1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE NOTICE NOTICE OF MOTION NO.1278 OF 2003 OF MOTION NO.1278 OF 2003 OF MOTION NO.1278 OF 2003 IN IN IN SUIT SUIT SUIT NO.1197 OF 2003 NO.1197 OF 2003 NO.1197 OF 2003 Intec Polymers Ltd. ) a Company incorporated under ) athe provisions of the Companies) Act, 1956 having its registered ) office at 405, Raheja Chambers, ) Nariman Point, Mumbai-400 021. )..PLAINTIFF Versus 1. Mr. Rajendra Eknathrao Tambe ) residing at or carries on ) business at 105, Ambika ) Niketan Society, Haria Park, ) Village Dungra, Vapi East, ) Gujarat, Pin-396 195 ) 2. Mr. Arvind Janardan Kirange, ) residing at or carries on ) business at B-303, Sahajanand) Co-op. Socy., Vapi -Silvassa ) Road, Haria Park, VIllage ) Dungra, Vapi East, Gujarat ) Pin-396 195 ) 3. Mr. Lalitkumar Laxman ) Choudhury, residing at or ) carries on business at New ) Gunjan Housing Society, ) Block No.34, Room NO.724, ) 2 GIDC, Vapi-East, Gujarat, ) Pin-396 195. ) 4. M/s.Polygel Technologies ) India Pvt. Ltd., a Company ) incorporated under the ) provisions of Companies Act ) 1956 having its registered ) office at 1st Floor, Mehta ) House, Apollo Street,M.S.Marg) Fort, Mumbai-400 023. )..DEFENDANTS WITH WITH WITH NOTICE NOTICE NOTICE OF MOTION NO.1688 OF 2003 OF MOTION NO.1688 OF 2003 OF MOTION NO.1688 OF 2003 IN IN IN SUIT SUIT SUIT NO.1197 OF 2003 NO.1197 OF 2003 NO.1197 OF 2003 Intec Polymers Ltd. ) a Company incorporated under ) the provisions of the Companies ) Act, 1956 having its registered ) office at 405, Raheja Chambers, ) Nariman Point, Mumbai-400 021. )..PLAINTIFF Versus 1. Mr. Rajendra Eknathrao Tambe ) 3 residing at or carries on ) business at 105, Ambika ) Niketan Society, Haria Park, ) Village Dungra, Vapi East, ) Gujarat, Pin-396 195 ) 2. Mr. Arvind Janardan Kirange, ) residing at or carries on ) business at B-303, Sahajanand) Co-op. Socy., Dungra ) Vapi East, Gujarat ) 3. Mr. Lalit Kumar Laxman ) Choudhry, residing at New ) Gunjan Housing Society, ) Block No.34, Room NO.724, ) GIDC, Vapi, Gujarat, ) 4. M/s.Polygel Technologies ) India P. Ltd., ) 1st Floor, Mehta ) House, Apollo Street,M.S.Marg) Fort, Mumbai-23. )..DEFENDANTS Dr.Virendra Tulzapurkar with Amit Jamsandekar i/b. M/s.Pravin Mehta & Co., for the Plaintiffs Mr.R.S.Jaisinghani i/b. Ms. Monika Sakharam for Defendant Nos.1 to 3. Mr. Ravi Kadam with Mr. S.K. Sen i/b. Ms.Kerban Anklesaria, for Defendant No.4. CORAM: CORAM: CORAM: F.I. REBELLO, J. F.I. REBELLO, J. F.I. REBELLO, J. DATE DATE DATE : : : 23rd December,2004 JUDGMENT: JUDGMENT: JUDGMENT: 4 1. The plaintiff has filed the suit against the defendant Nos. 1 to 3 who are the former employees and defendant No.4 which commenced manufacturing Organic Titanates from March, 2002. For the sake of brevity they will be referred to as the said products. The suit by the plaintiff is to restrain the defendants and others claiming through them from in any manner utilising, using, imparting, disclosing or taking unfair advantage of the confidential information, more particularly described in paragraph 4(c) of the plaint. It is the case of the plaintiff that they had developed the information as set out in paragraph 4(c) of the plaint after years of research and development.The plaintiff has developed secret processes and/or trade secrets and/or confidential information and the plaintiff is the owner of the same. The plaintiff by using its trade secret and/or secret process and/or confidential information is manufacturing and marketing high quality products with low manufacturing cost. The confidential information has placed the plaintiff on a much higher footing than its competitors in the world chemical market. The confidential information developed by the plaintiff to produce and market its products is neither purchased from other companies nor obtained from any consultants. After substantial efforts and carrying out research on the basic technology, many trials over a long period of time and after considerable expenses, the plaintiff has 5 developed the technology to manufacture the said products. It is manufacturing and marketing the products with the help of its eight specialised laboratories and after engaging 20% of its skilled employees in research and development. On account of years of research and development the plaintiff has acquired substantial goodwill for its product in the domestic as well as international market. The said information of the plaintiff is not available in the public domain nor is it available for sale anywhere in the world. Further relief is also sought to restrain the defendants or any person claiming through them from manufacturing the product or its variants and mixtures or any other products of the plaintiff directly or indirectly by using the said information. Relief is also sought that defendants and their representatives, etc., should be restrained from in any manner contracting plaintiff’s ex or current