Partly allowed

Lr Arun & Ors. v. Sheela Foam Limited & Ors.

Delhi HC4 Apr 2024ARB. A. (COMM.)/19/2024

Case brief

AI extract

What is this about?

The Delhi High Court disposed of an appeal against an Arbitrator's order directing respondents to handover devices. The Court modified the order to mandate in-situ inspection and copying at the DIAC premises within four weeks, ensuring appellants retain custody of devices.

What did the court decide?

Modified Para 64 of the impugned order; directed in-situ inspection and copying of data within four weeks at DIAC premises; appellants to retain custody of devices.

Lr Arun & Ors. Vs Sheela Foam Limited & Ors. — Arbitration | Delhi HC (2024)

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$~28

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* IN THE HIGH COURT OF DELHI AT NEW DELHI

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- ARB. A. (COMM.) 19/2024 & I.A. 7563/2024, I.A. 7565/2024

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LR ARUN & ORS.

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..... Appellants

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Through: Mr. Rohit Sharma and Mr. Rounak Nayak, Advocates.

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versus

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SHEELA FOAM LIMITED & ORS. ..... Respondents

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Through: Ms. Anuradha Mukherjee, Mr. Gyanendra Kumar, Ms. Shreya Som, Mr. Zaid Drabu, Mr. Aviral Singhal and Ms. Diya Narag, Advocates for R-1.

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CORAM:

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HON'BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI O R D E R % 04.04.2024

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I.A. 7564/2024_(exemption)

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Exemption granted, subject to just exceptions.

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Let requisite compliances be made within 01 week.

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Application stands disposed-of.

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ARB. A. (COMM.) 19/2024

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By way of the present appeal filed under section 37(2)(b) of the Arbitration & Conciliation Act 1996 (‘A&C Act’), the appellants impugn order dated 21.12.2023 (‘impugned order’) made by the learned Sole Arbitrator on an application under section 17 of the A&C

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ARB. A. (COMM.) 19/2024 Page 1 of 8

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This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/04/2024 at 12:04:49

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Act. The impugned order was made in furtherance of orders dated 29.08.2023 and 01.09.2023 made by a Co-ordinate Bench of this court in O.M.P.(I)(COMM) No.270/2023 under section 9 of the A&C Act.

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At the outset, Mr. Rohit Sharma, learned counsel appearing for the appellants submits, that by way of the impugned order the learned Arbitrator has issued directions to the appellants even though the present appellants were not parties to the arbitral proceedings before the learned Arbitrator.

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Mr. Sharma submits, that the essential grievance of the appellants is that by way of the impugned order, the learned Arbitrator has exceeded her remit under section 17 of A&C Act; and has gone beyond the directions given by the Co-ordinate Bench vide orders dated 29.08.2023 and 01.09.2023 in O.M.P.(I)(COMM) No.270/2023, which were made on a concession by the appellants.

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Mr. Sharma draws attention to the following paragraphs of order dated 29.08.2023 made by the Co-ordinate Bench :

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“2. Learned counsel appearing for respondent No.2, on instructions, submits that as undertaken in the written statement, the answering respondent is willing to handover the external device in the form of pen drive to the petitioner.

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“3. Learned counsel appearing for the respondent No.4 also, on instructions, submits that respondent No.4 is ready and willing to handover the pen drive as well as hard disc to the petitioner.

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“4. Learned counsel for the respondent No.3, on instructions, submits that during the course of his employment with the petitioner, the company’s email address was used to send emails which were also addressed to his personal email account, and to show his bonafide, he is willing to give an inspection of the same to

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ARB. A. (COMM.) 19/2024 Page 2 of 8

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the petitioner. He further submits that the inspection, if any, may be carried out by the petitioner.”

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Mr. Sharma submits, that at the stage when order dated 29.08.2023 was passed by the Co-ordinate Bench, the appellants were not aware that they were also subject of police investigation in a criminal complaint filed by respondent No.1 in Noida, Uttar Pradesh.

