In an application under Section 340 read with Section 195(1)(b) of the Criminal Procedure Code, 1973 (CrPC), against the plaintiff company and its authorized signatories in a suit filed for permanent injunction as well as damages before the Delhi High Court, a Single Judge Bench of Justice Subramonium Prasad allowed the application and directed filing a complaint under Section 195 of CrPC read with Section 340 of CrPC before a competent court.
The suit was filed to restrain the defendants and any other persons involved with them from carrying on any business in contravention of the non-disclosure agreements and to obtain a decree for damages in excess of Rs. 10,00,00,000/-.
The plaintiff was a private limited company incorporated under the Companies Act, 1956, engaged in providing integrated outsourced technology solutions and field services to banks and other financial institutions to facilitate the financial inclusion initiative in India. It was asserted that the plaintiff developed a unique in-house technology for rural banking services by providing a fully functional and certified end-to-end system that enables authentication and payments on the UIDAI Aadhaar Enabled Payment System (AEPS) platform for financial institutions, as well as providing gold loan sourcing.
In 2012, defendants 2 and 3 approached the plaintiff seeking employment. Defendant 2 was appointed as Group Area Manager in Chhattisgarh, and defendant 3 as Head of Delivery in Gurgaon. Thereafter, defendant 4 approached the plaintiff for employment and was appointed as Project Manager in Gurgaon. The plaintiff further employed defendants 5-20 for various posts between 2015 and 2021.
In the course of employment, the defendants gained access to the plaintiff’s confidential information, trade secrets, and business connections. For the protection of the plaintiff’s interests, the defendants 2-20 executed identical Non-Disclosure Agreements (NDAs), in which a clause was added stating that they could not disclose any information to anyone for 2 years from the date of their resignation.
In December, 2020, defendants 2-4 abruptly resigned and acting in good faith, the plaintiff accepted the resignations and completed all exit formalities. In 2021, the plaintiff learned that a certain bank had been approached by defendant 1 with a business proposal, through defendants 2-4, who purported to represent defendant 1. The plaintiff discovered that defendants 2-4 were actively engaged in various capacities with defendant 1, a company operating in the same line of business as the plaintiff.
Defendant 1’s master data revealed that it was incorporated on 02-02-2021, i.e., a month after the resignation of defendants 2-4. The record also revealed that defendant 4 was a director of defendant 1, that defendant 2 was employed as a Zonal Manager, and that defendant 3 held 4,000 equity shares in M/S Calance Software Pvt. Ltd., the holding company of defendant 1. On 18-08-2021, the plaintiff issued a legal notice to defendant 1, demanding that they stop carrying on any business in competition with the plaintiff, but no reply was given.
It was also stated that defendants 2-4, in collusion with defendant 1, had been inducing key employees of the plaintiff to breach their employment contracts and join defendant 1. Defendants 2-4 solicited and procured the resignation of defendants 5-20 from the plaintiff’s employment, and all of them had joined defendant 1. Therefore, the present suit was filed for breach of the NDAs.
The present application was filed by defendant 1, stating that the plaintiff had committed perjury by intentionally raising false pleas and furnishing false information during the judicial proceedings before this Court, and that an inquiry under Section 340 read with Section 195(1)(b) be initiated against the plaintiff. Notice for the same was issued to the plaintiff on 29-05-2023. Defendant 1 submitted that it had independently approached ICICI Bank through its directors for business purposes, and through defendants 2-20. It was also asserted that the Service Provider Agreement between the defendant 1 and ICICI bank had not impacted the plaintiff’s relationship with the said bank, which continued to avail services from the plaintiff.
The Court noted defendant 1’s allegation that the plaintiff had made false submissions to deliberately mislead the Court and had drawn the Court’s attention to various paragraphs of the plaint wherein incorrect averments were made. It was noted that defendant 1 approached the Sherlock Institute of Forensic Science (SIFS) and also submitted relevant documents.
After perusing Section 340 of the CrPC, the Court stated that before any action under Section 195, CrPC is taken, the Court must form an opinion that it is expedient in the interest of justice that an inquiry should be made into an offence referred to in Clause (b) of sub-section (1) of Section 195 CrPC in relation to a proceeding before the Court in respect of a document produced or given in evidence.
The Court stated that the pleadings in the plaint asserted that defendants 2-20 had executed the NDAs and were bound not to disclose confidential information, and on this basis, the plaintiff obtained an ad interim injunction. However, it subsequently transpired that the pleadings were not supported by the material on record, and the interim order was vacated by an order dated 17-08-2022, observing a lack of evidence. Hence, the Court held that a prima facie case was made out that false averments were made in the plaint and that the pleadings were inconsistent with the documents on record.
The Court noted inconsistencies in the execution of the NDAs and opined that the ingredients of Section 195(1)(b)(i) of CrPC were attracted since the alleged false statements formed part of the judicial record and had a direct bearing on the administration of justice. The Court said that the averments in the plaint were made by the plaintiff knowing fully that they were false, as defendant 19 had categorically stated that the signatures were forged. It was stated that the plaintiff was the beneficiary of a stay on the basis of the false statements and that the plaintiff had resorted to filing certain fabricated documents to cover up its lapses.
The Court found that the present case was one where it was in the interest of justice to initiate proceedings under Section 340 of CrPC and directed the Registrar General to prepare a complaint as per Section 195 of CrPC read with Section 340 for filing before the competent court, while allowing the application.
Appearances:
For Plaintiff – Ms. Malvika Trivedi (Sr. Adv), Mr. Atanu Mukherjee, Ms. Sujal Gupta, Mr. Shailendra Slaria
For Defendants – Ms. Shantha Devi Raman, Mr. Arihant Jain, Ms. Tanisha Gopal
