Facts
- The respondent company manufactures amongst other things tyre cord yarn at its plant at Kalyan known as the Century Rayon.
- Under an agreement dated January 19, 1961 AKU of Holland and VCF AG of West Germany agreed to transfer their technical know−how to the respondent company to be used exclusively for the respondent company‘s tyre cord yarn plant at Kalyan in consideration of 1,40,000 Deutsche Marks payable to them by the respondent company.
Clause 4 of that agreement provided that the Century Rayon should keep secret until the termination of the agreement and during three years thereafter all technical information, knowledge, know−how, experience, data and documents passed on by the said AKU and VCF and the Century Rayon should undertake to enter into corresponding secrecy arrangements with its employees
Law Points
- Niranjan shankar got job in the company and signed contract under which many clauses were there, related to secrecy, job tenure, condition etc
- But after some he resigned from the company and joined another company working in same tyre yarn business.
- The century spinning filed a suit in the court at kalyan alter alia an injunction restraining the appellant from serving in any company
The Trial Court on a consideration of the evidence led by the parties held:
- (1) that the respondent company had established that the appellant had availed himself of the training imparted by the said AKU in relation to the manufacture of tyre cord, the yarn, the operation of the spinning machines and that he was made familiar with their know−how, secrets, techniques and information;
- (2) that his duties were not merely to supervise labour or to report deviations of temperature as alleged by him;
- (3) that the said agreement was not void or unenforceable;
- (4) that he committed breach of the said
agreement; (5) that as a result of the said breach the respondent company suffered loss and inconvenience and was entitled to damages under Clause 17 and lastly that the company was entitled to an injunction
Judgement
High Court,
- the plea taken by him as to undue influence and coercion was given up.
- The high court agreed with the decision of Trial court and further said that the Rajasthan ryon started producing tyre cord yarn after 2−3 months after the appellant joined.
Supreme court
- Section 27 − agreement in restraint of trade, void.
- Brahmputra tea co ltd V Scarth
- An agreement to serve a person exclusively for a definite term is a lawful agreement.
- Negative covenant operative during term of employment do not fall u/s 27 of ICA 1872
As regards Clause 9 the injunction is to restrain him from divulging any and all information, instruments, documents, reports, etc. which may have come to his knowledge while he was serving the respondent company.
