MANU/DE/0152/2015

IN THE HIGH COURT OF DELHI

OMP 1257/2014
Decided On: 22.01.2015
Appellants: Affle Holdings Pte Limited
Vs.
Respondent: Saurabh Singh
Hon'ble Judges/Coram:
Rajiv Shakdher, J.
Counsels:
For Appellant/Petitioner/Plaintiff: N. Ganpathy, Gautam Varma and Manpreet Lamba,
Advocates
For Respondents/Defendant: Ajit Warrier, Sandeep Grover, Paresh and Aditya Nayyar,
Advocates
JUDGMENT
Rajiv Shakdher, J.
OMP 1257/2014 AND IA No. 23684/2014 (u/O. 39 R. 4 CPC by R-1)
1. On 16.10.2014, I had granted an ex parte interim order in favour of the petitioner in
terms of prayer clause (a), (d) and (e). In so far as relief sought in prayer clause (b)
was concerned, injunction was restricted to the car owned by respondent no. 1, which
is a BMW 5 Series Car, bearing registration no.UP 16A U5599.
1.1 This interim order was modified on 17.10.2014 on account of an application filed
by the petitioner, being : IA No. 20555/2014. The limited modification / correction
sought was that, the reference made in order dated 16.10.2014 to Mobulous
Technologies Pvt. Ltd. should stand corrected to Appstudioz Technologies Pvt. Ltd.
1.2 The modification / correction, as sought, was allowed, as indicated above, vide
order dated 17.10.2014.
1.3 The captioned application (i.e., IA No. 23684/2014) has been filed by respondent
no. 1 to seek "partial vacation / modification" of orders dated 16.10.2014 as modified
by order dated 17.10.2014.
2. In my view, in order to adjudicate upon the rival stands placed before me, on behalf
of the petitioner and respondent no. 1, it may be relevant to notice the following broad
facts :-
2.1 The respondents herein were evidently running and managing a company by the
name of Appstudioz Technologies Pvt. Ltd. (hereafter referred to as ATPL). The said
entity i.e., ATPL evidently was in the business of mobile applications development, on
various platforms, such as, I.O.S. and Android.
2.2 The petitioner, which is a private limited company, incorporated under the laws of

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Singapore, entered into a Share Purchase Agreement dated 04.04.2014 (in short SPA)
with the respondents in respect of ATPL.
2 . 3 The SPA envisaged, broadly, that the petitioner would purchase all, fully paid
ordinary shares of ATPL, numbering 10000, which were legally and beneficially owned
by the respondents, for a cash consideration of Rs.5,88,80,000/-. In addition, the
petitioner was required to transfer 2,19,325 shares in favour of the respondents in the
manner stipulated in clause 5.5 (a) of the SPA. The petitioner had also undertaken an
obligation to employ respondent no. 1 as the co-founder and managing director of
"Appstudioz business", at a compensation package adverted to in clause 5.5(d) of the
SPA.
2 . 4 The manner in which the total consideration of Rs.5,88,80,000/- was to be
distributed amongst the respondents is set out in clause 5.3 of the SPA. Notably, out of
the total consideration of Rs.5,88,80,000/-, respondent no. 1 received a sum of
Rs.4,41,60,000/-, while respondent no. 2 (i.e., Ms. Snigdha Singh), who is, admittedly,
the sister of respondent no. 1, received a sum of Rs.58,88,000/-. The other two
respondents, i.e., Sh. Abhinav Singh (respondent no. 3) and Ms. Preeti Singh
(respondent no. 4) received a sum of Rs.58,88,000/- and Rs.29,44,000/-. Similarly, the
consideration received in kind, that is, in the form of shares in the petitioner company
to which I have made a reference above was to be allotted in the following manner :-

