Bangalore District Court
M/S.Ripley Entertainment Inc vs M/S.Innovative Studios Private ... on 4 March, 2016
IN THE COURT OF THE XXV ADDL. CITY CIVIL & SESSIONS
JUDGE
AT BANGALORE CITY - CCH No.23.
Dated this the 4th DAY OF MARCH, 2016
PRESIDING OFFICER
PRESENT: Sri. Sadananda M. Doddamani.,
B.A.,L.LB.,
XXV ADDL. CITY CIVIL & SESSIONS JUDGE, BANGALORE.
A.A.No.882/2013
PLAINTIFF/S: 1. M/s.Ripley Entertainment Inc.,
Having its principal office at
7570 Kingspointe Parkway,
Suite 188,
Orlando,
Florida 32819
United States of America
Rep by its power of attorney holder
Mr.Sanjay Chhabra
(By Sr i.CKN, Advocate)
--Vs.---
DEFENDANT/S: 1. M/s.Innovative Studios Private Limited,
A company incorporated under
The Companies Act, 1956,
Having its office at
No.135, Outer Ring Road,
Varthur hobli,
Marathalli junction,
Bangalore - 560 037.
2 AA No.882/2013
Represented by its
Managing Director
Mr.Saravana Prasad.
(By Sri.ASK, Advocate)
JUDGMENT
This is a petition filed by the applicant / petitioner under section 9 of the Arbitration and Conciliation Act, 1996.
2. In brief the case of the petitioner/applicant is as under:
That the petitioner is absolute owner of the widely recognized trade marks for the "Ripley's Believe It Or Not". It is further contended that the petitioner is registered with the Trade Mark Registry in New Delhi. It is further contended that the respondent is involved in the business of entertaining and had approached the petitioner with the idea of starting a franchise in and around Bangalore. So the petitioner and respondent entered into a franchise agreement for franchising the proprietary system developed by the petitioner and its affiliates for the purpose of setting up and obtaining and 3 AA No.882/2013 operating tourist attractions under the name and style of "Ripley's Believe It Or Not", "Believe It Or Not" and "Ripley's" in the firm or museums auditorium and other tourist attractions.
It is further contended that under the agreement, the respondent agreed that the petitioner was the absolute owner of the trade marks and to make timely payment of royalties and also complied with the other terms of the agreement. So also the respondent agreed to cease use of petitioner's trade marks of termination. It is further contended that based on the representations made by the respondents, the petitioner agreed to licence the trade marks and other materials. This enabled the petitioner to obtain exhibition halls and to display artifacts and materials belonging to the petitioner for the purpose of tourist attraction and entertaining. The respondents accordingly have received the artifacts and upon the museums and auditoriums at their premises.
3. It is further contended that the respondent began defaulting in the payment of monthly royalty as per the franchise agreement and they stopped the payment altogether. 4 AA No.882/2013 So the petitioner issued a letter to the respondent company to remit the outstanding franchise fees. Thus concession was made as a bonafide gesture. It is further contended that the representations of the petitioner company need the Chairman of the respondent company to discuss the issues regarding the outstanding dues payable according to the franchise agreement. The Chairman of the respondent company committed to pay a sum of USD 75,979.97 by proposing the payment plan towards the same. Though this was not ideal the petitioner agreed as a goodwill gesture. The proposed payment plan was requested by the respondents and based on the promise made therein the petitioner obliged. It is further contended that the respondent once again defaulted in making of timely payments. Thus despite the fact that the payment plan was proposed by the respondent, in such manner as to suit their convenience, once again, several promises were made by the respondent regarding payment. It is further contended that given the consistent time, failure to make the payment schedule, the petitioner issued a notice of default as per clause 18 of the franchise agreement calling upon the 5 AA No.882/2013 respondent to pay a sum of USD 44,754.72 within a period of 10 days of the date of the notice. The respondent defaulted in payment, in this instance as well. It is further contended that the respondent finally made the payment of USD 20,000/- in July and payment of USD 44,000/- in the month of August. Only 50% of these amounts were towards the payment of monies due to the petitioner under the franchise agreement. It is further contended that the balance was applied towards the repayment of money due towards the Ripley's Mirror Maze and Louis Tussand's Wax Museum. The respondents have failed to clear the remaining balance of the outstanding royalties which included the ongoing monthly royalty amounts that had been since accruing on a monthly basis.
4. It is further contended that several reminders were sent to the respondents by the petitioner that the franchise agreement will be liable to be terminated if the respondent company continues to default in payment of monthly royalty fees and the outstanding amount due. The respondent however did not reply to the notice and continues to be in 6 AA No.882/2013 default of the payment. It is further contended that the respondent owes the petitioner a sum of USD 67,740 along with interest at the rate of 1.5% per month from the date when the amount became due till the date of payment. The interest still continues to run till this date. It is further contended that the petitioner thereafter was constrained to the issuance of notice for default of the respondent demanding payment of the outstanding amount within 20 days of the receipt of the notice, failing which the petitioner may terminate the agreement. It is further contended that several emails and other communications were received from the respondent company assuring the payment of amounts due and further to also cure defects in the performance of the agreement. It is further contended that inspite of the above said several emails and communications, no action has been taken with regard to the trade marks nor for the amounts been remitted to the petitioner. So the petitioner left with no other option terminated the franchise agreement by issuing a fresh notice of default. A list of artifacts belonging to the petitioner that was in possession and use of the respondent pursuant to the 7 AA No.882/2013 agreement was sought to be returned with immediate effect. Consequently the permission to use the trade marks was also revoked and liable to be removed.
