Delhi District Court
M/S Sagar Ratna Restaurants Pvt. Ltd vs M/S D S Foods And Ors on 27 February, 2020
IN THE COURT OF DISTRICT JUDGE
(COMMERCIAL COURT02), SOUTH DISTRICT, SAKET,
NEW DELHI
C.S. Comm No. 40 OF 2020
M/S SAGAR RATNA RESTAURANTS PVT. LTD.
Through its authorized signatory
Having its registered office at
C2, 2nd Floor, Malviya Nagar,
New Delhi - 110017
Email : [email protected]
.........PLAINTIFF
VERSUS
1. M/S D S FOODS AND ORS.
Through its Partner Mr. Anum Goyal,
Having registered office at :
SCO489, Sector35, Chandigarh160035
Email : [email protected]
2. Mr. Anjum Goyal
Partner M/s D.S. Foods,
Having registered office at :
SCO489, Sector35, Chandigarh160035
Email : [email protected]
3. Mr. Tarsem Kumar
Partner M/s D.S. Foods
Having registered office at :
SCO489, Sector35, Chandigarh160035
Email : [email protected]
......... DEFENDANTS
Date of Institution : 23.01.2020
Date of arguments : 25.02.2020
Date of Order : 27.02.2020
ORDER
1. This order shall dispose off an application U/s 8 of Arbitration & Conciliation Act, 1996 filed by the defendant and deal with the question of M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 1 of 17 maintainability of this suit in view of (i) existence of the arbitration agreement between the parties, (ii) appointment of arbitrator and at the instance of plaintiff, U/s 11 of Arbitration & Conciliation Act, 1996 (hereinafter referred to as "Act") and
(iii) No ruling by the arbitrator U/s 16 of the Act to show that he had no jurisdiction. On 23.01.2020, plaintiff filed a suit for permanent and mandatory injunction, recovery of Rs.3,08,995/ and for rendition of accounts, damages alongwith pendentelite and future interest @ 24% per annum.
2. Case of plaintiff is that it is in the business of running and operating a chain of vegetarian restaurant under the name of M/s Sagar Ratna. Plaintiff executed a Franchisee agreement dated 06.06.2018 with the defendants whereby defendants were appointed as its Franchisees and wherein plaintiff allowed defendants to use the trademark of "Sagar Ratna" South Indian Restaurant at 488/99, Main Market, Sector35, Chandigarh. As per terms of Franchisee agreement, defendants were interalia liable to pay Franchisee commission. Relationship between the parties continued and on 09.05.2018, defendants informed the plaintiff that they intend to shift the outlet/restaurant from its existing premises to another premises. Version of the plaintiff is that on 11.05.2018, they informed the defendants not to shift the premises. Despite that, they shifted unilaterally and on 20.08.2018, plaintiff terminated Franchisee agreement by giving notice by way of email. It is further the case of plaintiff, that defendants defaulted in making payment on regular basis and it has to recover Franchisee fees from the defendants, who disputed the liability. On 31.10.2018, a legal notice was sent to seize and desist to use their trademark Sagar Ratna.
3. On the other hand, case of defendants is that termination of Franchisee agreement by the plaintiff is unlawful and they have illegally terminated the agreement and they have not done anything against terms and conditions of agreement and they have not received any letter dated 31.10.2018, M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 2 of 17 therefore, direction of termination of agreement was not communicated to the defendants. Case of the defendant is that dispute had arisen which was referred to the Arbitrator despite his initial objections. Counsel for the defendants has further submitted that there was a Franchisee agreement between plaintiff and defendants wherein there is arbitration agreement and the issues are arbitrable and the relief claimed in this suit can be adjudicated upon by the arbitrator and this suit is barred by law and that plaint is liable to be rejected as arbitrator, Shri Gurdeep Kumar has already decided the issue of interim injunction U/s 17 of the 'Act' and remaining claim was withdrawn by the plaintiff and the counter claim filed by the defendant is still being adjudicated by the arbitrator and objections have been filed by the plaintiff.
