Karnataka High Court
Bengaluru Fitness Centre Pvt. Ltd. vs Snap Fitness (India) Private Limited on 20 June, 2013
Author: H.G.Ramesh
Bench: H.G.Ramesh
CRP NO.506/2012
1
IN THE HIGH COURT OF KARNATAKA AT BANGALORE
DATED THIS THE 20TH DAY OF JUNE, 2013
BEFORE
THE HON'BLE MR. JUSTICE H.G.RAMESH
CIVIL REVISION PETITION No.506 OF 2012
BETWEEN:
BENGALURU FITNESS CENTRE PVT. LTD.
FLAT NO.101, AVALON 1
RAHATH BAGH ENCLAVE
NAGAVARAPALYA
C.V. RAMAN NAGAR
BANGALORE-560 093
REP. BY ITS DIRECTOR
SRI. NISHANTH SACHEENDRAN
AND ALSO AT:
731, 1ST FLOOR, 38TH CROSS,
16TH MAIN, 4TH BLOCK
JAYANAGR,
BANGALORE-560 041.
... PETITIONER
(BY SRI: JAMES P ARUN KUMAR, ADVOCATE FOR
M/S. JAMES ARUN ASSOCIATES, ADVOCATES)
AND:
1. SNAP FITNESS (INDIA) PRIVATE LIMITED
5-6, PARK WEST
FLAT 52, PALI HILL
KHAR, MUMBAI-400 052
(REP. BY ITS DIRECTORS R2 & R3 BELOW)
2. MR. PETER JON TAUNTON
DIRECTOR
SNAP FITNESS(INDIA) PVT. LTD.
5-6, PARK WEST FLAT 52,
PALI HILL KHAR,
MUMBAI-400 052
CRP NO.506/2012
2
3. MR. WESLEY WILLIAM WINNEKINS
DIRECTOR
SNAP FITNESS(INDIA) PVT. LTD.
5-6, PARK WEST, FLAT 52
PALI HILL, KHAR
MUMBAI-400 052
... RESPONDENTS
(BY SRI L GOVINDARAJ, ADVOCATE FOR R1)
THIS CRP IS FILED UNDER SECTION 115 OF CPC,
AGAINST THE JUDGMENT AND ORDER DATED: 30.10.2012
PASSED ON I.A.06 IN O.S.7162/2012 ON THE FILE OF VIII
ADDL. CITY CIVIL AND SESSIONS JUDGE, BANGALORE,
ALLOWING THE I.A.06 FILED U/SECTION 8 OF ARBITRATION
AND CONCILIATION ACT.
THIS CRP COMING ON FOR ADMISSION, THIS DAY
THE COURT MADE THE FOLLOWING:
ORDER
H.G.RAMESH, J. (Oral):
This Revision petition by the plaintiff is directed against the order dtd. 30th October 2012 passed by the trial Court allowing IA.No.6 filed by the defendants under Section 8 of the Arbitration and Conciliation Act, 1996 by referring the parties to Arbitration and consequently dismissing the suit of the plaintiff in O.S.No.7162 of 2012.
2. I have heard the learned Counsel appearing for the parties and perused the impugned order. CRP NO.506/2012 3
3. Learned Counsel for the petitioner urged two contentions, firstly, that the subject matter of the suit is beyond the subject matter of the arbitration clause in the Franchise agreement dtd.27.04.2009. Secondly, that all the parties to the suit are not parties to the arbitration agreement. Accordingly, he contended that the Trial Court has erred in law in referring the parties to arbitration by allowing the application-IA.No.6 filed by the respondents- defendants.
4. In view of the above, the two questions that require to be examined are as to whether the parties to the suit and the agreement are the same and whether the dispute raised in the suit is beyond the arbitration clause in the agreement?
5. It is relevant to refer to the prayers made in the plaint which read as follows:
"WHEREFORE the plaintiff most respectfully prays to this Hon'ble Court to pass a judgment and decree, CRP NO.506/2012 4
1. Declaring that the Defendants have violated the designated area condition, and
2. Setting aside the illegal third party termination letter dated 20.09.2012 sent by the Defendant's agents and
3. Directing the Defendants to pay a sum of Rs.20,00,000 (Rupees Twenty lakhs only) towards the damages and direct the defendants to pay the damages of Rs.20,00,000 together with interest thereon at 12% per annum, from the date of this suit on the said amount, till the amount is paid in full to the plaintiff and further be pleased to award the costs of this suit, in the interest of justice and equity."
It is also relevant to refer to the arbitration clause in the Franchise agreement dtd.27.04.2009:
"DISPUTE RESOLUTION
12. The following provisions apply with respect to dispute resolution:
"A. Arbitration;Mediation. Except as qualified below, any dispute between you and us or any of our or your affiliates arising under, out of, in connection with or in relation to this Agreement, any lease for the Center or Authorized Location, the parties' relationship, or the business must be submitted to binding arbitration conducted in accordance with the Arbitration and Conciliation Act, 1996 ("Arbitration Act"). Each Party shall appoint one arbitrator and the two so appointed shall appoint the third. The place of arbitration shall be Bangalore. The arbitration must take place in Bangalore, or at such other place as may be mutually agreeable to in writing by the parties and the language to be used in the arbitral proceedings shall be English. Any arbitration must be resolved on an individual CRP NO.506/2012 5 basis and not joined as part of a class action or the claims of other parties. The arbitrators must follow the law and not disregard the terms of this Agreement. The arbitrators appointed must have at least 5 years' experience in franchising or in franchise law.