5. It is further contended that despite the notice of termination, the respondent continued to correspond with the petitioner regarding the difference in the figures stating its intention to make good the payment of the amounts that were due. The said conduct of the respondent coupled with subsequent defaults clearly shows the dilatory tactics used by the respondent to continue the usage of the artifacts and trade marks, despite non-payment. It is further contended that the petitioner received the reply to the notice of termination after a period of two months. The delay in the issue of reply further shows the conduct of the respondent as being disinterested in the repayment of the outstanding liabilities and its consistent attempts to procrastinate the payment due and payable. The contents of the reply denying all the averments shows that they never had any intention to repay the entire amount due. However the respondent continued with the unauthorized use 8 AA No.882/2013 of artifacts and trade marks. It is further contended that a payment of 10,000 USD was made by the respondent. The respondent however failed to specify under which head the payment made was towards. Several emails were once again sent to the petitioner regarding the outstanding amounts due. New promises of payment were made towards the outstanding amounts accompanied by baseless and vague exercises.
6. It is further contended that as a consequence of termination issued, the respondent no longer stands in the capacity of the franchise and is not entitled to use all the artifacts, trade marks, etc. The respondents however has continued to use the same with blatant disregard to the termination notice, the respondent has chosen to ignore the termination notice and pretend that no issue is in hand. The respondent failed to perform his obligations and ignored the law as and where it is convenient for them. It is further contended that despite the termination notice, the respondent sent weekly sales report to the petitioner company which clearly indicates that the respondent company continued to 9 AA No.882/2013 use and benefit from the trade marks and artifacts of the petitioner. However the respondent has not made any payment of monthly royalty nor made efforts to repay the outstanding amount.
7. It is further contended that the actions of the respondent are causing grave financial hardship to the petitioner and also causing reputation loss to the petitioner which cannot be compensated by money. The respondent has not made any payments it has agreed to while on the other hand it has illegally and forcibly acting in breach of the terms of agreement between the parties. It is further contended that the petitioner is the absolute owner of the materials artifacts, display articles, software and other valuable materials lying in the respondent's premises. The respondent has no right whatsoever relating to the said materials.
8. It is further contended that the petitioner apprehends that the respondent would try to continue the displaying the petitioners artifacts and would also violate the 10 AA No.882/2013 trade marks of the petitioner. It is further contended that there is need to secure the payments due to the petitioner since the respondent is facing the financial crises. It is further contended that the petitioner reliably understands that there are winding up proceedings filed against the respondent before the Hon'ble High Court of Karnataka. So there is an urgent need to pass suitable orders to protect the interest of the petitioner. If the petitioner is not protected by suitable orders of this court, the petitioner may suffer huge monetary loss other than loss of reputation and petitioner may also suffer the loss of or damage to the exhibits which would cause irreparable harm to the petitioner. It is further contended that the petitioner is having a very strong case including prima facie case against the respondents and the balance of convenience is also in favour of the petitioner and against the respondents. It is further contended that clause 29.03 (governing law and venue) of the franchise agreement provides for arbitration in Singapore. It is further contended that the combined reading of the judgment of the Hon'ble Supreme Court in Bhatia International and BALCO would show that 11 AA No.882/2013 this court has jurisdiction over the present matter. So in view of his above contention he has come up with the present petition and accordingly prays for to allow the petition.
9. The notice sent by this court was duly served upon the respondent. The respondents appeared before the court through his counsel. The records shows that inspite of affording sufficient time, the respondent herein failed to file his objection to the main petition. Consequently the objection of the respondent to the main petition was taken as not filed by order dated 21/6/2014. So also the records shows that subsequently the statement of objection filed by the respondent to the main petition is on the record. The said objection was filed by the respondent on 7/7/2014. The records shows that the respondent has not filed required application, i.e., to say seeking permission to file the objection to the main petition by recalling the order dated 21/6/2014. When such would be the case and when the permission was not accorded by the court to file the objection to the main petition, it is needless to say that the said objection filed by 12 AA No.882/2013 the respondent to the main petition cannot be taken into consideration.
10. Heard the arguments.
11. The learned counsel for the petitioner in support of his arguments has relied upon the following decisions:
(1) (2012)9 SCC page 552 (2) (2002)4 SCC page 105, between Bhatia International Vs. Bulk Trading SA and another (3) AIR 2005 Kar page 94, between Globe Cogeneration Power Limited Vs. Hiranyakeshi Sahakari. (4) AIR 1997 SC page 1240 between Tayabhai M. Bagarsarwalla Vs. Hind Rubber Industries Private Limited.
(5) (2010)1 AIR Kar 271 between Smt.Karisidamma and others Vs. Sannakenchamma and others.
12. The learned counsel for the respondent in support of her arguments has relied upon the following decisions:
(1) MANU/SC/0836/2011 SMS Tea Estates Private Limited Vs. Chandmari Tea Company Private Limited 13 AA No.882/2013 (2) MANU/SC/0722/2012 Bharat Aluminium Company and others Vs. Kaiser Aluminium Company and others.
(3) MANU/KA/0384/2005
Millenia Realtors Private Limited Vs. SJR
Infrastructure Private Limited.
13. The following points arises for my consideration :
(1) Whether the application/petition filed by the applicant/petitioner under section 9 of the Arbitration and Conciliation Act, 1996, is deserves to be allowed or not ? (2) What order ?
