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2009 DIGILAW 412 (DEL)

Action Construction Equipment v. Gulati Industrial Fabric P. Ltd.

2009-04-13

MANMOHAN SINGH

body2009
Judgment MANMOHAN SINGH, J. 1. The plaintiff has filed the instant suit for permanent injunction and misuse of confidential information. 2. Alongwith the suit, the Plaintiff has also filed an application under Order 39 Rule 1 and 2 read with Section 151 CPC. 3. An ex parte ad-interim order was passed against the defendant on 11.09.2006 in IA No. 10073/2006. 4. The case of the plaintiff company has been in existence for more than a decade. It started manufacturing Mobile Tower Cranes and other infrastructure construction equipment and is a major supplier of products to a number of reputed companies in the Private as well as Government Sector, to name a few CCL, Ranchi, WCl, Nagpur, SECL, Bilaspur, Punjab State Electricity Board, Rajasthan State Electricity Board, NHPC, NTPC, Railways, BSES, Delhi Jal Board, MCD and Defence etc. in the public sector and Reliance, ACC, Punj Lyod Limited, Gammon India Limited. etc. in the Private Sector. 5. The Plaintiff Company has also been exporting cranes to U.A.E, Saudi Arabia, Qatar, Bahrain, Kuwait, South Africa, Kenya, Nigeria, Mozambique, Ethopia, Algeria, Libya, Mouritious, Madagascar, Sri Lanka, Nepal, Bangladesh, Bhutan, Malaysia, Singapore, New Zealand, Kazakhstan Portugal and many other countries. 6. For the last 10 years, the Company is operating on independent basis for manufacturing six models of Hydraulics Mobile Cranes, Front End Loader and Mobiles Cranes Handler of capacities ranging from 5 tons to 20 tons and for last eight years manufacturing 2 models of Tower cranes. The Company provides complete range of Pick-N-Move cranes suiting to the core sector of Indian Industry. 7. The Plaintiff company is the leading manufacturer of the Hydraulic Mobile Cranes & Tower Cranes in India. The Plaintiff Company has already supplied over 4000 cranes of different models as on date. The products have also been endorsed and certified to be quality products by the Ministry of Defense, SAIL, Engineers India Limited., Department of Atomic Energy for the purposes of competing its tenders. 8. The Plaintiff has achieved a net turnover of Rs.200 crore for the period ending 31st March, 2006. The net-worth of the Company Was Rs.3914 lacs as on 31st March 2006. The Balance sheets of the Plaintiff Company for last five years are being filed along with the plaint. 9. As per Plaintiff, when the company was incorporated in 1995, R&D (Research Development) Team was constituted. They started developing and designing the cranes. The net-worth of the Company Was Rs.3914 lacs as on 31st March 2006. The Balance sheets of the Plaintiff Company for last five years are being filed along with the plaint. 9. As per Plaintiff, when the company was incorporated in 1995, R&D (Research Development) Team was constituted. They started developing and designing the cranes. This involved extensive use of labour and money on the part of the company and thereafter the successful type and design of Mobile Tower Cranes was developed. This was done by the Company?s design Engineers, who were involved in R&D (Research Development) Team of the Plaintiff. 10. The Tower Cranes have two models depending on lifting capacity and not limited to the models marketed as “MTC2418, MTC3625” etc. 11. Sometime in 1997, the defendant approached the Plaintiff for the supply of the fabricated components of the Tower crane. 12. The plaintiffs gave the industrial drawings of the key components of Tower Cranes to the Defendants for exclusively manufacturing and specifically supplying the manufactured key components to the Plaintiffs Only. The Drawing stipulated as under :- “This drawing is the property of “Action Constructions Equipments (P) Ltd.” It is furnished to you for development purposes only and is to be returned to ACE upon request. Unauthorised use of the drawing and duplicating or making product as per our drawing without our permission or any other misuse is not permitted.” 13. It was thus agreed between the parties that the defendants would maintain confidentiality and secrecy of the Plaintiff?s industrial drawings of Tower Cranes and use them only for the purpose of manufacturing of the components specifically for the plaintiff company only. 14. The key components are in the nature of (1) Pyramid 2) Winch Housing Stripped (3) Weight Box Assy. (4) Base Frame/Chassis for tower Crane (5) Axle Assy. These components constitute the major portion of the tower crane. The line diagram of the tower crane is also being annexed alongwith the plaint to show the placement of the aforesaid components on the crane and its use. From 1997 to 2004 the plaintiff had placing order on the defendants for manufacturing and supplying of the key components required for the manufacturing of the tower cranes. In this period, the defendants manufactured various components which are used by the Plaintiff in the manufacture of its tower crane. 15. From 1997 to 2004 the plaintiff had placing order on the defendants for manufacturing and supplying of the key components required for the manufacturing of the tower cranes. In this period, the defendants manufactured various components which are used by the Plaintiff in the manufacture of its tower crane. 