1 USJ IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO.2279 OF 2009 IN SUIT (L) NO.1220 OF 2009 1.Dietrich Engineering Consultant Holdings Z I Lages, Pieces A, Chemin du Devent P O Box 9, CH-1024, Ecublens, Switzerland 2.Dietrich Engineering Consultant India Pvt. Ltd. a company Incorporated under the companies Act, 1956, having its office at Churchgate House, 4th Floor, 32-34, Veer Nariman Road, Fort, Mumbai  400 001 .. Plaintiffs V/s. 1.Schist India & Ors. having office at C-103, Shanti, Unit No.G-15A, Top Class Enclave, Bhoidapada, Sativali Road, Vasai-East, Thane District 406 208 2.Shreepad Hegde F1/31, Noopur Society, Sector-22, Kopar Khairane, Navi Mumbai  400 709 3.Nanda Kumar residing at B-301, Hidden Treasure Apartments, Ayappa Swamy Road, 6-3-1194, Somajiguda, Hyderabad  500 082. (AP) having office at Plot No.25, Margadarshini Colony, Rasooloura, Secundarabad. 4.Pankaj Mehta Carrying on business in the name and style of Metal Craft Industries at 7, Pushpa Sadan, 2nd Carpenter Street, Near Null Bazar, Mumbai .. Defendants 2 ..... Mr. Janak Dwarkadas, Sr. Counsel a/w. Amit Jamsandekar i/by Udwadia & Udeshi for the plaintiffs Mr. Phiroze Palkhiwala, Sr. Counsel a/w. Xerxes Ranina & Rajmani Varma i/by Navdeep Vora & Associates for defendant Nos.1 to 3. Mr. Madhukar Kalzunkar and Suhas Patil i/by Shreeram Shirsat for defendant No.4. ..... CORAM : S.C. DHARMADHIKARI, J. RESERVED ON : 4th AUGUST, 2009 PRONOUNCED ON : 25th SEPTEMBER, 2009 ORAL JUDGMENT : 1. Considering the bulk of the pleadings, papers and documents produced, the number of Authorities cited and the oral arguments made for days together with Written Notes that this lengthy judgment is delivered at this Interlocutory stage. Suffice it to observe that the findings and conclusions are tentative and prima facie and shall not influence the Court while delivering the final Judgment. This is a Notice of Motion by the plaintiffs for interim reliefs in a suit which is filed for permanent injunction. 2. The prayers in the suit in so far as relevant for the present purpose reads as under :- (a) That the defendants, their agents, servants, employees, directors and any other person claiming thorugh or under them be restrained by a permanent order and injunction of this Hon ble Court from in any manner, directly or indirectly, using, imparting, disclosing the same, copying, storing on any medium, using it for manufacturing, marketing 3 and / or selling Mobile Power Transfer System/s, Drum Contentment System, Powder Transfer System- Mobile, Lump Breaker Sunction Lance, Micro-Powder Transfer System, Transbatch Feeder System, Batchmixers and Single Charge container or any variants or accessories thereof or otherwise dealing with the said confidential information particulars of which are given in para 7 of the plaint AND be restrained from selling and / or offering for to sale the Mobile Power Transfer System/s, Drum Contentment System, Powder Transfer System-Mobile, Lump breaker Suction Lance, Micro- Powder Transfer System, Transbatch Feeder System and Single change container or any variants or accessories thereof manufactured by the defendants by using the said confidential information, particulars of which are given in para 7 of the plaint; (b) That the defendants, their agents, servants employees or any other persons claiming through or under them be restrained by a permanent order and injunction of this Hon ble Court from in any manner, directly or indirectly, from using, making copies of the drawings, details of which are given in Exhibit  C hereto, in respect of Mobile Power Transfer System/s, Drum contentment System, Powder Transfer System-Mobile, Lump Breaker Suction Lance, Micro-Powder Transfer System, Transbatch Feeder System, Batchmixers and Single charge Container or any variants or accessories thereof, or storing the same in any medium, making, manufacturing or cause to make or manufacture the Mobile Power Transfer System/s, Drum Contentment System, Powder Transfer System-Mobile, Lump Breaker Suction Lance, Micro- Powder Transfer System, Transbatch Feeder System, Batchmixers and Single Change Container or any variants or accessories thereof or making or cause to make three dimensional depiction or two dimensional depiction of the three dimensional depiction or in any manner using the same so as to infringe the plaintiffs Copyright in the drawings, details of which are given in Exhibit  C hereto; 3. It is the case of the plaintiffs that the 1st plaintiff is a Company incorporated under the Companies Act and registered under the laws of Switzerland. The 2nd plaintiff is a Company incorporated under the provisions of Companies 4 Act, 1956 having its registered office at the address mentioned in the title. The plaintiffs are, inter alia, engaged in the business of development, manufacturing and marketing of POWDER HANDLING EQUIPMENTS AND SYSTEM . It is their case that the unique technology developed by 1st