2.5 This apart, certain other obligations were also undertaken by the petitioner under
clause 5.5 (b), (c) and (e) which were dependent upon the happening of the eventuality
provided therein. The said clauses not being particularly relevant, are not being dilated
upon herein.
2 . 6 Suffice it to say, the petitioner retained with it, the right to selectively waive
continuous employment requirement qua one or more of the respondents.
2.7 It may be important to note that while executing the SPA, respondent no. 1, acted
on his own behalf, as well as for the remaining respondents.
2.8 The petitioner, as agreed under the SPA, issued on the same day, i.e., 04.04.2014,
a letter of appointment to respondent no. 1, calling upon him to join Affle Appstudioz
Pte. Ltd., Singapore (HQ) as its Co-founder and Managing Director. This position, which
was offered to respondent no. 1, was based out of Noida in India, and accordingly,
respondent no. 1 was to take up the position of Co-founder and Managing Director,
Affle Appstudioz.
2.9 As compensation, respondent no. 1 was offered an annual fixed salary of Rs.50
Lakhs, with an additional variable component of Rs.15 Lakhs, in the form of
performance bonus. The variable component was to be paid annually subject to

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attainment of net increase in cash and cash equivalent from Affle Appstudioz not being
lower than Rs.5,30,76,800/-. The offer was accompanied by detailed terms and
conditions, which were accepted by respondent no. 1 on the same date, by counter-
signing the letter of offer. For the sake of convenience, hereafter the said contract will
be referred to as the employment contract.
3. There were two clauses in the letter of offer, which are relevant for the purposes of
the adjudication in the instant matter. The first such clause is, clause no. 6, which
prohibited respondent no. 1 from accepting any full time or part time employment of
any nature with any corporation during the course of the employment. The other
relevant clause is, clause no. 9, which required respondent no. 1, to execute and
observe standard non-compete, non-disclosure and assignment of inventions
agreements with the employer, i.e., Affle Appstudioz Pte. Ltd., Singapore (HQ).
3.1 Pursuant to the above, the respondents executed two addendums. These are dated,
01.05.2014 and 01.09.2014. Once again, for our purposes, what is relevant is, the
second addendum dated, 01.09.2014 and, in particular, clause 5.5 of the said
agreement.
3 . 2 The grievance of the petitioner emanates from the fact that despite the
understanding as amongst the parties herein, it discovered that respondent no. 1 was
not, fully committed to the business of ATPL, and was acting contrary to its interest in
the teeth of the obligation undertaken to the effect that it would not engage in a
competing business during the course of his employment or for a period of 36 months
after the consummation of the transaction, as envisaged in the SPA.
3 . 3 The petitioner claims that a google search by its representatives revealed that
respondent no. 1 had a domain name, i.e., www.mobulous.com, registered in his name,
which he had transferred to an entity by the name of : Mobulous Technologies Pvt. Ltd.
(in short MTPL); a company in which the majority shareholder was one, Sh. Peeyush
Kumar Singh, a close relative of respondent nos.1 and 2. The petitioner claims that
MTPL is in the same business as that of ATPL.
3 . 4 These actions of respondent no. 1, according to the petitioner, were not only
violative of the SPA and the terms of his appointment but were also in direct derogation
of the declaration furnished by him on 21.08.2014, to the effect, that he did not have
any interest in any company or organization including that of a Director and / or
Shareholder.
3.5 The petitioner also asserts that the google search conducted on 11.11.2014 by its
representatives revealed that the website of MTPL was a complete replication of ATPL, in
as much as, it offered "mobile app", as a service platform.
3.6 It is also the case of the petitioner that the registered office of MTPL, is situate at
the very address at which the registered office of ATPL is located, i.e., P-44, Ground
Floor, Pandav Nagar, Mayur Vihar Phase-1, Delhi-110091.
3.7 In sum, the grievance of the petitioner is that, despite a huge consideration paid in
cash and in kind, which is valued at, Rs.7.36 Crores, to obtain exclusive right to
customers, employees, all related intellectual properties and mobile business
applications, which formed the core of ATPL business, respondent nos.1 and 2, with
malafide intent set up a competing company.
3 . 8 It is thus, averred that the setting up of competitive business has resulted in

