MANU/GJ/0739/2010 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD Civil Application No. 207 of 2010 in Civil Suit No.

1 of 2007 Decided On: 17.09.2010 Appellants: Hind Mosaic and Cement Works and Anr. Vs. Respondent: Shree Sahjanand Trading Corporation and Anr. Hon'ble Judges: H.B. Antani, J. Counsels: For Appellant/Petitioner/Plaintiff: Saurabh Soparkar, Sr. Adv. and Pranav S. Trivedi, Adv. For Respondents/Defendant: Unmesh D. Shukla, Adv. for Respondent No. 2, Y.J. Trivedi, H.S. Tolia, Tejas Trivedi and Nakul J. Sharedalal, Advs. Subject: Civil Acts/Rules/Orders: Civil Procedure Code (CPC), 1908 - Section 151 - Order 11, Rule 12 Cases Referred: Kamalia Brothers and Co. v. State of Gujarat 1991 Law Suit (Gujarat) 124; M. Sivasamy v. Vestergaard Frandsen A/S and Ors. MANU/DE/1724/2009 : 2010 (42) PTC 273 (Del.); Shri M.L. Sethi v. Shri R.P. Kapur MANU/SC/0245/1972 : AIR 1972 SC 2379; Susan Thomas v. Elizabeth Pearce, Darlows Ltd. 2000 WL 474; Printers and Finishers Ltd. v. Holloway and Ors.; Coco v. A.N. Clark (Engineers) Limited (1968) F.S.R. 415; J.N. Dairies Limited v. Johal Dairies Limited, Gurbir Singh 2010 EWCA Civ 348 : 2010 WL 903148 Case Note: Civil Production of documents Section 151, Order 11, Rule 12 of Civil Procedure Code (CPC), 1908 Application for discovery and production of documents in possession and power of Plaintiffs Held, audited accounts along with report of auditors all notes, schedules and significant accounting policies of Plaintiff No. 2 were already produced and marked as exhibits With regard to item No. 2, prior to 200506, this form was not required to be maintained and no records need to be maintained showing these values With regard to item No. 3, the trade sensitive information cannot be parted with by Plaintiffs Individual invoices were totally unnecessary and uncalled for hence, cannot be produced by Plaintiffs With regard to item No. 4, profitability figures were not statutorily required to be maintained separately product-wise by Plaintiffs for the purpose of the claim under this suit With regard to item No. 5, necessary certificates issued by statutory authorities were already produced and marked at exhibits With regard to item No. 6, documents consisting of management certificate were enclosed along with affidavit in reply With regard to item No. 7, record showing price reduction etc. was produced and marked as exhibits during the evidence With regard to item No. 8, detailed record showing production of reports were already on record With regard to item No. 9, no such data or record were in possession of Plaintiffs and cannot be produced Information sought by Defendants cannot be provided to Defendants since it contains trade sensitive information and constitute trade secret of the Plaintiffs Application dismissed.

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Ratio Decidendi: The information which is sought by the Defendants cannot be provided to the Defendants since it contain trade sensitive information and constitute the trade secret of the Plaintiffs, if provided to the Defendants it would gravely prejudice the case of the Plaintiffs. JUDGMENT H.B. Antani, J. 1. This is an application filed by defendant No. 2 under Order XI Rule 12 read with Section 151 of the Code of Civil Procedure, 1908 (hereinafter referred to as "the Code") for discovery and production of the documents in possession and power of the plaintiffs. It is submitted that the plaintiffs have filed the suit inter-alia for infringement of its patent and defendant No. 2 has filed its defence that the patent is invalid and has also filed counter claim challenging the validity of the patent. The parties led the evidence and the trial was completed in the year 2008. In 2009 after completion of the trial, the plaintiffs sought an amendment in its prayer in the suit. The amendment was sought for incorporation of new prayer for compensation of Rs. 5,20,00,000/- only in addition to the account of profits already prayed for. The amendment was allowed by the Hon'ble High Court and defendant No. 2 also filed his written statement to the amended plaint. Defendant No. 2 had no occasion to exercise its defence to the plaintiffs' additional claim of compensation for the reason that the prayer for compensation was sought after the completion of trial. Therefore, it is submitted that in order to effectively answer the amended prayer and effectively cross-examine the witnesses who had filed the affidavit in support of the quantum of damages, defendant No. 2 requires certain documents which are exclusively in possession of the plaintiffs and therefore, defendant No. 2 has come forward with the application with a prayer to direct the plaintiffs to discover the documents specified in the Annexures attached to the application and in possession of the plaintiffs and order the plaintiffs to produce the same in the Court. Defendant No. 2 also intends to examine Chief Financial Officer of the plaintiffs, Chartered Accountant who has certified the financial results of the plaintiffs, Chief Operating and Marketing Officers etc. Therefore, it is prayed that in the interest of justice, the plaintiffs be directed to produce the documents which are enumerated in the annexures attached to the application and in possession of the plaintiffs. 2. Mr Saurabh Soparkar, learned Senior Advocate for defendant No. 2 has placed reliance on the documents which are annexed along with the application and submitted that in the annexures, 9 items are listed and they are required to be produced by the plaintiffs and necessary direction in that regard be given to the plaintiffs. On behalf of the plaintiffs, a detailed affidavit in reply is filed opposing the application preferred under Order XI Rule 12 read with Section 151 of the Code and it is contended that the plaintiffs have already produced necessary documents as prayed for by defendant No. 2. It is submitted that the details which are given in Para 2 of the affidavit in reply makes it clear that all the necessary information is provided by the plaintiffs to defendant No. 2 in order to have effective cross-examine of the witnesses of the plaintiffs. It is further submitted the cross-examination of the plaintiffs' witness No. 4 has already commenced and necessary records which are relied upon by the said witnesses are already sought for and produced and therefore, the application for production and inspection does not survive for consideration. It is also contended by the learned Counsel for the plaintiffs that a party cannot be compelled to produce the documents which are neither in possession of the concerned party nor in the control of the party and as substantial records and documents are submitted by the plaintiffs, no interference is called for in the present application preferred by defendant No. 2 and it deserves to be rejected. 3. Learned Senior Advocate for original defendant No. 2 has placed reliance on the judgment rendered in the case of Kamalia Brothers and Co. v. State of Gujarat 1991