plaintiff offered an almost unlimited number of possible applications. The applications range from conveying raw materials, introducing intermediate products during various phases of production process, handling the final product etc. The machine manufactured in India by the 2nd plaintiff by using the know how and confidential information of 1st plaintiffs, is used in several pharmaceutical and chemical companies by India and Overseas. The technology of the 1st plaintiff offers significant benefits in the prevention of explosions and guarantees Hygiene and complete containment of the product whenever necessary. It is the case of the plaintiffs that the 1st plaintiff has only authorized and allowed the use of know-how / confidential information to the 2nd plaintiff in India and no one else. 4. So far as the 2nd plaintiff is concerned, it is a joint venture of 1st plaintiff and one Patel Group, each holding 50% of the Issued and paid-up share capital of the 2nd plaintiff. The 1st plaintiff and the Patel Group have entered into a share subscription and share holders agreement dated 9th February, 2005 setting out their respective roles and responsibilities, the area of co- 5 operation with regard to the management and administration of the 2nd plaintiff. 5. The plaintiffs are not aware of the exact constitution of the 1st defendant but it is alleged that the 1st defendant is a Company formed by the 2nd defendant who is an ex-employee of 2nd plaintiff. The 3rd defendant is an agent of the 1st defendant and was also an ex-employee of one GMM Pfaudler Ltd. (hereinafter referred to as the said  Pfaudler ) in which Patel Group has substantial share holding. The 3rd defendant was an employee of the said Pfaudler and was incharge of Sales and Marketing of their products in Andra Pradesh and Karnataka. The said Pfaudler Ltd. and 2nd plaintiff are part of the Patel Group and have common customers in the pharmaceutical and chemical industries. The 4th defendant was a supplier / fabricator of 2nd plaintiff of some components of the PTS machines sold by the plaintiff and only for that purpose 2nd plaintiff has given drawings and other proprietary information to the 4th defendant. 6. The allegations are that the defendants are carrying on business of manufacturing machinery identical to that of the plaintiffs by unauthorizedly, illegally and in breach of their contractual obligations of Trust which are Express and / or implied using the confidential information and know-how and by infringement of the 1st plaintiffs 6 Copyrights. The plaintiffs are not aware of the exact constitution of the 4th defendant. 7. It is stated that the suit is filed to prevent unauthorized and illegal use of the plaintiffs confidential information and infringement of the 1st plaintiffs Copyright in the drawings committed and / or likely to be committed by the defendant. 8. The plaintiff states that pursuant to agreement dated 9th February, 2005 between the 1st plaintiff and the Patel Group, the 1st plaintiff executed in favour of the 2nd plaintiff an agreement dated 9th February, 2005 granting the 2nd plaintiff right to use certain know-how / confidential information and to manufacture, produce, process, Sale and distribution of the products produced by the 2nd plaintiff. 9. Annexure B is a copy of the said agreement. 10. It is alleged that the 1st plaintiff has over the years by spending tremendous amount of money, labour and skill has developed the know-how / confidential information in manufacturing and marketing the POWDER HANDLING EQUIPMENTS AND SYSTEM . The description of the machines manufactured and marked is set out in para 6 of the plaint. 11. Paragraphs 7 to 9 of the plaint are relevant for the 7 purposes of the present proceedings and read thus :- 7. The Know-how / confidential information developed and owned by the 1st plaintiff includes manufacturing process, operating procedure, specification, models diagrams, logic diagrams, PI Diagrams process and Instrumentation Diagrams, control panel specifications, drawings of various parts of machines and various components thereof including details of which are given in Exhibit  C hereto, patented or unpatented inventions which suits the various components and drawings, specifications of various parts, drawings/ designs of double entry PTS, customer list, cost of production, price strategy of the products, list of suppliers etc. in respect of Mobile Powder Transfer System, Drum Contentment System, Powder Transfer System-Mobile, Lump Breaker Suction Lance, Micro- Powder Transfer System, Transbatch Feeder System and Single Change Container and also various accessories in respect of these machines and the same is herein after referred to as the said confidential information . 