Ex-Employee or Partner Took Your Data or Clients? Getting a Court to Stop It

How Indian law protects business secrets

There's no trade secrets Act in force in India. Protection comes from three other places. First, contract: the confidentiality clauses in employment letters, NDAs, partnership deeds, and distribution and vendor agreements. Second, the equitable duty of confidence. Someone who receives information in confidence can't turn it against the person who shared it, written contract or not. Third, copyright, which covers source code and, in some cases, compiled databases and client lists that took real skill and effort to build.

In its 289th Report (2024), the Law Commission of India recommended a dedicated law and put forward a draft Protection of Trade Secrets Bill. As of October 2026 it hasn't become law. So courts still decide these cases on contract, equity and copyright. That's less of a gap than it sounds. The Delhi High Court and the district courts have been granting injunctions to protect confidential information for a long time, and the principles are well settled without any statute.

The practical lesson? It's short. Better paperwork, and clearer steps to keep things secret, make it easier for a court to act fast.

What courts will protect, and what they won't

Courts protect information that isn't public, that's commercially valuable because it's secret, and that the business took reasonable steps to keep secret. Most of what clients bring to us qualifies: client lists with contact persons, purchase history and negotiated prices, cost sheets and margins, supplier terms, formulas and processes, source code, tender strategies, product roadmaps and unpublished designs.

What they won't protect is the general skill, knowledge and experience an employee picks up over the years. Your salesperson knows which industries buy your product and how to close a deal. That leaves with him. And it should. Nor is public information confidential just because it sits in your CRM, and a list of companies anyone can find on Google isn't a secret. The line usually falls at compilations that took effort and hold non-public details, like the decision-maker's direct number, the last price paid and the renewal date.

How you treated the information counts too. If the client sheet went round a team WhatsApp group that included outsiders, or the code sat in a public repository, your claim gets weaker. Access controls, marked documents, NDAs and a proper exit process all help show it really was confidential.

Non-compete clauses, non-solicit clauses and Section 27

Section 27 of the Indian Contract Act makes agreements in restraint of trade void, with limited exceptions, and courts apply it firmly to ex-employees. A clause barring an employee from joining a competitor for two years after leaving is generally unenforceable in India. It doesn't matter how carefully it was drafted. Restrictions during employment are another matter. A ban on working for a rival while you're still on the payroll is usually enforced.

Non-solicit clauses fall somewhere in between. Courts have taken different views on clauses that stop a former employee approaching clients or staff after leaving. We prefer to build the claim around misuse of confidential information. The court may not stop someone working in the industry. But it can stop them using your client data, pricing or code to do it.

Partners are another story entirely. Section 36(2) of the Indian Partnership Act, 1932 lets an outgoing partner agree to stay out of a similar business for a specified period, or within specified local limits, if the restriction is reasonable. And the first exception to Section 27 saves restrictions given by someone selling a business along with its goodwill. The upshot is that a sensible non-compete in a partnership exit deed or a sale agreement can be enforced. The very same clause in an employment letter can't.

The files we see most often

• The salesperson who leaves. In his last month the sales head forwards client sheets to his personal Gmail. He joins a competitor. A few weeks later your biggest clients want revised quotes, or quietly stop ordering.
• The partner who breaks away. A partner in a consultancy or trading firm sets up a rival outfit, often in a relative's name, and shifts the firm's clients across.
• The developer with the repository. A developer or tech lead walks out with a copy of the codebase, or still has access to the cloud servers and keeps using them.
• The distributor or franchisee. Once terminated, the distributor uses your price lists and customer data to push a rival brand. The contract side of this is on our page about franchise and distributorship disputes.
• The vendor under NDA. A manufacturer or IT vendor takes the drawings or specifications you shared for one project and uses them to make products for other buyers.
• The director who walks out. A director of a private company resigns and diverts business to a new company of his own. The civil injunction runs alongside whatever company law remedies apply.

The provisions that actually apply

Which court, and is it a commercial suit?

It turns on the relationship between you. If the dispute arises under a distribution, franchise, joint venture, partnership, shareholders' or services agreement, it's usually a commercial dispute within Section 2(1)(c) of the Commercial Courts Act. Claim copyright in code or a database and Section 2(1)(c)(xvii), covering intellectual property rights, comes in too. An employer suing an ex-employee purely on an employment letter is a greyer case. Some of these are filed as ordinary civil suits, and courts haven't taken a uniform line. We fix the route on day one, because the procedure and the deadlines follow from it.

