Karnataka High Court
John Thomas vs M/S Aum-I Artistes Private Limited on 25 October, 2024
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 25TH DAY OF OCTOBER, 2024
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE G BASAVARAJA
COMMERCIAL APPEAL NO.263 OF 2024
BETWEEN:
1. JOHN THOMAS
S/O K.P. THOMAS
AGED ABOUT 48 YEARS
RESIDING AT 19C
SKYLINE DOMAIN
OPP. INFOSYS, KARIMANAL P.O.
THIRUVANANTHAPURAM-695 583
2. CLYDE D'ROZARIO
S/O ANTONY JERRY D'ROZARIO
AGE 48 YEARS
RESIDING AT H NO.1/722
ROSEVILLE
NEAR BISHOP'S HOUSE
FORT KOCHI-682 001
3. MOTHERJANE MUSIC PRODUCTION LLP
A LIMITED LIABILITY PARTNERSHIP
BEARING LLPIN AAQ-7618
REPRESENTED BY MR. JOHN THOMAS
AND CLYDE JOSEPH D ROZARIO
HAVING ITS OFFICE AT A2, 32/874 (43/1022)
PALLICHAMBAYIL ROAD, PALARIVATTOM KOCHI
ERNAKULAM, KERALA-682 025
...APPELLANTS
(By SRI. MUBARAK BEGUM S., ADVOCATE)
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AND:
M/s. AUM-I ARTISTES PRIVATE LIMITED
HAVING ITS OFFICE AT: 2ND FLOOR
RED BRO ARCADE, SY.NO.509/2
OPP. ESSAY PETROLEUM
HORAMAVU, KALKERE MAIN ROAD
BENGALURU-560 043
REPRESENTED BY ITS DIRECTOR
MR. SURAJ MANI
...RESPONDENT
(BY SRI. AAKASH SHERWAL,
SMT. VARSHA SHETTY, AND
SRI. TUSHAR TYAGI, ADVOCATES)
THIS COMMERCIAL APPEAL IS FILED UNDER SECTION
13(1A) OF THE COMMERCIAL COURTS ACT, 2015 READ WITH
SECTION 37(1)(A) OF THE ARBITRATION AND CONCILIATION
ACT, 1996, PRAYING TO (a) SET ASIDE THE ORDER DATED
07.06.2024 PASSED BY THE LXXXVIII ADDL. CITY CIVIL AND
SESSIONS JUDGE (EXCLUSIVE COMMERCIAL COURT)
BENGALURU (CCH-89) DISMISSING IA No.7/2024 FILED IN COM
OS No.1310/2023, FILED UNDER SECTION 8 OF THE
ARBITRATION AND CONCILIATION ACT, 1996, FILED BY THE
DEFENDANTS/APPELLANTS HEREIN VIDE ANNEXURE-A TO THIS
APPEAL MEMORANDUM AND ETC.
THIS APPEAL HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 28.08.2024 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, ANU SIVARAMAN
J., PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE G BASAVARAJA
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CAV JUDGMENT
(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN) This commercial appeal is directed against the order dated 07.06.2024 passed on I.A.No.7/2024 in Com. O.S.No.1310/2023 by the LXXXVIII Addl. City Civil & Sessions Judge (Exclusive Commercial Court) Bengaluru (CCH-89) (hereinafter referred to as "Commercial Court" for short).
2. For the sake of convenience, the parties are referred to as per their ranking before the Commercial Court.
3. The Commercial Court after considering the contentions advanced found that a person who seeks a remedy under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the Act' for short) has to make an application before disclosing his defence in the case. Further, the original arbitration agreement or certified copy thereof has to be filed along with application. If he is not in possession of such agreement he has to make an application calling upon the other party to produce the
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4 original. It was found by the Commercial Court that defendants No.1 and 2 have filed their written statement on 03.01.2024 and they have submitted their first statement on the substance of the dispute. Defendant No.3 had also filed a memo on 19.01.2024 adopting the written statement filed on behalf of defendants No.1 and 2. It is thereafter that I.A.No.7 under Section 8 of the Act was filed on 06.03.2024 without either the original or a certified copy of the Arbitration agreement. On these grounds, the application was dismissed with costs.