The decision of the arbitrators will be final and binding on all parties to the dispute; however, the arbitrators may not under any circumstances: (i) stay the effectiveness of any pending termination of this Agreement; (ii) assess punitive or exemplary damages; or (iii) make any award which extends, modifies or suspends any lawful term of this Agreement or any reasonable standard of business performance that we set. A judgment may be entered upon the arbitration award by any state or federal court in Minnesota or the state of the Authorized Location.
Before the filing of any arbitration, the parties agree to mediate any dispute that does not include injunctive relief or specific performance actions covered under Section 12-B, provided that the party seeking mediation must notify the other party of its intent to mediate prior to the termination of this Agreement. Mediation will be conducted by a mediator or mediation program agreed to by the parties and will take place in Minneapolis, Minnesota. Persons authorized to settle the dispute must attend any mediation session. The parties agree to participate in the mediation proceedings in good faith with the intention of resolving the dispute if at all possible within 30 days of the notice from the party seeking to initiate the mediation procedures. If not resolved within 30 days, the parties are free to pursue arbitration. Mediation is a compromise negotiation for purposes of the federal and state rules of evidence, and the entire process is confidential.
B. Injunctive Relief. Notwithstanding Section
12.A above, you recognize that the Center is one of a number of centers identified by the CRP NO.506/2012 6 Trademarks and similarly situated and offering to the public similar services and products, and the failure on the part of a single franchisee to comply with the terms of its agreement could cause irreparable damage to us and/or to some or all of our other franchisees. Therefore, it is mutually agreed that in the event of a breach or threatened breach of any of the terms of this Agreement by you, we will be entitled to an injunction restraining such breach or to a decree of specific performance, without showing or proving any actual damage, until such time as a final and binding determination is made by the arbitrators. Similarly, it is mutually agreed that in the event of our breach or threatened breach of any of the terms of this Agreement, you will be entitled to an injunction restraining such breach or to a decree of specific performance, without showing or proving any actual damage, until such time as a final and binding determination is made by the arbitrators. The foregoing equitable remedies are in addition to, and not in lieu of, all other remedies or rights that the parties might otherwise have by virtue of any breach of this Agreement by the other party. Finally, we and our affiliates have the right to commence a civil action against you or take other appropriate action for the following reasons: to collect sums of money due to us; to compel your compliance with trademark standards and requirements to protect the goodwill of the Trademarks; to compel you to compile and submit required reports to us; or to permit evaluations or audits authorized by this Agreement.
C. Attorneys' Fees. The prevailing party in any action or proceeding arising under, out of, in connection with, or in relation to this Agreement, any lease or sublease for the Center or Authorized Location, or the business will be entitled to recover its reasonable attorneys' fees and costs."CRP NO.506/2012 7
6. As stated above, learned Counsel appearing for the petitioner contended that the parties to the suit and the parties to the agreement are not the same. In other words, his contention is that defendant Nos. 2 & 3 are not parties to the arbitration agreement. As could be seen from the cause title, they are only the Directors of defendant No.1-company. Therefore, this contention is without substance.
7. The next question is as to whether the dispute raised would fall within the ambit of the arbitration clause in the Franchise agreement dtd. 24.04.2009 or not? In my opinion, the Trial Court has examined the matter in its proper prospective and has rightly answered it in the affirmative. It is relevant to refer to the following reasoning of the Trial Court:
"6....................................................... .............There is no dispute regarding the principles stated in the said decisions. Section 8 of the Arbitration and Conciliation Act deals with conditions for reference of dispute in a pending suit. There are four conditions:
i) The application seeking reference should be filed by the defendant, before filing his written statement.CRP NO.506/2012 8
ii) The entire subject matter of the suit should be the subject matter of arbitration agreement. If the reference to arbitration would amount to splitting of suit, the matter will not be referred to arbitration.
iii) All the parties to the suit (necessary parties) should be parties to the arbitration agreement.
iv) The application should be accompanied by arbitration agreement in original or a certified copy thereof.
There is no dispute regarding the above conditions................................... In this case, both parties have produced the true copes of the Agreement. The plaintiff's suit is based on the Agreement. At the time of the argument the plaintiff's Counsel has stated that he is not insisting for producing the Original Agreement to consider this application. Before filing the written statement, the defendant filed this Application. The subject matter in the Agreement between the parties and the subject matter of the suit are one and the same. The contention of the plaintiff that all the reliefs claimed in this suit are not the subject matter of the agreement between the parties cannot be accepted. Considering the fact and circumstances of the case, I come to the conclusion that the defendants are entitled to the relief claimed in I.A. No.6."
(Underlining supplied)
8. I find no legal infirmity in the above reasoning of the trial Court to warrant interference with the impugned order in exercise of the Revisional jurisdiction of this court under Section 115 of the C.P.C. The revision petition is devoid of merit. No CRP NO.506/2012 9 ground to admit the petition and is accordingly dismissed. In view of dismissal of the revision petition, IA.I/2013 filed for vacating of the interim order does not survive for consideration; it stands disposed of accordingly.
9. Before parting with the case, I deem it necessary to place on record the submission made by the learned Counsel appearing for the respondents. He submitted that the dispute raised in the suit falls within the arbitration clause in the Franchise agreement dtd. 27.04.2009 and the respondents will not raise any objection as to the arbitrability of the dispute in the suit. This submission is placed on record.
Revision Petition dismissed.
Sd/-
JUDGE *bgn/-