employees or giving them employment with the defendants or their servants, agents, representatives, etc. The other reliefs need not be adverted to. 2. The plaintiff took out Motion being Notice of Motion No.1270 of 2003. By order dated 25th April, 2003 the learned Judge was pleased to grant ad-interim relief in terms of prayer clause (a). It further transpires that pursuant to Judge’s Order Receiver came to be appointed to do certain acts. By order dated 6 13th June, 2003 certain directions were issued to the Receiver. On behalf of the plaintiff statement of their Counsel was recorded that they will deposit in Court their own information mentioned in paragraph 4(c) of the plaint within a period of four days from 13th June, 2003. The defendants thereafter by Notice of Motion No.1688 of 2003 had applied for setting aside the order of 24th April, 2003 and also prayed that the order dated 25th April, 2003 be stayed. As the pleadings of the parties were complete both the Motions have been heard. Based on the pleadings the case of the plaintiff is that in the course of the employment of defendant Nos. 1 to 3 with the plaintiff, confidential information was disclosed to them and that has been used by the defendant Nos. 1 to 3 as the employees of defendant No.4 and based on the aforesaid confidential information the defendant No.4 was able to manufacture the products of the specifications mentioned in Exhibit "H" to the plaint. The defendant No.1 resigned from the service of the plaintiff on 21st November, 2001. Defendant No.2 had resigned on 28th January, 2002 and defendant No.3 had resigned on 4th February, 2002. It is the further case of the plaintiff that till March, 2002 defendant No.4 was manufacturing only copper cable fitting and flooding jelly, fibre optic cable fitting and flooding jelly, cable spicing jelly and cable clearing liquid and it is only in March, 2002 as noted earlier defendant No.4 7 started manufacturing organic titanates of the specifications mentioned in Exhibits H and K to the plaint. In August, 2002 the defendant NO.4 started contacting the plaintiff’s customers and offering the same products at reduced price by 20%. The plaintiff’s customers informed the plaintiff about defendant No.4 contracting them and offering price at 20% lower than the plaintiff’s price. The plaintiff’s customer again informed them on 10th January, 2003 about contacting them and offering price at 20% lower than the plaintiff’s price. Some employees of the plaintiff on 25th January, 2003 informed them that defendant No.1 was asking them to join defendant No.4. As such the plaintiff came to file a suit on 31st March, 2002. The case of the plaintiff is that unless the plaintiff’s confidential information is used and applied it is not possible for the defendants to manufacture the said products of the specifications mentioned in Exhibit H. The defence of the defendant No.4 through the affidavit of Luv Shah, Managing Director is that it is derived from patents in the public domain and that there is nothing secret or confidential about the process of manufacturing the said products. Based on the pleadings and the law involved the plaintiff contends that the following issues arise for determination. 1. Whether the confidential information which is filed in this Court in sealed envelope pursuant to the 8 order dated 13th June, 2003 being secret is not available in any patent or in any other source which is in the public domain. 2. Whether following the defendants’ process described in Exhibit A to the affidavit of Luv Shah and Dr. Gopinathan by itself is enough to produce the said products i.e. organic titanates of the specifications mentioned in Exhibit H to the plaint; 3. Whether the use and application of the plaintiff’s confidential information submitted to this Court in a sealed envelop is required to be used or applied for the purpose of manufacturing the said products of the specifications mentioned in Exhibit H to the plaint. 4. Whether the plaintiff has carried out any improvement or improvisation to the plant and equipment, the information about which is secret and confidential; 5. Whether the defendants’ plant and equipment are made or worked only on the basis of the information which is in public domain or whether the defendants’ plant and equipment are based on the secret and confidential information of the plaintiff filed in this Court in a sealed envelop. 9 6. Whether defendant Nos. 1, 2 and 3 in fact received any secret and confidential information from the plaintiff while they were in the plaintiff’s employment. 7. Whether defendant Nos.1, 2 and 3 are obliged to keep the confidential information secret and in confidence and not to disclose the same to anybody. 8. Whether the defendant No.4 is using the aforesaid confidential information of the plaintiff for manufacturing the said products. 