Bombay High Court
Birla Edutech Limited vs Shanti Raj Eductional Trust And Anr on 22 February, 2024
Author: Bharati Dangre
Bench: Bharati Dangre
2024:BHC-OS:3203
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION APPLICATION (L) NO.37548
OF 2022
WITH
COMMERCIAL ARBITRATION PETITION (L) NO. 37551 OF
2022
Birla Edutech Limited .. Applicant
Versus
Shanti Raj Educational Trust and anr .. Respondents
...
Mr.Viraj Parikh i/b Indrajeet Hingane for the applicant/petitioner.
Mr.Mandar Soman, with Divakar Rai, Nitin Rai, Abhishek
Deorukhkar i/b Ramchandra Rane for the respondent.
CORAM: BHARATI DANGRE, J.
DATED : 22nd FEBRUARY, 2024 P.C:-
1 By the present application filed by Birla Edutech Limited, which run a chain of business schools under the brand "Birla Open Minds" seek appointment of an Arbitrator to resolve the dispute that has arisen between the parties, out of the Educational Services Agreement for running a School in Gaya Patna Main Road, Gaya, Bihar dated 2/9/2014. It is not in dispute that the Agreement contemplate resolution of any dispute or differences arising out of, or in connection with the agreement through Arbitration to be conducted in Mumbai.
Tilak ::: Uploaded on - 28/02/2024 ::: Downloaded on - 07/03/2024 18:54:38 ::: 2/10 13 CARAPL 37548-22.doc 2 Learned counsel Mr.Soman for the respondent has raised a preliminary objection and according to him, the Arbitration proceedings before the Arbitrator resulted in it's withdrawal, in the wake of the understanding arrived between the parties, which is recorded by him in the Minutes of Meeting dated 6/2/2019. The learned counsel would thus argue that the understanding arrived between the parties, and as recorded in paragraph nos.7 and 8 of the said Minutes of order, amount to a novation of contract and even the subsequent conduct of the applicant would reveal that it was acted upon, and as a result, once the arbitration has been invoked, relying upon the arbitration clause in the agreement, it is not permissible for the applicant to seek reference to Arbitration, by relying upon the very same clause.
I am unable to agree with the argument advanced by the learned counsel and the reasons for the same are to be found, in the following paragraphs of this order.
3 The parties entered into an agreement on 2/9/2014, being referred to as 'Education Service Agreement' for permitting the respondents to use the brand name of the applicant as well as its trademark, and to provide service of curriculum trading workshops and other educational services in Gaya, Bihar.
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4 The relevant clauses of the Agreement contemplated
as under :-
1.1.1 "Agreement" or "the Agreement" or "this
Agreement shall mean this Educational Services Agreement and shall include the annexures or schedules appended to this Agreement;
1.1.3 "Brand Name" shall mean Birla and include the name Birla Edutech, 'Open Minds - A Birla School', along with the color schemes, graphical representations, design patterns,s sound effects, lighting etc, which identify the uniqueness of the Brand Name which shall be licensesd to SERVICE RECIPIENT by SERVICE PROVIDER.
"7 INTELLECTUAL PROPERTY RIGHTS 7.1 The School shall be conducted under the trademark 'Open Minds' and "Globe To'ters" SERVICE RECIPIENT hereby agrees and acknowledges that SERVICE PROVIDER is the sole exclusive and lawful owner of the 'Open Minds' trademark and that SERVICE PROVIDER has licensed the said trademark to SERVICE RECIPIENT solely for the use of the same for the school and all acts, actions, activities undertaken towards the running and operation of the School.
7.2 SERVICE RECIPIENT hereto further agrees that nothing contained in this agreement is intended to, nor shall construed to vest in, transfer or otherwise convey to SERVICE RECIPIENT any right, title or interest in or to 'Open Minds' and "Globe To'ters" trademark or the goodwill associated therewith or pertaining thereto, other than the right and license to use the said trademark subject to the terms and conditions set forth in this Agreement.
17.4.3 Upon termination by efflux of time or early termination, SERVICE RECIPIENT shall forthwith cease to use or publicize the use of the "Open Minds" or "Globe To'ters" or in any way associate itself with the "Birla"
name or otherwise use the same and shall immediately return to SERVICE PROVIDER all the property of SERVICE PROVIDER, if any, in the possession of SERVICE RECIPIENT, including the Confidential and Proprietary Information and re-assign all rights that may Tilak ::: Uploaded on - 28/02/2024 ::: Downloaded on - 07/03/2024 18:54:38 ::: 4/10 13 CARAPL 37548-22.doc have accrued in favour of SERVICE RECIPIENT as a result of this relationship.