4. The learned counsel for the appellants/defendants submits that a Band under the name "Motherjane" was initially formed by the defendants and Mr. Suraj Mani, who later walked out from the band. Subsequently, Mr.Mani claimed rights over the band through Deed of Agreement dated 30.08.2008 which contained an arbitration clause (Clause 31) providing for arbitration as the mode of dispute resolution, which purportedly transferred certain rights to his Company. On the same day, a deed of assignment of trademark and copyright was also entered into between the
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5 parties. The same did not contain an arbitration clause. The defendants allege that they were misled into signing the said Deed of Assignment and were unaware of the full implication of the document. On the basis of this Deed of Assignment, Mr.Mani filed a suit in the Commercial Court, seeking an injunction to restrain the defendants from using the band's intellectual property and claiming damages for infringement of his rights.
5. The learned counsel appearing for the appellants submits that the dispute should be referred to arbitration as per Section 8 of the Act. The appellants also claim that the Commercial Court erred in rejecting I.A.No.7/2024 seeking reference to arbitration, as the suit is not maintainable due to the arbitration agreement.
6. It is further submitted that the Commercial Court has taken a narrow view by equating the written statement with the "first statement on the substance of the dispute"
under Section 8(1) of the Act. It is submitted that on 29.03.2023, a reply notice was sent by stating that the respondent failed to perform his obligation as per the
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contract. The pleadings of the respondent before the Commercial Court establishes the fact that the respondent-
Company started claiming the rights over the Trade name "Motherjane" and its music composition only during March 2023, i.e., after lapse of execution of the said contract.
7. It is further submitted that the appellants since the departure of Mr. Suraj Mani in 2011, they have been operating the band "Motherjane" independently, with no interference or claims from the Plaintiff. They claim that they have registered the trademark for "Motherjane Kochi"
and have successfully performed numerous shows without any objections from the Plaintiff until 2022. The appellants state that it was only when they were preparing to release their third album in 2022 that issues arose regarding their spotify and other social media accounts, which were blocked by Mr. Suraj Mani.
8. The learned counsel appearing for the appellants in support of her contentions relied on the following judgments:-
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• Rashtriya Ispat Nigam Ltd. v. Verma Transport Co. reported in (2006) 7 SCC 275;
• P. Anand Gajapati Raju v. P.V.G. Raju reported in (2000) 4 SCC 539;
• M/s. Sundaram Finance Limited and Another v. T. Thankam reported in (2015) 14 SCC 444; and • Madhu Sudan Sharma and Others v. Omaxe Limited reported in 2023 SCC OnLine Del 7136 In Rashtriya Ispat Nigam Ltd's case (supra), the Apex Court held that a party cannot be said to have waived its right to invoke arbitration clause or acquiesced itself to jurisdiction of Court before its filing of "first statement on the substance of dispute", which is to be distinguished from the written statement. It is only where the party actually submits to the jurisdiction of the Court that the first statement of defence can be said to have been filed.
In P. Anand Gajapati Raju's case (supra), it was held that the power of the Court under Section 8 of the Act is to be widely construed and in a case where there is admittedly an arbitration agreement entered into between the parties, the parties have to be referred to arbitration.
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8 In M/s. Sundaram Finance Limited's case (supra), as well, the Apex Court held that once there is an arbitration agreement between the parties, all disputes have to be resolved through arbitration.
The Delhi High Court in Madhu Sudan Sharma's case (supra), held that where an arbitration clause exists between the parties and where an objection to the Court deciding the issue raised relying on such clause, the Court has to refer the parties to the arbitration.
9. Per contra, learned counsel for the respondent contended that the agreement and the assignment in question are two separate and distinct contracts and there is no arbitration agreement governing the dispute. Therefore, the matter could not be referred to arbitration. The current dispute arises from a separate agreement involving the assignment of trademark and copyright which does not contain any arbitration clause. As a result, the arbitration clause from another contract cannot be applied to the current issue.
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10. The learned counsel for the respondent argues that the current dispute involves trademark and copyright infringement and passing off, which are not arbitrable. These are statutory rights under intellectual property law, and thus, the dispute falls outside the scope of arbitration. It is submitted by the learned counsel for the respondent that the Trademark rights are inherent statutory rights and are not subject to arbitration unless expressly agreed upon. It is further contended that the findings of the Commercial Court are perfectly legal, reasonable and valid and no grounds are made out for interfering in the order under appeal.
