Adani-Hindenburg Crisis: According To A Report, Adani Group’s Director Of Investor Relations Is On “Gardening Leave.”

Since December 2022, Balasubramanyam Danturti, Group Head, Investor Relations of Adani Listed Companies, has been on “gardening leave” as a result of the Hindenburg report, which sent the shares of the Adani group’s listed corporations on a roller-coaster ride. According to the source the global head of investor relations has been on vacation since the beginning of December, and he is scheduled to retire in June 2023.

“Gardening leave,” as used in human resources, refers to a period when a worker is not expected to go to work but is still paid. For the layperson, this is usually done to prevent the employee from having any influence on the company or accessing sensitive data while they are employed.

Adani Group equities, including Adani Power, Adani Green, Adani Total Gas, and Adani Power, were caught in a downward circuit after the report on January 24, 2023. The Hindenburg Report shocked the whole country, and the Adani Group received criticism for its wrongdoing from the opposing administration. According to the presentation given to investors last month, the gross debt of the Adani Group will increase from Rs. 1.11 trillion in 2019 to Rs. 2.21 trillion in 2023.

Balasubramanyam’s official email account is responsive to communications, according to a source. Using his official email, queries from investors are also transmitted to the group’s finance division. The primary responsibility of the IR head, according to the Corporate Finance Institute, is to increase investor confidence and belief in the company’s vision and plan for creating shareholder value.

According to source, Danturti has been sending the same text message to all the anxious investors who are reaching out to him and telling him that he has been on a “gardening” leave since December 2022. Danturti sent Fortune India the following text message on WhatsApp: “I am out of the system and no longer a contact of Adani.” Please get in touch with Anupam Mishra or Robbie personally. I am looking forward to my upcoming work with you once I retire on June 30, 2023. It had been fantastic working with you. Have a wonderful day.

Danturti served as the Chief of Investor Relations at BGR Energy Systems from February 2011 to December 2013 and at Jindal Steel and Power from December 2013 to March 2016. He worked for the Union Bank of India for a significant 24 years as well.

Garden Leave at Indian Law

Contracts that impose non-compete clauses or other trade limitations are invalid under Indian law to the extent that they do so unless the party subject to the restriction has sold goodwill. When it comes to workers, the courts have accepted reasonable non-compete limitations during employment because they wouldn’t constitute a trading constraint.

Regardless of how reasonable the limits are, courts have consistently ruled that they cannot be enforced against former workers. The legality of a garden leaves agreement so hinges on how the arrangement is constructed, even if garden leave is becoming more common for important employees in India.

By English law, a garden leaves

In the UK and certain other Commonwealth nations, garden leave is widely accepted, and employment contracts with garden leave clauses there are seldom challenged. Garden leave limitations, however, will only be upheld in these areas if they are fair. Garden leave clauses are treated the same as post-termination limitations, according to English courts.

Evening Standard Co. Ltd. v. Henderson

An employer asked the court for an injunction against an employee who wanted to provide 2 months’ notice instead of the 12 months’ notice that was stipulated in the contract. The employee said that if given this amount of notice, they would be obliged to work for their old company, go hungry, or do nothing.

As a workaround, the employer consented to put the employee on leave for the specified amount of time and to continue paying the person’s wages and providing all benefits under the contract while they were off work. The court recognized the employer’s assurance, took into account the balance of convenience, and granted an injunction in the employer’s favor.

When on garden leave, the employee is no longer considered to be “working” for the company and is not permitted access to either the clients or the other staff members. Nonetheless, until the end of the garden leave term, the employee continues to be paid and is often still listed on the employer’s payroll.

• Garden leave is beneficial to both the employer and the employee.
• The employer can ensure that the employee’s expertise and any commercial and trade secrets to which they were privy do not immediately become available to competitors; and
• The employee is not financially disadvantaged.

Garden leaves in India

Non-compete clauses that go beyond the duration of employment are unenforceable in India. So, whether or not garden leave clauses are regarded as post-employment limitations will determine whether or not they may be enforced.

The Bombay High Court ruled that an implied garden leave provision that would take effect after an employee’s termination would likely violate the Indian Contract Act of 1872 (Contract Act). The Court further noted that it was neither fair nor appropriate for a limitation to preclude a former employee from finding meaningful work elsewhere.

Yet, the courts have also considered garden leave as a precaution to stop a former employee from divulging trade secrets to their former employer’s rivals. In the case of M/s. Kuoni Travel (I) Pvt. Ltd. v. Mr. Ashish Kishore, an employer tried to enforce a garden leave clause that was in effect for three months after the cessation or termination of employment.

The Bombay High Court stated that it is “clear” that the “doctrine of restraint” on trade secrets might be enforced even after the service or employment time has ended, notwithstanding the former employee’s claim that the garden leave limitation constituted a restraint of commerce.

• The garden leave clause just invokes the “doctrine of restraint” concerning trade secrets.
• The former worker’s cash compensation from the company during the garden leave was acceptable.
• The former employee has the right to look for work as long as it isn’t with an employer’s rival; and
• The employee’s maternity leave covered a period that was critical to the employer’s operations, and if the ex-employee was allowed to work for a rival, it may hurt the employer’s operations.

As long as the rules for garden leave are fair and the employee or former employee is financially rewarded, courts in the United Kingdom, the United States, and other nations have recognized the rights of parties and supported garden leave clauses. Making a former employee eligible for compensation in exchange for taking a jobless period during their garden leave guarantees that neither the firm nor the former employee will suffer an unfair advantage.

Garden leave clauses will only be enforceable if they are reasonable; Indian courts concur with English and American courts in this regard. Nevertheless, Indian courts often do not uphold garden leave clauses that claim to apply after the end of an employment relationship (i.e., when the former employee is no longer included on the employer’s payroll).

The sole exception to this rule so far is the Kouni Travel case, where the court maintained a restriction on post-employment garden leave based on the necessity to preserve the trade secrets of the previous employer and the consideration provided to the former employee.

The will of the contracting parties, the reasonableness of the constraint, and the appropriateness of the compensation provided to the person being restricted must all be taken into consideration before a post-employment restrictive covenant in an employment agreement may be enforced. If the conditions are acceptable, the employee is paid while on garden leave, and the employee stays on the employer’s payroll until the end of the garden leave term, the garden leave will likely be enforceable under Indian law.

edited and proofread by nikita sharma