Delhi District Court
M/S Shri Sai Entertainment Private ... vs Sukanya Gupta on 14 May, 2025
IN THE COURT OF SH. AJAY KUMAR JAIN:
DISTRICT JUDGE COMMERCIAL COURT 03 - SOUTH EAST
DISTRICT SAKET COURTS, NEW DELHI.
OMP (COMM) 46/24
M/S SHRI SAI ENTERTAINMENT PRIVATE LIMITED
Having its office at:
J1/24, First Floor, Khirki Extension,
South Delhi, Delhi
..... Petitioner/Claimant
VERSUS
MRS. SUKANYA GUPTA
W/o Sh. Rakesh Gupta,
R/o 82/4, Patua Para Lane,
Serampore, Hoogaly, West Bengal- 712201
.....Respondent
Date of Institution : 10.05.2024
Date when final arguments heard : 03.05.2025
Date of Judgment : 14.05.2025
JUDGMENT
1. Vide this judgment, I shall decide, the present petition under section 34 of Arbitration and Conciliation Act, 1996 for setting aside the impugned award dated 06.12.2023 passed by Ld. Sole Arbitrator.
2. Brief facts of the case as per petition that petitioner operates a business of organizing beauty pageants under the name and style 'Haut Monde Mrs. India Worldwide' for the past 12 years. Respondent Mrs. Sukanya Gupta is one of the participants in the 8 th Season of the said OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 1 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA event. The deed of agreement dated 14.04.2018 executed between the parties specifies a tenure lasting until the expiration of five years from the date of grand finale. The grand finale of the 8 th season of the even occurred in around September 2018, thus, the tenure of the agreement expires on September 2023. Respondent was adjudged as 'Mrs. Social Butterfly', subsequently, immediately after the conclusion of the beauty pageant on 21.09.2018, respondent initiated her own beauty pageant under the name 'Jeeo King and Queen, Mr. Miss Mrs. India International' and conducted its seasons in 2019 and 2021. Respondent promoted and endorsed the said event through various online platforms such as her website. Respondent not only associated herself but also endorsed her own beauty pageant while acting as one of the jury members. The respondent promoted her pageant through press conferences, social media websites etc and the petitioner/claimant has filed video recording to substantiate the same.
3. The Ld. Sole Arbitrator was appointed by Hon'ble High Court vide order dated 09.12.2021 in ARBP 941/2021 to adjudicate the dispute between the claimant and the respondent Sukanya Gupta arising in connection with the agreement dated 14.04.2018. The claimant before the Ld. Arbitrator made the following claims :
i. Declaration that the Respondent has breached the terms of the Agreement;
ii. Permanent injunction against the Respondent from entering into contract in respect of work related to events, fashion, and entertainment industry without approval of Claimant.
OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 2 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA iii. Permanent injunction against the Respondent from using intellectual property of Claimant iv.Award of liquidated amount of Rs. 1 Cr details of which are as under:
a) For endorsing Jeeo King and Queen, Mr, Miss, Mrs India International in the year 2018-2019-Rs. 20 lacs.
b) For endorsing Jeeo Queen Miss India International and Mr. India International in the year 2021-2022-Rs. 60 lacs.
c) Towards running, managing, owning and having share in profits of beauty pageant Jeeo King and Queen-Rs. 20 Lacs.
d) Towards royalty @ 30% of the total remuneration earned by the Respondent by organizing beauty pageant Jeeo King and Queen-to be ascertained.
e) Towards honorarium @ 30% of earning made by the Respondent through the contacts of Mrs. India Worldwide or through any other sources-to be ascertained after rendition of accounts.
f) Towards not attending the auditions of season 9 of the said even ( organized by Claimant) held in Kolkata Rs. 20 Lacs.
g) Towards using Intellectual property of the Claimant Company for promoting her beauty pageant viz. Jeeo King and Queen-to be quantified later.
v. Award for unliquidated amount towards royalty @ 30% of the total remuneration earned by the Respondent by organizing her own beauty pageant.
vi. Award for unliquidated amount towards royalty@ 30% of the earning made by the Respondent through the contacts of Claimant's Pageant or through any other source. vii. Award unliquidated damages towards using the intellectual property of the Claimant for promoting Respondent's own Pageant.
viii. Direct rendition of accounts.
OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 3 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA
4. After framing of issues the evidence was lead by the parties and thereafter on conclusion of arguments, the impugned award was passed.
5. On filing of the present petition, the notice were issued to respondent, however despite service, she did not appear, therefore proceeded ex-parte.
6. Ld. counsel for the petitioner/claimant submitted that the Ld. Arbitrator has decided issue no. 1 i.e. agreement dated 14.04.2018 valid and unenforceable, however decided the issue no. 2 against the claimant holding that the terms of the contract are not binding upon the respondent as the same amount to negative covenant. Ld. Counsel further submitted that the Ld. Arbitrator misread the claim of the claimant which clearly falls within the exception of Section 27 of Indian Contract Act. Ld. Counsel submitted that the respondent admitted herself in the cross-examination that she promoted the said disputed beauty pageant and also given various promotional interviews. She, voluntarily admitted that she has shared the post for felicitation of Mr. Bharat K. Bhramar by the said disputed pageant. The witness Shain Soni and Mrs. Liza also narrated that the respondent is having an active role in the said disputed beauty pageant of 2019 to 2021 and she was also in the jury panel of the grand finale Ld. Arbitrator, however erroneously observed that the claimant has to show the pre-estimate of the damages, however Hon'ble Delhi High Court in case title 'KD Campus pvt. Ltd. Vs. Metish Adventures Pvt. Ltd., which held negative covenant operative during the period of the contract of the employment OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 4 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA not regarded as restrained of trade, therefore do not fall under section 27 of Contract Act. The court is competent to award the reasonable even if without actual damages proofs. Ld. Counsel submitted that Ld. Arbitrator misconceived the judgment of 'Kailash Nath Associates v, Delhi Development Authority and and Another: (2015) 4 SCC 136' where the Apex Court held that the sum named in the contract as an amount to be paid in case of breach irrespective of damage or loss proved. Ld. Counsel for petitioner also submitted that operation of Section 27 is not prohibited during the subsistence of the employment contract (relied upon 'Wipro Ltd. Vs. Beckman Coulter International, S.A., 2006 SCC OnLine Del 743' and 'Affle Holdings Pte Limted Vs. Saurabh Singh, 2015 SCC OnLine Del 6765').
