Delhi High Court - Orders
M/S Shree Rathnam Restaurants Pvt. Ltd vs M/S Vrinda Van Foods & Anr on 31 January, 2023
Author: Chandra Dhari Singh
Bench: Chandra Dhari Singh
$~34
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ARB.P. 95/2023
M/S SHREE RATHNAM RESTAURANTS PVT. LTD...... Petitioner
Through: Ms. Sanya Lamba, Advocate
versus
M/S VRINDA VAN FOODS & ANR. ..... Respondents
Through: None
CORAM:
HON'BLE MR. JUSTICE CHANDRA DHARI SINGH
ORDER
% 31.01.2023 I.A. 1799/2023 (Exemption) Exemption allowed subject to just exceptions.
The application stands disposed of.
ARB.P. 95/20231. The instant petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter "The Act, 1996") has been filed on behalf of the petitioner seeking the following relief:-
"i) Appoint an Arbitrator in terms of the provisions of Arbitration & Conciliation Act 1996 to adjudicate various disputes as mentioned above or any other dispute in addition to the above which may be raised before the Learned Arbitrator so appointed by this Court with costs..."
2. Learned counsel appearing on behalf of petitioner submitted that the Signature Not Verified Digitally Signed By:GAURAV SHARMA Signing Date:01.02.2023 18:32:09 Petitioner is a company duly incorporated under the Companies Act, 1956, having its registered office at C-3, 2nd Floor, Malviya Nagar, New Delhi- 110017. The Respondent no. l is a proprietorship firm having its principal place of business at 126, Railway Road, Mayur Lane More, Kothi, Hapur, Uttar Pradesh. The Respondent no. 1 through its proprietor, Respondent no. 2 warranted that it is the lessee/owner of the premises situated at Arjun Nagar Gate, Delhi Road, Hapur, Uttar Pradesh. It is submitted that the petitioner inter-alia is in the business of running and operating a chain of vegetarian restaurants both at national and international level and is owner of trade mark "Shree Rathnam" and other artistic and patterns denoting/publishing the Intellectual property in the aforementioned names/titles. The petitioner's trademark has been renewed from time to time. It is further submitted that considering the stature, recognition, likeliness, popularity, etc. of the Trademark, Brand Name and goodwill of the Petitioner, the Respondent no. l through its proprietor i.e. Respondent no. 2, had willfully approached the petitioner with the request to grant franchise rights to run and operate the restaurant under the trademark of the petitioner on franchise basis and under the supervision and guidance of the petitioner.
3. Learned counsel appearing on behalf of petitioner submitted that the petitioner agreed to grant franchise rights under its trademark and entered into the franchise agreement dated 31st March, 2017 (hereinafter referred to as the "Agreement") as per the mutually agreed and decided terms and conditions and the same was executed for a limited period of 9 years from the effective date of the agreement. It is submitted that under the aforesaid agreement, the petitioner being the franchiser, granted the Respondent no.1 a Franchisee to establish and operate a restaurant under the non-assignable Signature Not Verified Digitally Signed By:GAURAV SHARMA Signing Date:01.02.2023 18:32:09 trade mark "Shree Rathnam" and admittedly the same is being run by the Respondents at the premises lessee/owner of the premises situated at Arjun Nagar Gate, Delhi Road, Hapur, U.P. on license basis. In support of his arguments, he has referred to the Clause 2.1.3 of the agreement which mandates the Respondent no. 1 to pay the franchisor, a franchisee commission at 8% of net sales plus applicable service tax per month as consideration for grant of franchise license to operate the business and use of the trademark ''Shree Rathnam". It is further submitted that Clause 2.2.1 mandates the Respondent no. 1 to maintain an accurate and complete accounting and other financial records in accordance with the requirements of laws and established accounting practices/principles. He has also referred several Clauses of the agreement and submitted that the Respondent no. 1 is contractually and legally duty bound to adhere to the terms of the agreement.
4. Learned counsel appearing on behalf of petitioner submitted that the Authorized Representative of the petitioner visited the premises of the Respondent no. 1, where it was found that the said Franchise restaurant outlet failed to disclose complete accurate sales generated at the restaurant outlet from all means maintained from April 2020 to October 2020 and to pay the entire accurate outstanding franchisee commission. Consequently, the petitioner wrote several e-mails to the Respondent no. 1 and requested 1 to disclose the true and correct daily sales from all means and clear the outstanding franchisee commission without fail on various occasions. Despite repeated requests and follow-ups by the petitioner, the Respondent no. 1 failed to give any suitable reply and denied all the allegations of the petitioner. Furthermore, the Respondents inflicted frivolous and concocted allegations against the petitioner and the Authorized Representative of the Signature Not Verified Digitally Signed By:GAURAV SHARMA Signing Date:01.02.2023 18:32:09 petitioner while deliberately choosing not to comply with the terms of the agreement. It is submitted that due to the continuous breach of the agreement by the Respondent no. 1 with respect to the disclosure of true and correct sales from all means and continuous default in clearing the outstanding franchisee commission, the petitioner was constrained to terminate the agreement after giving notice of termination through email dated 30th September, 2021 and subsequent cease and desist noted 4th December, 2021. Despite the termination of the franchise agreement, the Respondent no. l is still running the restaurant thereby infringing the trademark and exploiting the intellectual property of the petitioner by prominently displaying the signboard bearing trademark/brand name of the petitioner, interiors of the restaurant including the dresses, invoice showing in the mind of general public that the restaurant is run by "Shree Rathnam"
i.e., the petitioner herein which is nothing but amounts to causing wrongful gain to itself and deceiving and cheating the general public at large. It is further submitted that the petitioner was constrained to prefer a petition under Section 9 of the Act, 1996 being OMP (I) COMM. 36/2022, which is pending for adjudication before the learned Commercial Court, Patiala House Court and the respondents are regularly appearing in those proceedings. It is also submitted that during the pendency of the above- mentioned petition under Section 9 of the Act, 1996, the petitioner sent a notice to arbitrate dated 18th August, 2022, pursuant to Article VIII of the Franchisee Agreement dated 31st March, 2017 to the respondents to settle the disputes by way of arbitration and to proceed with the appointment of arbitrator. However, no reply has been received to the same from the respondents yet.Signature Not Verified Digitally Signed By:GAURAV SHARMA Signing Date:01.02.2023 18:32:09
5. Learned counsel appearing on behalf of petitioner submitted that since the dispute between the parties is arbitral in nature, this Court may appoint an arbitrator to adjudicate the dispute between the parties and for the redressal of the same.
6. Heard learned counsel appearing on behalf of petitioner at length and perused the record, including the Franchisee Agreement dated 31st March, 2017 as well as letters/e-mails written by the petitioner to the Respondents.
7. In view of the facts and circumstances, issue notice to the respondents on filing PF within a week, through all permissible modes, returnable on 9 th March, 2023.
CHANDRA DHARI SINGH, J JANUARY 31, 2023 Dy/as Click here to check corrigendum, if any Signature Not Verified Digitally Signed By:GAURAV SHARMA Signing Date:01.02.2023 18:32:09