3. On the other hand on behalf of the defendant No.4 it is set out that the company was incorporated in the year 1998, and commenced manufacture of various types of Telecom Cable Gels like cable Filling and Flooding compounds, Cable cleaning liquids, Splice filling compounds and Thixotropic water swellable compounds used by both PIJF and Optic Fibre Cable manufacturers. The products are used in the manufacture of telecom cables to prevent water seepage and corrosion. The technology for the products was developed by a Team of Chemical Experts and International Consultants and the project design and consultancy was developed in-house by a team of Chemical Engineers and Chemists. The defendant NO.4 10 also has entered into a marketing arrangement with a U.K. based company UNIGEL Ltd., for marketing of Telecom Cable gels in export markets. The defendant No.4 has emerged as the market leader for Cable Gels in India and is steadily increasing its exports. Defendant No.4 has developed a strong R. & D capability in the field of specialty chemicals in the last 3 years of operations. Its products are regularly exported to more than 10 countries. Apart from the business of manufacturing Telecom Cable gels and organic titanates it manufactures various specialty chemicals, ethyl Silicates and Organo Tin Compounds and Mercapto Compounds, Adhesives and Sealants, Speciality Oils, Lube Additicves and Blended Waxes, Petroleum Jellies and Greases. The defendant No.4 has grown exponentially in the years of its operation and now has a turnover of Rs.2742.92 lakhs with net profit of Rs.241.63 lakhs. The defendant NO.4 is the only company in the world to manufacture all types of cable jellies under one roof and is the largest exporter of cable gels in India. It is also pleaded that the defendant No.4 has a strong in-house Research & Development Department with qualified Chemists, Process Engineers and Application Engineers and carries out extensive research for the purpose of developing new products which are utilised by the wire and cable industry. Apart from in-house research and development efforts, Defendant No.4 has also relied on experts and 11 consultants in the field of speciality chemicals. It is then set out in May, 2000 though the defendant NO.4 had conducted some lab trials in respect of organic titanates in 1999 the defendant decided to include organic titanates in their project array only in April, 2000 after meeting various potential consumers of organic titanates at the International Wire & Cable Trade fair in Dusseldorf. In view of the fact that Defendant NO.4 was engaged in the manufacture of products used by the wire and cable industry, the manufacture of organic titanates (which are specialty chemicals used predominantly in the wire and cable industry) was a logical extension of the defendants business. In September, 2000 defendant No.4 commenced lab trials with a view to commercial production of organic titanates. In April, 2001 the defendant No.4 engaged the services of Mr. Ravikumar Chaturvedi, a Project Consultant with 27 years of experience, to assist defendant No.4 in procuring and setting up plant and equipment with the capability of manufacturing organic titanates as well as other products. In May, 2001 Defendant No.4 engaged Dr. C. Gopinathan, a Retired Emeritus Scientist from National Chemical Laboratories (NCL) as a Consultant for setting up a process for manufacture of commercial production of organic titanates and their derivatives. Dr. Gopinath holds a Ph.D., in the organometallic chemistry of titanium and has been involved in research relating to 12 organometallic compounds including organic titanates for more than 40 years. Between 1st December, 2001 to 15th February, 2002 the defendant Nos.1 to 3 joined the defendant No.4 by which time most of the equipment for the facility had already been procured and civil Construction and modification work was already well under way before defendant Nos. 1 to 3 joined defendant No.4. In March, 2002 the defendant No.4 commenced commercial production of organic titanates. It is set out that the plaintiffs are seeking reliefs on the basis that alleged confidential information belonging to the plaintiffs relating to organic titanates had been disclosed by defendant Nos. 1 to 3 to defendant No.4. The particulars of the alleged confidential information were not disclosed in the plaint. The plaint also seeks reliefs in respect of polyvinyl formal polymer, polyvinyl butyral polymer and other products of the plaintiffs which are not even manufactured by the defendant No.4. These reliefs are on the basis of an alleged apprehension that defendant No.4. would lure away other employees of the plaintiffs who are privy to alleged confidential information relating to the said products. It is then pointed out that the plaintiffs applied for injunctive relief and for appointment of Court Receiver. The Court Receiver had issued various directions. On 12th May, 2003 the Court Receiver’s