On place, Section 20 of the Code of Civil Procedure lets you sue where the defendant lives or works, or where the cause of action arose. If the information was handed over, accessed or misused at your Delhi office, Delhi courts will usually have jurisdiction even if the ex-employee has since moved to Bengaluru. An exclusive jurisdiction clause in the employment letter or NDA will normally be respected, provided it names a court that has jurisdiction anyway.

Value is the third question. For an injunction over intangible rights, Section 12(1) of the Commercial Courts Act uses the market value of those rights as you, the plaintiff, estimate it, plus whatever damages you're claiming. Delhi splits commercial suits at Rs 2 crore. Up to that figure they're heard by the District Judge (Commercial Court) at Saket, Tis Hazari, Karkardooma or another district complex. Above it, the Delhi High Court. That limit may change, since a proposal to raise it has been under consideration since late 2025, so check it before filing. In Ghaziabad, Gautam Buddh Nagar, Gurugram and Faridabad, the district's designated Commercial Court takes the case. See our page on which court will hear your case for the value rules.

Urgent relief, and Section 12A mediation

Nearly every one of these suits is filed with a request for urgent interim relief. The damage is live. Your clients are getting calls this week, and the data can be passed on again tomorrow. Section 12A exempts a suit that genuinely contemplates urgent interim relief from pre-institution mediation. The court tests that against the plaint and the documents (Yamini Manohar v. T.K.D. Keerthi, Supreme Court, 2023). An injunction prayer added only to skip mediation won't pass.

Urgency is weak if you found the leak months ago and sat on it, or if the defendant has already returned the data and all you want is damages. Mediate first. Frankly, mediation can work well where the other side is a former partner who wants a clean break. Our page on mandatory mediation before a commercial suit sets out how it runs.

What to do, and in what order

The first few days decide most of these cases. Evidence lost in week one rarely comes back.

1. Shut the door

   Revoke the person's access to email, the CRM, cloud drives, code repositories and shared folders. Change any shared passwords. Collect the company laptop and phone at exit. Don't let anyone wipe them.

2. Preserve and image everything

   Get a qualified forensic examiner to image the devices and accounts and document the chain of custody. Then export the logs. You want mail forwards to personal accounts, downloads, CRM exports and USB activity. Electronic records are proved with a certificate under Section 63 of the Bharatiya Sakshya Adhiniyam, 2023.

3. Keep your own hands clean

   Don't log into the ex-employee's personal email or social media, even if you happen to know the password. Evidence collected that way can backfire badly, and it may expose you to a complaint under the IT Act and data protection law. Stick to your own systems and lawful sources.

4. Pin down exactly what was taken

   Be precise. Courts make specific orders, not vague ones. List the files, databases, drawings or code modules, and describe each. Anything sensitive can go in a sealed cover. That's routine.

5. Notice, or surprise?

   A firm notice can work on an ex-employee who made a mistake and wants to keep a clean record. If the person is actively using the data, a notice only warns him. File first, and ask for a local commissioner.

6. File the suit and ask for interim orders

   The plaint asks for injunctions against use and disclosure, return and deletion of the data, an affidavit saying where it went, damages or accounts of profits, and costs. If the court is satisfied, it can grant an ex parte ad interim order on day one. See urgent injunctions to stop harm to your business.

7. See it through

   After the interim order, the defendant files a reply and written statement, both sides disclose documents, and the case either goes to trial or settles. Plenty settle within months on undertakings to the court. Those undertakings aren't a formality. They're enforceable just like orders.

How long it takes, and what it costs

What the court's order usually looks like

A well-drafted order does a few things. It stops the defendant using or disclosing the specified confidential information. Return or deletion of the data is directed, and the defendant has to confirm that on affidavit and say where the data went. The new employer may be restrained too. That happens if it's knowingly benefiting. Where the evidence shows particular clients were won through misuse of your data, the court can also tell the defendant to stay away from them for a limited period. Courts are careful, though, not to let this turn into a non-compete by the back door.

Orders that just stop an ex-employee working in the same industry are usually refused. When Advocate B.K. Singh drafts these plaints, he ties every relief to one specific item of information and one specific act of misuse. Orders framed that way hold up against the defendant's challenge far more often than broad ones.

