement. The learned Counsel appearing for the respondents would argue that if the employees of the plaintiff have left the services of the applicant-plaintiff for better prospects, it cannot be stated that it was due to the inducement of the third respondent at the instance of the respondent 1 and 2 and there is no necessity for any injunction. If really there was no inducement by respondents 1 and 2 through the third respondent, issuing an injunction restraining them from inducing the employees of the plaintiff to leave the services of the plaintiff in utter disregard to the service agreement entered by them with the employer will not cause any prejudice to the respondents. The injunction sought for is restricted to the nature of the employment and to the area and it cannot be stated that it is an unreasonable or unnecessary one as contended by the learned Counsel appearing for the respondents. The question whether there was real inducement by the respondents 1 and 2 through the third respondent and whether the plaintiff has actually suffered damage on account of the inducement has got to be considered in detail only at the time of the trial and suffice it to observe at the present, that there is prima facie case made out by the plaintiff for getting an order of interim injunction, since it is alleged by the plaintiff that 135 employees of the plaintiff who have received training under the plaintiff had abandoned their employment with the plaintiff in utter disregard to the agreement of service entered into with the plaintiff. The plaintiff has, in my opinion, made out a prima facie case for granting injunction and the balance of convenience is also in its favour and therefore, injunction already granted is made absolute in O.A.No.996 of 1994."
163 Reliance was also placed on the judgment of the Hon'ble Delhi High Court in the case of Diljeet Titus, Advocate & others vs. Alfred A.Adebare & others (2006(32) PTC 609 (Del.) wherein the Hon'ble Delhi High Court was pleased to lay down as under:
"75. The legal pronouncements also make it clear that the copyright exists not only in what is drafted and created but also in list of clients and addresses Page 1905 specially designed by an advocate or a law firm. The exposition in the commentary of David Bainbridge on Software Copyright Law leaves no manner of doubt where it is emphasized that copyright can exist at two levels including the level of the database itself as a form of work in its own right. This has been cited with approval in Berlington Hope Shopping Private Limited case (Supra) where it has been further emphasized that customers' list and information consisting of mail order, catalogues itself amounts to confidential information."
164 The contention of the learned counsel for the plaintiff/ applicant by placing reliance on these judgments, was that requisite data of the plaintiff, i.e. its copyright materials with the defendant cannot be allowed to be used. The pleading and documents on record clearly show that the plaintiff has a prima facie case so as to restrain the defendants from using copyright materials of the plaintiff.
165 The reliance was also placed on the judgment of the Hon'ble Delhi High Court in the case of Desiccant Rotors International Pvt. Ltd. vs. Bappaditya Sarkar and another (Manu/DE/1215/2009) wherein the Hon'ble Delhi High Court while declining the prayer to restrain the employee from joining the competitor, restrained the defendant from approaching the plaintiff's suppliers and customers for soliciting business.
166 The learned counsel for the defendants/respondents vehamently on the otherhand contended that applications Nos.810 and 811 of 2011 are not maintainable as the relief claimed in these applications is not subject matter of the suit, therefore, once a person is not entitled to final relief, he could not claim interim relief, under Order 39 Rule 1 & 2 of the Code of Civil Procedure.
167 It is next contended, that there is no non-compete clause in the agreement, with the plaintiff nor there is any contractual or even residual contractual relationship with the plaintiff/applicant of the defendant No.1.
168 The contention of the learned counsel for the respondent, was that after initial agreement of three years, subsequent contemporaneous agreements and arrangements stood superseded and in the agreement entered into in the year 2008 did not have any non-compete clause furthermore. It also allowed the defendant to terminate the employment, which he did. His resignation was accepted, and therefore, the applications to restrain the defendants to do business is not maintainable.
169 It is also the contention of the learned counsel for the respondents/defendants 1 to 20 that they had given advance termination notices which were accepted and their contracts of service was terminated with the plaintiff at different times. The allegations of act of infringement is outcome of imagination without any basis.
170 It is the case of the defendants that the allegations against the defendants are based on no materials and furthermore, there is no intellectual property right of the applicant. As the business done by defendant No.1, does not require or involve any proprietary process or any intellectual property on the part of the BPO company. The business is carried out in the simple BPO operation, by the BPO employees; i.e.