7. Ld. counsel for petitioner submitted that in terms of the agreement dated 14.04.2018. The respondent failed to deposit 30% of the honorarium earned by her through the contacts and professional networks established during the said event. The respondent is holder of the subtitles 'Mrs. Social Butterfly' and 'Buzz Bea' and violated the terms by running, managing and owning the said disputed pageant just after the completion of the said event, thus liable to pay a sum of Rs. 20,00,000/- and the impugned award is liable to be set aside.
8. Ld. counsel for petitioner also filed written submissions.
9. Arguments heard. Record perused.
10. Before adverting to the contentions, the relevant paragraphs of the impugned award dated 06.12.2023 are reproduced as under :
OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 5 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA "....2.The case of the Claimant in brief is that it is a private limited company which is involved in the business of organizing beauty pageants under the name and style of "Haut Monde Mrs India Worldwide" and has been organizing the said pageant for last 10 years. The Claimant contends that it conducts auditions in various parts of the country and thereafter various contestants are shortlisted, pursuant to which the Claimant invests its considerable resources in groommg, personality development, skin care, photo shoot etc of the said candidates by seeking assistance and availing services of expert professionals. Thereafter, the selected candidates participate in the finale of the beauty pageant where various titles and subtitles are awarded by the Claimant.
3. The Claimant contends that the Agreement contained various clauses which the the Respondent has breached by starting her own beauty pageant in the name of "Jeeo King and Queen Mr, Miss and Mrs. India International" 2019 and then again in 2021.
The Claimant relies on the following clauses which are as under:
• Participant must deposit atleast at/east 30 % of the honorarium earned through the contacts of Mrs. India Worldwide or through any other sources and the participant must be available without consideration or retainer, for any event of Shri Sai Entertainment for 2 years.
• The winner, First runner-up of Mrs. India Worldwide 2018 for a period of 2 years and 20 subtitle holder of Mrs. India Worldwide 2018 for a period of 1 year shall not enter into any contract for any work related to events, fashion, entertainment industry without seeking approval of contract from Shri Sai Entertainment and without paying a 30% of total remuneration of such work to Shri Sai Entertainments. • The 20 subtitle holders of Mrs India Worldwide, 2018, shall not participate in or endorse any contest for 12 months or until the title is relinquished to the new title holder, whichever is later, unless authorized by prior written consent in writing by the company. In case of breach of this condition by the sub title holder, a sum of Rs. Twenty Lac (Rs. 20,00,000) shall be payable for every breach. Bye everyone who commits breach of this condition.
• None of the participants shall run, manage, own and have any share in profits of any beauty pageant for a period of jive OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 6 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA years from the date of 2018. For every breach of this grand finale of the Mrs India Worldwide 20 condition, a sum of Rs. Twenty Lac (Rs. 20,00, 20,00,000) 000) shall become payable.
4. It's the case of the Claimant that the Respondent participated in the eighth season of the Claimant's beauty pageant held in 2018 and qualified for the finale which was organized in Greece, wherein she was adjudged "Mrs. Social Butterfly" (sub-title holder) in the contest and the said pageant came to an end on 21.09.2018. Immediately after the completion of the said beauty pageant, the Respondent' launched her own beauty pageant in the name and style of "Jeeo King and Queen", Mr, Miss, Mrs India International in the year 2019 and then again in 2021. The Respondent has been promoting her pageant through her website and through her Facebook page and other social media websites.
The Claimants have filed various photographs and screenshots from the social media posts of the Respondent and from the website registration company. The case of the Claimant is that she not only associated herself with her pageant, but was also actively involved in endorsing the pageant Jeeo King and Queen Mr, Miss and Mrs. India International 2019 and 2021. The Respondent was also part of the said pageant in capacity of jury member. In support of its claim, the Claimant further filed the Facebook page of the Respondent where the Respondent claimed herself to be owner of Jio Guru app. The Claimant contended that the Respondent promoted her pageant through press conferences, social media website etc and the Claimant has filed video recording to substantiate the same. It was pleaded by the Claimant that the Respondent used the photographs taken during the Claimant's beauty pageant and violated the intellectual property rights of the Claimant.