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In view thereof, counsel submits, that they moved an application seeking modification of order dated 29.08.2023, which application was disposed-of by the High Court vide order dated 01.09.2023, with the following observations:

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“7. The respondent Nos. 2 to 4 filed their replies wherein it was admitted that they had copied data but submitted that it was not confidential in nature. Regardless of that, respondent 2 and 4 offered to handover the pen drive/external devices in their possession where the data was copied. The respondent No.3 submitted that in the normal course of business, the official emails were also marked to his own personal account and to show his bonafide, he offered an inspection of the same to the petitioner. On 29.08.2023, a statement to the aforesaid effect on behalf of all three respondents was also recorded.

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* * * * *

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“11. ….. On a prima facie reading of the forensic report placed on record, it is revealed that data which was deleted/copied from the petitioner’s official computers included data relating to petitioner’s network policy, pre-seasoned targets, information relating to sales and sales team, salary structure, exchange offers, price lists, business plans, dealer-wise data, State-wise strategy models, etc.

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“12. Parties have their own divergent views regarding the nature of data. Respondents dispute that the data is confidential in nature and contest that it enjoys any protection. According to the respondent, the data is generic in nature and there is nothing proprietary or unique about the same.

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This is a digitally signed order. ARB. A. (COMM.) 19/2024 Page 3 of 8 The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/04/2024 at 12:04:49

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“13. There is no denying the fact that respondent 2 to 4 by their conduct of copying the data have shown that the data in question may be of some value to them. This being so, whether the data in question is confidential or not may not be gone into. The respondent No 2 to 4 agree that the data belongs and pertains to the business of the petitioner. At this stage, where the limited concern of the Court is to preserve the subject matter of arbitration, more so when the parties have agreed to refer their disputes to an arbitrator for adjudication, it is deemed fit that the data in question is preserved and prevented from being compromised.

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* * * * *

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“15. Needless to state that the aforesaid directions are passed till the time the present application is taken up for consideration by the learned Arbitrator. The parties shall also be at liberty to file additional reply/documents. The parties shall also be at liberty to seek variation/modification of the above interim directions.

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“16. Insofar as respondent Nos. 2 to 4 are concerned, Mr. Dewan, learned Senior Counsel, on instructions submits that the respondents after filing the replies and giving undertakings before the Court, filed applications seeking modification. However, without prejudice to their rights, and to show their bonafides, they have no objection in reiterating their respective undertakings. Accordingly, with the consent of parties, it is directed that:

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“(i) The petitioner shall be at liberty to obtain a mirror image/copy of the pen drive and hard disc in possession of the respondent Nos. 2 and 4.

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“(ii) The aforesaid exercise shall be carried out by a Court Commissioner, and for which purpose, Mr. Abhishek Mahajan, Advocate (Mob: 9810981062) is appointed who will visit Bangalore and carry out mirror imaging/copying of the aforesaid devices that are in possession of respondent Nos. 2 and 4.

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“(iii) After duly carrying out the mirror imaging/ copying, the original pen drive/hard disc shall be retained by the respondents and the copy will be handed over to the petitioner/his counsel.

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ARB. A. (COMM.) 19/2024 Page 4 of 8

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“(iv) The respondent No.3 shall provide an inspection of his email account at Bangalore and the travel expenses for that shall be borne by the petitioner.”

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(emphasis supplied)

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Counsel submits however, that the learned Court Commissioner appointed by the Co-ordinate Bench was not able to copy/clone all the data from the devices belonging to the appellants; which position is reflected in the Court Commissioner’s report dated 15.09.2023, to say that : (i) insofar as appellant No.1 is concerned, one of the pen-drives labelled as ‘Exhibit-02’ could not be copied since due to some technical issue the estimated time for copying the data was showing as 50 hours; (ii) insofar as appellant No.2 is concerned, the data on the pen-drive labelled as ‘Exhibit-05’ could not be copied due to some technical error since the copying of data failed after 50% of the data was copied and forensic examination showed that the data on this pendrive was only browsable/viewable; and (iii) insofar as appellant No.3 is concerned, though commercially sensitive data was identified by the authorised representative of the appellants in 44 e-mails, the e- mails were not copied, nor were they opened to analyse any attachments contained therein.

