OP. ED.Practical Lawyer Archives

To pursue corporate relationships and transactions, it is very common for parties to enter into a confidentiality agreement on a non-disclosure agreement (NDA). The primary intent of executing such an NDA is to facilitate exchange of confidential information among parties and to that the confidential information disclosed thereunder will be safeguarded during the term of and (sometimes even) post-termination of the NDA.

Typically, there are certain provisions in an NDA which enable the discloser in protecting confidential information from unauthorised use or disclosure by the recipient, the latter’s representatives and any third parties and to limit liability of the contracting parties (as applicable) with respect to confidential information.

We are discussing some of these provisions in this article as under:

Return or destruction of confidential information

Discloser typically shares the confidential information to recipient for a designated business or professional purpose. Therefore, from discloser’s perspective, it is crucial to ensure confidential information is safeguarded and secured after accomplishment of intended purpose of disclosure of confidential information.

Prospect to return or destruction of confidential information is instrumental in ensuring recipient will not make any unauthorised use of confidential information post completion of intended purpose of disclosure of confidential information or termination of the NDA.

Triggering point: There are different triggering points wherein discloser can make recipient return or destroy confidential information. The following are such triggering points:

(a) Upon termination or expiry of the agreement.

(b) Upon termination or expiry of discussions between discloser and recipient.

(c) Upon request (oral or written) of the discloser or its representatives.

From discloser’s perspective, triggering of return or destruction of confidential information obligation based on termination or expiry of the agreement or discussions will be beneficial, so that discloser has no need to specifically request recipient to return or destroy confidential information as the recipient is implied to do so following the occurrence of stipulated event.

From recipient’s perspective, return or destruction of confidential information obligation qualified by a written request of discloser is useful to recipient as there is no onus on recipient to return or destroy confidential information unless and until the same is requested by the discloser in writing.

Return or destruction of notes

Notes means any notes, summaries, analysis, materials, etc. prepared by recipient or its representatives based on the confidential information. Inclusion of return or destruction of notes depends on parties. Generally discloser prefers to include the same and sometimes recipient prefers to exclude the same.

Certification or confirmation

Proof of such return or destruction of confidential information can be established with an obligation on recipient either to certify or confirm such return or destruction of confidential information. This will make discloser feel comfortable to learn its confidential information is either returned or destroyed.

From liability perspective, certification of return or destruction of confidential information is a bit more obligatory in nature. Confirmation of return or destruction of confidential information is less obligatory. For recipient’s benefit, certification or confirmation of return or destruction of confidential information can be tied to a written request of the discloser. This will ensure that recipient will be required only to confirm or certify of return or destruction of confidential information only if requested in writing by the discloser.

Retained confidential information

Like every rule comes with an exception, in certain cases, recipient will be exempted from this obligation to return or destroy confidential information. This is to enable recipient to retain confidential information in permitted cases for legal, compliance and regulatory purposes. Typically, a recipient will be permitted to retain copies of confidential information as required by law, compliance or record retention policies or as part of automated archival or backup copies.

Restricted access

To ensure recipient will not make use of retained copies of confidential information beyond permitted purposes, discloser may prefer to include a provision of restricted access to retained copies and use such copies for permitted copies only. This is to ensure only certain permitted personnel (i.e. legal, compliance or IT personnel) will have right to access such retained confidential information and such permitted personnel will further use such retained copies of confidential information only for permitted purposes only.

Survival

Survival of confidentiality obligations with respect to retained copies of confidential information is another parameter that will influence time period for which recipient will have to protect such retained copies of confidential information.

Typically, obligations (confidentiality, non-use or other, as applicable) with respect to retained copies of confidential information may survive:

(a) In perpetuity.

(b) For so long as the confidential information is retained by recipient.

(c) For the term of the NDA.

Term and protection period

Term of NDA is time duration for which the NDA will be in effect.

Protection period will be term for which the confidentiality obligations will be in effect without giving consideration to the fact that NDA is in effect or expired.

Triggering point: For an NDA to become effective or application of confidentiality obligations may begin from the effective date of agreement or date of disclosure or receipt of confidential information.

Tenure: Term or protection period can be a fixed term or perpetual. For protection period, sometimes confidentiality obligations will survive for so long as confidential information is retained by recipient.