5. The Claimant has made the following Claims:
i. Declaration that the Respondent has breached the terms of the Agreement;
ii. Permanent injunction against the Respondent from entering into contract in respect of work related to events, fashion, and entertainment industry without approval of Claimant. iii. Permanent injunction against the Respondent from using intellectual property of Claimant iv.Award of liquidated amount of Rs. 1 Cr details of which are as under:
OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 7 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA
a) For endorsing Jeeo King and Queen, Mr, Miss, Mrs India International in the year 2018-2019-Rs. 20 lacs.
b) For endorsing Jeeo Queen Miss India International and Mr. India International in the year 2021-2022-Rs. 60 lacs.
c) Towards running, managing, owning and having share in profits of beauty pageant Jeeo King and Queen-Rs. 20 Lacs.
d) Towards royalty @ 30% of the total remuneration earned by the Respondent by organizing beauty pageant Jeeo King and Queen-to be ascertained.
e) Towards honorarium @ 30% of earning made by the Respondent through the contacts of Mrs. India Worldwide or through any other sources-to be ascertained after rendition of accounts.
f) Towards not attending the auditions of season 9 of the said even ( organized by Claimant) held in KolkataRs. 20 Lacs.
g) Towards using Intellectual property of the Claimant Company for promoting her beauty pageant viz. Jeeo King and Queen-to be quantified later.
v. Award for unliquidated amount towards royalty @ 30% of the total remuneration earned by the Respondent by organizing her own beauty pageant.
vi. Award for unliquidated amount towards royalty@ 30% of the earning made by the Respondent through the contacts of Claimant's Pageant or through any other source. vii. Award unliquidated damages towards using the intellectual property of the Claimant for promoting Respondent's own Pageant.
viii. Direct rendition of accounts.
ix. Award costs.
6. The Respondent on the other hand pleaded that the Agreement was signed by the Respondent under coercion and undue influence and hence the Agreement was invalid under section 19 of the Indian Contract Act 1872. Furthermore the Respondent was only an honorary jury member in the pageant "Jeeo King and Queen Mr, Miss and Mrs. India International" and has not received any remuneration or share in profits. The Respondent has denied having launched or started any competing beauty contest. The Respondent also denied conferment of sub-title "Mrs. Social Butterfly" by the Claimant in the Claimant's beauty pageant Mrs. India Worldwide 2018. The Respondent further has OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 8 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA pleaded that the Claimant did not suffer any loss and hence is not entitled to any damages. The Respondent also argued that the aforesaid agreement is not properly stamped and is therefore invalid. The Respondent during the arguments has also raised the plea that aforesaid clauses relied by the Claimant are unenforceable being contrary to Sec 27 of the Indian Contract Act 1872.
7. That based on the pleadings of the parties the following issues were framed with consent of parties vide order dated 21.01.2023:
i.Whether the Agreement dated 14.04.2018 is valid and enforceable?
ii.Whether the Respondent is in breach of the Agreement dated 14.04.2018?
iii. Whether the Claimant is entitled to any reliefs as claimed for and if so whether interest is payable by the Respondent?
8. That the Claimant examined it's director Mr. Bharat K Bhramar as Cwl/1 CW 1/1 and thereafter the Claimant after obtaining orders from the Delhi High Court summoned Ms. Shaine Soni and Ms. Liza Varma who were duly examined and cross examined. On behalf of the Respondent, the Respondent testified herself and was duly cross examined.
9.That the Parties have by mutual consent extended my mandate for a period of six months which has been duly recorded in the order dated 07.10.2023.
10.That both the parties have argued their case and also submitted written arguments in support thereof.
11. In the facts and circumstances of the case I intend to first deal with issue ISSUE II: Whether the Respondent is in breach of the Agreement dated 14.04.2018?
12.The first un-numbered clause relied by the Claimant is"
Participant must deposit atleast 30 % of the honorarium earned through the contacts of Mrs. India Worldwide or through any other sources and the participant must be available without consideration or retainer, for any event of Shri Sai Entertainment for 2 years".
13.For the Respondent to be held to be in breach of this clause the Claimant has to establish that the Respondent has received honorarium from the beauty pageant "Jeeo King and Queen OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 9 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA Mr, Miss and Mrs. India International" and that it has earned the same through the contacts of Claimant's pageant. The Claimant has failed to do so. The Claimant's contention that the Respondent has used the contacts of the Claimant's Company for promoting and running the pageant "Jeeo King and Queen Mr, Miss and Mrs. India International" of 2019 and 2021 is belied by the statement of two witnesses summoned by the Claimant. Both the witnesses have clearly stated that they are well reputed professionals in their field and they were engaged for their services by the owners/organizers of "Jeeo King and Queen Mr, Miss and Mrs. India International" and not by the Respondent. Ms. Liza Varma in her evidence had stated that she has no professional relationship with the Respondent (answer to Q5-6); the owner of the "Jeeo King and Queen Mr, Miss and Mrs. India International" was Mr. Sunil Nagpal and she herself was the organizer and the Respondent was only a jury member ( answer to Q 10-11 ). The Respondent has filed its ITR returns for the assessment year 2021-22, 2019-20, 2020-21 along with respective balance sheets and Income and Expenditure Account (Exb 1/5). These documents clearly give a list of entities from which the Respondent has earned money. The Claimant has been unable to establish a single instance where the income of the Respondent has come from the sources related to the Claimant's Pageant. The Claimant has failed to establish that the Respondent earned money from the "Jeeo King and Queen Mr, Miss and Mrs. India International" and that the Respondent has used the contacts and services of the Claimant Company to do so. The Claimant has raised an objection on exhibition of the documents filed by Respondent particularly in relation to the Income Tax Returns and the financials for the relevant period of the Respondent on the ground that provisions of section 65B have not been complied with. However, as per section 1 of the Evidence Act, the Evidence Act doesn't apply to Arbitration proceedings. Same is the purport of Sec 19 (1) ( 1) of the Arbitration and Conciliation Act 1996. In any event the Claimant has not been able to establish that the Respondent has used the contacts of the Claimant's pageant and therefore even otherwise no breach of this clause is made out.