20 DISPUTE RESOLUTION 20.1 In the event that any dispute or difference arises out of or in connection with the interpretation or implementation of this Agreement, or out of or in connection with the breach, or alleged breach of the Agreement between SERVICE PROVIDER on the one part and SERVICE RECIPIENT on the other part, the Parties shall attempt in the first instance to resolve such dispute amicably. If the dispute is not resolved through amicably within [15(fifteen)] days after a Party of one part first informs the Party of the other Part in writing of the existence of the dispute, then either of the Parties may refer the dispute for resolution by arbitration. Such arbitration shall be governed by the provisions of the Arbitration and Conciliation Act of 1996 or any statutory re-enactment or modification thereof. The arbitration shall be held at Mumbai in the following manner:-
20.1.1 All proceedings in any such arbitration shall be conducted in English.
20.1.2 The arbitration shall be conducted by a sole arbitrator to be appointed by SERVICE PROVIDER. 20.1.3 The Venue of Arbitration shall be as decided by SERVICE PROVIDER.
20.1.4 The arbitration award shall be final and binding on the parties and the Parties agree to be bound thereby and to act accordingly. The award shall be enforceable in any competent court of Law.
20.1.5 The award shall be in writing.
20.1.6 The provisions of this Clause shall survive the termination of the Agreement."
5 The respondent no.1 Trust failed to pay the consideration under the agreement for the years 2016-2017 and 2017-18 and the unpaid dues were estimated at Rs.72,12,140/-.
This resulted in the applicant invoking arbitration and the dispute was referred to Arbitration.
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During the course of the proceedings, an
understanding is arrived between the parties which is recorded by the Arbitrator in the Minutes of its meeting held on 6/2/2019, when the respondent acknowledged its outstanding liability and by offering a concession, the applicant agreed to accept the sum of Rs.50 lakhs as full settlement of the amount due and payable till March 2019.
On receipt of the said amount, it was agreed that the arbitration proceedings shall stand withdrawn by the applicant.
Worth it to note that the order record that the respondent no.2 requested the applicant to execute a fresh agreement on making the payment of Rs.50 lakhs, either with Shanti Raj Educational Trust or with any new Trust in the same premises, where Open Minds A Birla School is situated.
6 Paragraph no.8 of the said order accordingly record an understanding between the parties that a fresh agreement shall be executed, but it shall not contain any initial set-up fees and the content use fees agreed by Mr. Rajiv Kumar shall be incorporated which should be @ Rs.4,400/- per student from April 2019 to March 2022 and Rs.4,840/- per student from April 2022 onward.
7 Though the arbitration proceedings were withdrawn, further agreement was never executed and as a result, the arrangement which was effected in the wake of the agreement Tilak ::: Uploaded on - 28/02/2024 ::: Downloaded on - 07/03/2024 18:54:38 ::: 6/10 13 CARAPL 37548-22.doc dated 2/9/2014 continued. On 27/3/2019, the respondents supplied a copy of the existing agreement to the CBSE Board for obtaining provisional affiliation and even the applicant conducted an audit of the respondent School as per the agreement.
Once again, from the month of July 2020, the respondent defaulted in making the payments and when the dues accumulated upto Rs.41 lakhs and despite repeated reminders, the same was not paid, the agreement was terminated on 27/7/2020.
Upon the said action, the respondent complained of the termination and alleged deficiency service on part of the applicant, pointing out lacunae in the teacher training, curriculum contents, CBSE affiliation, rejection etc, and expressed its inability to pay the agreed amount of Rs.4,400/-, but expressed that what it can arrange, is an amount of Rs.3,000/- per student.
8 On 20/9/2021, pursuant to the termination of the agreement, the applicant addressed a notice to the respondent, asking it to desist from using its mark and brand "Open Minds A Birla School". On 30/8/2022, a notice invoking arbitration was forwarded to the respondents, clearly setting out the default, as regards the outstanding amount and referring to the termination of the agreement, and also clearly stipulating that the agreement clearly contemplated that upon termination, the respondent shall Tilak ::: Uploaded on - 28/02/2024 ::: Downloaded on - 07/03/2024 18:54:38 ::: 7/10 13 CARAPL 37548-22.doc cease to use the marks and its brand name, and despite a notice being addressed to that effect, the respondent is continuing the use of the mark and brand name of the applicant.