Representations and warranties

Common representations and warranties in NDAs are discloser’s representation or warranty as to discloser’s right to disclose confidential information—this is to comfort the recipient that discloser is competent to disclose the confidential information to recipient.

One common caveat in representation and warranty segment is that information is provided on “as is” basis. This reflects that discloser passed on confidential information to recipient as it is without substantiating veracity of confidential information as it will be highly impossible for discloser to guarantee every piece of confidential information is true and accurate as the confidential information may be complied from different channels over which the discloser may have no control.

Among other representations and warranties, NDAs may contain the following:

(a) Parties’ authority to enter into the confidentiality agreement.

(b) Parties will comply with applicable laws and rules.

(c) Execution of the NDA will not violate any third party agreements or intellectual properties.

Generally, will contain disclaimer about accuracy or completeness of confidential information. Core purpose of such disclaimer is to say discloser does not warranty or guarantee about accuracy or truthfulness of confidential information as said above, confidential information will be compiled or received from multiple sources.

Disclaimer of liability: From discloser’s perspective, liability disclaimer is crucial as discloser will disclaim liability for any claims based on use of confidential information by recipient. However, this can be caveated for recipient’s benefit, with addition of “except for matters specifically agreed in the agreement”. This caveat will ensure that discloser will be liable for any claims based on matters specified in the confidentiality agreement and recipient will have leverage to make successful claims based on matters specifically agreed therein.

Injunctive relief

It is crucial for discloser to have right to seek injunctive relief or specific performance of the confidentiality agreement to prevent unauthorised use or disclosure of confidential information by recipient or its representatives or to limit damage related to any commission of unauthorised use or disclosure of confidential information.

From discloser’s perspective, qualifiers (without necessity of posting bond or without necessity of proof of damages) will make life of discloser easy to seek injunctive or other relief without the necessity of proof to backup damages claimed and without necessity of giving security with respect to such claim.

This is a special right given to discloser to seek remedies for any unauthorised use or disclosure of confidential information. At the same time, this right can also be mutual to discloser and recipient as a non-breaching party to claim relief for commission of breach of confidentiality agreement by breaching party.

Compensation for breach

Typically, in NDAs, either party does not prefer to have an obligation to indemnify the other party for any breach of the confidentiality agreement. Instead, a party may agree to pay compensation to a prevailing party in a litigation as awarded by court of competent jurisdiction in a final, non-appealable order.  Such compensation may include reimbursement of legal and miscellaneous expenses also. One way to limit liability for paying compensation is qualifying such expenses and fees by caveat of reasonable and documented. As a reason, non-prevailing party will only have to pay such expenses provided they are reasonable in nature and substantiated by proof of documentation.


Bhumesh Verma is Managing Partner at Corp Comm Legal and can be contacted at bhumesh.verma@corpcommlegal.in.

Karnataka High Court
Case BriefsHigh Courts

“…A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a Common Law Right. It is pure and simple, a statutory right. So is the right to be elected. So is the right to dispute an election.”

Karnataka High Court: Krishna S. Dixit J dismissed the petition being devoid of merits. 

The facts of the case are such that the petitioner, a Returned Candidate of Karle Grama Panchayat whose election having been set at naught, the first respondent was declared as having been duly elected in her stead by the Election Tribunal, knocked the doors of Writ Court for assailing the order dated 10-11-2021.

The Court relied on judgment Jyoti Basu v Debi Ghoshal , (1982) 1 SCC 691and observed that the case does not involve infraction of any of the Fundamental Rights. It relates to only statutory rights namely, right to continue in office till the expiry of elected tenure. Matters relating to election are it to the grass root electoral bodies such as Grama Panchayats or to the Parliament do fall within the realm of law of elections, as legislated.

The Court remarked the jugular vein of the election petition was the validity of four ballot papers namely, which were excluded from the Court in favour of the first respondent – Election Petitioner on the ground that they belonged to a different constituency.

The election tribunal observed “The materials on record clearly indicates that the 4 votes rejected as not genuine appears to be not proper for the reason that the said Ballot papers have been handed over by the officials themselves to the voters. The intention of the voter in making the mark on the symbol under which petitioner contested the election go to show that the said vote was casted in favour of the petitioner. Further, the Ballot papers which were admittedly handed over by the respondent No.3 to the voters have been treated as not genuine, which cannot be accepted because admittedly the same are issued by respondent No.3. 