Undertakings are common. Very common. The defendant may undertake to the court to return the data, keep away from named clients and stop using specified documents. Breaking an undertaking is contempt of court. That's a much quicker remedy than a trial.

Damages, accounts of profits and costs

Getting paid is usually the second goal. Stopping the misuse is the first, and it's the one that can't wait. You can ask for damages for the business you lost, or for an account of what the defendant earned from your data. Lost profits are far easier to prove when you can name clients who left shortly after the data did and show your margin on each. For an account of profits you need the defendant's books, and you get at those through disclosure and inspection under Order XI, which our page on document disclosure and inspection walks through.

Where code or a compiled database was copied, you can add a copyright claim to the confidentiality claim. It brings extra remedies, such as delivery up of the copies. See copyright infringement suits. Advocate B.K. Singh, looking at damages in a data theft file, starts with one question: can the client-wise sales records tie each lost account to the date the person left? A general dip in turnover is far harder to blame on one individual. Judges know sales go up and down for all sorts of reasons, from a slow quarter to a new competitor in Okhla. In commercial suits, costs usually go to the winner. A defendant who fights a weak case to the bitter end may be paying a large share of yours.

What to collect

What usually goes wrong

• Wiping the laptop. IT hands the departed employee's laptop to a new joiner, and your best evidence is gone in an afternoon.
• Suing on the non-compete alone. The court refuses relief under Section 27 and you lose months, when a confidentiality claim on the same facts might have worked.
• Asking for vague relief. A prayer to restrain use of "all confidential information", with no description of what that is, won't get far. Courts want specifics.
• Waiting to see what happens. Every week of delay weakens urgency, and meanwhile the data's spreading further.
• Collecting evidence yourself. Logging into someone's personal accounts or grabbing their personal phone creates fresh problems for you as the employer.
• No confidentiality paperwork at all. If you never had NDAs or marked documents, you're left relying on the general duty of confidence, and that's harder to prove.

It looks different depending on your business

Startups are often the most exposed. They're also the least prepared. Early employees and co-founders hold everything, and the paperwork is thin. A founder who leaves with the code and the investor deck raises questions of both confidentiality and ownership, and shareholder issues may sit alongside. If the fight grows into oppression or mismanagement within the company, those remedies belong before the NCLT. They're covered on ncltlawyers.in.

For MSMEs, trading houses, component makers and service firms, the loss is usually customers, not technology. So the client list and the dates on which clients moved tend to be the strongest evidence. Consultancies and professional firms are often partnerships or LLPs. There, you'd look at the partnership deed and Section 36(2) of the Partnership Act before any employment letter. The accounts and exit side is covered on our page on partnership firm disputes.

Large companies usually have the policies and the logs. What they're short of is time. Several people leave together, there's a rival company behind them, and the data is spread across devices and cloud services. These cases often combine copyright, confidentiality and contract claims in one suit, filed in the Delhi High Court where the value is high.

If you're the ex-employee or partner being accused

Take the notice or suit seriously. But don't panic. Stop using any document you took from your former employer, and don't delete anything now, because deleting after notice looks like destroying evidence. Then gather your own proof of what you knew before you joined, and of what's publicly available.

Accused employees tend to run the same few defences. The information was public anyway, or just general industry know-how. Clients followed them because of better service, a better price or a personal relationship, and no data was misused. The non-compete is void under Section 27. Or the employer's claim is too vague for any court to make an order on. An early, narrow undertaking can close the matter before it does real harm to your career. The deadlines you'll face are set out on our page on defending a commercial suit.

Preventing the next one, and what to do now

Cases like this are mostly won months before anyone resigns. What helps: confidentiality clauses that list the actual categories of information you care about, and access given by role, not to everyone. Keep data loss prevention logs. Mark confidential documents as such. Get signed IP assignments for code, and run an exit process that takes back devices and gets a signed acknowledgment. If you share data with vendors, have the NDA signed before the first meeting, not after the first problem. How compensation for breach is calculated is on our page on breach of contract and damages.

If a leak is happening right now, secure access today. Preserve the devices and logs, and write down a timeline of who left, when, and which clients moved. Then choose, and quickly, between a notice and a suit with urgent relief. If you'd like your contracts, logs and timeline looked at before you act, send them to Advocate B.K. Singh's team through the contact page.