4. At the outset, Ld. Counsel for plaintiff drew attention of the court towards para 16, 18 to 24, order dated 14.10.2019, while dismissing appeal filed by the plaintiff U/s 37(2) of Arbitration & Conciliation Act, wherein court noted as under :
16. "Two broad questions emerge out from the assertions and counter narratives of the appellant and the respondents, respectively. (one) whether the respondents can continue to use the trademark/trade name belonging to the appellant even if the termination is not, prima facie, valid; and (two), whether the rejection of the application under Section 17 of the Arbitration & Conciliation Act for want of jurisdiction is justified.
18. So far as the question No. 1 is concerned, it is settled law that no injunction can be granted in case the contract is determinable. It has been consistently held by the Superior Courts that even if the termination is illegal, the remedy would be damages. This Court is, prima facie, of the view that having admitted the factum of termination, as stands recorded in the order dated 29.01.2019 passed by the Hon'ble High Court in FAO No. 36/2019 and at least having acknowledged that the email dated 20.08.2018 of the appellant, which clearly contemplated termination, the respondents cannot have continued to use the trademark/trade name belonging to the appellant. As per the law of land the M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 3 of 17 remedy at best would be damages even if the respondents succeeds in proving that the termination was unjust or unlawful.
19. The question No. 2, however, alters the orientation of the proceedings. The contention of the appellant side is that the very agreement fundamentally is an agreement granting permission to use the Intellectual Property Rights, and the dispute would be a "dispute" within the four corners of the arbitration clause seems to be impressive arguments. One might feel tempted to accept it as the sole determinative factor. The fact, however, remains that such disputes have been decisively left out of the scope or purview of the arbitration law. No doubt the fact situation strongly leans in favour of the appellant, the significant question which emerges in the present proceedings, is one of the remedy and not the merit alone.
20. The facts involved, quite predictively, leads towards the grant of injunction but the present lis itself is besieged by inherent lack of jurisdiction. The contention of the Learned counsel for the appellant that the case laws cited by the respondent side at best can be treated as obiter as none of the case directly involves the determination of the question in relation with IPR, and further that since the agreement is fundamentally an agreement involving the Intellectual Property Rights itself the respondent cannot question arbitrability of the dispute, cannot be accepted. However, anomalous, dispiriting or unjust it may appear to the appellant, the jurisdiction would remain major determinative, and factors in too significantly in the present proceedings.
21. The jurisdiction of a Court/Tribunal/Forum, to try a given specie of matter, is a rigid concept, and cannot be over sighted. It assumes centre stage, whenever challenged. The factual upright involved in this case, in the opinion of this Court, would neither subsume, nor trivialize nor even obscure the lack of jurisdiction, which is clearly precept ed by law, as has been observed by the Hon'ble Supreme Court in A. Ayyasamy v. A. Paaramsivam & Ors, 2016 SCC OnLine SC 1110; and Emaar MGF Land Ltd. Vs. Aftab Singh, 2018 SCC Online 2771, as also the other case laws cited by the respondent side.
22. Jurisdiction appears to be a vantage point for the respondent in the present matter and any grant of injunction in ignorance thereof would lead to crisis of a different dimension.
23. In so far as the impugned order is concerned, even if this Court is of the view that another view could have possibly been M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 4 of 17 taken in regard with the notice of termination, or that the Learned Arbitrator could also have reflected upon the termination more emphatically, the fact remains what would still weigh more heavily, is the lack of jurisdiction. This Court would not hesitate in accepting the contention of the Learned counsel for the respondents that the question of jurisdiction could be raised subsequently, even if it was not raised at the time of appointment of arbitrator."
24. Appeal is accordingly, dismissed."
5. Learned counsel for the plaintiff submitted that after dismissal of his appeal U/s 37(2) of the Act and once it was held that Ld. Arbitrator had no jurisdiction to try IPR disputes and there being inherent lack of jurisdiction, plaintiff had no option but to approach civil court by filing civil suit of passing injunction against the defendants from using their trademark. He submitted that defendants while contesting the appeal U/s 37(2) of Arbitration & Conciliation Act, before Ld. ADJ had submitted that the matter is not arbitrable and as such, arbitration cannot be a remedy for such determination. In support, counsel for plaintiff relied upon "Mundipharma AG Vs. Wockhardt Ltd. 1" and "Helamin Technology Holding SA & Ors. Vs. Haribansh Rai & Ors. 2", in support of his submissions that once a licensor - licensee or a manufacturer - distributor relationship terminates, the licensee or the distributor has no right whatsoever to use either the trademark or the trade name of the licensor and the manufacturer. He further relied upon "Emmar MGF Land Limited Vs. Aftab Singh 3".