On election symbols, the Court observed that the election symbols of the candidates or their political parties through which they are put in the fray assume a lot of significance. These symbols are normatively by the jurisdictional authorities constituted under law. The election symbols play a vital role inasmuch as, ordinarily, the electors identify their candidates on the basis of symbols with which they contest in the elections, and vote. It is more so in the case of election to ‘grass-root’ level local bodies like the one in this case.

The Court observed that in the present case, though the ballot papers belonged to other constituency, there is irrefutable evidence on record that they were utilized for the election in this constituency; they had the same electoral symbol; they were taken & used for the constituency in question after scrutiny by the jurisdictional authorities; the voters acted upon the same accordingly.

The Court thus held, “the Election Tribunal rightly faltered their exclusion from counting and thereby, reckoned them to the account of Respondent–Election Petitioner, who eventually has been declared as duly elected, after invalidating the election of Returned Candidate.”[Prabhamani v. Hemalatha, 2022 SCC OnLine Kar 628, decided on 01-04-2022]


Appearance:

For petitioner: Mr. Sathish SP

For respondent: Mr. Basavaraju HT and Prathima Honnapura


 Arunima Bose, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: Taking a significant step towards gender equality, the Division Bench of Sanjay Kishan Kaul and Hrishikesh Roy, JJ., issued interim direction permitting the women candidates to take part in the National Defence Academy (NDA) examination.

Noticeably, the three modes of recruitment of officers in the Indian Army are through the National Defence Academy (NDA), Indian Military Academy (IMA) and Officers Training Academy (OTA). NDA and IMA are modes of direct entry through UPSC; whereas, through OTA, women are commissioned along with men, both through UPSC and Non-UPSC mode of entry. They are granted Short Service Commission, both men and women, and subsequently are considered for grant of Permanent Commission.

ASG, Ms Aishwarya Bhati submitted before the Bench on behalf of the Union government that a policy decision should not be interfered by an interim measure. It was her submission that subject to certain conditions laid down by the Supreme Court in Ministry of Defence v. Babita Puniya, 2020 (7) SCC 469, ten streams are open for women officers in army.

Pointing out the apparent gender biasness on the part of Army, the Bench asked, whether in the ten streams is there recruitment of male officers from the NDA route? Expressing disappointment over the reply of the Army, the Bench stated,

“We would have expected a more considered affidavit on policy decision based on gender equality more specifically keeping in mind the observations of this Court in Babita Puniya’s case (Supra).”

In view of the impending examination and on hearing counsel for parties, the Bench issued interim direction permitting the women candidates to take part in the NDA examination scheduled for 05-09-2021, subject to further orders from the Court. The Union Public Service Commission (UPSC) was directed to take out the necessary corrigendum in view of the interim orders and give it wide publicity so that the intent of the order is translated into benefit at the ground level.

Similarly, taking note that the process of admitting girls in Sainik Schools had already started and it would be further expanded, the Bench commented on non-inclusion of girls in Rashtriya Indian Military College (RIMC),

“It is stated that it is a 99 years old institution which will complete 100 years next year. The question is whether it completes its 100 years with gender neutrality or not!”

Since the matter has direct relation with admission in NDA programmes, the Bench scheduled it on 09-09-2021 for consideration.[Kush Kalra v. Union of India, Writ Petition(s)(Civil) No.1416 of 2020, 18-08-2021]


Kamini Sharma, Editorial Assistant has reported this brief.


Appearance by:

For Petitioner(s): Petitioner-in-person, Chinmoy Pradip Sharma, Sr. Adv., Mohit Paul, AOR, Sunaina Phul, Adv. and Irfan Haseib, Adv.,

For Respondent(s): Aishwarya Bhati, Ld. ASG, Archana Pathak Dave, Adv., Ruchi Kohli, Adv., Chinmayee Chandra, Adv. and Arvind Kumar Sharma, AOR

Case BriefsTribunals/Commissions/Regulatory Bodies

Central Information Commission (CIC): Saroj Punhani (Information Commissioner), harmonised the conflicting interests of the parties keeping with the letter and spirit of the Right to Information Act.

