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Journalism of Courage
NEW DELHI, JULY 31: Pepsi is filing an appeal against yesterday’s order by the Delhi High Court on an interim injunction appeal made by it in April last year. Justice Bhandari rejected Pepsi’s appeal for an interim injunction, to prevent Coke’s bid to win over around 50 of its key personnel, in an attempt to disrupt its functioning. A Pepsi press release today said that the rejection of the interim injunction will, however, have no impact on the main suit, though it will be appealing on the interim injunction to the Delhi High Court’s division bench.
Last year in April, Pepsi found that Coke was making a slew of offers to various offices of Pepsi across the country. The entire ten-member sales team at Kanpur, for example, was offered lucrative jobs with Coke except for the territory development manager Kochin Wu and two more, the others had refused the bait. At this point, Pepsi’s internal understanding was similar offers were on the anvil for at least another 100 Pepsi staffers, including distributors andother strategic players.
Coke had also tried to entice Pepsi’s entire home-service division at Bangalore; Pepsi’s exclusive distributor for the railways in Ahmedabad was also made an offer by Coke; and on the morning of the day Pepsi first filed the case in the Delhi High Court, the general manager in charge of finance at one of Pepsi’s top southern centres also found his offer in the mail.The crux of Pepsi’s case against Coke is based on a Supreme Court ruling in the famous Mastek case a few years ago. A Tata group software firm filed a case against Mastek in a Madras court arguing that Mastek was trying to lure its personnel en masse, and the idea was to hurt the company’s operations. The case finally made its way to the Supreme Court which ruled against Mastek.
Pepsi argued that since its contracts have a clause that prevents staffers from joining a competitor within a year of leaving Pepsi, the personnel who were joining Coke were also guilty of breach of contract. And by encouraging them to violatetheir contract, Coke was violating the law of torts which states that `inducement to one of the parties to breach a contract is tortuous, or illegal interference’.
Incidentally, this is not the first time Pepsi has taken Coke to court over such attempts to disrupt its business. A couple of years ago, Pepsi was awarded damages of $94 million by a Venezuela court when it charged Coke with coercing one of its bottlers into dumping Pepsi the court agreed with Pepsi’s arguments and the damages were shared by both Coke and the bottler.