14. Furthermore, the Claimant has also not been able to prove that it had called the Respondent for its event and she had OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 10 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA refused the same. The Claimant has neither filed any invitation letter nor any other proof that it had invited the Respondent for 9" season of Claimant's Pageant. Infact in cross examination the director of the Claimant Mr. Bharat K Bhramar has not been able to confirm whether the Claimant has invited the Respondent for its subsequent Pageant.
15. Thus there is no proof that the Respondent received any remuneration from "Jeeo King and Queen Mr, Miss and Mrs. India International" or that she was called by the Claimant for its subsequent beauty pageant, but refused to make herself available for Claimant's pageant.
16. The next un-numbered clause relied by the Claimant is, "the winner, First runner-up of Mrs. India Worldwide 2018 for a period of 2 years and 20 subtitle holder ofMrs. India Worldwide 2018for a period of 1 year shall not enter into any contract for any work related to events, fashion, entertainment industry without seeking approval of contract from Shri Sai Entertainment and without paying a 30% of total remuneration of such work to Shri Sai Entertainments."
17. There is dispute as to the application of this clause. While the Claimant contends that the Respondent was conferred with the sub-title "Mrs. Social Butterfly" in its Pageant of 2018, this fact has been denied by the Respondent who has contended that she was not conferred with any sub-title. Since the 2018 Pageant was organized by the Claimant, it's the Claimant who should have shown in evidence that the Respondent had been awarded the sub-title of "Mrs. Social Butterfly" from its records. The Claimant instead of showing through positive evidence that the Respondent had won the subtitle of "Mrs. Social Butterfly" in its Pageant of 2018 which of 2018 ought to be in its possession, has relied upon various social media posts of the Respondent in relation to other beauty Pageant "Jeeo King and Queen Mr, Miss and Mrs. India International" where she has been representing herself as "Buzz Bea of Hout Monde Mrs. India". I agree with the contention of the Respondent that the said post uses the phrase Buzz Bea as an epithet and that they do not establish that the Respondent won the sub-title "Mrs. Social Butterfly"
in the Claimant's pageant of 2018. As no proof has been given by the Claimant in this regard this clause is not applicable to the Respondent in view of my above findings.
OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 11 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA
18.The next clause relied by the Claimant to allege breach is, "The winner, First runner-up and Second runner-up of Mrs. India Worldwide 2018 shall not participate in or endorse any contest for 2 years or until the title is relinquished to the new title holder, whichever is later, unless authorized by prior written consent in writing by the company. In case of breach of this condition by the winner, first runners up or second runner up, a sum of Rs. Twenty Lac (Rs. 20,00,000) shall be payable for every breach by everyone who commits breach of this condition."
19.Since the said clause applies to winner, 1st runner-up and second runner-up and the fact that the Respondent admittedly even as per the case of the Claimant was neither of the three, the said clause does not apply to the Respondent.
20.The next clause relied upon by the Claimant is, "The 20 subtitle holders of Mrs India Worldwide, 2018, shall not participate in or endorse any contest for 12 months or until the title is relinquished to the new title holder, whichever is later, unless authorized by prior written consent in writing by the company. In case of breach of this condition by the sub title holder, a sum of Rs. Twenty Lac (Rs. 20,00,000) shall be payable for every breach. Bye everyone who commits breach of this condition"
21.The said clause applies to subtitle holders of Claimant's pageant of 2018 .. I have already held that Claimant has further failed to establish that Respondent was a the Respondent was not a subtitle holder and therefore the above clause would not be applicable to the Respondent.
22. The next clause relied upon by the Claimant is, "None of the participants shall run, manage, own and have any share in profits of any beauty pageant for a period offive years from the date of grand finale of the Mrs India Worldwide 2018. For every breach of this condition, a sum of Rs. Twenty Lac (Rs. 20,00,000) shall become payable."
23.The Ld. Counsel for the Claimant had drawn attention of the Tribunal to various documents on record to show that Respondent had been running, managing and owning the beauty pageant in the Name of Jeeo King and Queen. Most of the documents which are social media post, pictures and videos of the Respondent show that the Respondent was intimately and OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 12 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA actively involved in the promotion and running of the pageant "Jeeo King and Queen Mr, Miss and Mrs. India International"
even though she was not the owner of the said pageant. While both summoned witness summoned by the Claimant have stated that the Respondent was only a jury member and was socializing and partying in the said pageant, the social media posts, pictures, videos tell a different story. Infact in the Facebook page of the Respondent at page 187 of the SOC the Respondent is representing herself as country head of "Mr, Miss and Mrs. India International" relating to Jeeo King and Queen. Therefore I do not accept the Respondent's contention that she was only a jury member in the said pageant and was not involved in the running of the said pageant.
24. However, to be awarded damages for breach of this clause the Claimant has to show that it was not in the nature of a penalty but a genuine pre-estimate of damages to be suffered by the Claimant on breach. It is settled law as laid down in Kailash Nath Associates v, Delhi Development Authority and and Another: (2015) 4 sCC 136 that even to support a claim for liquidated damages under section 74 of the Contracts Act, some loss has to be proved. In the present case, the Claimant has failed to prove any loss on account of breach of the above clause of the Agreement. In fact, in the cross- examination, the Claimant's witness was specifically put the question pertaining to loss suffered which is as follows:
Q42. Did you suffer any loss as consequence of launch of Jio King and Queen?
A. It is not suffering the loss, it was the breach of contract. She participated in Claimant's contest and learnt the techniques and taking advantage of the same, she started her own pageant.