A claim was also staked in the tune of Rs.1,16,34,336/- and by relying upon clause 20 of the Principal Agreement dated 2/9/2014, and the dispute was sought to be made over to the Arbitrator.
9 The response of the said notice is interesting, as in the communication dated 12/10/2022, the following is stated:-
"I would like to make one thing very clear that the agreement about which your client is talking about is completely fraudulent and due to that agreement our school has suffered a lot as C.B.S.E. The board rejected affiliation of the school two times, first in 2018 because of that agreement and again in 2019 because of one MoU provided by your client in which such points are mentioned which revokes the rules of C.B.S.E affiliation bye laws. So because of these reasons I have been always asking your client for a fresh agreement. Your client has firstly revoked the rules which they have mentioned in their agreement as they first made an FIR in the police station near to the school against the Trust, all the trustees. But upon investigation the FIR stood wrong and now they are talking about arbitration. Your client had a meeting with me in Mumbai on Feb 2019 in which the arbitrator was also selected and his name is written therein the minutes of meeting so now your client can't change arbitrator and we want same arbitrator as he was available in that meeting in which it was agreed by your client that they will do a fresh agreement with me 'Rajeev Kumar' as Chairman, Shanti Raj Educational Trust after making the payment of a fixed amount and even after making the payment, your client has not signed any agreement with me and that is why I think they have not provided any of the services from 2019. This time the two arbitrators from our side also and the arbitration place was not decided in MoU, so that place will Open Minds A Birla School Gaya, Bihar. So if your client is not willing to move further with us then the same is the scenario this side. But we want our amount back as we had made the due paymenet on this term that your client will sign up a fresh agreement with me without taking any sign up fee and also investment done. So if they have not signed any fresh Tilak ::: Uploaded on - 28/02/2024 ::: Downloaded on - 07/03/2024 18:54:38 ::: 8/10 13 CARAPL 37548-22.doc agreement that they must return the money back with applicable interest rate which is given below"
10 Though the learned counsel for the respondent has vehemently asserted and raised an objection about the maintainability of the application, in the wake of the earlier proceedings being resulted into withdrawal, I am of the view that since an agreement in question provide for a clause contemplating reference of "All disputes arising therefrom", it necessarily would cover those disputes which were in existence at the relevant time, but even where once the arbitration is invoked, that do no preclude the same party or the other party from invoking arbitration, if at a future point of time, the dispute arises between them.
11 Mr.Parikh has placed reliance on the decision of the Apex Court in case of Dolphin Drilling Limited Vs. Oil and Natural Gas Corporation Limited,1 which clearly provide for the same and in the wake of the above, since the term "disputes" would also cover the disputes which arise out of the Agreement, and though having arisen at a later point of time, will not preclude the applicant from invoking arbitration once again.
12 In any case, it is open for the respondent to dispute the entitlement of the applicant to the claimant which it had staked in the notice invoking arbitration and it shall be for the Arbitrator to pronounce upon the same.
1 (2010) 3 SCC 267
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By consent of the parties, Advocate Surel Shah is appointed as a Sole Arbitrator to adjudicate the disputes and differences that have arisen between the parties. His mobile number and email address is as follows :-
Adv Surel Shah : Cell 9821145720 email : [email protected] The Arbitrator shall, within a period of 15 days before entering the arbitration reference forward a statement of disclosure as contemplated u/s.11(8) r/w Section 12 of the Arbitration and Conciliation Act, 1996, to the Prothonotary and Senior Master of this Court to be placed on record.
The Arbitrator, shall after entering the reference fix the date of first hearing and issue further directions as are necessary.
The Sole Arbitrator shall be entitled for the fees as per Bombay High Court (Fee Payable to Arbitrators) Rules, 2018 and the arbitral costs and fees of the Arbitrator shall be borne by the parties in equal portion and shall be subject to the final Award that may be passed by the Tribunal.
13 Mr.Parikh make a specific statement that Section 9 Petition shall be permitted to be converted into an application u/s.17 by the learned Arbitrator and all efforts shall be made by him to decide the application in an expeditious manner.
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( SMT. BHARATI DANGRE, J.) Tilak ::: Uploaded on - 28/02/2024 ::: Downloaded on - 07/03/2024 18:54:38 :::