Hindustan Composites Ltd. Vs. Jasbir Singh Randhawa and anr. - Court Judgment

D.K. Deshmukh, J.

1. The petitioner has presented this petition invoking the powers of this Court under Article 215 of the Constitution of India, the Contempt of Courts Act, 1971 and section 151 r/w Order XXXIX of the Civil Procedure Code.

2. The facts that are relevant and material for deciding this petition are as follows :-

a) The petitioner claims that it is a company incorporated and registered under the Companies Act, 1956 and is engaged in the business of manufacture of brake linings, clutch facings and other friction materials used in the automobile industry. The petitioner has been in this business for more than thirty years and is a leader in the development, manufacture and marketing of asbestos industrial products and friction materials. The petitioner has a Research and Development Center which is engaged in constantly updating the technology used by the petitioner and the same has been accorded recognition by the Department of Science and Technology, Government of India. The respondent No. 2 is a coindenticalorporated under the provisions of the Companies Act on 19-4-1995. It carries on the business of manufacturing the products identical to that of the petitioner. The respondent No. 1 and the respondents Nos. 3 to 9 are the Directors of the respondent No. 2. The respondent No. 1 was in the employment of the petitioner since 11-10-1987. The terms and conditions of service of the respondent No. 1 are contained in the letter dated 29-9-1987. According to the petitioner the respondent No. 1 in terms of the conditions of his service was obliged not to be interested directly or indirectly in the manufacture or sale of any product likely to compete with those in which the petitioner is interested, communicate any information, obtained by him regarding the manufacture of the product by the petitioner, during the employment and also after termination of his employment and divulge to any one any trade secrete or manufacturing process or any information of a secrete or confidential nature concerning the business of the petitioner which comes to his knowledge during his employment.

b) It is claimed that the respondent No. 1 promoted the respondent No. 2. While he was still in the employment of the petitioner, he resigned the service of the petitioner by letter dated 12-5-1996. The respondent No. 1 and the respondent No 3 are brothers, they are Managing Directors of the respondent No. 2, that the respondent No. 2 was formed with a view to carry on the business of manufacturing the products which are identical to that of the petitioner by utilising the secret information, which he has gathered in the course of his employment with the petitioner.

c) The petitioner claims that in these circumstances the petitioner filed in this Court Suit No. 4594 of 1996 and took out Notice of Motion No. 50 of 1997. The suit was filed for a permanent injunction against respondent Nos. 1 & 2 from in any manner utilising the process, technical know how and information acquired by respondent No. 1 during the course of his employment with the petitioner. The petitioner took out the above Notice of Motion for injunction for restraining the respondent No. 1 from divulging or parting with in favour of respondent No. 2 or any one else any trade secret, manufacturing process and/or information of secret, or confidential nature concerning business of the petitioner and for restraining respondent No. 2 from using the same. The petitioner states that an application was made by the petitioner in the above Notice of Motion for ad interim reliefs in terms thereof. After hearing the respective parties, this Court was pleased to record the statement of the Counsel appearing on behalf of 2nd respondent that the process proposed to be used by the 2nd respondent was different from that of the petitioner. Being satisfied with the prima facie case made out by the petitioner, this Court by an order dated 24th December, 1996 was pleased to grant reliefs, pending the hearing and final disposal of the above Notice of Motion in terms of prayer Clauses (a) and (b) thereof, which read as under :-

(a) that pending the hearing and final disposal of this petition, defendant No. 1 by himself his servants, agents or otherwise howsoever be restrained by an order of perpetual injunction of this Hon'ble Court from in any manner divulging or parting with in favour of defendant No. 2 or any one else any trade secret, manufacturing process and/or information of secret or confidential nature concerning the business of the plaintiff or any of its associates:

(b) That pending the hearing and final disposal of this petition, defendant No. 2 by itself, its servants, agents or otherwise howsoever be restrained by an order of perpetual injunction of this Hon'ble Court from in any manner using or applying any trade secret, manufacturing process and/or information of secret or confidential nature concerning the business of the plaintiff or any of its associates acquired by defendant No. 1 in the course of his employment with the plaintiff.