6. On the other hand, learned counsel for defendants submitted that decision of the arbitrator as U/s 17 of Arbitration & Conciliation Act is final and that if plaintiff had not obtained liberty from arbitral tribunal to go to another forum, then they have no right to file this suit. It is submitted that unless 1 1990 SCC OnLine Del 269 : ILR (1991) 1 Del 606 2 I.A. No. 10720/2012 & others in CS (OS) 1663/2012 3 2018 SCC OnLine SC 2771 M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 5 of 17 specifically barred, what a civil court can do, arbitrator can do and once the parties have cautiously decided to refer the dispute arising from the contract to a private forum (Arbitrator), no question arises at all of those dispute being non arbitral. In support, counsel for defendant referred "Eros International Media Limited Vs. Telemax Links India Pvt. Ltd. 4" and "Little Millennium Education Pvt. Ltd. Vs. Monica Lalchand Vaswani 5". In Little Millennium's case, para 9 it was observed : "The Franchisee Agreement clearly shows that the respondents were granted a right to use the trade mark "Little Millennium" only as licensee during the period of the Franchisee Agreement. The Franchisee Agreement could be terminated by the petitioner for convenience as also for default. The petitioner exercising its right under Clause 9.4, terminated the Franchisee Agreement. Whether such termination is right or wrong and whether the counter claims raised by the respondents have any merit, are issues to be determined by the Arbitrator to be appointed by the parties in accordance with the Arbitration Agreement."
7. Counsel for defendants referred "Ministry of Sound International Ltd. Vs. Indus Renaissance Partners Entertainment Pvt. Ltd. 6" He submitted that the dispute is arbitrable and arbitral tribunal has already decided the issue of interim injunction by deciding application U/s 17 of Arbitration & Conciliation Act and now, plaintiff have withdrawn the claims without seeking liberty from arbitral, whereas counterclaim filed by the defendants are still being adjudicated by the arbitrator.
8. In rebuttal, counsel for plaintiff submitted that defendants are stopped from raising contradictory plea in different forum before the arbitrator and before the appellant court. Defendants had taken the plea that disputes are not arbitral and whereas before this court stands of the defendants is that disputes
4. 2016 SCC OnLine Bom 2179 : (2016) 6 Bom CR 321 5 2018 SCC OnLine Del 10237 6 2009 SCC OnLine Del 11: (2009) 156 DLT 406 M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 6 of 17 are arbitral and that once licence agreement is terminated, defendants are not entitled to use the trademark and there cannot be specific performance of contract which is determinable and thus, plaintiff is entitled to injunction. Counsel for plaintiff submitted that having accepted the order of the Ld. ADJ which held that there is lack of jurisdiction in granting the injunction by the Ld. Arbitrator in view of the judgment cited by the respondent, the appeal was dismissed, therefore, the appellant filed the present suit seeking injunction. He further urged that after 2015 amendment Act in the Arbitration & Conciliation Act, Section 16 cannot be made redundant by exercising jurisdiction U/s 11 of the Act, U/s 11 of the Act, Hon'ble High Court had only to see the existence of arbitration agreement and not other questions including arbitrability.
9. Ld. Counsel for the defendants pointed out that while dismissing the appeal U/s 37(2)(b) of the Act by the Ld. ADJ on 14.10.2019, the question of jurisdiction was left open and it was merely observed that "the question of jurisdiction could be raised subsequently even if it was not raised at the time of appointment of arbitrator." It is submitted that arbitrator had not dismissed the application U/s 17 of the Act of the plaintiff on the ground of jurisdiction or on the point that the dispute in questions were not arbitrable but on the facts and on the ground that 45 days notice was not served to the defendants. It is submitted that the only course open to the plaintiff was to challenge the order by filing SLP, if plaintiff was aggrieved with the order passed by the Ld. ADJ dated 14.10.2019 of the appellate court U/s 37(2)(b) of the Act. It is submitted that in the circumstances, suit filed by the plaintiff is not maintainable in view of the existence of the arbitration clause and the matter has to be adjudicated by the arbitrator.
