Overview:
In a recent judgment by the Hon’ble Delhi High Court in the case of Navigators Logistics Ltd.v/s Kashif Qureshi, the Court addressed a pivotal issue surrounding the complexities of classification and protection of trade secrets within the Indian legal framework.

Brief background:
Navigators Logistics Ltd (“Appellant”) filed a Commercial Suit against multiple defendants, including former employees and a competing company, alleging misappropriation of trade secrets and confidential data. The Appellant claimed that its proprietary information was leaked by former employees who resigned within a short period and subsequently transferred sensitive data to a competitor.

Primary Allegations:

• Misappropriation of Trade Secrets:
  The Appellant alleged that the former employees had deleted confidential information from their work devices upon resignation and engaged in a conspiracy to exploit this information for personal gains.
   
• Injunction and Damages:
  The Appellant sought both mandatory and permanent injunctions against the respondents and claimed damages amounting to ₹1.5 crore.

Initial Ruling:
On 17 September 2018, the Single Judge dismissed the Appellant's plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 (“CPC”), ruling that:

• • The claims regarding copyright infringement were vague and lacked specificity.
  • Customer lists were not deemed copyrightable works.
  • The confidentiality of customer information was not established as it is generally available in the public domain.
  • Non-compete clauses were found to be unenforceable under Section 27 of the Indian Contract Act (“ICA”)

Appeal:
The Appellate Court set aside the order of the Single Judge for the following reasons:

• • It was observed that the Single Judge ought to have confined its assessment based on the contentions in the Plaint, rather than weighing the defence presented by Respondent for evaluating an application under Order VII Rule 11 of CPC.
  • It was noted that the Single Judge erred in interpreting the non-compete clauses under Section 27 of the ICA.
  • Certain claims relating to transfer and deletion of confidential information by the former employees indicated a cause of action that necessitated a trial. Thus, the findings on these allegations could substantiate the claims raised by the Appellant which were improperly dismissed by the Single Judge.

MHCO Comment:
This ruling sets a precedent for future cases involving trade secrets and employment agreements in India. It provides guidance on how courts may interpret similar claims, potentially influencing how businesses approach their internal policies regarding confidentiality and competition. The judgment serves as a pivotal reference point in Indian law concerning trade secrets, non-disclosure agreements and non-compete clauses, reinforcing essential principles that protect both business interests and individual rights within the employment context. As companies navigate these legal complexities, they must ensure clarity, specificity, and reasonableness in their contractual obligations to mitigate risks associated with potential litigation.

This article was released on 20 January 2025.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us for any assistance.

This update was released on 20 Jan 2025.

The views expressed in this update are personal and should not be construed as any legal advice. Please contact us directly on +91 22 40565252 or legalupdates@mhcolaw.com for any assistance.

Legal Update Team
MANSUKHLAL HIRALAL & COMPANY
Advocates, Solicitors and Notaries
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