14. My findings to the above said points are as under:
Point No.1 :In the Affirmative
Point No.2 :As per the final order
for the following:
REASONS
15. Point No.1: The learned counsel for the petitioner during the course of his arguments submitted that the 14 AA No.882/2013 petitioner is the absolute owner of the widely recognized trade marks for the "Ripley's Believe It Or Not" and the petitioner is registered with Trade Mark Registry in New Delhi. He further contended that the respondent is also involved in the business of entertainment, as such, he approached the petitioner with the ideas of starting the franchise in and around Bangalore. Accordingly they entered into a franchise agreement for franchising the proprietary system development by the petitioner and its affiliates for the purpose of setting up, opening and operating tourist attractions under the name and style of "Ripley's Believe It Or Not" and / or "Ripley's", in the forum or museum, Odditoriums and other tourist attractions. He further contended that under the franchise agreement, the respondent agreed that the petitioner was the absolute owner of the marks and also agreed to make timely payment of royalties and also agreed to comply with the other terms of the agreement and also agreed to cease use of the petitioner's trade marks on termination. So he contended that based on the representations made by the respondent, the petitioner agreed to licence the trade marks and other materials. So the 15 AA No.882/2013 said aspect enabled the petitioner to open exhibition halls and to display the artifacts and materials belonging to them for the purpose of tourist attractions and entertainment. He further contended that the respondent in pursuance of the franchise agreement have received the artifacts and opened the museum and Odditoriums at their premises.
16. He further contended that the respondent has become defaulter in the payment of the monthly royalties as per the franchise agreement and now almost he stopped payments altogether. In order substantiate his contention, he placed his reliance upon annexure 4, i.e., letter issued by the petitioner to the respondent company to remit the outstanding franchise fees. He further contended that the representatives of the petitioner company met the Chairman of the respondent company to discuss the issues regarding the outstanding dues payable as per the franchise agreement. He further contended that the Chairman of the respondent company committed to pay a sum of USD 74,979.97 by proposing a payment plan towards the sum. He further contended that though the said 16 AA No.882/2013 proposal was not ideal but the petitioner agreed as a good will gesture, so the petitioner obliged the proposed payment plan. In order to substantiate his contention, he placed his reliance upon Annexure 5. He further contended that again the respondent became defaulter in the matter of making timely payments. As such, the petitioner caused notice as per clause 18 of the franchise agreement. In order to substantiate his contention he placed his reliance upon Annexure 7.
17. He further contended that finally the respondent made payment of USD 20,000/- in July and payment of USD 44,000/- in the month of August and only 50% of these amounts were towards payment of monies due to the petitioner under the franchise agreement. He further contended that still the respondent is due and has been liable to pay the amount to the petitioner and inspite of several reminders sent to the respondent by saying that the franchise agreement will be terminated, if he continues to default in payment of monthly royalty fees and the outstanding amount due. He further contended that the respondent initially did 17 AA No.882/2013 not gave any reply to the said notice but after a period of two months, he gave reply to the said notice. He further contended that the very delay in issue of reply, shows the conduct of the respondent as being disinterested in the repayment of outstanding liabilities. He further contended that inspite of issuance of several emails and other communications sent to the respondent, he has failed to take any action with regard to the trade marks nor have the amounts been remitted to the petitioner. So the petitioner terminated the franchise agreement by issuing the fresh notice of default as per Annexure 10 and also called upon him to return the artifacts belonging to the petitioner that was in his possession and also the permission to use the trade marks was revoked. He further contended that inspite of notice of termination, the respondent continued to correspond with the petitioner regarding dues in the figures stating its intention to make good the payment of the amounts that were due. So he contended that the very said act and conduct of the respondent clearly shows that it is nothing but the dilatory 18 AA No.882/2013 tactics used by the respondent to continue usage of the artifacts and trade marks despite nonpayment.
18. So in view of his above arguments, what he contended that as a consequence of termination issued by the petitioner, the respondent no longer stands in the capacity of franchisee and is not entitled to use artifacts and trade marks. The respondent however has continued to use the same with blatant disregard to the termination notice. What he contended that the respondent has chosen to ignore the termination notice and pretends that no issue is on hand. So he contended that the respondent failed to perform its obligation and ignored law, where it is convenient for them. So in view of the above facts and circumstances of the case, the petitioner has come up with the present petition. He further contended that the very facts set out in the petition and the materials placed before the court along with the petition shows that the petitioner has made out good grounds to grant the reliefs as sought by him in the present petition. 19 AA No.882/2013 So in view of his above arguments he urged to allow the petition.
19. The learned counsel for the respondent during the course of his arguments mainly contended that the petition filed by the petitioner is not at all maintainable. She further contended that the present petition filed by the petitioner is a gross abuse of process of law, as the relief sought for in the instant petition are in excess of 7 in numbers with multiple prayers. It is further contended that in the event the petition is allowed, there is no need for arbitration, as because it would amounts to decreeing the petition. She further contended that as per rule 4(f) of the Hon'ble High Court of Karnataka, arbitration (proceeding before the court) Rules 2001, the petitioner has to produce the original or the duly certified copy of the arbitration agreement. He further contended that the petitioner himself in his petition admitted to the loss of the original franchise agreement. So he sought for the dispensation of the production of the said document. So what she contended that in the absence of production of original 20 AA No.882/2013 agreement the present petition under section 9 of the Arbitration and Conciliation Act, 1996, is not maintainable because the very non-production of the original agreement shows that it is in violation of the rules as mentioned above, as such the petition is liable to be dismissed.
20. She further contended that the party is by consent cannot confer jurisdiction over this court. She further contended that the non-production of the original franchise agreement is fatal to the case of the petitioner and he cannot maintain the present petition under the Arbitration and Conciliation Act, 1996 nor can seek for appointment of an arbitrator. She further by placing her reliance on the judgment rendered by the Hon'ble Supreme Court in the case of SMS Tea Estates Pvt. Ltd. Vs. Chandmari Tea Company Private Limited reported in (2011)14 SCC page 66, contended that the party who files petition under section 9 not only should produce the Arbitration Agreement, but also the said agreement should be duly stamped for all purpose. So by placing reliance upon the said decision contended that first of 21 AA No.882/2013 all the petitioner has not produced the original franchise agreement and the second thing is that it is not duly stamped as observed by the Hon'ble Supreme Court in the above decision. So on this sole ground and in the light of the decision rendered in the above decision she urged to dismiss the petition.