10. It may be noted that both parties have shifted their stands earlier plaintiff himself invoked arbitration clause and got appointed arbitrator U/s 11 of M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 7 of 17 the Act from the Hon'ble High Court and participated in the proceedings. He is aggrieved due to dismissal of his application U/s 17 of the Act and thereafter only, filed suit. Earlier defendant was objecting to the jurisdiction and in his statement of defence had stated about nonarbitrability of dispute in terms of Section 16 of the Act and that the disputes were covered with the Article viii i.e. arbitral clause.
11. In the instant case, there is no dispute about the existence of the arbitration agreement in as much as there is a specific arbitration clause in the Franchisee agreement. However, the question raised by plaintiff is that nature of dispute is such that it cannot be referred to arbitration and is incapable of settlement through arbitration. Legal position is well settled that the Arbitration & Conciliation Act does not make any provision excluding any category of disputes treating them as nonarbitrable. Courts however, have held that certain disputes like criminal offences of a public nature, dispute arising out of illegal agreements and disputes such as divorce cannot be referred to Arbitration.
12. In A. Ayyasamy Vs. A. Parmasivam & Ors.7, Hon'ble Supreme Court observed that : "In this behalf, we have to begin our discussion with the pertinent observation that in so far as the Arbitration and Conciliation Act, 1996 is concerned, it does not make any specific provision excluding any category of disputes terming them to be non arbitrable :
A number of pronouncements have been rendered laying down the scope of judicial intervention, in cases where there is an arbitration clause, with clear and unambiguous message that in such an event judicial intervention would be very limited and minimal. However, the Act contains provisions for challenging the arbitral awards. These provisions are Section 34 and Section 48 of the Act. Section 34(2)(b) and Section 48(2) of the Act, inter alia, provide that an arbitral award may be set aside if the Court finds that the "subject matter of the dispute is not capable of 7 (2016) 10 Supreme Court Cases 386 M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 8 of 17 settlement by arbitration under the law for the time being in force".
Even when such a provision is interpreted, what is to be shown is that there is a law which makes subject matter of a dispute incapable of settlement by arbitration. The aforesaid position in law has been culled out from the combined readings of Sections 5, 16 and 34 of the Act.
When arbitration proceedings are triggered by one of the parties because of the existence of an arbitration agreement between them, Section 5 of the Act, by a nonobstinate clause, provides a clear message that there should not be any judicial intervention at that stage scuttling the arbitration proceedings. Even if the other party has objection to initiation of such arbitration proceedings on the ground that there is no arbitration agreement or validity of the arbitration clause or the competence of the Arbitral Tribunal is challenged, Section 16, in clear terms, stipulates that such objections are to be raised before the Arbitral Tribunal itself which is to decide, in the first instance, whether there is any substance in questioning the validity of the arbitration proceedings on any of the aforesaid grounds. It follows that the party is not allowed to rush to the court for an adjudication. Even after the Arbitral Tribunal rules on its jurisdiction and decides that arbitration clause is valid or the Arbitral Tribunal is legally constituted, the aggrieved party has to wait till the final award is pronounced and only at that stage the aggrieved party is allowed to raise such objection before the court in proceedings under Section 34 of the Act while challenging the arbitral award."
13. In the aforenoted A. Ayyasamy's7 case, it was further observed "that the following categories of disputes are generally treated as nonarbitrable i) patent, trademark and copyright, ii) antitrust/competition laws, iii) insolvency/winding up, iv) bribery/corruption, v) fraud, vi) criminal matters. In para 20 of the aforenoted case, Booz Allen & Hamilton Inc. Vs. SBI Home Finance Ltd., reported as (2011) 5 SCC 532, was quoted by the Hon'ble Supreme Court. At this juncture, we may point out that the issue has been revisited by another Division Bench of this Court in Booz Allen & Hamilton Inc. SBI Home Finance Ltd. In this case, one of the questions that had arisen for determination was, in the context of Section 8 of the Act, as to whether the subject matter of the suit was "arbitrable" i.e. capable of being adjudicated by a private forum (the Arbitral Tribunal). In this context, the Court carried out detailed discussion on the term "arbitrability" by pointing out three facets thereof viz :
M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 9 of 17(1) whether the disputes are capable for adjudication and settlement by arbitration?
