An investor in a company terminated the agreement and demanded repayment of amounts paid after discovering that a material client was diverted to a competing business of the control holder. In retrospect it was found that that specific client was not diverted but another was.
The Court held that a material client commenced receiving services from another company of the control holder and that is a breach of the agreement that included a non-compete provision even if no intention to divert client was shown. This is a material breach of the investment agreement that included a non-compete provision and thus no prior notice was required for the termination. The fact that the correct client details were not stipulated in the termination notice does not affect its validity because a termination notice need not include the exact termination ground. Thus, the Court held that the termination was duly made and that the investor is to be refunded for all investment amounts