By the said order dated 24th December, 1996, this Court was further pleased to direct the parties to file in sealed covers, within two weeks, affidavits setting out in detail their respective process. The Prothonotary and Senior Master of this Court was directed to show the said affidavits to an expert in the field. The Expert was directed to opine whether the process of the petitioner and that of the 2nd respondent are the same. This Court was further pleased to observe that if it is found that the 2nd respondent's process is the same as that of the petitioner, the injunction will have operated and if in the meantime respondent Nos. 1 and 2 decide to continue to manufacture using the same process, they will have done so at their own risk, in as much as, they would be in contempt of this Court. The petitioner states that respondent Nos. 1 and 2 filed separate appeals against the said order dated 24th December, 1996. Both the appeals were dismissed by separate orders, both dated 5th February, 1997, as being without any merits and the order passed on 24th December, 1996 was confirmed. Respondent No. 2, thereafter, filed petition in the Hon'ble Supreme Court for Special Leave to Appeal against the said order dated 5th February, 1997 passed in Appeal No. 26 of 1997. The said petition was dismissed as withdrawn on 7th November, 1997. Pursuant to the said order dated 24th December, 1996 the petitioner and the 2nd respondent filed their respective processes with the Prothonotary & Senior Master in sealed covers. Prof. D.D. Kale, Head of Polymer Technology, University of Bombay, was appointed by the Prothonotary & Sr. Master as the Expert in terms of the said order dated 24th December, 1996. The Expert submitted his opinion to the Prothonotary and Sr. Master and copies thereof were made available to the parties. The petitioner states that the said opinion dated 15th May, 1997 clearly states that the affidavit filed by the 2nd respondent does not set out the exact formulations and the control at various stages which play an important role and are proprietary in nature. By the said order dated 24th December, 1996 the petitioner and the respondents were directed to set out their respective processes 'in detail'. The petitioner submits that it is obvious that the 2nd respondent with a malicious intent and with the purpose of rendering the said order, dated 24th December, 1996 infructuous has concealed the facts to the formulations and the controls, which form an integral part of the process. The petitioner states that respondent No. 1 was employed in a position with the petitioner whereby he was privy to the aforesaid facts in respect of the petitioner's process. The aforesaid concealment on the part of the respondents makes it apparent, that apart from the knowledge of the secret process of the petitioner gained by the 1st respondent when he was in the employment of the petitioner he is not aware of the any other process. The petitioner states that this is further obvious from the opinion of the Expert which states that comparing the various operational steps and the targets to be achieved at the end of the steps as described by the petitioner and respondent No. 2, the manufacturing processes are the same. The petitioner submits that in light of the said opinion of the Expert, the injunction against respondent Nos. 1 and 2 operating pursuant to the said order dated 24th December, 1996 has been breached, as stated therein, since the process employed by the 2nd respondent is the same that of the petitioner. The petitioner therefore filed Contempt Petition No. 72 of 1998 in respect of the breach of the said order dated 24th December, 1996. Respondent Nos. 1 to 8 have filed their respective affidavits in reply in the said contempt petition. The said Contempt Petition has been admitted and is pending hearing and final disposal. The petitioner states that after the aforesaid contempt petition was filed the said Notice of Motion No. 50 of 1997 was heard and finally disposed of by an order dated 8th December, 1998. By the said order dated 8th December, 1998 various contentions raised by the respondents were rejected and the Notice of Motion was made absolute in terms of prayer Clauses (a) and (b). It is significant that respondent Nos. 1 and 2 had applied for a stay and the same was refused. The petitioner states that even thereafter, the 2nd respondent continued to use the said manufacturing process of the petitioner. The petitioner states that respondent Nos. 1 and 2 filed separate appeals viz. Appeal Nos. 261 and 455 of 1999 against the said order dated 8th December, 1998. The said appeals were admitted by a common order 6th May, 1999. However, interim relief was expressly refused. Despite the same, respondent No. 2 has continued to use the said manufacturing process of the plaintiff in blatant violation and wilful disregard to the orders passed by this Court. Even after receipt of the opinion of the expert, the 2nd respondent did not stop the manufacturing process. The petitioner submits that the respondents have blatantly violated the orders of this Court in the aforesaid manner. The petitioner submits that the respondents have committed contempt of this Hon'ble Court. The petitioner further submits that all the defences of respondent Nos. 1 and 2 ought to be struck off for contravening the said order dated 8th December, 1998 of this Hon'ble Court. The petitioner further submits that the properties of respondent Nos. 1 and 2 ought to be attached for violating the said order dated 8th December, 1998. The petitioner further submits that it is also just, necessary and in the interest of justice that the respondent No. 2 be restrained by an order and injunction of this Hon'ble Court from carrying on its manufacturing activities which are obviously being carried out utilising the said manufacturing process of the petitioner, in blatant violation of the said order dated 8th December, 1998.