11. In support of the contentions, the following judgments were relied on:-
• M.R. Engineers and Contractors (P) Ltd. v. Som Datt Builders Ltd reported in (2009)7 SCC 696;
• Indian Performing Right Society Ltd v. Entertainment Network (India) Ltd reported in 2016 SCC Online Bom 5893;
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• A. Ayyasamy v. A. Paramasivam and Others reported in (2016) 10 SCC 386;
• Vidya Drolia and Others v. Durga Trading Corporation reported in (2021) 2 SCC 1; and In M.R. Engineers and Contractors (P) Ltd.'s case (supra), the Apex Court held that a mere reference to a document in an agreement would not have the effect of making an arbitration clause from the prior document, a part of the contract. It was held that for the arbitration clause in a separate contract being adopted between the parties, the conscious acceptance of the said clause from another document by the parties as part of their contract is required.
In Indian Performing Right Society Ltd's case (supra), the High Court of Bombay held that infringement and passing off are actions in rem and are not arbitrable disputes.
In A. Ayyasamy's case (supra), the Apex Court held that even in cases where arbitration clauses exists in agreements, the question whether the dispute raised by the
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11 respondent in the suit is capable of settlement through arbitration has to be considered by the Court while considering application under Section 8 of the Act.
In Vidya Drolia's case (supra), the Apex Court held that actions in rem including questions of trademark infringement and passing off are excluded from the ambit of arbitration and where the arbitration agreement is non- existent, invalid or the disputes are non arbitrable, the Court would be justified in not referring the disputes to arbitration.
12. Having considered the contentions advanced on either side, the following point arises for consideration:-
"Whether the order passed by the
Commercial Court under Section 8 of the
Arbitration and Conciliation Act, 1996, requires any interference?"
13. It is not in dispute before us that there were two agreements entered into on the same day i.e., on 30.08.2008. One of them was a Deed of Agreement, which provided for production of five music albums and for management of the Band. The said agreement is placed on
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12 record as Annexure - B. The said agreement had an Arbitration Clause. It is contended that the respondent had invoked the arbitration clause and appointed one R.P. Ramanathan as arbitrator as per clause 31 of the said deed. The appellants challenged the appointment of the arbitrator and the learned Arbitrator recused himself from the proceedings. Subsequently, a legal notice dated 13.10.2023 was sent by the appellants proposing arbitration proceedings under the Deed of Agreement and that the said proceedings are pending. While so, O.S.No.797/2023 was filed by the appellants before the Munsiff Court, Ernakulam seeking permanent injunction against the respondents.
14. The appellants also prayed for mandatory injunction to direct the Defendants therein to handover all materials or music accounts on different platforms for music streaming. The said suit was subsequently withdrawn by the appellants as infructuous, citing that the appellants had successfully performed the event without disturbance from the defendants therein.
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15. It is stated that thereafter, appellants No.1 and 3 filed Arbitration Application No.85 of 2023 under Section 9 of the Act along with I.A.No.1/2023 before the City Civil Court, Bengaluru, and secured an ex-parte ad-interim order dated 09.10.2023. Thereafter, the present Commercial O.S. was filed by the respondents seeking the following reliefs:-
"a. An order for permanent injunction restraining and enjoining the Defendants, their partners, principal officers, servants and agents and all others acting on its behalf as the case may be from utilizing 'motherjane' and any other deceptively similar mark belonging the Plaintiff by virtue of the Deed of Assignment deed dated 30th August 2008; and b. An order for permanent injunction restraining the Defendants, their partners, principal officers, servants and agents and all others acting on its behalf from utilizing from performing the copyrighted compositions & songs, vested with the Plaintiff by virtue of the Deed of Assignment deed dated 30th August 2008, and c. An order for rendition of accounts in respect of revenue derived by using the trade name, brand name, goodwill & copyrights belonging to the Plaintiff under the Deed of Assignment dated 30.08.2008, including but not limited to the music shows identified by the plaintiff and decree of the amount so found due in favor of the Plaintiff till date;
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d. An order for damages to the tune of INR 5,50,000/- or such higher amount, in favor of the Plaintiff, as may be determined towards for loss of profits, reputation, and goodwill of the Plaintiff caused by the illegal activities of the Defendants.
e. Grant cost of present proceedings."