(2) whether the disputes are covered by the arbitration agreement?
(3) whether the parties have referred the disputes to arbitration?
As we are concerned with the first facet of the arbitrability of dispute, on this aspect the Court pointed out that in those cases where the subject matter falls exclusively within the domain of public for a viz. the Courts, such disputes would be nonarbitrable and cannot be decided by the Arbitral Tribunal but by the courts alone. The justification and rationale given for adjudicating such disputes through the process of courts i.e. public for a and not by Arbitral Tribunals, which is a private forum, is given by the Court in the following manner : (Booz Allen case, SCC pp. 54647, paras 3538).
"The Arbitral Tribunals are private for a chosen voluntarily by the parties to the dispute, to adjudicate their disputes in place of courts and tribunals which are public for a constituted under the laws of the country. Every civil or commercial dispute, either contractual or noncontractual, which can be decided by a court, is in principle capable of being adjudicated and resolved by arbitration unless the jurisdiction of the Arbitral Tribunals is excluded either expressly or by necessary implication. Adjudication of certain categories of proceedings are reserved by the legislature exclusively for public for a as a matter of public policy. Certain other categories of cases, though not expressly reserved for adjudication by public for a (courts and tribunals), may by necessary implication stand excluded from the purview of private for a. Consequently, where the cause/dispute is inarbitrable, the court where a suit is pending, will refuse to refer the parties to arbitration, under Section 8 of the Act, even if the parties might have agreed upon arbitration as the forum for settlement of such disputes.
The well recognized examples of nonarbitrable disputes are :
(i) disputes relating to rights and liabilities which give rise to or arise out of criminal offences; (ii) matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody; (iii) guardianship matters; (iv) insolvency and winding up matters; (v) testamentary matters (grant of probate, letters of administration and succession certificate); and (vi) eviction or tenancy matters governed by special statues where the tenant M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 10 of 17 enjoys statutory protection against eviction and only the specified courts are conferred jurisdiction to grant eviction or decide the disputes.
It may be noticed that the cases referred to above relate to actions in rem. A right in rem is a right exercisable against the world at large, as contrasted from a right in personam which is an interest protected solely against specific individuals. Actions in personam refer to actions determining the rights and interests of the parties themselves.
In the subject matter of the case, whereas actions in rem refer to actions determining the title to property and the rights of the parties, not merely among themselves but also against all persons at any time claiming an interest in that property. Correspondingly, a judgment in personam refers to a judgment against a person as distinguished from a judgment against a thing, right or status and a judgment in rem refers to a judgment that determines the status or condition of property which operates directly on the property itself. (Vide Black's Law Dictionary).
Generally and traditionally all disputes relating to rights in personam are considered to be amenable to arbitration; and all disputes relating to rights in rem are required to be adjudicated by courts and public tribunals, being unsuited for private arbitration. This is not however a rigid or inflexible rule. Disputes relating to subordinate rights in personam arising from rights in rem have always been considered to be arbitrable."
14. It may further be noted that before amendment, Section 8 of Arbitration & Conciliation Act, 1996 read as under : "Power to refer parties to arbitration where there is an arbitration agreement
i) A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so apply not later then when submitting his first statement on the substance of dispute, referred the parties to arbitration......"
15. After 23.10.2015, when the amendment to Section 8 of Arbitration & M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 11 of 17 Conciliation Act came into force Section Section 8(1) reads as under : "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."
16. Perusal of amendment shows that it requires the judicial authority to compulsorily refer parties to arbitration irrespective of any decision by the Supreme Court or any other Court, if the judicial authority finds that a valid arbitration clause prima facie exists. The amendment would have the effect of nullifying the exceptions drawn by the Courts. Section 8 of the Act forms the basis for forcing the parties to adopt arbitration process where there exists an arbitration agreement. Section 5 of the Act also says notwithstanding anything contained in any other law for the time being enforced, in matters governed by this part, no judicial authority shall intervene except where so provided in this part. It is settled law that mere reference to an arbitration agreement is sufficient and need not be coupled with a specific prayer for reference to Arbitration.