(i) access medical records of patients in the United States
(ii) do medical coding and data entry (filling patient names, addresses and insurance information)
(iii) follow up on outstanding dues and
(iv) make related accounting entries which does not need any research or customization.
171 The work is carried out on the instruction of the clients, and all informations are provided by the clients. It is the client who stipulates the system and hardware requirements. Thus, there is no question of copyright or intellectual property. The defendants who were previously employees of the plaintiff had resigned of their own free will and accord and were properly relieved by the plaintiff company.
172 This fact is not disputed by the plaintiff/applicant that the defendants are relieved by the plaintiff. The allegation of loss is also denied.
173 The stand of the other defendants is also similar that they were in employment whose employment came to end after following due process of law.
174 The learned counsel for the respondent vehamently contended that the allegations of the plaintiff/applicant, that the defendant No.1 or defendant No.21 was inducing the employees is based on no materials, nor the defendants are inducing any employees.
175 The learned counsel for the respondents/non applicants states that it is admitted case that resignation of the employees were accepted, and defendants were relieved by the plaintiff, in terms of the letter of employment.
176 The learned counsel for the respondents/non applicants also pointed out that the plaintiff/applicant has suffered no loss, as on relieving of the defendants, the work was transitioned to other employees. The details whereof reads as under:
List of Defendants and their replacements Defendant No. Name of the Defendant Relieved on Work Transitioned to 1 Devendra Saharia 31.03.2011 Tony Mira 2 Shankar Narasimhan 21.03.2011 Narasimha Nayak 3 Maya Mohan 18.02.2011 Donna Perry 4 Mahesh M.S. 18.03.2011 Jagan Kumar 5 Meenakshi Karthik 14.03.2011 Craig Ross 6 Nambirajan 18.03.2011 Nikhil Mehta 7 Elango M 18.03.2011 Rajeev 8 Deepak R 17.03.2011 Shreewas 9 Paul Praveen Kumar 14.03.2011 Ashique 10 MGK Thirumozhi 14.03.2011 Hari 11 Kiran G 17.03.2011 John Samuel 12 Jim Philip 7211 Paul Sridhar 13 David Roy Prabhu 18.03.2011 Ilamourugu 14 P.B. Srivathsan 2211 T.A.Rajagopal 15 Ramesh L 17.03.2011 Vijayalakshmi 16 Shobana G 17.03.2011 Gadiga 17 Gowri Shankar K. 18.03.2011 Subramani
177 In support of the contention that the plaintiff is not entitled to injunction as prayed, the learned counsel for the defendants/ non applicants placed reliance on the judgment of the Hon'ble Supreme Court in the case of Niranjan Shankar Golikari v. Century Spinning and Manufacturing Co. Ltd. (A.I.R. 1967 SC 1098) wherein the Hon'ble Supreme Court was pleased to lay down as under:
'(15) The result of the above discussion is that considerations against restrictive covenants are different in cases where the restriction is to apply during the period after the termination of the contract than those in cases where it is to operate during the period of the contract. Negative covenants operative during the period of the contract of employment when the employee is bound to serve his employer exclusively are generally not regarded as restraint of trade and therefore do not fall under section 27 of the Contract Act. A negative covenant that the employee would not engage himself in a trade or business or would not get himself employed by any other master for whom he would perform similar or substantially similar duties is not therefore a restraint of trade unless the contract as aforesaid is unconscionable or excessively harsh or unreasonable or one sided as in the case of W.H. Milsted and Son Ltd., surety was impaired, and the surety stood discharged for the whole amount recoverable from the contractor. The High Court of Madhya Pradesh confirmed the decree of the trial Court."
178 The reliance was also placed on the judgment of the Hon'ble Supreme Court in the case of Superintendence Company of India (P) Ltd. v. Krishan Murgai (A.I.R. 1980 SC 1717) wherein the Hon'ble Supreme Court was pleased to lays down as under:
"28. The question whether an agreement is void under Section 27 must be decided upon the wording of that section. There is nothing in the wording of Section 27 to suggest that the principle stated therein does not apply when the restraint is for a limited period only or is confined to a particular area. Such matters of partial restriction have effect only when the facts fall within the exception to the section.