3. The petition is contested by the respondents. The respondent No. 1 in his affidavit in reply states as under :-

With respect to the order of injunction in terms of prayer (b), the respondent No. 2 has nowhere been restrained from applying or using a manufacturing process which is not a trade secret, or a manufacturing process and/or information of secret or confidential nature concerning the business of the plaintiff or any of its associates. Thus clearly the order of injunction operating against the respondents No. 2 does not preclude manufacture by the respondent using a method, which may be the same or similar to that used by the petitioner, if such process is not a secret process or a trade secret belonging to the petitioner. It is relevant to mention that at the time of passing the order dated 8-12-1998 confirming the injunction, the report of Dr. Kale was before the Hon'ble Court. However, this Court was not pleased to restrain the respondent No. 2 to continue to manufacture in absolute terms. This Court vide order dated 8-12-1998 confirmed the injunction in terms of prayers (a) and (b) as above, which are both clearly and strictly confined to the divulging or use of a secret process. In fact the Court has clearly held vide the said order dated 8-12-1998 that the issue as to whether the process of manufacture utilised by the defendants was in fact a secret or confidential process of the plaintiff need not be gone into at that stage. Whatsoever be the reasons set out in the various orders of this Court, the interim reliefs granted were expressly confined to prayers (a) and (b) of the Notice of Motion, and were never expanded beyond those prayers notwithstanding the clear case of the defendants that they are not using any secret process of manufacture belonging exclusively to the plaintiffs. This clearly implies that the respondent No. 2 was not injuncted absolutely from continuing to manufacture and was only restricted from manufacturing by a secret process of the petitioner. Thus, the injunction can only be said to be breached if there is a process belonging exclusively to the plaintiffs, which is established by them to be a secret process. In the context of the present contempt petition, the respondent No. 1 submits that the secrecy of the process has necessarily to be proved by the petitioner before any allegation of contempt can be sustained. The respondent No. 1 respectfully submits that in contempt jurisdiction this issue can not be deducted by inference or supposition or logical deduction, but has to be directly and expressly proved, as it could lead to the incarceration of innocent people. Even the expert has admitted that the manufacturing process utilised by the petitioner is available in literature. Therefore, it is clear that there is nothing secret about the said manufacturing process. The expert Dr. Kale has in fact clearly stated that his opinion is restricted/limited to whether the manufacturing process utilised by the defendants and the plaintiffs is the same. In fact Dr. Kale has not even opined on whether the formulations utilised by the plaintiff are secret or confidential in nature, or even whether the said process belongs exclusively to the plaintiff, as is clear from the report where he states that 'the plaintiffs have given full details of formulations used by them in wet and dry mix process. Since, the defendants have not submitted the details of their formulations, I am unable to comment on this particular aspect'. Thus he has not even given a mandate on whether the specific formulations utilised by the plaintiff are confidential in nature and exclusive to them. No interim relief has been granted to the petitioner, which restrains the respondent from utilising a manufacturing process which may be same or similar to that used by the petitioner, unless it is proved that the said process is a trade secret and is confidential in nature and protected as the exclusive property of the plaintiff. The order dated 24-12-1996 provided a procedure to determine whether or not the process used by the petitioner and the respondent No. 2 was the same, viz. an expert was to be appointed from among the three names each to be suggested by the petitioner and the respondent No. 2. The said order further provided that in the event that the process of manufacture was held to be the same, the injunction would have operated and the respondent No. 2 would be held to be in contempt of the said order. Thereafter, the respondent No. 2 filed Appeal No. 26 of 1997 in the present suit impugning the said order dated 24-12-1996. One of the principal grounds of appeal was that the process of manufacture used by the petitioner was not secret and hence the petitioner could not seek any reliefs in respect of a process in which they had no proprietary rights of any kind whatsoever. By an order dated 5th February, 1997, Their Lordships Dr. B.P. Saraf and P.D. Upasani, JJ., inter alia clarified the order dated 24-12-1996 as meaning that the said order of Justice Variava envisaged the appointment of an expert also for the purpose of ascertaining whether or not the process of manufacture used by the petitioner was secret.