17. In the present case, there is a specific arbitration clause in the Franchisee agreement. Admittedly, the dispute between the parties have arisen on the basis of Franchisee agreement. The disputes are whether defendants could shift the premises from 488 Sector 35, Main Market, Chandigarh to 489 Sector 35, Main Market, Chandigarh or whether defendants shifted the premises against wishes of the plaintiff despite informing on 11.05.2018 not to do so; whether plaintiff had given a requisite notice of 45 days to the defendants and/or M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 12 of 17 whether plaintiff has wrongfully terminated the Franchisee agreement on 20.08.2018 and despite notice dated 31.10.2018 and defendants are still using the trademark of the plaintiff in violation of the terms of Franchisee agreement.
18. This court is of the considered view that the relief sought by the plaintiff is not an 'action in rem' exercisable against the world at large, but the relief sought is an 'action in personam' solely against defendants and refers to actions determining the rights and interests of the parties i.e. M/s Sagar Ratna and D.S. Foods.
19. It is interesting to note the track record of the cases filed by the parties. Admittedly, on 27.12.2018, plaintiff filed an application U/s 9 of Arbitration & Conciliation Act before the District Court, Saket which was allowed on 27.12.2018 whereby defendants were restrained from using the trademark Sagar Ratna till 90 days and parties were directed to invoke the arbitration proceedings within 90 days. Defendants filed FAO 36/2019 before the Hon'ble High Court challenging the interim measure order dated 27.12.2018. The said FAO was dismissed by the Hon'ble High Court on 29.01.2019.
20. In the aforesaid FAO also, Hon'ble High Court noted that a Franchisee agreement and arbitration clause were not disputed and that since the defendants had terminated the Franchisee agreement vide email dated 20.08.2018, primafacie it appeared that defendants have not left with any right to use trade mark of the respondent (plaintiff herein) and that the Ld. ADJ had rightly injected the appellant (defendants herein) from using the trade mark. Ld. Counsel for the defendants had contended that plaintiff has not invoked the arbitration clause despite the order dated 27.12.2018 and it was noted that the order was enforce for 90 days. Hon'ble High Court found no infirmity or illegality in the impugned order i.e. U/s 9 of Arbitration & Conciliation Act.
21. Thereafter, plaintiff invoked arbitration proceedings on 27.02.2019.
M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 13 of 17Defendants sent a reply to the invocation of arbitration proceedings and thereupon, plaintiff preferred a petition U/s 11 of Arbitration & Conciliation Act on 08.04.2019. On 07.05.2019, Hon'ble High Court allowed the application U/s 11 of Arbitration & Conciliation Act and appointed Shri Gurdeep Kumar, ADJ (Retired) as Sole Arbitrator to adjudicate the dispute between the parties.
22. In the order on the application U/s 11(5) of Arbitration & Conciliation Act was filed by the plaintiff, also the existence of the arbitration agreement was not disputed by the defendants and the invocation of arbitration clause by the plaintiff was stated to be matter of record and parties were directed to appear before the arbitrator as and when notified.
23. Now, the version of the plaintiff is that the Franchisee Agreement admittedly entered between the parties stands terminated vide emails dated 11.05.2018 and 20.08.2018 and therefore, thereafter the respondents are not entitled to use the trademark "Sagar Ratna" or any deceptive name and hence the claimant is entitled to adinterim injunction restraining the respondents from using the said trademark or any similar or deceptive name till disposal of the statement of claim. Case of defendant is that the Franchisee agreement does not stand terminated for want of legal notice in terms of the Franchisee Agreement because 45 days notice has not been served by the claimant.