representative visited the premises with the plaintiff’s representative and 13 their Advocates at which time no representative of the defendant No.4 authorised to respond to requests for documents was present. This was recorded in the report dated 13th May, 2003. It is pointed out that though the order of 25th April, 2003 directed only the documents in paragraph 4(c) relating to organic titanates be taken over by the Court Receiver if in defendant No.4’s possession, the plaintiffs sought to information and documents relating to organic titanates belonging to the defendants and this demand was clearly beyond the scope of the order dated 25th April, 2003. The plaintiffs obtained an exparte Judge’s Order from Chamber Judge directing the Court Receiver to take forcible possession of the documents and information set out in paragraph 4(c) of the plaint through a technical expert from her panel along with the representative/technical persons of the plaintiff and to give inspection of plant, equipments, machinery, raw materials etc., and to take inventory thereof. It is the contention of the defendants or the defendant No.4 that the ex-parte Judge’s Order travelled far beyond the scope of the order dated 25th April, 2002. On 10th June, 2003 various documents and records of defendant No.4 were seized and it is in these circumstances that the defendants applied for setting aside the exparte order dated 25th April, 2003. It is then pointed out that the report of Kishore H. Parkar filed on 23rd June, 2003 travelled beyond the scope of both the 14 exparte orders obtained by the plaintiffs. It may be mentioned that Mr. Parkar is an Architect. Various defects and deficiencies in the said report are pointed out. 4. The defendant Nos. 1 to 3 filed their written statement. It is their contention that though they were required to sign a confidentiality agreement during the course of their employment with the plaintiffs, no information of a confidential nature was disclosed to these defendants nor were these defendants informed that any information acquired by them was confidential or a trade secret. In any event, it is pointed out that the plaintiffs have not disclosed any information to them in the course of the employment and had no contact whatsoever with defendant No.4 during the employment with the plaintiff except for enquiries that these defendants made regarding vacancies at defendant No.4 prior to their resignation. It is their case that they did not approach the defendant No.4 in the course of their employment with the plaintiff offering any information as alleged nor did they contact the defendants in any way and they had the plaintiffs for better prospects. When the defendants informed the plaintiff that they wished to leave their employment, they became hostile and demanded that these defendants sign agreements undertaking not to enter into employment with any company manufacturing chemical 15 products, but the defendants declined to do so since their background and experience was only in the chemical industry. It is their case that they could not even disclose in their resignation letter the fact that the defendants wished to take up employment elsewhere for fear that their dues would not be paid by the plaintiff. They were recruited by defendant No.4 after going through their recruitment procedure and interview. It is their case that the defendant No.4 was already in the process of setting up a line for manufacture of organic titanates when the defendants joined the defendant No.4. Soon after joining defendant No.4, the defendants underwent a month long orientation and training programme organised by the defendant No.4 for new employees. During this training programme the defendants were given formal and theoretical training on various aspects of all products manufactured by defendant No.4 including Telecom Cable gels, 2 Mercaptobenzimidazole, Rubber adhesives, polyurethane adhesives, antistatic coning oils and organic titanates. These aspects included their production procedure, raw materials used, batch timings, packing instructions, handling instructions, etc. Systematic training of a similar nature was not imparted to the defendants during their earlier employment with the plaintiff. Consequent thereto the defendants have acquired far more information and expertise regarding production techniques, processes 16 and applications of various products including organic titanates during their one year tenure with the defendant No.4 than during their 7 year tenure with the plaintiffs where a system for training and sharing information was absent. It is also pointed out that during their employment with the plaintiff they were not in charge of procurement or sales for which the plaintiff had designated personnel and had no access to supplier or customer information including, inter alia, pricing. It is further pointed out that they had no involvement in any research or