In fact the order of the Hon'ble Appeal Court states :

'Mr. Grover, learned Counsel for the appellants, however, submits that on the reading of the ad interim impugned order of the learned Single Judge, it appears that the learned Single Judge has already accepted that the appellant company is using some secret process of the respondent company. We do not find any basis and/or justification for this apprehension of the learned Counsel for the appellants. In fact, in the impugned order, the learned Single Judge has directed the Prothonotary & Sr. Master to appoint an expert with a view to ascertaining whether the appellant is using any secret process of the respondent company.'Thereafter, the present matter was placed before the Prothonotary & Sr. Master of this Court for the purposes of determining the appointment of the expert to be appointed in terms of the said order dated 24-12-1996. On objection being raised by the respondent No. 2 with regard to the manner of selection of the expert and the mandate of the expert clearly excluding the most vital ingredient of investigation regarding the secrecy of the petitioner's process, the Prothonotary & Sr. Master was pleased to pass an order dated 2nd May, 1997. The Prothonotary & Sr. Master merely forwarded a copy of the orders dated 24-12-1996 and 5-2-1997 to the said expert and further directed him to furnish his report by 15th May, 1997 in terms of the said orders.

Dr. Kale, the said expert, however, choose to ignore the clear and unequivocal mandate of the Division Bench of this Court and proceeded to examine the affidavits filed in sealed covers by the petitioner and the respondent No. 2 and filed his report dated 15th May, 1997. The said report clearly records that the Prothonotary & Sr. Master only asked the said Dr. Kale to opine on whether the process described by the petitioner and the respondent No. 2 was the same or not. This clearly shows that Dr. Kale failed to opine on whether the process utilised by the petitioner is a secret one or not. The order dated 2-5-1997 passed by the Prothonotary & Sr. Master clearly records that, 'I do not feel it necessary for me to give any directions to Professor Dr. D.D. Kale as the directions given by the Hon'ble Court on 24-12-1996 and subsequently on 5-12-1997 are explicit'. Thus, Dr. Kale chose to ignore the specific mandate of this Court to ascertain whether the process of manufacture utilised by the petitioner was a secret one. In the absence of any finding in this regard and in the absence of any material on record to prove beyond doubt that the process of manufacture utilised by the petitioner is a secret process no prima facie conclusion can be arrived at to ascertain whether the respondent No. 1 or the respondent No. 2 have acted in contravention to prayers (a) and (b) to the Notice of Motion No. 50 of 1997.