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Law Suit (Gujarat) 124, wherein in the case before the Hon'ble High Court, the plaintiffs had filed the suit against the State being Special Civil Suit No. 157 of 1977 for recovery of Rs. 1,77,397.57 for extra work done and for damage on account of termination of the construction contract on the part of the respondent-defendant. During pendency of the suit, the petitioner served the respondent with a notice of production in respect of three specific letters. Such letters have been addressed by specific officials of the PWD and also addressed to some specific officers of the PWD. Since the notice of production was not complied with, the petitioner as plaintiff gave an application Exh.73 for discovery on oath of the specified documents under Order 11 Rule 12 of the Code. The Trial Court heard the application and passed the order rejecting the same below Exh.73 which was challenged by filing Revision Application before the High Court. The Trial Court further observed in Para 5, 6 and 7 as under: 5. The trial court has upheld the contention of the defendant in respect of a simple plea that letters are confidential letters and confidential letters cannot be produced and discovery in respect thereof cannot be granted. The trial court has not assigned any cogent or logical reason for upholding this bare plea. It must be borne in mind that the trial Court was conscious of the petitioner's plea that merely by labelling the letters in question as "Confidential Letters" the same cannot be excluded from the purview of Order 11 Rule 12 of Civil Procedure Code. The trail Court was also aware that the petitioner had specifically contended that no specific or particular privilege in respect of the letters in question had been claimed by the defendant, and that there was no claim and or contention on the part of the defendant that disclosure would be prejudicial to public interest and or to national security and or opposed to public policy and or detrimental to the interest of the defendant in any other manner. In fact there is no reason (for the confidentiality) disclosed by the defendant nor any explanation and or clarification offered in respect of the nature of confidential letters. 6. Under the circumstances, it is clear that the bare plea that the letters are "confidential letters" cannot be upheld. It is also clear that the trial Court has not substantiated its order by resorting to proviso to Order 11 Rule 12 of C.P.C. The trial Court has not arrived at any finding or expressed any opinion that the discovery of the letters in question is not necessary either for disposing fairly of the suit or for saving costs. In fact the trial Court has accepted the contention, in an indirect manner, raised by the petitioner that the letters in question are important documents and relevant for the determination of the controversy between the parties, and go to the root of the important issues raised in the suit. Thus it also appears that the impugned order in rejecting the application for discovery is inconsistent with the trial Court's earlier finding that the letters in question are relevant and material documents. 7. The trial Court has also rejected the plaintiff's application on the ground that the documents in question are not between the plaintiff and the defendant, but they are documents between the officials of the defendant. I have no doubt that this observation of the trial Court is merely an obfuscation inasmuch as the correspondence between the officers of the defendant can certainly be relied upon by the plaintiff if according to the plaintiff the same may prove or support the plaintiff's case. It is obvious that the Order 11 Rule 12 does not in any way limit the discovery of documents, in the case of letters, to the letters exchanged only by the parties to the suit. The requirements of this provision are limited only to the fact that the documents should be or should have been in the possession or power of a party to the suit, and that the same should relate to any matter in question in the suit. Clearly the letters in question satisfy these requirements and, therefore, the order for discovery thereof cannot be refused on the ground that the letters are not directly between the