24. It may be noted that on 31.05.2019, arbitrator held its first sitting and the pleadings were completed on 23.07.2019. On 13.08.2019, while dismissing application U/s 17 of the Act, Ld. Arbitrator noted that the dispute between the parties revolved around Franchisee agreement and the rights and liabilities under that agreement and thereafter the claimants version was noted in para 11. In para 12 it was observed that there was nothing on record by the claimant to show that it had served 45 days notice on the respondent as required under clause 7.2.1 of Article VII of the Franchisee Agreement and in the light of M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 14 of 17 this fact, the claimant cannot be said to have shown a prima face case in its favour which is prerequisite as interim injunction. Arbitrator further noted that besides the relief of rendition of amount had claimed claimed damages @ 50% of the net sales of the respondent (defendant herein), so it cannot be said that money compensation will not afford an adequate relief for nonperformance contract. Thus, in the light of aforesaid reasons, Ld. Arbitrator was of the considered view that claimant was not entitled to any adinterim relief and, therefore, application U/s 17 of the Act was dismissed.
25. Then, plaintiff preferred an appeal U/s 37(2) of Arbitration & Conciliation Act against order dated 13.08.2019 of the Ld. Arbitrator. Appeal filed by the plaintiff was dismissed by the Ld. ADJ on 14.10.2019. On asking, Ld. Counsel for the parties have failed to show as to how rejection of application U/s 17 of the Act by the Ld. Arbitrator was for want of jurisdiction. It has already been noted in the above para no. 25, the grounds on the basis of which Ld. Arbitrator had dismissed the application U/s 17 of the Act, filed by the claimant/plaintiff. Admittedly, arbitrator has neither passed any award nor has closed the proceedings. ` It is not disputed by the counsels, appearing for both sides, that Ld. Arbitrator had not given any categorical finding that it had no jurisdiction to adjudicate the disputes in questions. Thereafter on 11.12.2019, plaintiff unilaterally withdrew its claim from the arbitral tribunal and filed the present suit. There is no dispute that plaintiff had not raised the plea of jurisdiction or had asked the Arbitrator to rule on its own jurisdiction.
26. This court finds that since the arbitrator had not given any ruling on its own jurisdiction and if plaintiff had any doubt about the same, he could have applied for ruling as regards the jurisdiction of the arbitrator to adjudicate upon the dispute which has not been done by the plaintiff. Similarly, the appellate court has also not categorically given any ruling that arbitrator had no jurisdiction.
M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 15 of 17It was within the competence of arbitral tribunal to rule on its jurisdiction U/s 16 of the Act.
27. Having regard to the existence of a valid arbitration agreement in this case coupled with the fact that arbitrator has not ruled on its own jurisdiction, invocation of arbitration clause by the plaintiff himself and participation in the proceedings pursuant to appointment of arbitrator by the Hon'ble High Court, judicial intervention by this court shall be against the mandate of law U/s 5 and 8 of the Act.
28. Ousting arbitrability, in the face of an arbitration clause is not something to be lightly assumed. It can be done in limited cases which are clearly nonarbitrable and it is altogether too broad a proposition to accept that no action under the Trade Marks Act or the Copyright Act can ever be referred to arbitration. In the present case, in the suit filed by the plaintiff, mandatory and permanent injunction is sought for restraining defendants and their agents etc apart from recovery of Rs.3,08,995/ and rendition of account by the defendants w.e.f. 21.08.2018 till the closure of outlet and seeking directions to the defendants to pay 50% of the net sales for using trademark of the plaintiff since 21.08.2018 alongwith interest @ 24%. Where, there are matters of commercial disputes and parties have consciously decided to refer these disputes arising from that contract to a private forum, as in the present case, no question arises of those disputes being nonarbitrable. Such actions are always actions in personam. In the present case plaintiff is seeking a specific particularized relief against a particular defined party i.e. defendants and not against the world at large.
29. In view of the aforesaid reasons and existence of valid arbitration agreement between the parties, no judicial intervention is required by this court and parties are referred to the arbitration. Application U/s 8 of the Act filed by the M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 16 of 17 defendants stands allowed and the suit is dismissed as not maintainable.
30. Parties are directed to appear before the Arbitrator as and when notified. No orders as to cost. Decree be prepared accordingly.
31. File be consigned to record room.
(Announced in the open court today i.e. on 27.02.2020) N VINAY KUMAR KHANNA District Judge (Commercial Court02) South Distt., Saket, New Delhi/27.02.2020 M/S Sagar Ratna Restaurants Pvt. Ltd. Vs. M/s D.S. Foods & Ors. Page 17 of 17