16. An ex-parte interim order was also passed on 25.11.2023, which was duly communicated to the appellants. When the interim injunction was not complied with, Commercial Miscellaneous Petition No.7 of 2024 was moved under Order XXXIX, Rule 2A for disobedience, which is also being considered by the Court. It is after filing a detailed written statement as well as an application under Order XXXIX Rule 4 for vacating the ex-parte interim order dated 25.11.2023, on 03.01.2024 that the appellants had moved application under Section 8 of the Act. It is submitted that the Deed of Assignment on which the present O.S. has been filed and the Deed of Agreement are entered into on the same date, but are different and distinct agreements as would be evident from a mere perusal of the same.
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17. Section 8 of the Arbitration and Conciliation Act, 1996 reads as follows:-
"8. Power to refer parties to arbitration where there is an arbitration agreement.- [(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists.] (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:
[Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub- section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.]
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(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made."
18. As far as the present suit is concerned, it is clear that the suit is specifically based on the Deed of Assignment dated 30.08.2008. The relevant portion of the Deed of Assignment reads as follows:-
"1. In consideration of the sum of Rs.50,000/- (Rupees Fifty Thousand only) to be shared equally between the five members of the Band "motherjane" at Rs.10,000/- (Rupees Ten thousand only) each paid by the ASSIGNEE to the ASSIGNOR, the receipt whereof the ASSIGNOR hereby admits and acknowledges, the ASSIGNOR does hereby grant, sell, assign, transfer and assure to the ASSIGNEE the sole, exclusive and monopoly Intellectual Property Rights to own and use the Name, Musical Compositions, Lyrics, Songs, Audio and Visual works of the Band called "motherjane" to stage, present, perform, reproduce, broadcast, telecast, exhibit, rewrite, in full or any part thereof in Public by means of sound or silent films, stage performances or any other similar contrivance which may be mechanically, musically, represented, exhibited or performed in all the parts of the world in all the aforesaid Name, Musical Compositions, Lyrics, Songs, Audio and Visual films, scenes, scenery etc. in all his business activities for the goods/services offered by the ASSIGNEE and the ASSIGNOR relinquish all their
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rights over all the Intellectual Properties created by them which are acquired in full by the ASSIGNEE."
Therefore, it is the right of the parties under the Deed of Assignment which is the subject matter of the present suit.
19. Though the learned counsel for the appellants vehemently contends that the dispute between the parties is only with regard to their contractual rights arising from the Deed of Assignment, we are of the opinion that in the nature of the contentions of the parties, questions with regard to the right and enforceability of the Trade Name and the Copyrights will have to be considered in the suit.
20. In the instant case, the Commercial Court has considered the contentions of the parties quite extensively. It was found that the application under Section 8 of the Act was not accompanied by the original or a duly certified copy of the agreement which contained the arbitration clause. Though it is contended by the learned counsel for the appellants that the agreement was already before the Court, the statutory requirement in sub-section (2) and the proviso thereto could not have been ignored by the Commercial
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18 Court. Further, the application under Section 8 of the Act cannot be made as an after thought after placing the contentions on merits on record by filing a written statement. The written statement was filed by defendants No.1 and 2 on 03.01.2024. Defendant No.3 has also filed a memo adopting the said written statement on 19.01.2024. They have also moved an application to vacate the interim order. It is only thereafter on 06.03.2024 that I.A.No.7 was filed under Section 8 of the Act. Moreover, in the light of the averments and the relief sought for in the plaint and the contentions raised by the appellants in response thereto as evidenced by their written statements, it is clear that the question as to the existence of the registration and the right to use the trademark, brand name and the copyright are issues which are required to be considered in the present suit. The contention that there is interrelation between two agreements executed on the same day would not be sufficient for the Commercial Court to hold that there is a valid arbitration clause and that the dispute between the parties is arbitrable.
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21. In the above factual circumstances, we are of the opinion that the finding of the Commercial Court that there is no specific arbitration clause between the parties in the agreement in question and that the petition under Section 8 could not have been allowed, cannot be found fault with.
22. In view of the discussions made above, the point raised is answered in "the negative". The appeal therefore fails, the same is accordingly dismissed.
There will be no order as to costs.
Pending I.A.No.1/2024 and I.A.No.2/2024, are hereby disposed of.
Sd/-
(ANU SIVARAMAN) JUDGE Sd/-
(G BASAVARAJA) JUDGE cp*