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parties to the suit. Considering the aforesaid aspect, the High Court quashed and set aside the impugned order below Exh.73 dated 8.5.1985 and the application of the plaintiff vide Exh.73 was granted. 4. Learned Senior Advocate on behalf of the plaintiffs submitted that no case is made out by defendant No. 2 for exercise of power under Order XI Rule 12 read with Section 151 of the Code and therefore, the application deserves to be rejected. 5. Mr. Deepak Poddar on behalf of the plaintiffs has also filed a detailed affidavit wherein it is contended that defendant No. 2 has sought the discovery in respect of sales invoices for the patented column pipes including packing list and other connected documents raised/sent to the buyers for the financial years 2003-04 to 2008-09. However, defendant No. 2 has failed to state as to why the particular specific documents itself is necessary and how the other documents such as audited financial statements cannot suffice the requirement for the purpose of verification of the financials of the plaintiffs. It has already been stated by the plaintiffs in their reply filed on earlier occasion that they are submitting the sales register (report generated from the Tally software, maintained in the ordinary course of business of the plaintiffs) for the same period showing the actual sales of the patented column pipes and various sizes. Thus, the documents clearly provide the total quantity of the patented column pipes sold by the plaintiffs, the rates at which they are sold and the total value fetched by them. Such documents sufficiently establish the actual volume of the sales achieved by the plaintiffs in respect of the patented column pipes which would enable the defendants to cross-examine the plaintiffs, Chartered Accountant or other witness on the issue of quantum of damages. The plaintiffs object to the production of the individual sales invoices for the past 7 years which run into several thousands of pages but more importantly, since they contain trade sensitive information and constitute the trade secret of the plaintiffs, the same cannot be produced. The customers' list along with the postal address, contact details such as fax, phone numbers, contact person details, email IDs etc. with the plaintiffs is part of the trade secret with the plaintiff and the same is already accepted as confidential information by the law. The disclosure of such confidential information in the present proceedings to the defendants is going to be prejudicially affect the plaintiffs' interest and therefore, the plaintiffs cannot be compelled to produce the aforesaid information as sought for by defendant No. 2. 6. Learned advocate has placed reliance on the following judgments. They are as under: (i) M. Sivasamy v. Vestergaard Frandsen MANU/DE/1724/2009 : 2010(42) PTC 273 (Del.) (DB). A/S and Ors.

(ii) Shri M.L. Sethi v. Shri R.P. Kapur MANU/SC/0245/1972 : AIR 1972 SC 2379. (iii) Susan Thomas v. Elizabeth Pearce, Darlows Ltd. 2000 WL 474. (iv) Printers and Finishers Ltd. v. Holloway and Ors., Chancery Division, Cross, J. (v) 415 Coco v. A.N. Clark (Engineers) Limited. In the High Court of Justice Chancery Division, 1 July 1968, [1968] F.S.R. 415. (vi) J.N. Dairies Limited v. Johal Dairies Limited, Gurbir Singh 2010 EWCA Civ 348 : 2010 WL 903148.