21. She further contended that the petitioner cannot be permitted for dispensation of production of original franchise agreement in contravention to the well settled law and the provisions of the statute. As such the instant petition needs to be dismissed in limine.
22. She further contended that the parties may have had an agreement, but that is a matter of evidence to be proved in a manner known to law. The present un-attested copy of the document produced by the petitioner, the respondent cannot confirm whether or not the said agreement has been signed and extended by the respondent and the same cannot be the basis for the instant petition. 22 AA No.882/2013
23. She further contended that the very averments made in the petition shows that the franchise agreement provides for arbitration in Singapore. So what she contended that when that would be the case, this court has no jurisdiction to entertain the present petition and if at all the petitioner has got any grievance he has to work out his rights before the jurisdictional court as per the alleged franchise agreement. She further contended that when the agreement specifically specifies the jurisdiction, in case of any dispute arises between parties, other than the jurisdictional court cannot grant even interim reliefs. In support of her contention, she placed her reliance upon the decision rendered in (2012)9 SCC page 552 between Bharat Aluminium Company and others Vs. Kaiser Aluminium Company and others. So in view of her above submission and decision, she also urged to dismiss the petition on the point of jurisdiction.
24. She further contended that the reference and repetition of various clauses of the franchise agreement by the 23 AA No.882/2013 petitioner cannot be looked into in the absence of the original or duly certified copy of the franchise agreement. She further contended that in the absence of non-production of the original franchise agreement the respondent denying the signing and execution of the said franchise agreement. She further contended that the alleged franchise agreement produced by the petitioner at Annexure 1 does not bear the date of execution and signature of witnesses besides the signature which according to the petitioner is that of the respondent. What she contended that the failure of the petitioner to produce the agreement as per section 7 of the Arbitration and Conciliation Act, 1996, immediately ousts the jurisdiction of this court to entertain the petition. She further contended that when the original agreement is not produced, there is no circumstances to give the interim relief.
25. She further contended that as per rule 23 of the Karnataka Civil Rules of Practice, 1967, only one prayer is maintainable per petition, whereas the present petition shows that multiple reliefs have been sought by the petitioner in a 24 AA No.882/2013 single petition. As such on the said ground also the petition filed by the petitioner is liable to be dismissed. In support of her contention she placed her reliance upon the decision rendered in 2005(6) KLJ page 36 between Millenia Realtors Private Limited Vs. SJR Infrastructure Private Limited.
26. So by placing reliance upon the said decision, what she contended that in the said decision the Hon'ble High Court of Karnataka has directed the parties to file separate petition for each prayer and has warranted that not more than one prayer can be sought per petition. So in view of the above decision she urged to dismiss the petition as because the petitioner sought multiple reliefs in a single petition. So in view of her above arguments and decisions she urged to dismiss the petition.
27. The learned counsel for the petitioner during the course of his reply arguments, contended that the objection filed by the respondent to the main petition and arguments submitted by the respondent counsel cannot be considered as 25 AA No.882/2013 because this court by its order dated 21/6/2014 taken the objections of respondents as not filed. He further contended that subsequently, the respondent counsel without filing required application, placed her objection statement to the main petition. So what he contended that when the objection to the main petition is not filed in accordance with law, the said objection statement filed by the respondent cannot be looked into.
28. He further contended that the respondent has repeatedly and continuously been in disobedience of the orders passed by this court dated 5/15/2013 and operative till date. The interim order was passed by this court on I.A. dated 2/2/2004 restraining the respondent from using or displaying the trademarks of the petitioner that are set out in the schedule 1 of the petition. Despite this order the respondent has been blatantly using the trade marks, artifacts and in violation of the laws applicable. He further contended that it is the duty of every person against whom the order is operative to comply with the orders of the court. He further contended 26 AA No.882/2013 that the respondent having been given the opportunity continues to be negligent and omission is fatal to all other claims made in subsequent applications by the respondents. In support of his case, he placed his reliance upon the following decisions:
1997(2) SCC 1240 page 32-43, between Tayabhai M.Bagarsarwalla Vs. Hind Rubber Industries Private Limited.
So by placing his reliance upon the decision, he contended that respondent cannot be heard till it has perges itself of the disobedience. He further contended that in the said decision the Hon'ble Supreme Court has cautioned that not only the party seeking the interim order is relevant but also the conduct of the party who opposes such interim orders. So also in support of his above contention he has relied upon the following decision reported in (1995) 5 SCC page 4545 between M/s. Gujarat Bottling Company and another Vs. Coca Cola company and others.
29. He further in his reply arguments contended that there is no defect in the petition as contended by the 27 AA No.882/2013 respondent counsel. What he contended that section 9 of the Arbitration and Conciliation Act, 1996 does not restrict the seeking of more than one relief. He further contended that chapter 3 of Karnataka Civil Rules of Practice deals with interlocutory matters and makes no reference to section 9 of petitions. What he contended that the said rules cannot be made applicable to the petition filed under section 9 of Arbitration and Conciliation Act, 1996. He further contended that the prayer sought by the petitioner in the petition shows that all the prayers are inter-connected and arises out of the same cause of action. When that would be the case, filing of separate petitions would only lead to multiplicity of proceedings and the possibilities of order being passed at variance to each other. What he contended that when the relevant prayers sought are inter-connected there is no need to file separate petition. He further contended that section 9 of the Arbitration and Conciliation Act, 1996, does not restrict the seeking of more than one relief in one petition. 28 AA No.882/2013
30. He further contended that even for a moment assuming but not conceding that there is a procedural defect, Rule 23 of the Karnataka Civil Rules of Practice provides for the court to direct the correction of defects if any. So he contended that the defect would not be fatal to the maintainability of the petition but will be required to be cured.
