Client stealing

Dear Mr Praveen, You may file a suit for damages. You may not be able to obtain any stay or injunction in this case as per existing law. If you have not released the salary, the same can be prayed for being adjusted against damages that may be awarded. You will not be able to retain gratuity amount if any if you do not proceed with disciplinary proceedings and pass a termination order after due procedure of enquiry etc. 

As regards releasing certificates, better you release the certificates after mentioning the true facts of his misconduct. 

it will be difficult for you to prove that your employee has solicited your client while in employment unless contract was signed with him personally during employment. if you are able to prove then you may claim damages but - you won't get your contract value. read hadley vs baxendale if you have penchant for reading along with sections 73-75 of Indian Contract Act. In short if the contract value is not that big, don't expect too much. post employment he is generally free to do whatever he wants and non compete or restrictive clauses in employee agreements are looked down upon by courts as they are hit by section 27 of Indian Contract Act. My advise is settle the matter amicably and out of court. And yes - do return his certificates else you may land up in trouble.