25. In the absence of any proof of loss, the Claimant is not entitled any claim for damages. Even otherwise as discussed hereinafter this clause is unenforceable in terms of sec 27 of the Indian Contract Act 1872.
ISSUE (I): WHETHER THE AGREEMENT DATED 14.04.2018 IS VALID AND ENFORCEABLE?
Coercion/ Undue Influence:
26. The Ld. Counsel for the Claimant has argued that the Agreement was duly signed by the Respondent after going through and having understood the same. The Claimant in this OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 13 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA regard has relied upon a video of the orientation program (Exb- C-3). The said video shows that all the contestants including the Respondent were being instructed to go through the Agreement, take their time and were told to ask questions if they had any. The Ld. Counsel for the Claimant further relied on cross examination of Respondent where she admitted that she is an honours graduate (answer to Q.1) and that she was given 5-10 minutes to fill the contract and sign it (answer to Q.19). The Claimant further argued that the case is covered by doctrine of "caveat subscriptor" and relied upon the judgments namely Bharathi Knitting DBL Worldwide Express Courier Division of Airfreight Company vs. DHL Ltd. (1996) 4 SCC 704Para 6 wherein it was held that a party having signed the contract is bound by the same even when the said party has not read the terms of the contract; Cauvery Coffee Traders vs. Hornor Resources (International) Co. Ltd. (2011) 10 SCC 420 Paras 33- 34 where it has been held that a party cannot be permitted to approbate and reprobate and where one knowingly accepts the benefits of a contract the said party is estopped from denying the validity or binding effect of the contract however this rule must not be applied in a manner as to violate the principles of right and good conscience and Ramathal vs. K. Rajamani 2023 SCC OnLine SC 1022 Para 18-19 wherein it was held that the plea of non est factum could not be invoked by anyone who signed without taking any trouble to find out the general effect of the document or where there was a mistake as to the legal effect of the document signed.
27.The Respondent in this regard has relied upon section 19 of the Indian Contract Act 1872 and argued that when the consent to a contract is vitiated by coercion or undue influence the same would be voidable. Reliance was placed on Pioneer Urban Land vs. Govindan Raghavan (2019) 5 SCC 725 to contend that the terms of a contract will not be binding if it is shown that the signing person had no other option but to sign on the dotted lines. It was further argued that the Respondent had no option but to sign the Agreement as she was coerced that in case she did not do it, her participation will be cancelled and her fees of Rs. 1.5 Lacs will be forfeited. The Respondent claims that she was also not given any time to read or raise any query. The Respondent has further relied upon the evidence of Ms. Liza OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 14 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA Varma to 5- 7 minutes to sign the contend that that the contestants were given 5-7 Agreement (answer to Q. 5 of cross examination).
28. In my view the Respondent has failed to establish a case of coercion or undue influence. The signature of the Respondent on the Agreement is not denied or questioned by the Respondent. From perusal of the video of the orientation program (Exb-C-3) at the Claimant's pageant of 2018 it is clear that the Respondent was being told to read the Agreement and raise queries if any. Furthermore, Ms. Liza Varma CW3 in reply to Q. 3 of the cross examination had clearly stated that she was not aware whether contestants were given enough time or not to go through and sign the Agreements.
29.From the evidence I find that no case of coercion is made out and the video Exb C3 relied upon by the Claimant does indicate that the Claimant had given opportunity to all the contestants including the Respondent to read and raise queries in relation to the Agreement. Therefore I do not accept the submissions of the Respondent that the Agreement was signed under coercion. Merely because some conditions of the Agreement are onerous does not make it voidable and the Respondent has failed to establish a case of coercion and undue influence. Inadequate Stamp Duty:
30.Respondent has raised objection on the enforceability of the Agreement on the ground that the same is not adequately stamped and hence the Agreement cannot been enforced. However, such plea is untenable in view of the fact that at the time when the said Agreement was being tendered by the with the Claimant, no such objection was raised by the counsel for the Respondent on the mode of proof or admissibility of the said Agreement due to insufficient stamp free. It is well settled principle of law as held by the Hon'ble Supreme Court in SLP (C) No. 14882-14883 of 2022 titled SIRIKONDA MADHAVA RAO VERSUS N. HEMALATHA & ORS that "Once a document has been admitted in evidence, such admission cannot be called in question at any stage of the suit or proceedings on the ground that the instrument has not been duly stamped. Objection as to admissibility of a document on the ground of sufficiency of stamp, has to raised when the document is tendered in evidence. Thereafter, it is not open to the parties, or even the court to OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 15 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA reexamine the order or issue. Thus, the submission of the Respondent in this regard is rejected.
Section 27 of the Indian Contract Act 1872:
31. The Respondent during final arguments has contended that the clauses relied upon by the Claimant for seeking compensation are hit by sec 27 of the Indian Contract Act 1872. Since this is a purely a question of law the Claimant was given an opportunity in rebuttal arguments to deal with the said plea as it also relates to issue (ii) relating to validity and enforceability of the relevant terms of the Agreement.
32. The Respondent relies upon the judgment of Precept D'Mark (India) Pvt. Ltd. Vs. Zaheer Khan and Ors AIR 2006 SC 3426 Para 44 to contend that the relevant terms of the Agreement are hit by section 27 of the Indian Contract Act 1872.