31. He further in view of the arguments canvassed by the respondent counsel with regard to section 4(f) of the Karnataka Arbitration Rules 2001 and section 7 of the Arbitration and Conciliation Act, 1996, what he contended that as a matter of fact, the petitioner has sought for dispensation of the requirement of the production of original documents, while filing the petition itself and the said aspect was also brought to the notice of the court, at the time of passing the interim orders. He further contended that the production of original agreement is not mandatory but it is only a directory. As such Rule 4 of the Karnataka Rules cannot be interpreted. Contrary to the judgment rendered in Bharat Seva Sansthana Vs. UP Electronics Corporation 29 AA No.882/2013 Limited. By relying upon the said decision, what he contended that in the said decision it was upheld by the Supreme Court the decision allowing photo copies on record to ascertain existence of the Arbitration agreement and also in the said decision, it was held that the requirement of producing the original document is not mandatory, but it is only directory. So by relying upon the above decision, what he contended that merely on the basis of the production of copy of franchise agreement and the non-production of the original of the same is not a ground to dismiss the petition.
32. He further contended that Rule 4(f) of the Hon'ble High Court of Karnataka, arbitration rules and when the same read with Rule 5 clearly shows that if the rules are not adhered to, the parties must either be given a chance to cure the defects or an opportunity to be heard wherever is necessary. What he contended that in the present case also when the petition is filed, the office of this court has not raised any objection with regard to the production of the original franchise agreement and also it was brought to the notice of 30 AA No.882/2013 the court with regard to the production of copy of the said franchise agreement and by considering the same, this court has granted the interim relief as sought in I.A.No.2 to 4. So he contended that whatever the arguments canvassed by the respondent counsel cannot be accepted. He further contended that section 7 requires the agreement to be in writing, merely because the original agreement is lost does not vitiate the very existence of the agreement.
33. He further contended that the very copy of the franchise agreement shows that it contains an Arbitration clause and even the reply notice given by the respondent shows that he has admitted the said agreement.
34. He further during the course of his reply arguments submitted with regard to the submission made by the respondent counsel that the franchise agreement is not duly stamped, as such the petition is not maintainable. So far as the said contention of the respondent counsel is concerned, what he contended that section 18 of the Karnataka Stamp 31 AA No.882/2013 Act, 1959, require document executed outside India to be stamped only when the original is brought into the state of Karnataka. So he contended that there is no violation in the present petition.
35. So far as the arguments canvassed by the learned counsel for the respondent with regard to the jurisdiction of the court is concerned, what he contended that the respondent has put forward an incorrect position of law. What he contended that though it was mentioned in the agreement that the place of arbitration is to be held at Singapore, but the courts of India are not barred from granting interim measures. In support of his contention, he has relied upon the decision rendered in 2002(4) SCC page 105 between Bhatia International Vs. Bulk Trading SA and another by placing his reliance upon the said decision, what he contended that this court has jurisdiction to entertain the present petition. He further contended that the judgment rendered in Balcos case applies only to agreement entered into before 6/9/2012, whereas the present agreement is dated 29/9/2006. As such 32 AA No.882/2013 he contended that the Balcos case cannot be made applicable to the present case and in view of the decision rendered in Bhatia International case, this court is having jurisdiction to entertain the present petition. So in view of his above reply arguments, he urged to allow the petition by rejecting the arguments canvassed by the respondent counsel.
36. In the light of the arguments canvassed by the respective counsels for the parties, I have gone through the records and also the decisions as relied upon by them. The petitioner herein has come up with the present petition under section 9 of the Arbitration and Conciliation Act, 1996, seeking certain reliefs much less the reliefs as sought in the petition. It is the specific stand of the petitioner herein that he is the absolute owner of the widely recognized trade marks for the "Ripley's Believe It Or Not". The respondent is also involved in the business of entertainment, as such he approached the petitioner with the idea of starting franchise in and around Bangalore. Accordingly franchise agreement entered between the parties for franchising the proprietary system development 33 AA No.882/2013 by the petitioner and its affiliates for the purpose of set up, obtaining and operating tourist attractions under the name and style of "Ripley's Believe It Or Not" in the forum or museums Odditoriums and other tourist attractions. It is the contention of the petitioner that the respondent has agreed under the franchise agreement that the petitioner is the absolute owner and also agreed to make timely payments of royalties and also agreed to comply with the other terms of the agreement and also agreed to cease petitioners trade marks on termination. It is the specific contention of the petitioner that after agreement between them the petitioner agreed to licence the trade marks and other materials and that would enable the petitioner to open exhibition halls and to display artifacts and the petitioner for the purpose of tourist attraction and entertainment. It is the specific stand of the petitioner that the respondent became defaulters in the matter of payment of monthly royalties. So also it is the specific stand of the petitioner that in pursuance of the repeated requests and demands and meetings with the Chairman of the respondent company, some times he paid certain amount but again he 34 AA No.882/2013 became defaulters in the matter of payment of monthly royalty amounts. It is the further contention of the petitioner that inspite of repeated reminders and sending of emails the respondent has failed to heed to the request of the petitioner. So ultimately they terminated the franchise agreement by issuing the fresh notice of default on 19/2/2013 as per Annexure 10. It is the contention of the petitioner that even after termination of the notice, the respondent continued to correspond with the petitioner regarding the difference in figures of outstanding debt and he sent reply to the termination notice after lapse of two months on 25/3/2013. It is the further contention of the petitioner that the very reply sent by the respondent shows his conduct and also he is not interested in repayment of the outstanding liabilities. So it is the contention of the petitioner that after termination of franchise agreement, the respondent no longer stand in the capacity of the franchise and is not entitled to the use of artifacts and trade marks. But still the respondent continued to use the same with blatant disregard to the termination notice. It is the further contention of the petitioner that the 35 AA No.882/2013 very weekly sales reports sent by the respondent to the petitioner company clearly shows the respondent company continued to use and benefit from the trade marks and artifacts of the petitioner, though he has not made any monthly royalties to the petitioner. So the petitioner has come up with the present petition seeking the appropriate reliefs much less the reliefs as sought in the petition.