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dilution of the petitioner's market share and business value.
3.9 It is, precisely in these circumstances, that Affle Appstudioz Pte. Ltd., Singapore
(HQ), terminated the employment contract, it had with respondent no. 1. This resulted
in respondent no. 1's services as an employee, Co-founder and Managing Director being
terminated with immediate effect. As a matter of fact, respondent no. 1 was also
removed by the shareholders of Affle Appstudioz Pte. Ltd., Singapore (HQ) and ATPL as
a Director from their respective Boards after a duly convened Extraordinary General
Meeting (EGM) held in this behalf on 31.10.2014 and 04.11.2014, respectively.
4 . It would be relevant to mention at this stage that the petitioner, which owned the
entire share capital of ATPL, had caused a special notice dated 08.10.2014 to be served
on ATPL for convening an EGM in order to enable it to move, inter alia, a resolution for
removing respondent no. 1 as Director of ATPL.
4 . 1 Consequent thereto, the respondent no. 1 ceased to be an employee of Affle
Appstudioz Pte. Ltd., Singapore (HQ) and was also removed as the Director of Affle
Appstudioz Pte. Ltd., Singapore (HQ) and ATPL.
4 . 2 It appears that pursuant to the interim order passed on 16.10.2014 and
17.10.2014, the petitioner caused service of two legal notices dated 17.10.2014 and
20.10.2014, to be served on respondent no. 1, primarily with the view to have
respondent no. 1 transfer the following domain names in favour of the petitioner.
(a). Domain names :
* appstudioz.fr
* appstudioz.co.uk
* appstudioz.de
* appstudioz.nl
* appstudioz.co.in
* appstudioz.org
(b). AppStudioz Facebook page
https://www.facebook.com / AppStudioz/info?ref=page_internal
(c). AppStudioz Twitter handle - https://twitter.com/Appstudioz
4.3 It appears that not only the facebook account but also five (5) out of the six (6)
domain names stand transferred in favour of the petitioner. This position obtained at
least till the date of filing of the affidavit dated 13.11.2014, on behalf of the petitioner
herein, by one, Sh. Kapil Mohan Bhutani. This affidavit adverts to the correspondence
exchanged between the petitioner and respondent no. 1, on the said issue. Copies of
the communications exchanged between them have been appended including an interim
activity log report dated 04.11.2014 submitted by Price Water House Coopers Pvt. Ltd.
(in short PWC). This report details out the analysis made by PWC vis-a-vis the user
activity carried out on the laptop, which is described as : Make Macbook, Model :
Macbook Air; S/N:-Co2N6EJ8Go86 for the period commencing from 01.10.2014.
Apparently, the said laptop was used by respondent no. 1.

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4.4 It is the petitioner's case that certain files were copied from the said laptop on
02.10.2014.
5. It is in this background that respondent no. 1 filed the captioned application, being
IA no. 23684/2014. The said application was filed on 27.11.2014. The application came
up for hearing before the court for the first time on 28.11.2014 when, notice was
issued. Upon pleadings being completed, arguments were heard on 05.12.2014, upon
which judgment in the matter was reserved.
6 . On behalf of the applicant/respondent no. 1, arguments were advanced by Mr.
Warrier, while on behalf of the non-applicant/petitioner, submissions were made by Mr.
Ganpathy.
6.1. The submissions of Mr. Warrier can be, broadly, paraphrased as follows :-
(i). The non-applicant/petitioner has concealed the fact that on the day when
the SPA was executed, another agreement dated 04.04.2014 (marked as
Annexure A-1), was also executed which, inter alia, recognized the fact that
another start-up by the name of Mobulous Softwares Pvt. Ltd. (MSPL), founded
by Mr. Peeyush Kumar Singh and one, Mr. Anil Sharma, was in existence.
(ii). The said document (Annexure A-1) also reveals that the petitioner had
knowledge of the fact that respondent no. 2 having been married and settled in
USA would find it difficult to continue in employment with ATPL and that her
skills would be used as a consultant, if and when, she could spare time for the
said purpose. In other words, it recognized that respondent no. 2 would render
need based support and guidance to the android team of ATPL.
(iii). The petitioner, had failed to disclose to this court that on the very date
when it pressed for interim orders, i.e., 16.10.2014, it had unilaterally
terminated the employment of respondent no. 1, as its Co-founder and
Managing Director. This fact was not even disclosed to the court when
modification was sought on the next date, i.e., 17.10.2014. The fact that the
petitioner intended to take these coercive measures was evident upon a bare
perusal of the communication dated 08.10.2014 whereby, the petitioner served
a special notice on ATPL to convene an EGM for removal of respondent no. 1 as
ATPL's Director.
(iv). The relief granted in terms of prayer clause (a) was liable to be vacated as
the injunction could not operate post the termination of respondent no. 1's
employment with ATPL. If such injunction were to operate, it would render
respondent no. 1 jobless and force him to remain unemployed, indefinitely,
resulting in violation of his fundamental right to livelihood.
(v). The non-compete obligation contained in clause 5.5 of the second
addendum could have arisen, it at all, had the petitioner executed the various
agreements referred to in the said clause, such as : the standard non-compete
agreement, non-disclosure agreement and the assignment of inventions
agreement (collectively referred to hereafter as non-compete agreements). It
was asserted that since none of these agreements were executed, no injunction
in terms of clause 5.5 of the second addendum could issue qua respondent no.
1.
(vi). The prohibition on respondent no. 1, contained in clause 6 of the

