1 IN THE HIGH COURT OF JUDICATURE AT MADRAS (ORDINARY ORIGINAL CIVIL JURISDICTION) MONDAY, THE 21st DAY OF NOVEMBER 2011 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 Ajuba Solutions (India) Private Limited, Represented by its Director-Finance & Administration Mr.Narasimha Nayak K No.12-02, A-Block, Tidel Park, No.4, Canal Bank Road, Taramani, Chennai 600 113. ... Applicant/Plaintiff (in O.A. Nos.808 to 811 of 2011 & in A. No.4733 of 2011) -Versus- 1. Mr.Devendra Kumar Saharia, 5 Crescent Street, Off AB Avenue Boat Club, Chennai 600 028. 2. Mr.Shankar Narasimhan, 5-D, Block 1, Abbotsbury, 42 C.P Ramaswamy Road, Chennai 600 018. 3. Mrs.Maya Mohan, Plot 746, 2nd Main Road, Raja Nagar, Neelankarai, Chennai 600 041. 4. Mr.M.S.Mahesh, No.5, New Colony, Pallikarani, Chennai 601 100. 5. Ms.Meenakshi Kartik, 5A, Block I, Abbotsbury 74 C.P Ramaswamy Road, Chennai 600 018. 6. Mr.Nambirajan G, 71/32, Flat No.5, East Coast Flats, 2nd Main Road, Gandhinagar, Adyar, Chennai 600 020. https://hcservices.ecourts.gov.in/hcservices/ 2 7. Mr.Elango. M, New No.11, Rettai Kuzhi Lane, Tondiarpet, Chennai 600 081. 8. Mr.Deepak Raman 466/1, Padmavathy Apartments, Karthikeyapuram 3rd Street, Madipakkam, Chennai 600 091. 9. Mr.Paul Praveen Kumar, R 21, Welcome Colony, Anna Nagar West Extn., Chennai 600 101. 10. Mrs.Thirumozhi MGK alias K Geetha Apartment No.S-1, Plot No.F-6, Govind Nagar, I Main Road, Palavakkam, Chennai 600 041. 11. Mr.Kiran.Guntur Flat B-1, Deccant's Dream, New No.4, Old No.5, 5th Street, Nandanam Extension, Chennai 600 035. 12. Mr.Jim Phillip, Plot No.1017 A-I-Block, 42nd Street, 6th Avenue, Anna Nagar, Chennai 600 040. 13. Mr.David Roy Prabhu, B.16, Apt H2, Jain Green Acres, 91 Dargah Road, Zamin Pallavaram, Chennai 600 043. 14. Mr.P.B.Srivathsan, 5, BOI Colony, Ashok Nagar, Chennai 600 083. 15. Mr.L.Ramesh, No.40/G, Guruvayurappan Apartments, Kripa Sankari Street, West Mambalam, Chennai 600 033. 16. Mrs.G.Shobana, Old No.23, New No.44, Mangaduswamy Street, Nungambakkam, Chennai 600 034. 17. Mr.K.Gowrishankar 9-B, Manohar Nagar Main Road, Pallikaranai, Chennai 600 100. https://hcservices.ecourts.gov.in/hcservices/ 3 18. Mr.Dominic Rajesh R.M Plot No.2, Sri Narayana Nagar 1st Street Kolapakkam, Gerugambakkam Post Chennai 602101. 19. Mr.Shiva Ganesh, Block 5-2 B; Natwest Vijay Phase-2 48 Velachery, Tambaram Road, Pallikaranai Oil Mills, Pallikaranai Chennai 600 100. 20. Mr.P.K.Prasad, 65/18, Alankar Sri Sankara Apartments, Ranga Road, Mylapore, Chennai 600 004. 21. Adroit Global Solutions India Private Limited, Represented by its Board of Directors, No.05-02, "A" Block TIDEL Park, No.4, Canal Bank Road, Taramani, Chennai 600 113. ... Respondents/Defendants (in O.A. Nos.808 to 811 of 2011 & in A. No.4733 of 2011) O.A. No.808 of 2011:- Original Application praying that this Hon'ble Court be pleased 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 infringing the applicant's copyright in the Intellectual property morefully described in Schedule I hereunder 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. O.A. No.809 of 2011:- Original Application praying that this Hon'ble Court be pleased 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 https://hcservices.ecourts.gov.in/hcservices/ 4 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 herein, and performed by the applicant in its office premises at No.12-02, A Block, Tidel Park, No.4, Cana 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. O.A. No.810 of 2011:- Original Application praying that this Hon'ble Court be pleased 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 hereto 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. O.A. No.811 of 2011:- Original Application praying that this Hon'ble Court be pleased 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 respondent pending disposal of the suit. https://hcservices.ecourts.gov.in/hcservices/ 5 A. No.4733 of 2011:- Application praying that this Hon'ble Court be pleased 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 Hon'ble Court and file a report thereof. These applications coming on this day before this court for hearing the court made the following 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." https://hcservices.ecourts.gov.in/hcservices/ 6 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 https://hcservices.ecourts.gov.in/hcservices/ 7 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 https://hcservices.ecourts.gov.in/hcservices/ 8 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 https://hcservices.ecourts.gov.in/hcservices/ 9 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; https://hcservices.ecourts.gov.in/hcservices/ 10 (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. https://hcservices.ecourts.gov.in/hcservices/ 11 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 https://hcservices.ecourts.gov.in/hcservices/ 12 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 https://hcservices.ecourts.gov.in/hcservices/ 13 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 https://hcservices.ecourts.gov.in/hcservices/ 14 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 https://hcservices.ecourts.gov.in/hcservices/ 15 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 https://hcservices.ecourts.gov.in/hcservices/ 16 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 https://hcservices.ecourts.gov.in/hcservices/ 17 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. https://hcservices.ecourts.gov.in/hcservices/ 18 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 https://hcservices.ecourts.gov.in/hcservices/ 19 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 Mira’s promoted company called MiraMed Global Services, Inc.—another US company (hereinafter referred to as “MiraMed”). MiraMed owns all