37. In this case the respondent put his appearance before the court through his counsel. The records shows that though sufficient opportunity was given to the respondents, he failed to file his objection to the main petition. Consequently the objection of the respondent was taken as not filed by order dated 21/6/2014. The records shows that the respondent filed objection and it is forthcoming in the records and also the date mentioned therein shows that the same was filed after passing of orders on 21/6/2014. So also upon perusal of the records, it shows that before filing the objection to the main petition the respondent has not at all filed appropriate application seeking permission to file objection to the main 36 AA No.882/2013 petition. When once the objection of the respondent has been taken as not filed, it is the duty of the respondent counsel to seek permission of the court by filing an application to file objection to the main petition. The records shows that the counsel representing the respondent has not done so. So it can be said that it is clear violation of procedural aspect. When that would be the case, it is needless to say that whatever objection filed by the respondent to the main petition cannot be considered. In this regard it would be useful to refer a decision rendered in (1997)2 SCC page 443 between Tayabhai M. Bagarsarwalla Vs. Hind Rubber Industries Private Limited. In the said decision it was held by their lordships that the respondent cannot be heard till it has purged itself of the disobedience. So also the Hon'ble Apex Court has cautioned the court that not only the conduct of the parties seeking the interim order is relevant, but also the conduct of the party who opposes such interim order. So looking into the dictum laid down by their lordships in the above decision it can be said that the ratio laid down in the said decision is applicable to the present case in hand, as because in the 37 AA No.882/2013 present case though the objection of the respondent to the main petition was taken as not filed and the said aspect is well within the knowledge of the respondent and the counsel representing his case, but inspite of that they failed to follow the procedure as laid down under law. When that would be the case, it clearly shows the conduct and intention of the respondent herein. Under the above said circumstances whatever the objection filed by the respondent to the main petition cannot be taken into consideration.
38. Now coming to the arguments canvassed by the learned counsel for the respondents. She mainly contended that as per rule 4(f) of the Hon'ble High Court of Karnataka, arbitration (proceeding before the court) rules 2001 the petitioner has to produce the original or the certified copy of the arbitration agreement, but the very averments of the petition shows that the petitioner contended that the original agreement lost. So he has produced the Xerox copy of the said agreement. So what she contended that the very petition filed by the petitioner under section 9 of the Arbitration and 38 AA No.882/2013 Conciliation Act, 1996 is in clear violation of rule 4(f) of the Hon'ble High Court of Karnataka arbitration Rules 2001. So the main contention of the learned counsel for the respondent is that in the absence of production of original franchise agreement or certified copy of the said agreement the petition filed by the petitioner is not maintainable, as such the same is liable to be dismissed.
39. She further contended that even the Xerox copy of the franchise agreement produced by the petitioner shows that it was not duly stamped as required under law. In support of her contention she has relied upon the decision rendered in (2011)14 SCC page 66, between SMS Tea Estate Vs. Chandamari Tea Company Private Limited. So by relying upon the said decision what she contended that since the alleged franchise agreement is not duly stamped, so for any purpose the said document cannot be looked into or considered. So on this sole ground she urged to dismiss the petition.
39 AA No.882/2013
40. In the light of her above arguments on going through the records it shows that the petitioner herein at the time of filing the present petition filed I.A.No.1 under section 151 C.P.C. for dispensation of production of original or certified copy of the franchise agreement. The records shows that by considering the reasons stated in the affidavit enclosed to the application this court dispensed the production of the original or the certified copy of the franchise agreement and by considering the reasons assigned in the other applications, i.e., I.A.No.2 to 4, this court has granted interim relief to the petitioner.
41. So far as the contention of the respondent i.e., in the absence of production of original or certified copy of the franchise agreement the petition itself is not maintainable is concerned it can be said that upon perusal of the documents, particularly the reply notice sent by the respondent, it shows that wherein he has not at all disputed the franchise agreement that was entered between himself and the petitioner. When that would be the case, when the factum of 40 AA No.882/2013 franchise agreement in between them is accepted by the respondent, the non-production of either the original or certified copy of the franchise agreement is not a ground to dismiss the petition. It is an well established principles of law that admitted facts need not be proved. When the reply notice dated 25/3/2013 shows he is not at all denied the factum of franchise agreement entered between himself and the petitioner, it is needless to say that the non-production of original or certified copy of the franchise agreement is not a fatal to the case of the petitioner. In the decision rendered in Bharat Seva Sansthana Vs. U.P.Electronics Limited, wherein the Hon'ble Apex court upheld the decision allowing the photo copies on record to ascertain the existence of arbitration agreement. The requirement of producing the original agreement has been held to be directory and not mandatory. So looking into the dictum laid down by their lordships in the above decision also it can be said that the non-production of original or certified copy of the franchise agreement is not a fatal to the case of the petitioner herein. So it can be said that Rule 4(f) of the Karnataka arbitration rules No.1 as contended 41 AA No.882/2013 by the respondent counsel cannot be interpreted contrary to the judgment as referred above.