8. The said confidential information of the 1st plaintiff is not available in the public domain and the same is developed by the 1st plaintiff. The said confidential information is very valuable intellectual property of the 1st plaintiff. The said confidential information is disclosed by the 1st plaintiff to its employees and associated companies under a very strict obligation to maintain secrecy of the same. The 1st plaintiff is the owner of the said confidential information. Under the Agreement dated 9th February, 2005, the said confidential information is disclosed by the 1st plaintiff to the 2nd plaintiff and allowed to use the same on the terms more particularly mentioned in the Agreement. 9. The plaintiffs state that the said confidential information is highly confidential and trade secret of the plaintiffs and not available in the public domain and therefore the same is not annexed to the plaint. If the same is annexed to the plaint then it wil cease to be confidential information and shall be misused in future and the whole purpose of the present suit shall be frustrated. However, the plaintiffs are ready and willing to file the said confidential information in a sealed envelope in this Hon ble Court if so desired or considered 8 necessary. 12. It is then alleged that the 1st plaintiff is also owner of the Copyright in the industrial drawings which are part of the confidential information. The components which are more particularly referred in para 10 of the plaint are stated to be manufactured on the basis of these drawings. These drawings are prepared to suit the over all functions of the machine and the confidential information. The drawings are prepared at Switzerland by the 1st plaintiff and they are the owners thereof. These drawings are original and the plaintiffs have a Copyright in the same. Therefore, the plaintiffs are entitled to claim protection in respect thereof in India. 13. The 1st plaintiff is also the owner of various inventions which are patented in Switzerland and other parts of Europe in respect of various components of machineries manufactured by the 1st plaintiff. 14. It is stated that the 2nd defendant joined the services of 2nd plaintiff on 3rd January, 2005 as Manager-System. The appointment letter is dated 3rd January, 2005 and terms and conditions are set out in the same. The 2nd defendant was initially appointed on probation for a period of six months and thereafter he was confirmed in the employment, as his work was found to be satisfactory. Copies of these 9 letters are enclosed to the plaint as Annexures E and F 15. It is stated that the 2nd defendant was in a key position in the employment. It was necessary to disclose confidential information to him. The same was disclosed to him in confidence and trust. He was under an obligation to maintain secrecy and use it only for the benefit of the plaintiffs. The said confidential information was disclosed so that he could have discharged his duties effectively. The 2nd defendant is under an obligation of trust, express and / implied to maintain secrecy and use this information during the course of his employment with 2nd plaintiff and not otherwise. It is stated that the said confidential information was disclosed to the 2nd defendant in trust by 2nd plaintiff. The information was under the control and supervision of the 2nd defendant and / or he always had access to the same. 16. It is stated that 2nd defendant continued to be in employment of 2nd plaintiff for a period of 3 years, 2 months and 21 days. During this period, the 2nd defendant was trained by 2nd plaintiff with regard to all aspects of the products that were manufactured by the plaintiffs. The training included engineering, operations, manufacturing, maintenance, marketing and all other aspects in relation to the products of the plaintiffs. The plaintiffs further state that the training received by defendant No.2 10 including his visits to the 1st plaintiff at Switzerland on various occasions, for total time period of 43 days was at the cost of 2nd plaintiff. The plaintiff states that Mr. Fredric Dietrich, the Managing Director of the plaintiff has personally trained 2nd defendant in Switzerland and during his several visits to India. The plaintiffs incurred tremendous expenses in his training and also during this training the confidential information was disclosed from time to time. 17. The 2nd defendant after completion of his training underwent Knowledge Assessment Test with regard to the engineering operations, manufacturing, maintenance, marketing and all other aspects of the plaintiffs products manufactured by using the said confidential information. The test would prove that the plaintiff was specifically trained with regard to Powder Transfer Solution which is being manufactured by the plaintiffs by using the said confidential information. The said knowledge assessment also had confidential clauses to which the 2nd defendant had agreed to and accepted. Thus, it is stated that the 2nd defendant had extensive knowledge of the confidential information and it was intended that he uses the same for the purposes of business of the plaintiffs. These allegations are repeated throughout the plaint and it is alleged that the 2nd defendant prior to joining the 2nd plaintiff was employed with Companies, whose name are 11 listed in para 18 of the plaint for a total period of 12 years. However, none of these companies had nothing to offer even remotely in the area of Powder Transfer and / or Powder Transfer Equipment or other machines of the plaintiffs. 