The respondent No. 1 further states that clearly from the aforesaid report of the said expert, the dry-mix process used by the petitioner and the respondent No. 2 is freely published and a process commonly used by all industries in the field. Under no circumstances can it be said that the plaintiff/petitioner has proved that this a secret process which belongs to the plaintiff/petitioner alone, or which is not in widespread use all over. Therefore, it is clearly not a trade secret, and in any event there is no material whatsoever before the Court to conclude that it is a trade secret, and even otherwise there is no proprietary right in the said process and it is not based on secret or confidential information belonging to the petitioner. Clearly the said expert has not stated that the formulations utilised by the petitioner are unique and exclusively used by them and hence they are secret processes in which the petitioner has a proprietary right, whether for the processes or the said formulations. Admittedly the petitioner has no patent or copyright with respect to the said processes of formulations to sustain its claim that the said processes or formulations are created or generated by them and is confidential in nature.

4. The respondents Nos. 2 and 3 contest the petition on the same grounds as the respondent No. 1. The respondent No. 3, in addition, in paragraph 3 of his affidavit states thus :-

'Respondent No. 2 company was set up by me and incorporated in 1995. Respondent No. 3 was the main promoter of the respondent No. 2 company and it is as a result of my efforts that P.S.I.D.C. agreed to invest in the respondent No. 2 company. In fact the respondent No. 3 have made a personal investment of Rs. 10,49,800/- in the respondent No. 2 Company. I state that respondent No. 1 had no role in setting up the said company and was never consulted by me in this regard. In 1996 respondent No. 1 was appointed as Managing Director. In view of the said facts, it is clear that there is no question of the respondent No. 2 using any manufacturing process of the petitioner company, which is divulged by the respondent No. 1. In any event neither the respondent No. 2 Company nor I were privy to the contract if any entered between the respondent No. 1 and the petitioner and therefore we are not bound by its terms.'

The respondent No. 4 claims to be a nominee director of the respondent No. 2 who does not take part in the day to day working. The respondent No. 5 claims to be 'a director on paper' of the respondent No. 2. He also claims that he has resigned on 16-11-2000. The respondent No. 6 claims that he does not take part in the meetings of the Board or business of the respondent No. 2. Respondent Nos. 7 to respondent Nos. 9 are the nominees of a financial institution set up by the Government of Punjab which has financed the respondent No. 2.

5. The learned Counsel for the petitioner submits that it is clear from the affidavits filed by and on behalf of the respondents that the product manufactured by the petitioner and the respondent No. 2 is same, the process adopted by the respondent No. 2 for manufacturing its product from the inception is the same, the respondent No. 2 has not even claimed that after the order granting ad interim injunction was passed by this Court and after that order was confirmed there are changes made in the process. He submits that it is clear from the order dated 8-12-1998, passed by this Court, that the contention of the respondent No. 2 was that the difference in the manufacturing process adopted by the manufacturers of the product in question lies in the formulation used by them and that this Court has held that the formulation used by the respondent No. 2 are the same as the petitioner. By the order of temporary injunction, the respondent No. 2 has been restrained, part from other things, from using the manufacturing process used by the petitioner. According to him, once this Court records a finding that the manufacturing process including the formulation adopted by the respondent No. 2 is the same as the petitioner and grants temporary injunction restraining the respondent No. 2 from doing so it follows that the respondent No. 2 was obliged to stop the manufacturing till it changes the process. The conduct of the respondent No. 2 and it's Directors of continuing the manufacture of the product by using the same process amount to violation of the order passed by this Court at 8-12-98 and the violation is deliberate and wilful. He further submits that the contention that there is nothing secret about the manufacturing process adopted by the petitioner has already been rejected by this Court by it's order dated 8-12-94, therefore that question cannot be raised in these proceedings. He further submits that the expert in his opinion has stated the exact formulation and control at various stages of manufacture of the product play important role and are proprietary of the formulation, the respondent No. 2 has no right to use the same formulation and therefore, this Court has granted temporary injunction in favour of the petitioner to protect it's proprietary rights in the formulation. The petitioner has proprietary right in the formulation because it has developed them, and they are unique to the petitioner. The respondent No. 1, therefore, obviously gained the information about them while he was in the employment of the petitioner. Therefore, he could not have used the said formulation in manufacturing the product of the respondent No. 2. He submits that the findings recorded in the order dated 8-12-98, are binding on the respondent Nos. 1 to 3, all the contention that have been raised by them in their replies filed in this petition were raised before this Court in the replies filed in the notice of motion which has been decided against them and therefore, the same contention cannot be raised by them in this petition. He submits that the stand taken by the respondents in the replies filed in this petition, that even after this Court made the order dated 8-12-1998, they were not obliged to stop the manufacturing the product by using the same process is contrary to the stand taken by the same respondents in the notice of motion and the appeals filed by them against the order dated 8-12-98 and therefore is an after thought and has been raised merely to avoid obeying the orders passed by this Court. He also invited my attention to several judgment of the Supreme Court in relation to the exercise of the Contempt Jurisdiction by the Court.