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 employment contract could operate only, during respondent no. 1's employment
with ATPL and not post termination of the employment contract. That in any
event, clause 6 was contrary to Section 27 of the Indian Contract Act, 1872 (in
short the Contract Act).
(vii). Enforcement of a non-compete clause post termination was in violation of
Section 27 of the Contract Act.
(viii). That there was no obligation under the terms of the SPA, on the part of
respondent no. 1 to transfer domain names in favour of the petitioner, which
were registered in his personal name.
7 . Mr. Ganpathy, on the other hand, while conceding that various non-compete
agreements were not executed between the petitioner and respondent no. 1,
emphasized the fact that these were standard form agreements which were made
available to respondent no. 1, who had, consequently, knowledge of the said
agreements.
7.1 It was also the contention of Mr. Ganpathy that the petitioner, having bought the
entire shareholding of ATPL had, in effect, acquired the business and goodwill of the
said entity, and was, thus, entitled to impose the obligations cast upon respondent no.
1 in terms of clause 5.5 of the second addendum. It was the learned counsel's
submission that this obligation continued to operate notwithstanding the fact that Affle
Appstudioz Pte. Ltd., Singapore (HQ) had terminated the employment contract in its
capacity as the employer of respondent no. 1.
7 . 2 In so far as the allegation with regard to concealment of material facts was
concerned, it was Mr. Ganpathy's submission that, the document dated 04.04.2014
(Annexure A-1) was a forged and fabricated document. Mr. Ganpathy asserted that
signatures of one Sh. Anuj Khanna Sohum, which are found on the said document have
been copied and pasted on to the said document by respondent no. 1. The learned
counsel submitted that, the fact that no such document dated 04.04.2014 (Annexure A-
1) was executed, is clearly borne out from the fact that there is not a single
communication, whether digital or otherwise, either before or after the execution of the
SPA, which, would indicate that on the same date, on which, the SPA was executed, any
such document as alleged, or at all, was executed between the petitioner and
respondent no. 1.
7.3 To buttress the aforesaid submission, reference was made by the learned counsel to
various communications which have been placed on record with the reply filed on behalf
of the petitioner to the captioned application. Assertions made in the reply with regard
to the circumstances which would point to the document being forged and fabricated
were also referred in the course of arguments.
7.4 As regards the concealment with regard to the fact of termination of respondent no.
1's employment contract is concerned, it is contended that first of all the petitioner was
not the employer of respondent no. 1. The employer of respondent no. 1 was Affle
Appstudioz Pte. Ltd., Singapore (HQ). Upon termination of the employment contract by
the said employer vide communication dated 16.10.2014, the same was e-mailed to the
petitioner on 18.10.2014, much after the dates when hearings were held in this court.
7 . 5 It was stated, as a matter of fact, the lawyers of Affle Appstudioz Pte. Ltd.,
despatched the termination notice, well after the hearing held in this court on
17.10.2014. In this behalf, reliance was placed on the tracking report of the courier

