Legal Question in Business Law in India

terms of appointment

Mr.Abel was appointed as a manager of a company under a contract of appointment,restricting him to disclose the secret of company and restricting him to join any other company in the same field after leaving the job for a period of six years.he, then after 4 1/2 years later was nominated in Board of Director of the company. In this capacity he violted the terms of agreement by leaking some of the secrets like the company used a carcinogenic compound in manufacturing the compound.He also leave this company and joined that company to which it leaked as board of director. I now wanted to know whether the agreement which Mr.Abel signed with the company in the capacity of manager is applicable to him now when he was nominted in Board of Director and when he leaked the secret And does he violaed his terms of appointment.plese guide me.


Asked on 7/28/06, 1:52 am

3 Answers from Attorneys
Nand Kishore NK Associates

Re: terms of appointment

As per the terms of employment, Mr. Abel was not to disclose the secret of the company (say Company A), while in employment. Hence if during his employment he has leaked out the secrets of company A to a rival company say Company B, then certainly the Company A has a strong case. It is immaterial as to in which capacity Mr. Abel joined the company.

In case Mr. Abel leaves the company A and joins the company B to whom he had leaked the secrets when in employed with Company A, it is still an offence and the Company A can sue him and stop him from doing so and also claim damages for the loss.

Please revert with detailed facts of the case for further detailed opinion

regards

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Answered on 7/28/06, 2:33 am
Shrichand Nahar S.V.Nahar, Advocate

Re: terms of appointment

As far as your ex-employee or present director joining another company is concerned - there can not be a blanket restriction. In any case, said restriction may cease to have any application after he ceases to be your manager, unless his terms of contract as Director have similar restriction. An Agreement in Restrain of Trade normally contemplates damages for breach thereof. You may refer to well known case of Jet Airways in this behalf.

As regard leaking secret information of company is concerned - this is a serious matter and may amount to offences under IPC and some intellectual property laws.

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Answered on 7/29/06, 7:36 am
Navin Kumar Naashree Associates, Advocates

Re: terms of appointment

Yes, the terms of employment is still binding on Mr. Abel. You can explore the possibilities of making him legally liable, in terms of the agreement of employment.

Note: The above advice is based on the facts and circumtances mentioned and as per the Indian laws.It is also advised that one should always consult an attorney giving out all the relevant details.

Navin Kumar, Partner, Nashree Associates, Advocates. Litigation cell: 6,Babar Lane, Ist Floor, Bengali Market, New Delhi-110001. Email:[email protected]

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Answered on 7/28/06, 5:33 am


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