6. Learned Counsel appearing for respondent No. 2 submits that the order of temporary injunction restrains the respondent No. 2 from using trade secret or manufacturing process of secret or confidential nature concerning the business of the plaintiff acquired by the respondent No. 1 during the course of his employment with the petitioner, therefore, unless the petitioner establishes beyond doubt in these proceedings that the manufacturing process used by the petitioner of secret or confidential nature and that the respondent No. 2 is using that secret or confidential manufacturing process, it cannot be held that the respondent No. 2 has disobeyed the order passed by this Court. It is submitted that as the present proceedings are of quasi-criminal nature, the finding that the respondents have committed contempt of this Court cannot be based on findings which are reached by drawing inferences. It is submitted that the expert has not stated in his opinion that the formulation utilised by the petitioner are of secret or confidential nature. He has also not stated that process belongs exclusively to the petitioner. He relies on a judgment of the Supreme Court in the case of Mrityunjoy Das and another v. Sayed Hasibur Rahaman & others, : [2001]2SCR471 . Relying on the judgment of the Supreme Court in the case Indian Airport Employees Union v. Ranjon Chaterjee, 1999(3) Bom.C.R. : 1999(2) S.C.C. 527, he submits that mere disobedience of an order does not amount to contempt, specially if it is as a result of bona fide misinterpretation of the order. He submits that the order of this Court of which disobedience by the respondents is alleged is capable of being interpreted in the manner in which the respondents have done, therefore, it cannot be said that they have deliberately flouted the order. He also relied on a judgment of Queen's Bench Division in England in the case of A.P.A. Trhomas and Co. v. Mould, 1968 All.E.R. 963. He further submits that the petition is based by section 20 of the Contempt of Courts Act and relies on a judgment of the Supreme Court in the case of Pallav Sheth v. Custodina, 2001(7) S.C.C. 599.

7. The learned Counsel for the respondent No. 1 refers to the order of the Division Bench dated 5-2-1997 passed in Appeal No. 26/97 and submit that by that order, the ad interim order dated 24-2-96 was clarified and the expert was directed to find out whether the respondent No. 2 is using any secret process of the petitioner. The expert has not opined that the process adopted by the petitioner is secret. The order of temporary injunction restrains the respondent No. 2 from using the process of the petitioner. Thus, the temporary injunction does not operate against the respondent No. 2.

8. Now, if in the light of the rival submissions the record is perused, it becomes clear that the petitioner in this petition claims that the respondents have wilfully and deliberately violated and disobeyed the order dated 8-12-98, by which this Court had confirmed the ad interim order dated 24-12-1996 granting ad interim injunction in terms of prayer Clause (b) of the Notice of Motion No. 50/97. Perusal of the affidavit submitted by the respondent No. 1 shows that the respondents have understood that order to mean that it restrains them from using process which is secret or a trade secret. The respondent No. 1 has, in para 5 of his affidavit stated thus :

Thus clearly the order of injunction operating against the respondent No. 2 does not preclude manufacture by the respondent using a method, which may be the same or similar to that used by the petitioner, if such process is not a secret process or a trade secret belonging to the petitioner.