29. A contract, which has for its object a restraint of trade, is prima facie, void. Section 27 of the Contract Act is general in terms and unless a particular contract can be distinctly brought within Exception I there is no escape from the prohibition. We have nothing to do with the policy of such a law. All we have to do is to take the words of the Contract Act and put upon the meaning which they appear plainly to bear. This view of the section was expressed by Sir Richard Couch, C.J., in celebrated judgment in Madhub Chunder v. Raj Coomar Doss8 laying down that whether the restraint was general or partial, unqualified or qualified, if it was in the nature of a restraint of trade, it was void.
30. The observations of Sir Richard Couch, C.J., in Madhub Chunder v. Raj Coomar Doss8 which have become the locus classicus were these:
The words restraint from exercising a lawful profession, trade or business do not mean an absolute restriction, and are intended to apply to a partial restriction, a restriction limited to some particular place, otherwise the first exception would have been unnecessary. Moreover, in the following section (Section 28) the legislative authority when it intends to speak of an absolute restraint and not a partial one, has introduced the word absolutely.... The use of this word in Section 28 supports the view that in Section 27 it was intended to prevent not merely a total restraint from carrying on trade or business, but a partial one. We have nothing to do with the policy of such a law. All we have to do is to take the words of the Contract Act, and put upon them the meaning which they appear plainly to bear.
31. The test laid down by Sir Richard Couch, C.J. in Madhub Chunder v. Raj Coomar Doss8 has stood the test of time and has invariably been followed by all the High Courts in India.
32. The agreement in question is not a good will of business type of contract and, therefore, does not fall within the exception. If the agreement on the part of the respondent puts a restraint even though partial, it was void, and, therefore, the contract must be treated as one which cannot be enforced."
179 The reliance was thereafter placed on the Hon'ble Division Bench judgment of this Court in the case of G.R.V.Rajan v. Tube Investments of India Ltd. (1995-I L.W.274) wherein the Hon'ble Division Bench of this Court lays down as under:
"17. The learned Judge rejected the contentions of the defendant and made the interim injunction already granted absolute. Thus, he allowed O.A.Nos.882 to 885 of 1994 filed by the plaintiff and dismissed Application Nos.5866 to 5869 of 1994 filed by the defendant. The learned Judge has mainly relied upon the report of the Advocate Commissioner who had inspected the defendant's premises. According to the said report, the defendant had started establishing the factory. But the Commissioner did not find any activity and any workman. There were only securitymen and the fixing of machinery and electrical fitings was going on. Secondly, the learned Judge held that the Supreme Court laid down the entire law on the subject of restraint of trade in Niranjan Shankar Golikari v. Century Spinning and Manufacturing co. Ltd. (AIR 1967 SC 1098)and that the restraint on trade is reasonable and necessary to protect the interests of the plaintiff and therefore, not violative of Section 27 of the Contract Act. After referring to the judgment in Superintendence Co. of India (P) Ltd.v. Krishan Murgai (AIR 1980 SC 1717), the learned Judge said that the view expressed by A..Sen, J. Ran counter to the rule laid down in the earlier case and therefore, the earlier decision would prevail over the later and the earlier rule is applicable to the present case. As regards the three machines claimed by the plaintiff, and the secret of confidential information relating to the same, the learned Judge held that he was of the prima facie view that the allegations of the defendant were not true and that the plaintiff had aregal right to make the claim. The learned Judge also held that the balance of convenience was in favour of the plaintiff.
18. Normaly, in an appeal against an interlocutory order, the appellate Bench will be slow to interfere with the discretion exercised by the learned single Judge of the High Court. Th question of granting temporary injunction is within the judicial discretion of the trial judge and if it had been reasonably exercised, the appellate Court will not interfere. But, in a case where it apears that the fundamental condition for the grant of injunction viz., a prima facie case is not fulfilled and if the appreciation of the fats of the cse made by the learned trial judge is based on an eroneous view of the law, the appellate Court has neceessarily to correct the same. In this case, the learned judge has started with an erroneous premise that the rulings of the Supreme Court in "Niranjan Shankar Golikari" (AIR 1967 SC 1098) and "Superintendence Co. of India (P) Ltd.v. Krishan Murgai (AIR 1980 SC 1717 = 91 L.W.17(S.C.)(S.N.) are contradictory to each other and that earlier judgment having been rendered by two learned Judges while in the later judgment, though rendered by three learned Judges, the relevant question has beenconsidered only by one of them and the other two not having expressed any opinion, the earlier ruling will prevail. Secondly, the learned judge has not referred to any relevnt material excepting the report of the Advocate Commissioner on the basis of which he has expressed his prima facie view on the question of fact. In all the relevant paragraphs of his judgment, he has only referred to the arguments of counsel on both sides and at the end expresed his prima facie view. The learned judge has also ovelooked that the relevant issues between the parties are highly contentious and it would require volume of evidence, both oral and documentary, for the parties to establish their respective cases and that it is not a matter which can be decided merely on the averments in the plaint or the affidvaits. Hence, we find it neceessary to consider all the materials available on record and give our own findings.
