Bombay HC Says Confidentiality Claims Need Evidence, Refuses Injunction Against Tata Retail Arm Trent

On 7 July, the Bombay High Court held that allegations of misuse of confidential information, proprietary business methods and protected employees cannot, at the interim stage, justify a blanket injunction against a party's business activities and require adjudication before the arbitral tribunal on the basis of evidence.

Justice Amit Borkar partly allowed a Section 9 petition filed by The Packshot (India) Pvt Ltd and directed Trent Ltd, Tata's retail arm, to preserve records relating to its engagement with Yoshi Agency Pvt Ltd pending arbitration. However, the Bench declined Packshot's prayer for a blanket injunction restraining Trent from carrying on its business or using the disputed information. It observed:

"Pending commencement and conclusion of the arbitral proceedings, the Respondent shall preserve and maintain all documents, records and electronic data in its possession, custody or control relating to its engagement with Yoshi Agency Private Limited, including invoices, purchase orders, work orders, payment vouchers, ledger accounts, vendor onboarding records, internal approvals, statements of account, bank transaction records, emails, electronic communications and other documents which are relevant to the disputes raised in the present Petition."

The dispute arose from allegations that Trent, the Tata Group retail company operating retail chains including Westside and Zudio, misused Packshot's confidential business information, proprietary business methods and protected employees through its engagement with Yoshi Agency. The two entered into service agreements dated 24 August 2015 and 21 May 2021, under which the latter provided photography and e-commerce services.

Packshot alleged that after its then Managing Director Sapna Sisodia became associated with Yoshi Agency, Trent diverted work, confidential information and protected employees to Yoshi in breach of the agreements. Trent denied the allegations, contending that the agreements were non exclusive and that Yoshi was engaged as an independent vendor.

The Court observed that Clause 2.2 of the agreement prima facie permitted Trent to appoint additional consultants or service providers and that mere appointment of another vendor would not by itself amount to breach of the agreement.

On the issue of confidentiality, the Bench held that the confidentiality and intellectual property obligations continued even after expiry of the agreement and that allegations regarding misuse of confidential information required evidence before the arbitral tribunal. It noted:

"The Petitioner relied upon Clause 15.18 and submitted that the obligations relating to confidentiality and intellectual property continue even after expiry or termination of the agreement. Prima facie, this survival clause appears to keep some obligations alive even after the agreement comes to an end. Therefore, merely because the agreement expired on 31 March 2023, it cannot be said that all contractual obligations also came to an end. Whether confidential information or proprietary material was used is a matter which requires evidence. Still, the survival clause cannot be overlooked at this stage."

The Bench also held that Trent's explanation that Yoshi was engaged because it offered similar services at competitive rates did not answer allegations relating to confidentiality or use of protected information if ultimately proved. It observed:

"At the same time, such explanation may not answer the allegations relating to confidentiality or use of protected information if those allegations are proved. Therefore, both these issues are required to be kept separate."

Justice Borkar directed Trent to preserve emails, metadata, server records and internal communications relating to Sapna Sisodia, Sameer Padmanabha Prabhu, Umashankar Naidu and Shalini Parthi. Further, it directed preservation of records concerning the Zudio and Westside portfolios and ordered that such material should not be destroyed, altered or deleted.

Accordingly, the High Court declined Packshot's request for immediate disclosure of documents and left it open to seek discovery before the arbitral tribunal. It directed the tribunal to decide all issues independently on their merits.

For Petitioner: Siddharth Jha a/w Hetan Jain i/by Law Global

For Respondent: Karl Tamboly a/w Zahan Setalvad i/by Jerone Merchant and Partners