33.The Claimant in rebuttal has stated that the said clauses fall under exception to section 27 i.e Saving of Agreement not to carry on business of which goodwill is sold. The Claimant that it has gained immense goodwill over last 10 years. It was further argued that there was no restriction and the clauses required only permission and payment of adequate compensation to the Claimant and upon doing that the Respondent was free to carry on its competing business. Precept D'Mark case was sought to be distinguished by the Claimant stating that the case pertained to a contract which had ended and that as per Para 40 of the judgment since the Hon'ble Supreme Court was dealing with temporary injunction it was held that the petitioner could be compensated in terms of money. Relying on the said judgment, it was argued by Ld. Counsel for the Claimant that the Supreme Court has endorsed the view that compensation can be granted even if the Claim is hit by Section 27 of the Contracts Act.
34. As held earlier the only applicable Clause in this regard is as under:
"None of the participants shall run, manage, own and have any share in profits of any beauty pageant for a period of five years from the date of grand finale of the Mrs. India Worldwide 2018. For every breach of this condition, a sum of Rs. Twenty Lac (Rs. 20,00,000) shall become payable.
35. Contrary to the assertions of the Claimant, the plain reading of the aforesaid clause makes it clear that it is restrictive in nature and operates beyond the term of the OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 16 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA Agreement which related to the 8" Season of Haut Monde Mrs. India Worldwide. It is settled law that any covenant in a contract which prevents a party to the agreement to carry on any profession, trade or business is void and unenforceable. As a consequence any compensation based on any unenforceable clause of a contract would be equally unenforceable. It is also settled law that any restriction in a contract during its currency would not be violative of Sec 27 of the Indian Contract Act 1872 and it is only when the restriction extends beyond the tenure of the contract that Section 27 of the Indian Contract Act 1872 would apply. It is also settled law that unlike English law which permits reasonable restrictions on such a right, the Indian Law prohibits any restriction whether partial or complete and the test of reasonableness of restriction does not apply in Indian Law.
36. Section 27 of the Indian Contract Act 1872 reads as under:
27. Agreement in restraint of trade, void.-Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void. -Every agreement by which any one is restrained from exercising a lawfal lawful profession, trade or business of any kind, is to that extent void." Exception 1.-Saving of agreement not to carry on business of which goodwill is sold.-One who sells the goodwill of a business may agree with the buyer to refrain from carrying on a similar business, within specified local limits, so long as the buyer, or any person deriving title to the goodwill from him, carries on a like business therein, provided that such limits appear to the Court reasonable, regard being had to the nature of the business." [***]
37. The Claimant's argument that the above clause in the contract fall within exception in Sec 27 of the Indian Contract Act 1872 is fallacious as there is no sale of goodwill in the present case. The restrictive and anti competitive clause comes into effect for a period of 5 years after expiry of the beauty pageant to which the Agreement related i.e. the Claimant's Pageant of 2018 and therefore is hit by section 27 of the Indian Contract Act 1872 and hence is unenforceable. The reliance on para 40 of the Precept D'Mark case by the Claimant is misconceived as clauses in the Agreement are violative of sec 27 of the Agreement and therefore unenforceable. In view thereof no compensation can be granted in respect of the clause OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 17 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA which itself is unenforceable and hit by sec27 of the Indian Contract Act 1872.
38. Lastly it was contended by the Claimant that Respondent is misusing the photographs and other intellectual property of the Claimant Company and apprehends that the Respondent will further misuse the same to promote her own beauty pageant. The Respondent denied the same and stated during final arguments that the Respondent has neither used the intellectual property of the Claimant nor does the Respondent intend to use the same.
39. Even though the Claimant has not been able to establish that the Respondent has misused the Intellectual Property of the Claimant, in view of the above statement of the Respondent , the Respondent is directed to abide by and be bound by its above statement and not to use any Intellectual Property of the Claimant.
40. For the reasons aforegoing all the monetary claims of the Claimant and claim for rendition of accounts are rejected...."
11. Ld. Arbitrator during proceedings has framed three issues. Ld. Arbitrator first decided issue no. 2 i.e. Whether the respondent is in breach of the agreement dated 14.04.2018. The claimant made a condition in agreement that participant must deposit atleast 30% honorarium earned through the contracts of Mrs. India world wide or through any sources and participant must be available without consideration or retainer for any event of Shri Sai Entertainment for two years, however Ld. Arbitrator observed that claimant/petitioner unable to establish that the respondent has received any honorarium from the 'Jeeo King and Queen Mr. Miss and Mrs. India International'. The claimant also not able to prove that the respondent used the contacts of claimant's company for promoting and running the pageant 'Jeeo King and Queen Mr. Miss and Mrs. India International'. Both the witnesses of the claimant stated that they were engaged by the owners OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 18 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA and not by the respondent who are only a jury members. The claimant not able to establish a single instance where the income of the respondent come from the sources related to claimant's pageant and also failed to establish that she has used the contents of claimant company. The claimant also not able to prove that it had called the respondent for its event and the respondent refused the same.
12. Ld. Arbitrator regarding the next un-numbered clause relied by the Claimant is, "the winner, First runner-up of Mrs. India Worldwide 2018 for a period of 2 years and 20 subtitle holder of Mrs. India Worldwide 2018for a period of 1 year shall not enter into any contract for any work related to events, fashion, entertainment industry without seeking approval of contract from Shri Sai Entertainment and without paying a 30% of total remuneration of such work to Shri Sai Entertainments.'
13. Ld. Arbitrator, however observed that the respondent denied to have conferred the sub-title of 'Mrs. Social Butterfly' and the claimant could not show any positive evidence conferring the said title but relied upon social media posts of the respondent where she has been representing herself as 'Buzz Bea of Haut Monde Mrs. India', however it does not establish sub-title 'Mrs. Social Butterfly'.