18. It is alleged that the 3rd defendant was a employee of Pfaudler Ltd. and he was heading the sales and marketing activities for Karnataka region. He joined Pfaudler Ltd. as a Branch Manager on June 18th 2005 and was in there employment till February, 18th 2008, the details of his employment with that Company are set out in para 19 and similar allegations are made as against him. 19. So far as 4th defendant is concerned, it is stated that he was a supplier of a few components viz. PTS Body, PTS Cover, Suction Lance, Suction pot, Delumper of Mobile Powder Transfer System to the plaintiffs. These components were manufactured by the 4th defendant for the plaintiffs. To manufacture these components as per their requirement, the 2nd plaintiffs has given the copies of the drawings to the 4th defendants. These drawings are still in possession of the 4th defendant. Even he is therefore entitled to maintain secrecy of the same and use them only for the purposes of the plaintiffs and none else. 20. It is stated that 2nd defendant resigned from the 2nd 12 plaintiffs employment w.e.f. 22nd February, 2008. By letter addressed to the 2nd plaintiff, it was stated by 2nd defendant that he would resign and would also handover complete charge to Mr. Rajesh Vyas, Vikram Rajput, D. Joshi of the 2nd plaintiff. He also obtained the list of materials / documents which he handed over to the 2nd plaintiffs. He also requested the 2nd plaintiff for relieving letter recording that he had left the employment w.e.f. 22nd February, 2008. It is stated that these documents are set out in e-mail dated 15th February, 2008. It is further stated that the 2nd plaintiff accepted the resignation letter of the 2nd defendant and relieved him from the services on 23rd February, 2008. It is then alleged that by letter dated 10th March, 2008, the 2nd plaintiff expressly informed and called upon the 2nd defendant to return all papers, documents and products belonging to plaintiffs. He was also warned against disclosing and divulging any information about the affairs of the business of the plaintiffs and its data which was known to defendant No.2 as the same were proprietary in nature. He was also paid his legal dues. 21. It is alleged that the 2nd defendant during the course of his employment with the 2nd plaintiff was in over all control of the 2nd plaintiff s business. He used to represent the plaintiffs in various exhibitions, clients meetings, negotiations etc. on the basis of the 13 confidential information and on instructions of the plaintiff. The price negotiations, clients meetings, correspondence with the customers, purchase orders, quotations of specific products etc. was under the control of the 2nd defendant. 22. It is stated that even the 3rd defendant resigned from the services of the said Pfaudler Ltd. around the same time as of the 2nd defendant. It is alleged that 3rd defendant is now working as an Agent of the 1st and 2nd defendants and marketing and selling the machines manufactured by them. It appears that the plaintiffs are not getting manufactured components of their machines from the 4th defendant but the drawings given to the 4th defendant by the plaintiffs, listed at Annexure C to the plaint are still in possession of the 4th defendant. 23. In para 26 and 27 it is alleged that ;- 26. The plaintiffs state that the plaintiffs were shocked to learn that defendant No.2 incorporated the 1st defendant and started manufacturing the marketing identical Mobile Powder Transfer System like the plaintiffs by using the said confidential information. The use of the said confidential information by the 2nd defendant is in breach of trust and obligation to maintain the secrecy of the same. The plaintiffs state that to manufacture the Mobile Powder Transfer System like the plaintiffs it is necessary to have the said confidential information and the 2nd defendant has the same in his possession. The plaintiffs have disclosed and given copies of the confidential information in respect of the Mobile Powder Transfer System to the 14 2nd defendant during the course of his employment with the 2nd plaintiff and the same includes manufacturing process, operating procedure, specification, models diagrams, logic diagrams, control panel specifications, PI diagrams drawings of various parts of machines and various components thereof, patented or unpatented inventions which suit the various components and drawings, specifications of various parts, drawings/designs of double