It is clear from this statement that according to the respondents though they may be using the same process as the petitioner still the order does not operate against them because the petitioner has not established that the process is of secret or confidential nature. It is to be seen that there is a clear finding recorded in the order at 8-12-98 that the respondent No. 2 is using the same process as the petitioner. Perusal of the order dated 8-12-98, further shows that at the final hearing of the notice of motion it was the case of the respondent No. 2 that the manufacturing process used by the petitioner is not secret or confidential and therefore, the ad interim order should not be confirmed. The Court has recorded the submission made on behalf of the respondent No. 1 in para 6 of the order in following words:

'In the submission of Mr. Vashi, there are no secrets involved in the manufacturing process adopted by the plaintiff and other companies are also adopting those process.' Perusal of para 9 of the order dated 8-12-98 shows that the above submissions has been rejected by the Court. Thus, the Court has confirmed the ad interim order, after rejecting the submission of the respondent No. 1 that there is nothing secret in the manufacture process used by the petitioner. Once, the Court confirms the ad interim order after rejecting the submission that the process adopted by the petitioner is not of secret nature, in my opinion, the respondents cannot be heard to say that the order does not operate against them because the process used by the petitioner is not of secret nature. It is clear that in their defence in this petition the respondents are raising the same controversy which was raised by them at the final hearing of the notice of motion and which was considered and rejected by this Court while confirming the ad interim order. There is a clear finding recorded in the order dated 8-12-98 that the process used by the petitioner and the respondent No. 2 is the same. The respondents at the hearing of this petition did not dispute this position. Thus, with these two findings recorded by the Court in the order dated 8-12-98 that the process used by the petitioner and the respondent No. 2 is the same and that the process adopted by the petitioner is of secret nature, there is no room for doubt that the order granting temporary injunction in terms of prayer Clause (b) of the Motion operates against the respondent No. 2 and the respondent No. 2 was obliged to stop using the manufacturing process.

9. Perusal of the order dated 8-12-98 shows that the respondent No. 2 clearly understood that in case the Court confirms the ad interim order it will have to stop the manufacture of their product. In para 7 of the order dated 8-12-98, the Court has referred to the submissions made on behalf of the respondent No. 2. The following from para 7 of the order is relevant.

'Relying on the judgment of the Gujarat High Court in the case of M/s. Lalbhai Dalpatbhai & Co. v. Chittaranjan Chandulal Pandya, : AIR1966Guj189 , he submitted that as grant of injunction against the defendants would result in closure of the company where public money has been invested and 50 employees are engaged, the grant of the injunction would be against the public interest, therefore the injunction cannot be granted.'

It was pointed out by the learned Counsel for the petitioner that in the memorandum appeal filed any respondent No. 2 in paras 18 and 26 it has stated as follows :-

'The grant of the interim relief is not in public interest in as much as the public financial institutions have invested large amounts of money in the appellant company and large number of employees are employed by them. Grant of relief as prayed for would necessarily result in the closure of he Appellant Company, which cannot be permitted in an action on trade secret or confidential information (para 18)

The appellant shall suffer irreversible harm and loss if production would stop, and the respondent No. 1 is incapable of compensating the loss in terms of money (Para 26).'

It is thus clear that when the notice of motion was being heard finally the respondent understood that the grant of injunction in the terms in which it was sought would result in obliging the respondent No. 2 to stop the production, therefore when the ad interim order was confirmed they sought stay of the order. In the appeals filed by the respondent No. 1 and respondent No. 2 also they sought stay of the order, saying that otherwise they will have to stop the production, but the Appeal Court while admitting the appeals said 'No interim relief'. In this situation, therefore, the respondent No. 2 had only two options i) to secure stay of the order granting temporary injunction from superior Court or ii) to stop the production. The respondents did neither. They have admittedly continued the production using the same process which has been held to be the same as the petitioner. In this situation, therefore, the stand now taken in these proceedings by the respondents that the order injunction does not operate against the respondent No. 2 because the petitioner has not proved that the process that it uses is secret, is obviously an after thought and therefore, cannot be said to be bona fide. As observed above, the Court at the final hearing of the notice of motion, where all the contention now raised were raised, including the question about the secrecy of the process used by the petitioner, confirmed the ad interim order, therefore, now the respondents cannot raise the same contention. In my opinion, therefore, it is clearly established that the respondents have disobeyed the orders passed by this Court.

