Esys obtains temporary order against ex employee
View(s):eSys Technologies Lanka (Pvt) Ltd, a computer hardware distributor, has obtained a temporary order in the Civil Appellate Court of Colombo against an ex employee restraining him from serving or joining a competitor.
The defendant, H.L.M Nasser, a top executive of eSys Technologies, was privy to the highly confidential business strategies and customer profiles of the company. Mr. Nasser had agreed by his contract of employment to refrain from competing with eSys Technologies for a period of one year following his resignation or termination. However, having resigned from eSys Technologies he joined a start-up IT company as Country Manager and proceeded to directly compete with eSys Technologies, in violation of his contract.
An application for an interim injunction restraining him from breaching his contractual obligations was refused by the District Court inter-alia on the grounds that contracts in restraint of trade are prima facie void.
eSys Technologies then appealed against the order to the High Court of Civil Appeal. Counsel for eSys Technologies submitted that despite contracts restraining employment being prima facie void in law in Sri Lanka, where an employer can show such clause to be reasonable, the employer should be given an order requiring the employee to honour his contractual obligation. It was further submitted that the period of his restraint and the limitation to the IT industry was reasonable given the circumstances, and that refusal to enforce such clauses in contracts would cause much damage not only to the appellant but would also set a bad precedent affecting the corporate sector as whole in Sri Lanka.
Having heard both parties, the bench comprising Justice H.C.J Madawala and Justice L.T.B Dehideniya granted leave to appeal and an interim injunction as prayed for by eSys Technologies.
M.U.M Ali Sabry PC and Shamir Zavahir, Attorney-at-Law instructed by Paul Rathnayake Associates appeared for eSys Technologies.
Uditha Egalahewa P.C. with Mr. Damitha Kaunarathne appeared for the Defendant-Respondent.