15. The value of these components manufactured by the defendant based on the industrial drawing and designs of the plaintiff over this period was crores of rupees. The said orders were executed by the Defendants on the basis of industrial drawings, which were handed over to the defendants specifically for the above purpose. According to the plaintiff, the defendants from Sept, 2003 turned dishonest and devised and tried to pass off sub standard goods manufactured by the defendants for greater market penetration of the premier brand of the Plaintiff namely ACE. 16. The Defendants originally set up a fabrication unit and Mr. Sanjay Gulati came in contact with the Plaintiff Company and offered services for manufacturing components for "Hydraulic mobile cranes". Thereafter they started also dealing in the fabrication of the components of Tower Crane. 17. It has recently come to the knowledge of the Plaintiff, that the modus operandi adopted by the defendants in the "Hydraulic mobile cranes" has been the same. The Plaintiff has initiated separate actions for the hydraulic mobiles cranes and present suit is only with respect to “Tower Cranes”. 18. The Defendants are thus habitual offenders. In the past they have misused the drawings of the components of the "Hydraulic Mobile Cranes". Now they are making attempts to misuse the drawings of the “Tower Cranes”. 19. The Defendant are inducing the general public into booking orders to buy their inferior, low-grade Tower Cranes (which they claim, would be introduced in market shortly) by exhibiting of their works of the Tower Crane purchased from one of the Defendant?s Customer and manufactured by the Plaintiff Company. The Defendants project that the said tower crane as their own product under the defendant?s brand name “Omega”. 20. It is contested by the Plaintiff that the defendants are also using unauthorizedly the drawings of the Plaintiff which were given to the Defendants by the Plaintiffs for manufacturing the components exclusively to be supplied to the Plaintiff and nobody else. The Defendants project that the said tower crane as their own product under the defendant?s brand name “Omega”. 20. It is contested by the Plaintiff that the defendants are also using unauthorizedly the drawings of the Plaintiff which were given to the Defendants by the Plaintiffs for manufacturing the components exclusively to be supplied to the Plaintiff and nobody else. The defendant are manufacturing inferior low grade Tower cranes under the brand name of “Omega” which is also contrary to the terms of the contact between the parties and the stipulation of the drawings. 21. It is averred in the plaint, that the defendants thereafter started approaching the employees of the plaintiff including some who had worked previously and were well versed with the company?s technology and affairs of the plaintiffs, who were involved in the Design, Engineering, Purchasing, Production, Marketing, Service & Spare parts of the Cranes. The Plaintiff has given the details in Para 24 of the plaint about the workers and senior employees and claimed that the defendants are indulging in the unfair practices. 22. The defendant has contested the suit and has also challenged the interim order passed by this Court. The main contention of the defendant is that the plaintiff has filed the suit with mala fide intentions for restraining the defendants from manufacturing and marketing Tower Cranes while the plaintiff knows that the defendants are not manufacturing or marketing Tower Cranes at the moment. 23. It is further contended that the plaintiff has no exclusive rights in the industrial drawings or specifications of the Tower Crane manufactured and marketed by it under the trademark „ACE? as the same is a hundred percent copy of the tower crane being manufactured by M/s. Alpha Services, A-8, Shivalik, New Delhi, India. The defendant further contended that it was M/s.Stanford Engineering Ltd., who in 1987 acquired the technology and specifications of the said tower crane from one Monitou of France to manufacture and market the said crane model in India. It is further contended by the defendants that defendant nos.1 and 2 have introduced their hydraulic mobile cranes in the market based on their own drawings and specifications, which are giving strong competition to the plaintiff and in fact the hydraulic mobile cranes introduced by the defendants are better and far more efficient than the hydraulic mobile cranes of the plaintiff. It is further contended by the defendants that the suit of the plaintiff is based on two premises, firstly that the defendants are likely to infringe the plaintiffs copyright in certain industrial drawings pertaining to the tower cranes of the plaintiff and secondly that the defendants have purchased a tower crane of the plaintiff from one of the plaintiff?s customers and are exhibiting the same in their factory in order to misrepresent to the world at large. The defendants further contended that the defendants neither have, nor intend to misuse or copy the alleged but not admitted, industrial drawings of the plaintiff in respect of their tower crane. 24. It is submitted by the defendants that they have not purchased any tower crane of the plaintiff from any of its customers and the tower crane present in the factory of the defendants was actually sent to the defendants? factory by one of their clients for servicing and repairs. 25. The defendant has also contended that as the plaintiff is scared of losing market share once the more efficient and qualitatively superior tower cranes of the defendants are introduced in the market, has instituted the present suit to paralyze the business of the defendant and is seeking exclusive rights in what is an item of public domain. It is further contended that the mobile tower cranes are an item of public domain and are made by a number of manufacturers around the country, many of whom have been in business much prior to the plaintiff. 