'Poaching Employees of Another Firm is No Offence'

Published: 26th October 2015 05:05 AM  |   Last Updated: 26th October 2015 05:05 AM   |  A+A-

HYDERABAD:The Hyderabad High Court has made it clear that a company can take action against its employees only if the service contract between them permits such an action. It is because the employees are not the property of the company concerned, it has observed.

Justice U Durga Prasad Rao made these observations on a plea made by a software company for quashing of the proceedings pending against it before III Additional Chief Metropolitan Magistrate, City Criminal Court at Hyderabad.

On a private complaint filed by another company (complainant), the trial court took cognizance of the case for the offences under various sections of IPC against the accused software company.

As for the case, an international software company had wanted to have a partner to look after its global operations and preferred the accused software company to deal with all other players in the field. The accused software company authorised some of its employees to negotiate with one of the directors of the complainant company. The complainant, in good faith, submitted the confidential employee data to the accused company by email, pending settlement of the terms and conditions of the contract with the accused company. After receiving the data, the accused company backed out of the agreement vide email, and started alluring and poaching on the employees of the complainant company bypassing the latter. One of such employees, who was poached by the accused company, revealed to his employer about the poaching efforts made by the accused company.

As the investigation was pending, the accused software company moved the High Court seeking quashing of the proceedings pending against it in the trial court.

While denying the allegations made in the FIR, the counsel appearing for the petitioner (accused software company) argued that the complainant company had not provided any specific details, names and contact numbers of its employees and, subsequently, as no consensus was reached on payment terms, it had backed out of the contract. Therefore, the question of obtaining confidential information about employees of the complainant company and  alluring the latter’s employees did not arise. Besides, the question of poaching some of the employees of complainant company was a myth as they attended walk-in-interview to get the job in the accused company.

“Even assuming that the complainant company shared confidential data of its employees with the accused company and the latter tried to bait the employees of the former, the act would not amount to any offence because inviting skilled and expert employees of one organisation by another  by offering better package would not amount to an offence under any of the laws,” the counsel said and argued that the trial court had erred in taking cognizance of the case though the complainant’s allegations had not made out any offence and therefore, continuation of criminal case would amount to abuse of the process of law.

The counsel for the complainant company argued that the accused company had contacted it through a number of emails and  made representations as if they were going to have a contract with it. When the talks were midway, the accused sought the confidential data of employees.

Trusting that the accused company would enter into a contract, it passed on the confidential data of its employees to the accused company. But it cheated not only by backing out of the contract talks but also poached on the expert employees of the complainant. As a result, many project works of the complainant company came to a grinding halt and caused loss of money and damage to its reputation. Hence the criminal case was very much maintainable against the accused company, the petitioner company’s counsel added.

After hearing both the parties, justice Durga Prasad Rao noted that the petitioner company’s employees were working under certain terms of contract. The relationship between the complainant and its employee is only a master-servant relationship but not the owner-property relationship. If any employee, in pursuit of better job opportunities, leaves the company, he cannot interdict them unless there exists a contract between the two requiring them to work for a certain number of years under him and if any of them prefers to leave  midway, he may impose penalty on such employee. However, by no stretch of imagination can he claim any violation of his legal right against the new employer.

“In a commercial era of cut-throat competition where one organisation prefers to dominate others by hook or crook and where human relations are eclipsed by monetary considerations, it is too naive to expect unshaken fidelity and loyalty from  employees. That apart, no law is laid down prohibiting one organisation inviting the employees of another organisation to its fold by offering lucrative pay packages. So, complainant cannot harp that the accused committed any offence. It may at best take action against its own employees if the service contract between them permits such action,” the judge observed.

While allowing the petition of the accused company, the judge said that even if the complaint’s allegations were uncontroverted, they did not constitute any offence on the part of the accused. Therefore, continuation of criminal proceedings would certainly amount to abuse of process of law and hence liable to be quashed.

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