Following information was sought by the appellant:

  1. “Provide a copy of Thesis titled ‘Studies on some nitrogen fixing genes of Azotobacter vinelandi submitted/authored by Umesh Kumar Bageshwar which is catalogued in Dr Zakir Husain Library of Jamia Millia Islamia University under Access No. 130906. 
  1. If the said Thesis is not available for circulation, provide the reason(s) for inaccessibility/restricted circulation of the said Thesis with a copy of instructions, if any restricting such circulation.
  1. lf the said Thesis circulation is restricted, provide the guidelines/policy that govern restricted access in Dr. Zakir Husain Library of Jamia Milia Islamia University with a copy of categories of items that can be placed in restricted access.”

CPIO submitted that the thesis sought for by the appellant pertains to the work of a third party who had categorically informed the University not to disclose the thesis without having an NDA signed with him by the requestor concerned.

Further, CPIO explained that the averred scholar has already got a US Patent and he intends to file for an Indian Patent too with respect to the research wok documented in the averred thesis and has also apprehended that a number of foreign companies are trying to gain unrestricted access to the said work for commercially exploiting it without his consent.

In view of the commercial viability of the said thesis and the protected interest of the scholar and his guide, the FAA invoked Section 8(1)(d) of the RTI Act in order to deny the information to the appellant.

Adding to the above, emphasis was laid on the point that the research scholar informed the University that if any request for access to the said thesis comes that should be facilitated through him.

Analysis, Law and Decision

Commission observed that the appellant primarily harped on the relevant University Ordinances to insist that the thesis of the averred research scholar ought to be disclosed in the public domain as once the scholar submits the thesis to the University, it ceases to be the property of the scholar and hence the consent or dissent of the said scholar is not consequential to the disclosure of the thesis in the public domain.

In Commission’s view, the arguments of the representative of the Appellant questioning the originality of the said thesis or challenging the Patent filing on the grounds that the idea invested in the thesis is no more ‘novel’ are more in the nature of self-serving arguments or at best calls for the intervention of the University administration to assess if any procedural or ethical lacunae is pertinent in the award of degree based on the averred thesis in the context of the serious allegations of the Appellant.

Coram stated that the appellant may note that merely because University Ordinance prescribes publication of the thesis does not take away the protection available to the disclosure of the same under the RTI Act if exemption of Sections 8 and 9 therein is applied and justified.

thesis publication of the research scholars cannot be reasonably even brought under any of the suo motu components of disclosure envisaged under Section 4 of the RTI Act, thereby reinforcing the proposition that the protection of Section 8 and 9 exemptions is very much available to the CPIO in the instant case.

Further, adverting to the peculiarity of the instant case in the context of the serious allegations of the Appellant and the admitted stance of the CPIO that the third party intimated that the thesis be withheld from public disclosure or publication, the Commission deemed it expedient to harmonise the conflicting interests of the parties concerned in keeping with the letter and spirit of the RTI Act.

In view of the above discussion, Commission directed CPIO to provide a copy of the relevant and available instructions received from the third party requesting for the complete confidentiality of the said thesis. or in the absence of said record, any other corresponding document as available should be provided to the Appellant.

CPIO was also directed to provide the relevant and available guidelines governing restricted access of thesis submitted by the scholars of the University to the Appellant, in case the same was not available, a categorical statement shall be stated in the CPIO’s reply.

Appellant was at liberty to approach the University for the purpose of facilitating access to the thesis subject to the signing of NDA in consultation with the concerned research scholar.

Note for UGC

Instant case impliedly suggests that despite relevant University Ordinances stipulating access permission to the submitted thesis of scholars, the prerogative lies with the University to withhold one such thesis in absolute confidentiality on the grounds of commercial viability and market competition. If that be the message that the Respondent University is conveying, it may be assessed if the said prerogative of the University is backed by any UGC Regulations and if the same is conducive to the interests of the research community at large.

Hence, in regard to the above, Vice-Chancellor, JMI shall consider placing in the public domain any exceptions to the rule of granting access to the submitted thesis of the scholars in order to dispel the apprehensions of other fellow research scholars or the general public at large and to avoid casting aspersions on the work of the scholars.

In view of the above discussion, appeal was disposed of. [Rajeev Kumar v. CPIO, Jamia Milia Islamia; 2021 SCC OnLine CIC 4459; decided on 12-04-2021]


Advocates before the Commission:

Appellant: Represented by Varun Sharma, Advocate through the intra-video conference.

Respondent: Dr Shakeb Ahmad Khan, Professor & CPIO present through intra- video conference.