A Section 27 objection does not defeat interim restraint against alleged misuse of confidential information.

The plaintiff, which developed the “Crafto” platform, employed Defendant No. 1 as Head—Business & Partnership from February 2021 until July 2023. It alleged that, during his employment, he developed “Political Poster” using or replicating Crafto’s features and confidential material, and that Defendant No. 2 later released a substantially similar application, “Poster App–Political.”

The plaintiff sued for injunctions and damages and sought interim relief under Order XXXIX Rules 1 and 2 CPC. After the plaint was returned for presentation before the Commercial Court, that court dismissed the interim applications, finding the evidence insufficient to establish a prima facie case, balance of convenience, or irreparable injury.

Whether the Commercial Court’s dismissal of the plaintiff’s interim-injunction applications warranted appellate interference

Whether the plaintiff had shown a prima facie case, balance of convenience, and risk of irreparable injury sufficient to restrain the defendants from operating the allegedly competing applications pending trial

Order XXXIX Rules 1 and 2, read with Section 151 of the Code of Civil Procedure, 1908, governs interim injunctions.

The applicant must establish a prima facie case, that the balance of convenience favours relief, and that refusal would risk irreparable injury.

Section 27 of the Indian Contract Act, 1872, concerns agreements in restraint of trade; the Court held that this objection could not, at the interlocutory stage, dispose of a claim directed at the alleged continued use of material developed during employment and in breach of confidentiality and intellectual-property obligations.

Section 13(1A) of the Commercial Courts Act, 2015, provided the basis for the appeal.

The Court considered the alleged access Defendant No. 1 had to the plaintiff’s customer data, marketing strategies, product material, and revenue model; the development of “Political Poster” during his employment; and the timing and similarities of the later application released through Defendant No. 2. It found that the similarities in the applications’ templates, graphics, content, privacy policy, and EULA, taken together with the employment agreement and supporting documents, provided a sufficient basis for interim protection.

The Court held that a damages claim did not, by itself, preclude an injunction because alleged misuse of confidential information could cause continuing injury to goodwill and market position that might not be adequately remedied after trial. It also concluded that the Commercial Court had not properly assessed the cumulative effect of the evidence and that Section 27 did not answer the specific claim of continued exploitation of allegedly misused material.

Pending disposal of the suit, the defendants and persons claiming through them were restrained from operating “Poster App–Political,” “Political Poster,” or any application developed by Defendant No. 1 during his employment or competing with, or substantially similar in form, format, and substance to, Crafto.

The Commercial Court was directed to decide the suit independently of the appellate observations and, as far as possible, within six months of receiving the certified order.