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company.
7.6 Mr. Ganpathy submitted that after the termination of the employment contract of
respondent no. 1, on 16.10.2014, he continued as the Director of Affle Appstudioz Pte.
Ltd. till his removal at the EGM of the said company, held on 31.10.2014. Similarly,
respondent no. 1 continued as Director of ATPL till his removal at the EGM, held on
04.11.2014.
7.7 The learned counsel submitted that since, the petitioner, had served a special notice
dated 08.10.2014, on ATPL, for removal of respondent no. 1 as its Director, in fitness of
things the said notice was placed on record of this court.
7 . 8 It was contended that the documents placed on record would show that the
petitioner had not withheld any material fact or communication which was within its
power and possession on the dates of hearing held before this court.
REASONS
8 . I have heard the learned counsel for the parties and perused the record. The
undisputed facts and events which have emerged and which have a bearing on the
matter are as follows :-
(i). Upon execution of the SPA, the respondents received the requisite
consideration amounting to Rs.5,88,80,000/- from the petitioner, and that, as
agreed, respondent no. 1 received out of the total consideration, a sum of
Rs.4,41,60,000/-.
(ii). Respondent no. 2, who is admittedly, the sister of respondent no. 1 and, is
now settled, in US, post her marriage, received a sum of Rs.58,88,000/-.
(iii). The control and management of ATPL thus, stood transferred to the
petitioner on the acquisition of the entire paid-up share capital of ATPL.
(iv). The manner, in which, the transaction was configured, required the
employment of respondent no. 1 as the Co-founder and Managing Director of
Affle Appstudioz Pte. Ltd., Singapore (HQ). For this purpose, petitioner had
agreed to pay respondent no. 1, a fixed annual salary of Rs.50 Lakhs, with a
variable performance bonus of Rs.15 Lakhs.
(v). Respondent no. 1, was also appointed as a Director of both Affle
Appstudioz Pte. Ltd., Singapore (HQ) and ATPL.
(vi). As per the terms of the employment contract, respondent no. 1 was
prohibited from accepting any full time or part time employment with any
corporation while being employed by Affle Appstudioz Pte. Ltd., Singapore
(HQ). (See clause 6 of the employment contract.)
(vii). Furthermore, respondent no. 1 had also undertaken an obligation under
clause 9 of the employment contract to execute various non-compete
agreements. These agreements, however, were never executed.
(viii). The petitioner and respondents, however, executed two addendums to
the SPA dated 01.05.2014 and 01.09.2014.
9 . In this background what one needs to examine is: whether circumstances obtain,

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which should persuade me to continue the interim order passed on 16.10.2014, as
modified on 17.10.2014.
9.1 In this context, let me first deal with Mr. Warrier's contention that there has been
concealment of the following two material facts. First, that document dated 04.04.2014
has been kept-back. Second, that the factum of termination of the employment contract
vide communication dated 16.10.2014, was not disclosed to the court.
9.2 In so far as the first assertion is concerned, I must note here that when Mr. Warrier
was asked whether he was relying upon the document dated 04.04.2014, he candidly
said, for the purposes of pressing the captioned application for vacation of stay, he did
not wish to rely upon the same. Notwithstanding this answer of Mr. Warrier, I must
record my prima facie view, which is that, the document, does not appear to have been
executed between the petitioner and respondent no. 1.
9.3 The reasons for coming to this conclusion at this stage, I must record, are plainly
circumstantial and based on assertions made on affidavits by both the sides. The
balance at this stage, turns in favour of the petitioner, as none of the communications
preceding or following the execution of the SPA refer to the document dated 04.04.2014
(Annexure A-1). It is quite unlikely that such a document though in existence, would
not be adverted to in any of the communications exchanged between the parties. What
is particularly revealing in this context is, an email dated 29.11.2014, sent by Mr.
Abhinav Singh, who was apparently a witness to the SPA, to the effect that apart from
the SPA, no other agreement was executed between the petitioner and respondent no.
1.
9.4 Since, this is an aspect which would go to trial, if raised by respondent no. 1, I do
not wish to make further observations qua the said document (Annexure A-1). Suffice it
to say, at this juncture, it does, introduce a certain amount of doubt as to the credibility
of the assertions made by respondent no. 1, on affidavit.
9.5 This brings me to the second allegation made on behalf of respondent no. 1, which
is that, the factum of the termination of the employment contract was kept-back by the
petitioner. In this context, what has to be noticed is, that respondent no. 1, was not an
employee of the petitioner. Undisputedly, respondent no. 1 was an employee of Affle
Appstudioz Pte. Ltd., Singapore (HQ) and, consequently, the employment contract could
have been terminated only by that entity. The petitioner for whatever it is worth, is
seeking to protect its right under the SPA to which it is a party. The rights, if any, under
the employment contract cannot enure in favour of the petitioner, which is only a
shareholder of ATPL. Therefore, in one sense, the termination of the employment
contract was not a fact material to the reliefs that the petitioner was seeking from this
court in terms of its rights under the SPA.
9 . 6 However, even if, I were to assume for a moment that, the termination of
employment contract by Affle Appstudioz Pte. Ltd., Singapore (HQ) vide communication
dated 16.10.2014 was material, I am satisfied that the said communication was not
within its power and possession on at least the dates and the time at which hearings
were held in this court, i.e., on 16.10.2014 and 17.10.2014. The material placed on
record by the petitioner with its reply does tend to point in this direction. In this behalf,
I may only refer the e-mail dated 18.10.2014. (See Annexure P-6.)
9.7 Which brings me to the assertion of Mr. Warrier that the employment contract with
respondent no. 1 having been terminated, the non-compete clause could not operate
post the termination. This assertion, Mr. Warrier has made, dehors his submission that