26. During the course of the hearing of the interim application, learned counsel for the defendants has also drawn the attention of this court to the replication filed by the plaintiff wherein the statement has been made by the plaintiff that the suit of the plaintiff is not based on infringement of copyright. Learned counsel for the defendant states that in view of the said statement, the suit of the plaintiff is liable to be dismissed as the plaintiff himself is not claiming infringement of copyright. 27. On the other hand, learned counsel for the plaintiff has argued that the present suit is based upon misappropriation of the industrial designs, which were given to the defendants for the purpose of manufacturing the component. There are no contradictory stands. The plaintiff is admittedly not claiming the copyright. 27. On the other hand, learned counsel for the plaintiff has argued that the present suit is based upon misappropriation of the industrial designs, which were given to the defendants for the purpose of manufacturing the component. There are no contradictory stands. The plaintiff is admittedly not claiming the copyright. In fact, the defendant has dismantled the tower crane purchased from one of the customers of the plaintiff and has performed reverse engineering of the crane purchased from the plaintiff and has not misused the industrial drawings of the plaintiff. Learned counsel for the plaintiff has also relied upon the report of the local commissioner in this regard. 28. Learned counsel for the plaintiff has further argued that the case of the plaintiff is based upon the breach of trust and misappropriation of industrial drawings of the plaintiff. In fact, the defendants have done breach of contract and violated the confidentiality of the industrial drawings handed over to them exclusively for the purpose of manufacturing of the components for the plaintiff company. 29. I have gone through the pleadings and the documents filed by the parties. At the initial stage when the suit was taken up, this Court on 11.09.2006 passed an ex parte ad interim order and the said interim order is still continuing against the defendant. The main thrust of the defendants is that the plaintiff is not the owner of the drawings in question as the plaintiff himself has copied the same from the third party. 30. The defendants have filed the brochure of the third party in order to prove the same. It is well established law that the copyright subsists only in the original work under Sections 13 and 14 of the Copyright Act 1957, which is exclusively protectable under the Act. In this case, the defendants have not disputed the fact that for number of years the defendants were doing job work for fabricating the components for the plaintiff. It is also a matter of fact that the matter has already gone for trial where the plaintiff has already produced the evidence by way of affidavit. 31. All the defences raised by the defendant can only be examined at the time of trial. It is also a matter of fact that the matter has already gone for trial where the plaintiff has already produced the evidence by way of affidavit. 31. All the defences raised by the defendant can only be examined at the time of trial. At this stage, since the evidence produced by the defendant is not clear and cogent, therefore, it would be appropriate that in case any defence of the defendants is valid, the same can be determined after the trial. 32. In the case of Mr. Diljeet Titus, Advocate vs. Alfred A Adebare & Ors., 130 (2006) DLT 330 this Court has gone far ahead while making the survey of all the authorities on trade secret and has interpreted the employer and employee relation which also includes the lawyer and his associates. This Court has restrained the defendant from misappropriating the information including the lists of clients and other information forming database of the said law firm. 33. In the case of Burlington Home Shopping Pvt. Ltd. vs. Rajnish Chibber, 61 (199) DLT 6 this Court has granted the injunction restraining the defendants from using the compilations, database comprising the list of the clients. 34. In the case of M/s J. C. Bamford Excavators Ltd. & Anr. V. Action Construction Equipment Ltd. & Ors. in I.A. No. 3741/06 in CS (OS) 566/06 decided on 26.5.2006, the plaintiff in that suit claimed copyright in the drawings of the component produced and manufactured by it alleging that the defendant (who is now plaintiff in the present case) copied the drawings of the plaintiff and therefore the plaintiff would suffer irreparable damage if the defendants are not restrained. While refusing the injunction, the court held that the drawing does not seem to be similar to the open eye, on technical specifications it might be similar, still refused to grant an injunction in favour of the plaintiff. 35. The interim order in the present case has been continuing for the last more than two and a half years, it is not proper at this stage to interfere with the said interim order in view of reasons given in para 30 to 33 of my order. Therefore, I am of the considered view that ex parte ad interim injunction order granted on 11.09.2006 be made absolute till the disposal of the suit. IA no. 10073/06 is allowed. CS [OS] no.1740 of 2006 36. Therefore, I am of the considered view that ex parte ad interim injunction order granted on 11.09.2006 be made absolute till the disposal of the suit. IA no. 10073/06 is allowed. CS [OS] no.1740 of 2006 36. List this matter before Joint Registrar for directions on cross-examination on 21.07.2009 of the witnesses of the Plaintiff.