14. Ld. Arbitrator while dealing with clause relied by the claimant to alleged breach 'The winner, First runner-up and Second runner-up of Mrs. India Worldwide 2018 shall not participate in or endorse any contest for 2 years or until the title is relinquished to the new title holder, whichever is later, unless authorized by prior written consent in OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 19 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA writing by the company. In case of breach of this condition by the winner, first runners up or second runner up, a sum of Rs. Twenty Lac (Rs. 20,00,000) shall be payable for every breach by everyone who commits breach of this condition', observed that the above said clause applies to winner, 1st runner-up and second runner-up and second runner-up and as per the case of the claimant, respondent was neither of the three, the said clause is thus not applicable.
15. Ld. Arbitrator on this clause relied by the claimant i.e. "The 20 subtitle holders of Mrs India Worldwide, 2018, shall not participate in or endorse any contest for 12 months or until the title is relinquished to the new title holder, whichever is later, unless authorized by prior written consent in writing by the company. In case of breach of this condition by the sub title holder, a sum of Rs. Twenty Lac (Rs. 20,00,000) shall be payable for every breach. Bye everyone who commits breach of this condition', observed that the said clause applies to subtitle holders of claimant's, however failed to establish that respondent was a subtitle holder, therefore this clause is also not applicable.
16. Ld. Arbitrator also dealt with the clause relied by the claimant that '"None of the participants shall run, manage, own and have any share in profits of any beauty pageant for a period of five years from the date of grand finale of the Mrs India Worldwide 2018. For every breach of this condition, a sum of Rs. Twenty Lac (Rs. 20,00,000) shall become payable. ', and observed that the respondent was a jury member and not the owner, however she is representing herself as country head of 'Mr, Miss and OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 20 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA Mrs. India International' as per the Facebook page, therefore not accepted that she is only jury member but held that in terms of 'Kailash Nath Associates (supra)' some loss has to be proved which is not proved, therefore held that the claimant is not entitled for any claim of damages.
17. Ld. Arbitrator also observed that this clause is an unenforceable under section 27 of Indian Contract Act. The plain reading of this clause makes it clear that it is restrictive in nature and operates beyond the terms of the agreement which related to 8 th season of 'Haut Monde Mrs. India world wide'. Ld. Arbitrator observed that this clause is violative of Section 27 and do not fall within the exception in Section 27 of Indian Contract Act. The restrictive and anti competitive clause comes into effect for a period of five years after expiry of the beauty pageant to which the agreement related, hence hit by section 27, therefore no compensation could be granted in respect of clause which is unenforceable and hit by Section 27 of the Indian Contract Act.
18. The whole contention of the Ld. Counsel for claimant/petitioner is that the reliance of the Ld. Arbitrator on Section 27 is misplaced, however as per clause of the agreement that the none of the participants shall run, manage or own etc. of any beauty pageant for the period of five years from the date of grand finale, shall have to compensate Rs. 20 Lakhs to claimant/petitioner. This clause itself suggest that it operates only after the conclusion of the contract not during the subsistence of the contract, therefore hit by Section 27 of the Indian Contract Act.
OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 21 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA
19. On overall appreciation of material on record, I do not found any illegality leave aside the patent illegality in the impugned award passed by Ld. Arbitrator. The present award is not against to the public policy. The Ld. Arbitrator passed the award after proper appreciation of material on record, and this court also cannot re-appreciate the case on merits. No ground made out to interfere in the impugned award.
64. Scope of interference under section 34 of Arbitration and Conciliation Act with Arbitrator's award is very limited. The Court would not be justified in reappraising the material on record and substituting its own view in place of the view taken by Arbitrator. Once the Arbitrator has applied his mind to the matter before him, the Court cannot reappraise the matter as if it were an appeal and even if two views are possible, the view taken by the Arbitrator would prevail as held by Hon'ble Supreme Court in the case of Navodaya Mass Entertainments Ltd. v. J.M. Combines reported in (2015) 5 SCC 698.
65. Hon'ble Supreme Court in the case of 'Sutlej Construction Ltd. v. State (UT of Chandigarh) reported in (2018) 1 SCC 718' has held that when it comes to setting aside of an award under the public policy ground, it would mean that the award should shock the conscience of the court and would not include what the court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrator to do what it considers to be "justice. Paragraph nos. 10 to 13 of the said judgment are extracted below:-
"10. We are not in agreement with the approach adopted by the learned Single Judge. The dispute in question had resulted in a reasoned award. It is not as if the arbitrator has not appreciated OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 22 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA the evidence. The arbitrator has taken a plausible view and, an in our view, as per us the correct view, that the very nature of job to be performed would imply that there has to be an area for unloading and that too in the vicinity of 5 km as that is all that the appellant was to be paid for. The route was also determined. In such a situation to say that the respondent owed no obligation to make available the site cannot be accepted by any stretch of imagination. The unpreparedness of the respondent is also apparent from the fact that even post-termination it took couple of years for the work to be carried out, which was meant to be completed within 45 days. The ability of the appellant to comply with its obligations was interdependent on the respondent meeting its obligations in time to facilitate appropriate areas for unloading of the earth and for its compacting. At least it is certainly a plausible view.
11. It has been opined by this Court that when it comes to setting aside of an award under the public policy ground, it would mean that the award should shock the conscience of the Court and would not include what the Court thinks is unjust on the facts of the case seeking to substitute its view for that of the arbitrator to do what it considers to be "justice".
