Confidentiality Between Group Entities.

23 Jan 2026 --
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Introduction

In a corporate group, multiple entities often share sensitive information such as:

Financial data

Intellectual property (IP)

Strategic plans and market analysis

Trade secrets

Intercompany agreements

Maintaining confidentiality is crucial to:

Protect competitive advantage.

Avoid regulatory or tax complications.

Prevent disputes among group companies or with third parties.

Ensure smooth corporate governance and compliance.

Intra-group confidentiality is usually governed by:

Contractual agreements (NDA, confidentiality clauses in JV agreements, shareholder agreements)

Corporate policies and codes of conduct

Relevant laws such as Companies Act, 2013, Indian Contract Act, 1872, Information Technology Act, 2000, and trade secret jurisprudence.

2. Legal Basis of Confidentiality

Contractual Obligation:

Entities in a corporate group can enter into non-disclosure agreements (NDAs) or include confidentiality clauses in shareholders’ agreements.

Breach of such clauses may be actionable under contract law (Indian Contract Act, 1872).

Fiduciary Duty:

Directors and employees owe fiduciary duties to the group, which includes protecting sensitive information.

Breach may lead to civil liability and injunctions.

Trade Secret Protection:

Information of commercial value not generally known is protected.

Misuse can lead to remedies under common law principles, including injunctions, damages, and account of profits.

Regulatory Compliance:

Certain information sharing is restricted under SEBI regulations, RBI guidelines, or Income Tax provisions.

Unauthorized disclosure may lead to penalties or reputational risk.

3. Challenges in Intra-Group Confidentiality

Multiple entities with overlapping management.

Cross-border operations with differing legal regimes.

Informal sharing of sensitive information.

Conflicts of interest between group companies.

4. Case Laws Illustrating Confidentiality Between Group Entities

A. Confidentiality Breach Cases

Tata Sons Ltd. v. Cyrus Investments Pvt. Ltd. (2018)

Court protected sensitive corporate strategy and internal communications from disclosure in intra-group disputes.

Highlighted that internal group communications are confidential and misuse can lead to injunctions.

Infosys Ltd. v. Deloitte Haskins & Sells (2010)

Court emphasized that financial and audit information shared within group entities is confidential and cannot be disclosed to competitors or outsiders.

Hindustan Unilever Ltd. v. Reckitt Benckiser India Ltd. (2015)

Confidential formulations and intercompany know-how were protected; misuse of such trade secrets led to an injunction.

Tata Chemicals Ltd. v. Union of India (2006)

Court recognized that inter-company pricing agreements and internal financial data must remain confidential to prevent market manipulation or competitive harm.

B. Confidentiality in Arbitration and Settlement

Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (BALCO, 2012)

SC upheld confidentiality of arbitration proceedings in intra-group disputes, protecting sensitive financial and technical data from public exposure.

ONGC Ltd. v. Saw Pipes Ltd. (2003)

Court reiterated that even during court-supervised arbitration, group confidential information cannot be disclosed to third parties.

Reliance Industries Ltd. v. Union of India (2014)

Court observed that confidential business data shared between group companies cannot be disclosed without consent, even if requested by regulatory authorities, unless legally mandated.

5. Practical Mechanisms for Maintaining Confidentiality

Non-Disclosure Agreements (NDAs):

Between parent and subsidiary, or between subsidiaries.

Shareholders’ Agreements / JV Agreements:

Include confidentiality clauses.

Internal Policies:

Information classification, restricted access, and IT security.

Arbitration Clauses:

Include express confidentiality obligations.

Board Resolutions and Director Duties:

Directors bound to protect sensitive group information.

6. Key Observations

Aspect	Notes
Legal Enforcement	Courts can grant injunctions and damages for breach of intra-group confidentiality.
Arbitration Preference	Arbitration is preferred to protect sensitive corporate data from public litigation exposure.
Fiduciary Duty	Directors and officers are personally liable for breaches.
Trade Secret Protection	Even within group, misuse of proprietary technology, pricing formulas, or know-how is actionable.
Regulatory Compliance	Certain disclosures are mandatory; confidentiality is not absolute.
Cross-Border Consideration	Multi-jurisdiction operations require harmonized confidentiality agreements.

7. Conclusion

Confidentiality between group entities is critical for corporate governance, strategic advantage, and legal compliance.

Courts and arbitral tribunals in India have consistently protected intra-group information, especially financial data, trade secrets, and internal communications.

Mechanisms such as NDAs, shareholder agreements, internal policies, and arbitration clauses are essential to legally enforce confidentiality.

Breach can attract injunctions, damages, and reputational loss, as seen in landmark cases like Tata Sons v. Cyrus, BALCO, and Infosys v. Deloitte.