10. The question now to be considered is whether the disobedience is wilful or deliberate. When an order made by Court is not obeyed by a party due to bona fide misinterpretation of the order, the disobedience does not amount to contempt of the Court. In the present case, can it be said that the respondents disobeyed the order dated 8-12-98 because they bona fide misinterpreted the order? In my opinion, the answer has to be in the negative. It is clear from the submission of learned Counsel for the respondent No. 2 recorded in the order and reproduced above that the respondent knew perfectly well, what would be the consequences of the confirmation of the ad interim order. This is further clear from the contents of the memorandum appeal referred to above. Once, the prayer of the respondents for stay of the order dated 8-12-98 was not granted by the Appeal Court, there was no justification whatsoever for continuing the production. It is thus, clear that the respondents have wilfully and deliberately disobeyed the order dated 8-12-98 and therefore, they are guilty of having committed contempt of the Court.

12. All the respondents have submitted apology, therefore, I have to consider whether the apology submitted by the respondents is to be accepted or not. Respondent No. 4 is a lady who claims to be a nominee director and that she does not take part in the day to day working of the company. Respondent No. 5 also claims that he does not take part in the day to day working and he has also resigned. Respondent No. 6 claims that he has never taken part in the working of the company. Respondent Nos. 7 to 9 are the nominees of financial agency, they are on the Board of Directors primarily to look after the investment made by the financial agency. Hence, in my opinion, the apology submitted by respondent Nos. 4 to 9 should be accepted. It appears that they are not the persons who are really running the respondent No. 2. So far as the respondent Nos. 1 and respondent No. 3 are concerned, on the other hand, are the persons who set up the respondent No. 2 and are running it. The conduct of the respondent No. 1 and respondent No. 3 through out the litigation has been such as to lead one to the conclusion that they were bent upon continuing with the production whatever order this Court passed. Even during the hearing of this petition, they did not offer to stop the production. Their design appears to continue the production, taking advantage of delay involved in the process of litigation. The apology submitted by them cannot, in my opinion be termed as either genuine or bona fide and hence, it has to be rejected.

13. The learned Counsel appearing for the respondent No. 2 submitted that because this petition was not filed within one year of the order dated 8-12-98, it is barred by limitation. The submission has no substance. Disobedience of the order dated 8-12-98 everyday by the respondent Nos. 1 to 3 would give a fresh cause of action to the petitioner everyday. Apart from this, Contempt Petition No. 72/98 was filed by the petitioner, alleging the disobedience of the ad interim order even before the order dated 24-12-96 had been confirmed. Thus this petition cannot be dismissed on the ground of limitation.

14. Having found that the respondent No. 1 and respondent No. 3 are guilty of having committed contempt of the Court, in my opinion, considering the facts and circumstances of the case, imposing fine of Rs. 2,000/- on each of the respondent No. 1 and respondent No. 3 would meet the ends of justice. Hence, it is accordingly so ordered. The fine is directed to be paid within two weeks from today. In default, they are sentenced to undergo Simple Imprisonment in Civil Prison for one week. The respondent No. 2 is directed to forthwith stop production using the process which is the same as the petitioner, till the Suit No. 4594 of 1996 is pending or till the order dated 8-12-98 remains in force. As the respondent Nos. 1 and 2 have disobeyed the orders passed by the Court, their defence in Suit No. 4594 of 1996 is, therefore, struck off. This petition is also granted in terms of prayer Clause (c). The affidavit to be filed within two weeks. The petitioner shall be at liberty to take out appropriate proceedings after the affidavits are filed.

Contempt petition is disposed of.

Parties to act on simple copy of the order duly authenticated by the associate of the Court as a true copy.