12. The approach adopted by the learned Additional District Judge, Chandigarh was, thus, correct in not getting into the act of re- appreciating the evidence as the first appellate court from a trial court decree. An arbitrator is a chosen Judge by the parties and it is on limited parameters can the award be interfered with. 13. The learned Single Judge ought to have restrained himself from getting into the meanderings of evidence appreciation and acting like a second appellate court. In fact, even in second appeals, only questions of law are to be determined while the first appellate court is the final court on facts. In the present case, the learned Single Judge has, thus, acted in the first appeal against objections dismissed as if it was the first appellate court against a decree passed by the trial court."
20. The scope of interference with an arbitral award under Section 34 of the Act has been considered and discussed by Hon'ble Supreme Court in a judgment rendered in the case of 'MMTC Ltd. v. Vedanta Ltd. reported in (2019) 4 SCC 163'. Paragraph nos. 11 to 14 of the said judgment are extracted below:
OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 23 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA "11. As far as Section 34 is concerned, the position is well-settled by now that the Court does not sit in appeal over the arbitral award and may interfere on merits on the limited ground provided under Section 34(2)(b)(ii) i.e. if the award is against the public policy of India. As per the legal position clarified through decisions of this Court prior to the amendments to the 1996 Act in 2015, a violation of Indian public policy, in turn, includes a violation of the fundamental policy of Indian law, a violation of the interest of India, conflict with justice or morality, and the existence of patent illegality in the arbitral award. Additionally, the concept of the "fundamental policy of Indian law" would cover compliance with statutes and judicial precedents, adopting a judicial approach, compliance with the principles of natural justice, and Wednesbury reasonableness. Furthermore, "patent illegality" itself has been held to mean contravention of the substantive law of India, contravention of the 1996 Act, and contravention of the terms of the contract.
12. It is only if one of these conditions is met that the Court may interfere with an arbitral award in terms of Section 34(2)(b)(ii), but such interference does not entail a review of the merits of the dispute, and is limited to situations where the findings of the arbitrator are arbitrary, capricious or perverse, or when the conscience of the Court is shocked, or when the illegality is not trivial but goes to the root of the matter. An arbitral award may not be interfered with if the view taken by the arbitrator is a possible view based on facts.
13. It is relevant to note that after the 2015 Amendment to Section 34, the above position stands somewhat modified. Pursuant to the insertion of Explanation 1 to Section 34(2), the scope of contravention of Indian public policy has been modified to the extent that it now means fraud or corruption in the making of the award, violation of Section 75 or Section 81 of the Act, contravention of the fundamental policy of Indian law, and conflict with the most basic notions of justice or morality. Additionally, sub-
section (2-A) has been inserted in Section 34, which provides that in case of domestic arbitrations, violation of Indian public policy also includes patent illegality appearing on the face of the award. The proviso to the same states that an award shall not be set aside merely on the ground of an erroneous application of the law or by re-appreciation of evidence.
14. As far as interference with an order made under Section 34, as per Section 37, is concerned, it cannot be disputed that such interference under Section 37 cannot travel beyond the restrictions OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 24 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA laid down under Section 34. In other words, the court cannot undertake an independent assessment of the merits of the award, and must only ascertain that the exercise of power by the court under Section 34 has not exceeded the scope of the provision. Thus, it is evident that in case an arbitral award has been confirmed by the court under Section 34 and by the court in an appeal under Section 37, this Court must be extremely cautious and slow to disturb such concurrent findings."
21. In the case of 'Maharashtra State Electricity Distribution Company Ltd. v. Datar C.C.L. Ltd. reported in (2018) 3 SCC 133' it has been held by Hon'ble Supreme Court that "the proposition of law that the Arbitral Tribunal is the master of evidence and the findings of fact which are arrived at by the arbitrators on the basis of evidence on record are not to be scrutinised as if the Court was sitting in appeal now stands settled by catena of judgments pronounced by this Court without any exception thereto."
22. Ld. Arbitrator has passed the award upon consideration of material placed before him. There is nothing on record that the relevant material is not placed before the Ld. Arbitrator. There is nothing perverse or patent illegality in the findings of the Ld. Arbitrator.
23. The Ld. Sole Arbitrator has drawn inferences and conclusions after the factual appreciation in the light of the legal principles. The views of the Ld. Sole Arbitrator can not be found fault with only for the reason that some other views can emerge by appreciating the same set of facts and evidence, until and unless it is shown that such a view is totally obnoxious and unsupported by the sound legal principles.
24. This Court cannot substitute its own views or the views of the parties with the view taken by the Ld. Arbitral Tribunal, if the view OMP (COMM) 46/24 Dt. 14.05.2025 Page nos. 25 of 26 M/S SHRI SAI ENTERTAINMENT PVT. LTD. Vs. MRS. SUKANYA GUTPA taken by the Ld. Arbitrator is not in conflict with the settled legal position. There is nothing to suggest that the findings and conclusions rendered by the Ld. Arbitrator are per-se perverse, illegal or non- sustainable or against public policy.
25. Accordingly, the present petition under Section 34 of the Arbitration and Conciliation Act as pressed into service by the petitioner is therefore not sustainable within the scope and ambit of the provision, therefore, liable to be dismissed and accordingly dismissed and disposed of.
26. File be consigned to record room after necessary compliance. Announced in the open court on 14th May 2025 (Ajay Kumar Jain) Digitally signed by District Judge(Commercial Courts- 03), AJAY AJAY KUMAR SED/Saket Courts/Delhi KUMAR JAIN Date:
JAIN 2025.05.14
16:12:00
+0530
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