19. Before discussing the facts of the case in detail, we would like to briefly state the law on the subject Section 27 of the Contract Act provides that "every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void". The section is absolute in its terms and admits of only one exception as at present, though when it was enacted there were three exceptions. The only exception now continuing on the statute book is that "one who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the godwill from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business". A reading of the main section and the exception places beyond doubt that there is only one exception to the rule as it stands now and that exception can come into play only in the case of a goodwill and the like business being carried on by the purchaser. In such a case, the Court has to find out whether the limits imposed by the agreement are reasonable, having regard to the nature of the business. The section does not make a distinction between a pertial restraint and an absolute restraint. The significance thereof is brought out by the language of Seciton 28, which deals with agreements in restraint of legal proceedings. In that section, the resraint is void only if it is absolute. The section used the word "absolutely".
180 It may be noticed that the learned counsel for the plaintiff/ applicant also placed reliance on the judgment of the Madhya Pradesh High Court in the case of Hari Shankar vs. Kailash Narayan and others (A.I.R. 1982 MP 47), wherein the Hon'ble Madhya Pradesh High Court was pleassed to lay down that reputation of the person cannot be measured in terms of money and therefore, person can be granted injunction against the defendant.
181 On consideration of the matter, I find force in the contention raised by the learned counsel for the defendants/non applicants.
182 The allegations in the plaint with regard to inducing the employees,so as to bring the matter under tort is not born out from any material on record.The allegations are totally vague, and no employee has been specifically named who is said to have terminated the contract with the plaintiff on being induced.
183 It is not disputed that resignations of defendants were accepted and they were relieved by the plaintiff. There is no prima facie material on record to show, as to which intellectual property of the plaintiff has been taken away the defendants, even if it is taken to be intellectual property for the sake of arguments. The general allegations have been levelled without any particular details pointing out any specific act which may be called the tort.
184 The Hon'ble Supreme Court has laid down that negative covenants are not enforceable. In the absence of any material showing that any customers of the plaintiff, have been contacted, no injunction can be granted, on the basis of mere allegations in the absence of any prima facie material in support thereof.
185 The plaintiff thus, failed to make out any prima facie case, nor plaintiff is to suffer irreparable loss and injury, as admittedly, the plaintiff would be entitled to damages, if it succeeds, in the case. In fact, damages have in fact been claimed in this suit.
186 Once wrong can be compensated in terms of money, no injunction can be granted to restrain the defendants from carrying on the business on mere vague allegations.
187 There is no material in support of the defamation. The defamation has to be proved by specific allegations supported by some materials, no pleading of defamation can be accepted on vague allegations like one made in the suit.
188 The allegations of the plaintiff are merely for breach of contract of employment, though termed as tortuous act. It is to be noticed here that all the defendants i.e. Defendants 1 to 20 left the service of the plaintiff by submitting their resignation, which were duly accepted and the employees were relieved of their duty by giving charge to other employees.
189 In the absence of any material on record showing inducing of employee, and the fact that the employees left service after being relieved by the defendant, the judgment of this Court in the case of M/s.Tata Sons Limited vs. Mastech Corporation and 2 others (supra) has no application to the facts of the case.
190 The plaintiff has failed to make out any case for appointment of Advocate Commissioner. The plaintiff does not have any prima facie case to collect the material of business of another company, as damages are to be proved by leading positive evidence by the plaintiff. The Advocate Commissioner cannot be used for this purpose. The plaintiff/applicant thus, has failed to make out any primfa facie case, nor the balance of convenience is in favour of the applicant. The suit as framed also shows that plaintiff/applicant are not likely to suffer any irreparable loss, as plaintiff has claimed damages. It may be noticed that similar case has been filed in U.S.A., it is not understood why similar relief was not claimed in the previous suit.
191 For the resons stated hereinabove, all the four applications are ordered to be dismissed.
No cost.
vaan