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The essential dispute, as explained by Mr. Sharma, is that the appellants do not wish to part with custody of any of their storage devices including the pen-drives as mentioned above, nor the e-mail account that belongs to them; whereas respondent No.1 insists that in keeping with the directions contained in orders dated 29.08.2023 and 01.09.2023, they were entitled to either copy or undertake a proper

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This is a digitally signed order. ARB. A. (COMM.) 19/2024 Page 5 of 8 The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/04/2024 at 12:04:49

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inspection of the data on the pen-drives and in the e-mail account as aforesaid. The appellants are aggrieved by the directions issued by the learned Arbitrator to effectuate the prayers made by respondent No.1. 9. Issue notice.

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Ms. Anuradha Mukherjee, learned counsel is present on behalf of respondent No.1 on advance copy; and accepts notice.

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Learned counsel for the parties point-out, that respondent No.2 and respondent No.3 are not the contesting respondents and service of notice upon them is therefore not necessary.

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The court has heard Mr. Sharma, learned counsel for the appellants; as also Ms. Mukherjee, learned counsel for respondent No.1 at length.

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Considering the nature of the contestations in the matter and after hearing learned counsel for the parties, the appeal is disposed-of with the following directions :

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13.1. Insofar as the pen-drive labelled as ‘Exhibit-02’ is concerned,

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that device would be offered by appellant No.1 for copying/inspection to the authorised representative of respondent No.1 on a date and time of mutual convenience of the parties, within 04 weeks. The data on the device would be copied or inspected, as respondent No.1 may choose, within the premises of the Delhi International Arbitration Centre (‘DIAC’); and the copying/inspection would be done in the presence of authorised representatives and counsel for appellant No.1 and respondent No.1. If copying of the data takes inordinately long, appellant No.1 would provide print-outs of

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ARB. A. (COMM.) 19/2024 Page 6 of 8

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the data to respondent No. 1, which can be cross-checked by respondent No.1 by viewing/browsing the data on the device.

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13.2. Insofar as ‘Exhibit-05’ is concerned, since the data on the pendrive is stated to be only browsable/viewable, respondent No.1 shall inspect the data within the premises of the DIAC in the presence of authorised representatives and counsel for appellant No.2 as well as respondent No.1, on a date and time of mutual convenience of the parties, within 04 weeks. Respondent No.1 is also permitted to take print-outs of the data, if technically feasible.

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13.3. Insofar as inspection of the e-mails of appellant No.3 are concerned, those would also be inspected and/or copied alongwith the attachments therein, within the premises of the DIAC in the presence of authorised representatives and counsel for appellant No.3 as well as respondent No.1, on a date and time of mutual convenience of the parties, within 04 weeks. Respondent No.1 is also permitted to take print-outs of the emails alongwith the attachments therein, if technically feasible.

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It is made clear that the devices in question will not be handed-over by the appellants to respondent No.1, nor will access to the e-mail account be granted by appellant No.3 to respondent No.1, except for the limited purpose of copying/inspection as aforesaid. It is further reiterated, that any inspection/copying would be done in the presence of authorised representative and counsel for the concerned parties.

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Para 64 of impugned order dated 21.12.2023 stands modified, limited

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ARB. A. (COMM.) 19/2024 Page 7 of 8

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to the above extent. It is made clear, that no other modification has been made insofar as the order of the learned Arbitrator is concerned.

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Needless to add, that any data obtained or accessed by respondent No.1 as aforesaid would, if tendered in evidence in the arbitral proceedings, be required to be proved in accordance with law; and nothing in this order shall prejudice the rights and contentions of the parties in respect of the proceedings pending before the learned Arbitrator.

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The appeal is disposed-of in the above terms.

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Pending applications, if any, also stand disposed-of.

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ANUP JAIRAM BHAMBHANI, J

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APRIL 4, 2024/ ak

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This is a digitally signed order. ARB. A. (COMM.) 19/2024 Page 8 of 8 The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 25/04/2024 at 12:04:49

Lr Arun & Ors. v. Sheela Foam Limited & Ors.

Case brief

What is this about?

What did the court decide?

Lr Arun & Ors. v. Sheela Foam Limited & Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

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