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The aforesaid judgments are cited in support of the submission that the confidentiality is claimed in the matter of production of certain documents as it would reveal the trade secret, customers' address, etc. The same cannot be demanded by the defendants and therefore, the prayer in respect thereof deserves to be rejected. 7. I have heard Mr Saurabh Soparkar, learned Senior Advocate for defendant No. 2 and Mr Unmesh Shukla, learned advocate for the plaintiffs. I have also considered the judgments cited by the learned Counsel of both the sides and there is no dispute about the ratio or proposition laid down in those judgments. I have also perused the averments made in the application for discovery and production of the documents under Order XI Rule 12 read with Section 151 of the Code as well as the reply filed by the plaintiffs and the detailed affidavit filed by Mr. Deepak Poddar on behalf of the plaintiffs. The list which is annexed along with the application for production of the documents is also carefully taken into consideration by me. So far as item No. 1 which is the audited accounts along with the report of the auditors all notes, schedules and significant accounting policies of plaintiff No. 2 for the financial year 2003-04 to 2008-09 is concerned, it has been stated in the affidavit in reply that the same are already produced and marked as exhibits during the evidence of the plaintiffs' witness No. 4 and therefore, there is no requirement to issue a direction to produce the documents as per survey No. 1 of the requisition. With regard to item No. 2, it has been contended that the said requisition is absolutely vague and not specific. However, the plaintiffs have submitted the month-wise excise form No. ER6 every month for a period from 2005-06 to 2008-09 showing the opening balance, purchases of raw materials, consumption of raw materials, closing balance of raw materials in respect of PVC column pipes along with the production of PVC column pipes in the metres. Prior to 2005-06, this form was not required to be maintained and no records need to be maintained showing these values in metric tonnes so as to correlate the same with the figures of installed capacity. Therefore, there is no requirement to issue direction to produce the documents as per survey No. 2 of the requisition. With regard to item No. 3, it is stated in the affidavit filed by the plaintiffs that the information is not relevant and not required in light of the other audited documents and the information made available by the plaintiffs. It is further submitted that the defendants have approached the Court with unclean hands and suppression and misleading statements. The trade sensitive information cannot be parted with by the plaintiffs. Individual invoices are totally unnecessary and uncalled for and hence, the same cannot be produced by the plaintiffs as already the financial statements are prepared, audited and accepted by the authorities and there are no objections or queries pending whatsoever in respect of the same. The plaintiffs have also submitted the sales register for the period from 2003-04 to 2008-09. With regard to item No. 4, it is stated that the requisition is absolutely vague and not specific as to which particular record the defendant No. 2 is seeking from the plaintiffs. However, it is submitted that the profitability of the plaintiffs can be ascertained from the audited financial statements. The profitability of patented product is always higher than the profitability of non-patented product as the plaintiffs enjoy the monopoly in the market in so far as the patented product is concerned. It is submitted that since the profitability figures are not statutorily required to be maintained separately productwise by the plaintiffs for the purpose of the claim under this suit, the average profitability percentage is considered based on the figures in the audited financial statements. With regard to item No. 5, it is contended that necessary certificates issued by the statutory authorities are already produced and marked at exhibits during the cross-examination of plaintiffs' witness No. 4. With regard to item No. 6, it is stated that it is in respect of the detailed record showing the maximum possible capacity utilization etc. The said information/documents consisting of management certificate accompanied by computation details of the same is enclosed along with the affidavit in reply. With regard to item No. 7, the record showing the price reduction etc. by the plaintiffs is already produced and marked as exhibits during the evidence of plaintiffs' witness No. 4. With regard to item No. 8, detailed record showing the production of the reports which has been already there on the record. With regard to item No. 9, it is stated that no such data or record are in possession of the plaintiffs and therefore, the same cannot be produced. However, in the detailed affidavit filed

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by Mr. Deepak Poddar, it is stated in Para 3 that the discovery in respect of sales invoices for the patented column pipes including the packing list and other connected documents raised or sent to the buyers in financial year 2003-04 to 2008-09 cannot be produced because the defendant No. 2 has not stated as to why the particular specific documents is necessary and how the documents such as the audited financial statements cannot be sufficient in the facts and circumstances of the case. The plaintiffs have already submitted the sales register (report generated from the Tally software, maintained in the ordinary course of business of the plaintiffs) for the same period showing the actual sales of the patented column pipes and various sizes. It provides the total quantity of the patented column pipes sold by the plaintiffs, the rates at which they are sold and the total value fetched by them. Such documents sufficiently establish the actual volume of the sales achieved by the plaintiffs in respect of the patented column pipes which would enable the defendants to crossexamine the plaintiffs, Chartered Accountant or other witness on the issue of quantum of damages. Therefore, the information which is sought by the defendants cannot be provided to the defendants since it contain trade sensitive information and constitute the trade secret of the plaintiffs. The customers' list along with the postal address, contact details such as fax, phone numbers, contact person details, email IDs etc. are part of the trade secret of the plaintiffs and therefore, the same cannot be provided to the defendants as it would gravely prejudice the case of the plaintiffs. Save and except the aforesaid information, all other information and the documents which were in possession of the plaintiffs are already given to the defendants. The suit is filed by the plaintiffs and it is incumbent upon the plaintiffs to prove its case and defendant No. 2 would have sufficient opportunity to cross-examine the witnesses and elicit the information during the cross-examination. Even the defendants would have ample opportunity to cross-examine the plaintiffs' witness, Chartered Accountants or other witnesses and during the cross-examination, the information can be elicited from the witnesses. So at this juncture, the plaintiffs have already supplied the inspection or discovery of the documents, except the sale invoices for the patented column pipes including the packing list and other connected documents raised or sent to the buyers for the financial year 2003-04 to 2008-09. 8. In view of the aforesaid facts and circumstances of the case, there is no merit in the application preferred by defendant No. 2 and as the same is devoid of merit, it is hereby rejected. However, the Commissioner is directed to dispose of the trial within one month from the date of receipt of writ of this Court.

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