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various non-compete agreements referred to in the SPA were never executed between
Affle Appstudioz Pte. Ltd., Singapore (HQ) and respondent no. 1. In support of the
aforesaid submission, reliance was placed by Mr. Warrier on the judgment of the
Supreme Court in the case of: Percept D'Mark (India) (P) Ltd. Vs. Zahir Khan and Anr.,
MANU/SC/1412/2006 : (2006) 4 SCC 227.
9.8 In my opinion, the principles with regard to grant of injunction where a negative
covenant obtains are far too well settled for me to reinvent the wheel. In the present
case, what has to be considered is, can an injunction operate qua respondent no. 1 post
termination of his employment contract. Undoubtedly, the answer has to be that, a
negative covenant in the employment contract which prohibits carrying on a competing
business beyond the tenure of the contract is void and not enforceable. This prohibition
operates on account of the provisions of Section 27 of the Contract Act. However, the
prohibition does not operate during the subsistence of the employment contract. Since,
the employment contract, has been terminated on 16.10.2014, clause 6 of the
employment contract prima facie ceased to operate qua respondent no. 1. [See
Superintendence Co. of India Pvt. Ltd. vs Krishan Murgai MANU/SC/0457/1980 : AIR
1980 SC 1717; Niranjan Shankar Golikari vs Century Spg and Mfg. Co. Ltd.
MANU/SC/0364/1967 : (1967) 2 SCR 367; and Gujarat Bottling Co. Ltd. vs Coca Cola
Co. MANU/SC/0472/1995 : AIR 1995 SC 2372]
9.9 However, as noticed above, respondent no. 1 is not an employee of the petitioner.
Respondent no. 1, is an employee of Affle Appstudioz Pte. Ltd., Singapore (HQ).
Therefore, any which ways, respondent no. 1 could not have taken recourse to the
provisions of clause 6 of the employment contract. Since, Affle Appstudioz Pte. Ltd.,
Singapore (HQ) is not before me, I need not dilate any further on this aspect of the
matter.
1 0 . The moot point therefore, is: whether the petitioner can take recourse to the
amended clause 5.5 of the SPA, which finds a mention in the second addendum. For the
sake of convenience, the said clause is extracted hereinbelow :-
"5.5 Continuous Employment Related Obligations - Post Completion
The Purchasers have (in addition to other rights) absolute rights to selective
waive the continuous employment requirement from one or more of the
Partners if required.
In consideration of clause 5.3 and continuous employment clauses 5.5(a),
5.5(b), 5.5(c), 5.5(d) and 5.5(e) above, the offer letter dated April 4, 2014
signed by Saurabh Singh and Abhinav Singh and Standard Contract of
Employment of the company and / or Purchaser, each of the Partners singularly,
commit, agree and undertake to oblige and observe standard non-compete,
non-disclosure and assignment of inventions agreements with the Company.
For avoidance of doubts, the duration for Standard contract for non-compete
agreements with the company states that from the date of the Partner's
employment with Purchaser and for a period of thirty six (36) months after
completion date, each of the Partners agree not to engage directly or indirectly,
in any business or commercial activity(s) that competitively affects the business
of the Purchaser including that of its subsidiary(s) that includes the Company.
All other terms and conditions stated on the Agreement remain unchanged.."