entry PTS, customer list, cost of production, price strategy, list of suppliers etc. The Mobile Powder Transfer System has various components such as body, butterfly valve, actuators, control panels pressure regulators, camlok and fittings, triclover and ferrules, filter frames, delumer blades, wooden box, halar coating, PTFE gasket, termocol chips and other components and miscellaneous hardware. These components are manufactured and assembled as per the drawings/specifications, diagrams and assembled as per the operating procedure. During the employment of the 2nd defendant with the 2nd plaintiff, the 2nd defendant use to personally interact with various suppliers of the components of Mobile Powder Transfer System to the 2nd plaintiff and use to instruct them on the manufacturing process on the basis of the said confidential information. The 2nd defendant in breach of trust and obligation to maintain the secrecy and use the said confidential information for the benefit of the plaintiffs has disclosed the same to the 1st defendant and / or its employees and the suppliers. The 1st and the 2nd defendants are manufacturing, marketing and selling Mobile Powder Transfer System and other equipment, identical as of the plaintiffs by using the said confidential information. Defendant No.3 represents defendant No.1 and defendant No.2 in South India and promotes their products to the same customers that he interacted with while in the products of the plaintiffs. 27. The plaintiffs state that the components of Mobile Powder Transfer System such as filter cartridge and PTS body can only be manufactured on the basis of the drawings of the same which are listed in Exhibit C hereto. The filter cartridge and pTS body, Delumper, Suction Lance, of the Mobile Powder Transfer System manufactured by the 1st and 2nd defendant is identical / substantially similar to the plaintiffs filter cartridge and PTS body. The 1st and 2nd defendants have used the drawings of the plaintiffs which were given to the 2nd defendant during the course of the employment with the 2nd 15 plaintiff and have depicted in three dimensions and manufactured the components and / or the 1st and the 2nd defendants have dismantled the filter cartridge of the plaintiffs and prepared the drawings and then manufactured the same. The plaintiff states that such activities of copying drawings and making another drawing of the same and manufacturing components amounts to infringement of the plaintiffs artistic work of drawings. 24. Thereafter, it is alleged that 4th defendant has been supplying identical components of Mobile Powder Transfer System to 1st and 2nd defendant. This is all done on the basis of drawings which are in his possession. It is alleged that defendant Nos.1 and 2 has approached and booked orders with several parties (listed in para 29) by using the confidential information. These companies / entities are the clients of the plaintiffs. There are several orders which have been finalized by the defendants are various entities with regard to the said PTS and this is adversely affecting the business of the plaintiffs and resulting in plaintiffs incurring huge losses. The 3rd defendant is representing 1st and 2nd defendants. The details of how the orders were obtained from some of the clients are set out in para 30 to 33. In para 34 and 35 the plaintiffs allege thus ;- 34.The plaintiffs state that after realizing that the defendants are misusing and abusing the plaintiffs confidential information and the Copyright the plaintiffs further investigated the matter internally and the plaintiffs realized that the 2nd defendant was dishonestly acting contrary to the interest of the plaintiffs even during the 16 course of his employment with the 2nd plaintiff. The plaintiffs recovered computer used by the 2nd defendant during the course of his employment with the 2nd defendant and found that the 2nd defendant was copying and preparing for his illegal activities when he was in the employment. The plaintiffs found the catalogue prepared by the 2nd defendant for the 1st defendant which is again copied from the catalogue of the plaintiffs. Hereto annexed and marked as Exhibit R is a copy of the printout taken from the computer which was used by the 2nd defendant. 35. The 2nd defendant for his personal gain and for the benefit of the 1st defendant is negotiating, quoting and planning their pricing and marketing strategy by using the said confidential information. The 2nd defendant during his employment with the 2nd plaintiff was trained and disclosed to negotiations, quotations and pricing and marketing strategy of the plaintiffs and the same is being used by the 2nd defendant to commit the acts of unfair trading by the 2nd defendant and to cause injury, loss and damage to the plaintiffs. 25. In these circumstances and making further allegations in paragraphs 36 and 38, the plaintiffs have claimed the aforementioned reliefs. 26. In