development efforts of the plaintiffs, product development process, product trials, laboratory testing of products or quality control. They were only concerned as operational personnel with running the equipment and machinery for manufacture of organic titanates. It is pointed out that during the course of employment they are not confined to the production of organic titanates and include involvement in the production of other products. Dealing with the various averments it is the case of the defendant Nos. 1 to 3 that they were not imparted with any special and/or confidential information about any process nor they have disclosed the process to defendant No.4 and on the contrary they have acquired the skills when they were employed with the defendant No.4. 5. On behalf of the plaintiff it is submitted that 17 the stand taken by the defendants is inconsistent. There is material on record to show that defendant Nos. 1, 2 and 3 had received confidential information from the plaintiff. Defendant Nos.1,2 and 3 are bound by the negative covenants contained in clauses 3.1 and 3.2 of their respective Agreements with the plaintiff and that the defendant No.4 is manufacturing organic titanates by use of the plaintiffs confidential information. . On behalf of the plaintiffs their learned Counsel contends that the plaintiff is entitled for interim relief as from the material on record and from the affidavits filed by the defendants it is clear that (1) the stand taken by defendant is inconsistent; (2) there is material on record to show that defendant Nos. 1, 2 and 3 had received confidential information from the plaintiff; (3) the defendant Nos. 1, 2 and 3 are bound by the negative covenants contained in clauses 3.1 and 3.2 of their respective Agreements with the Plaintiff; (iv) Defendant No.4 is manufacturing organic titanates by use of the plaintiff’s information. Reliance is placed on various judgments, which will be adverted to in the course of the judgment. 6. It is submitted on behalf of the defendants that the plaintiffs are disentitled to the reliefs 18 prayed for inter alia for the following reasons:- 1. The plaintiffs have abused the process of the Court; 2. The plaintiffs do not satisfy the four requirements that the plaintiffs must address to succeed in any breach of confidence action; 3. The plaintiffs’ case as argued and pleaded is inconsistent and self contradictory; 4. The defendant No.4’s case that their plant and process have been set up independently on the basis of advice of independent experts skilled in the art and/or information available in the public domain is correct and required to be accepted at the interlocutory stage; 5. There is no dilution of the defence and the defendants subsequent affidavits merely explain that the information referred to in the reply affidavits would be obvious to persons skilled in the art; 6. The well settled interlocutory consideration of prima facie case, balance of convenience, irreparable injury weigh heavily 19 in favour of the defendants. . Learned Counsel for the defendants has further contended that plaintiffs are not entitled to any equitable relief by way of interim injunction for the reasons as set out in paragraph 5 of the order. The contention urged by the parties will be dealt with to the extent they are necessary for deciding an application for interim relief. 7. Before going into the merits of the matter the 1st contention which has to be considered is whether the plaintiffs have abused the process of the Court. The defendants have raised this contention on the ground that the plaintiffs obtained a Judge’s order on 10th June,l 2003 without notice to the defendants and had sought reliefs much more than what was granted by this Court by order dated 25th April, 203. It is pointed out that on 6th May, 2003 itself on behalf of the defendants their Lawyer had intimated the plaintiffs that the information which was demanded was far beyond the scope of the order dated 25th April, 2003 and was clearly an attempt to over-reach the order passed by this Court. By further letter dated 15th March, 2003 they had informed the Court Receiver that they had no document and/or records in their possession pertaining to any alleged secret or confidential information of the plaintiffs. Inspite of that the 20 plaintiffs obtained Judge’s order from the Chamber Judge exparte, without notice to the defendants which travelled beyond the scope of order dated 25th April, 2003, and the subsequent acts of the Court Receiver’s representative in seizing documents and records belonging to the defendant No.4 and inventory of plant and machinery and taking photographs was clearly beyond the scope of the order. The plaintiffs by so doing over-reached the exparte order obtained from this Court in an attempt to create false evidence without notice to the defendants and suppressing the Defendant’s Advocate’s letter dated 15th March, 2003.