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 10.1 It is not in dispute that the petitioner and respondent no. 1 have not executed the
various non-compete agreements, to which a reference was made in clause 9 of the
employment contract and amended clause 5.5 of the SPA, which finds a mention in the
second addendum. Thus, what needs to be considered is, how one is to construe the
amended clause 5.5 of the SPA.
1 0 .2 A bare perusal of the aforesaid extract would show that, firstly, respondents
undertook to "oblige" and "observe" the covenants of non-compete agreements, which
gives a sense that parties, in particular, the respondents, knew what obligations the
said agreements contained. Secondly, it made clear the duration of the non-compete
obligation and, while doing so, made explicit what that obligation was.
10.3 In other words, the said clause 5.5 is suggestive of the fact that respondents were
aware of the fact that they could not engage directly or indirectly in any business or
commercial activity which could, affect the business of the petitioner and / or its
subsidiary(s) including ATPL, and that this obligation would last not only during the
duration of the standard non-compete agreements but also for a period of 36 months
after the "completion date".
10.4 The completion date is defined in the SPA, to mean as 04.04.2014 or, such other
date, as the parties may mutually agree in writing. Counsels for parties before me
submitted that the completion date was in fact, 04.04.2014. It is common ground that,
no other date was agreed to between the parties to the SPA. Obviously, the intent of
those who were parties to the SPA, was to incorporate various terms of the non-
compete agreements by way of reference. I must confess that the amended clause 5.5
has been drafted most ineptly, and therefore, the resultant difficulty in discovering the
underlying intent.
1 0 .5 Having said so, what, to my mind, appears to have been the intent, behind
executing the second addendum which, got reflected only partially though (in as much
as the non-compete agreements were never factually executed) was that, respondents
could not engage in a competitive business for a period of 36 months after the
completion date. As indicated above, the completion date was 04.04.2014, which was
when, the SPA was executed. Quite clearly, the petitioner, had bought the entire
controlling interest of ATPL, with a view to acquire its business along with its goodwill.
1 0 .6 The fact that a substantial consideration stands paid to respondent no. 1 for
acquisition of those rights, is not disputed. Given these circumstances, the petitioner's
case in my view would fall in exception 1 to Section 27. Such a clause, in my view,
does not fall foul of Section 27 of the Contract Act. The prohibition, on respondent no.
1, in indulging in competitive business or commercial activity, in my view, is reasonable
both in time and space and, therefore, cannot be held to be in restraint of trade, and
thus, void and/or illegal as contended by Mr. Warrier. The contrary submissions made
by Mr. Warrier in this behalf, will thus, have to be rejected.
10.7 As regards, Mr. Warrier's submission that respondent no. 1 need not transfer the
domain names, the letters dated 22.10.2014 and 02.11.2014 seem to indicate that
respondent no. 1 has already transferred five (5) out of the six (6) domain names,
registered in his name, in favour of ATPL. I must, however, indicate that these transfers
were made, it appears, by respondent no. 1, so as to not be seen as violating the
interim orders passed by this court on 16.10.2014, as modified by order dated
17.10.2014. Whether such an obligation is cast on respondent no. 1 or not will, have to
be contested finally before the concerned arbitral tribunal, which would rule, amongst

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 others, on this aspect of the matter, after evidence is led by the parties.
11. In view of the above, IA No. 23684/2014 is dismissed, and interim order dated
16.10.2014, as modified by order dated 17.10.2014, is confirmed.
12. Needless to say, any observations made hereinabove, will not impact the merits of
the case.
OMP 1257/2014
13. List before the Roster Bench on 02.02.2015.
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