42. Now coming to the contention taken by the learned counsel for the respondent that the alleged franchise agreement is not duly stamped. So far as the said contention of the learned counsel for the respondent is concerned, it can be said that as admitted by the respondent counsel and also upon perusal of the averments made in the petition it shows that the petitioner contended that the original franchise agreement was lost and it was executed in USA. When the original franchise agreement was mis-placed and it was not at all brought to the state of Karnataka, the question of agreement was liable to be stamped does not arise as per section 18 of the Stamp Act. Under such circumstances it can be said that the decision as relied upon by the learned counsel for respondent reported in:
(2011)14 SCC page 66 between SMS Tea Estate Vs. Chandmari Tea Company Private Limited, cannot be made applicable to the present case in hand. So also by looking into 42 AA No.882/2013 the facts and circumstances of the present case, whatever contention taken by the learned counsel for the respondent cannot be accepted.
43. Now coming to another contention taken by the learned counsel for the respondent, that the petition filed by the e petitioner is not maintainable in view of the various reliefs sought by him in a single petition and which is against the rules 23 of Civil Rules of Practice, 1967. What she contended that as per the said rule only one prayer is maintainable per petition and multiple reliefs in a single petition is not permissible under law. In support of her contention she placed her reliance upon the decision rendered in 2000(6) KLJ 36 between Millenia Realtors Private Limited Vs. SJR Infrastructure Private Limited, Bangalore.
44. So far as the said contention taken by the learned counsel for the respondent is concerned it can be said that the petitioner herein sought for some reliefs and looking into the reliefs sought by the petitioner it shows that all the reliefs as 43 AA No.882/2013 sought by him are interconnected. When that would be the case it cannot be said that in view of various reliefs sought by the petitioner in a single petition the present petition is not maintainable. So also upon perusal of section 9 of the Arbitration and Conciliation Act, 1996, it shows that the said provision does not bars or restrict the party seeking from more than one relief in one petition with a view to avoid multiplicity of proceedings. Under the above said circumstances it can be said that whatever the contention taken by the learned counsel for the respondent cannot be accepted.
45. The learned counsel for the respondent contended that the very contents of the petition shows that the franchise agreement entered outside the territory of India. So also the contents of the petition shows that the places of arbitration is shown at Singapore. So she contended that if that would be the loss, if any dispute according to the petitioner the place of arbitration is only at Singapore but not in India muchless before this court. So what she contended that the very contents of the petition shows that this court has no 44 AA No.882/2013 jurisdiction to entertain the present petition. When this court has no jurisdiction to entertain the petition, the petition is liable to be dismissed. In support of her contention she placed her reliance upon the decision reported in (2012)9 SCC page 552 between Bharat Aluminium Company and Kaiser Aluminium Technical Services Inc. So far as the said contention of the learned counsel for the respondent is concerned it can be said that no doubt in the petition it is mentioned that franchise agreement provides for arbitration at Singapore, bit it does not mean that this court has no jurisdiction to entertain the present petition. This view of mine is supported by the decision rendered by the Honb'le Apex Court in a decision rendered in (2002)4 SCC page 105, Bhatia International Vs. Bulk Trading SA and another, wherein it was held by their lordships as under:
(A) Arbitration and Conciliation Act, 1996 - Pts I & II, section 9, 17, 2(2), (3), (4), (5), 2(1)(f),
(e), (a), 2(7), 28 and 36 - Held, provisions of Pt I are equally applicable to international commercial arbitrations held outside India, 45 AA No.882/2013 unless any or all such provisions have been excluded by agreement between the parties, expressly or by implication - therefore, unless section 9 has been excluded, parties may seek interim relief from a court as defined in section 2(1)(e) - clarified that article 23 of ICC Rules permits parties to apply to a competent judicial authority for interim or conservatory measures
- therefore, where arbitration is to be carried out as per rules of ICC, parties can seek relief under section 9 - Arbitration between parties was to be held in Paris under ICC Rules -
Respondent No.1 seeking before ADJ, intra alia interim injunction against appellant company restraining it from alienating it, transferring and / or creating third party rights in respect of its business assets and properties - appellant contending that application was not maintainable - Held on facts, Hon'ble High Court rightly dismissed writ petition of appellants and rightly confirmed the order of ADJ holding that the application was maintainable - Rules of Arbitration of the International Chamber of Commerce, article 23
- words and phrases - "This Act" - Model Law on International Commercial Arbitration 46 AA No.882/2013 Adopted in 1985, Art 1(2) - Statute Law - Non obstante clause - Words and Phrases - "only".
(B) Arbitration and Conciliation Act, 1996 -
Pt I - applies compulsorily to all arbitrations held in India and all proceedings relating thereto - parties can deviate only to the extent permissible by the derogable provision of Pt I. (C) Jurisdiction - Statutory ouster of jurisdiction - for a court which would otherwise have jurisdiction in respect of the subject matter concerned, held, ouster cannot be implied - ouster must be express Civil Procedure Code, 1908, section 9.
(D) Arbitration and Conciliation Act, 1996 -
held, the Act is a consolidated and integrated Act - general provisions applicable to all types of arbitration such as those contained in section 9 and 17 are therefore not repeated in every chapter and part of the Act - such general provisions apply to all chapters and parts unless it is expressly stated that they are not to apply or where separate provisions have been made in a particular chapter or part."
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46. Looking into the dictum laid down by their lordship in the above decision, it can be said that wherein the Hon'ble Apex Court has held that despite the seat of arbitration being outside India, the courts of India are not barred from granting interim measures. So looking into the dictum laid down by their lordship in the above decision, it can be said that whatever the contention taken by the learned counsel for the respondent that this court has no jurisdiction to entertain the present petition cannot be accepted. I have gone through the decision relied upon by the learned counsel for the defendant. Looking into the facts and circumstances of the present case and also looking into the dictum laid down by their lordship in Batia International Case as referred above, it can be said that the decision as relied upon by the learned counsel for the respondent is not helpful to the case of the respondent.
47. As it is already stated above, the respondent entered into a franchise agreement with the petitioner for franchising the proprietary system development by setting tourist 48 AA No.882/2013 attractions under the name and style of "Ripley's Believe It Or Not". So also it is also stated above the respondent has agreed for the terms and conditions mentioned in the franchise agreement. So the petitioner agreed to licence the trade marks and other materials. It is the specific stand of the petitioner that the respondent after receiving the artifacts and obtaining of the museums and Odditoriums at their premises became defaulters in the matter of payment of monthly royalties. It is the specific stand of the petitioner that inspite of repeated requests, demands, notice and emails, correspondence, the respondent has failed to pay the amount due by him to the petitioner. So ultimately he terminated the franchise agreement and admittedly the records shows that the same was duly served upon the respondent and after lapse of two months after the receipt of said notice, he gave reply to the said notice, which is also placed before the court by the petitioner. The very contents of the reply notice shows the conduct and attitude of the respondents. So also as it is already stated above in this case inspite of the respondents appeared before the court through his counsel and affording 49 AA No.882/2013 sufficient time, has not chosen to file objection to the main petition. No doubt he has filed objection after taking the same as not filed without adopting the procedure prescribed under law, as such the said objection filed by the respondent cannot be considered.
48. The learned counsel for the respondent during the course of her arguments, she only pointed out on technical grounds and legal aspect. So far as the allegation made by the petitioner with regard to the transaction in between the petitioner and the respondent is concerned she has not canvassed acceptable arguments. so also the material placed before the court by the petitioner to show that it is in consonance with the averments made in the petition and as it is already stated above the respondent has not denied the factum of franchise agreement in between himself and the petitioner. So far as the other allegations made by the petitioner against the respondent is concerned no satisfactory explanation nor materials has been placed before the court. When things stood like so, in order to protect the interest and 50 AA No.882/2013 right of the petitioner it would be just and appropriate to grant the reliefs as sought by the petitioner in the present petition in the interest of justice and equity. When absolutely there is no contra say with regard to the merit of the case, i.e., with regard to the transaction whatever the contention taken by the petitioner in the present petition has to be accepted. So by considering the over all facts and circumstances of the case this court is of the opinion that the petitioner has made out grounds to allow the petition. Accordingly point No.1 for consideration is answered in the Affirmative.
49. Point No.2: In view of my finding to the above points, I proceed to pass the following:
ORDER The petition / application filed by the applicant / petitioner under section 9 of the Arbitration and Conciliation Act, 1996 is hereby allowed.
The respondent and its directors, agents, employees or any persons acting under it are hereby restrained by way of injunction from using 51 AA No.882/2013 or displaying the trade marks of the petitioner with / set out in the schedule No.1 including any colourable imitation and further they are restrained from using in any manner or for any purpose any of the petitioners confidential information, trade secrets, merchandise and programmes, specifications or descriptions of exhibits, procedures, forms, techniques and materials acquired by virtue of the relationship established with the petitioner under the franchise agreement.
So also the respondents are directed to immediately deliver to the petitioner all the standards, supplements of standards, training and other materials furnished to him, computer software and data based material, customer list, admission records, other records and files, documents, instructions, display items, advise and promotional materials, signs and related items which bears the petitioners mark or slogans or insignias or designs, advertising contracts, forms and other materials and property of the petitioner and any copies in possession of the respondent, failing which , the petitioner or its agents are at liberty to recover the same including all the exhibits and artifacts from the respondents.52 AA No.882/2013
Further the respondent is directed not to dispose off the artifacts and exhibits set out in schedule No.1 to any third party or to create any third party rights on the same and also directed to offer security for the payment of sum equivalent in INR of USD 3,15,548, by way of bank guarantee till passing of the award in the arbitration proceedings initiated by the petitioner.
No order as to cost.
(Dictated to the Judgment-Writer, transcribed, computerized and printout taken by her, revised and then pronounced by me in open Court on this the 4th day of March 2016).
(Sadananda M. Doddamani) XXV ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE.53 AA No.882/2013
Judgment pronounced in open court (vide separate detailed judgment) with the following operative portion:-
ORDER The petition / application filed by the applicant / petitioner under section 9 of the Arbitration and Conciliation Act, 1996 is hereby allowed.
The respondents and its directors, agents, employees or any persons acting under it are hereby restrained by way of injunction from using or displaying the trade marks of the petitioner with / set out in the schedule No.1 including any colourable imitation and further they are restrained from using in any manner or for any purpose any of the petitioners confidential information, trade secrets, merchandise and programmes, specifications or descriptions of exhibits, procedures, forms, techniques and materials acquired 54 AA No.882/2013 by virtue of the relationship established with the petitioner under the franchise agreement. So also the respondent is directed to immediately deliver to the petitioner all the standards, supplements of standards, training and other materials furnished to him, computer software and data based material, customer list, admission records, other records and files, documents, instructions, display items, advise and promotional materials, signs and related items which bears the petitioners mark or slogans or insignias or designs, advertising contracts, forms and other materials and property of the petitioner and any copies in his possession, failing which , the petitioner or its agents are at liberty to recover the same including all the exhibits and artifacts from the respondent. 55 AA No.882/2013 Further the respondent is directed not to dispose off the artifacts and exhibits set out in schedule No.1 to any third party or to create any third party rights on the same and also directed to offer security for the payment of sum equivalent in INR of USD 3,15,548, by way of bank guarantee till passing of the award in the arbitration proceedings initiated by the petitioner. No order as to cost. XXV ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE.