On 24th September, a bench of Delhi High Court consisting of Justice Vibhu Bakhru, while hearing a petition held that merely because a company is required to report any material event affecting its affairs to the Stock Exchange, does not render the disputes relating to such events as non-arbitrable. It further held that the question whether an agreement is in its nature determinable, is required to be understood in the context of the nature of that agreement.
Facts of the case:
The present petition has been filed by M/s Golden Tobacco Limited under Section 9 of the Arbitration and Conciliation Act, 1996 inter alia, praying that the respondent – M/s Golden Trobe Private Limited be restrained from manufacturing, selling and supplying to the market,cigarettes under the exclusive brands owned by GTL, that is, Panama, Golden Gold Flake, Golden Classic, Taj Chhap and Chancellor.
Contention of the petitioner:
The petitioner contended the following:
- The Petitioner submitted that it is the owner of the Exclusive Brands, which have acquired significant reputation and goodwill in domestic and international market.
- GTL contends that the said Trademark License Agreement was a comprehensive agreement not only for sale, supply and distribution of cigarettes, but also for manufacture of the same under the Exclusive Brands.
- GTL claims that GTPL has violated the terms of the Amendment Agreement dated 29.08.2020 as it did not enter into any further discussions regarding the payment of royalty, targets of sales turnover and other terms and conditions applicable from December, 2020 onwards.
- GTPL preferred an appeal [RFA (OS) (COMM) 3/2021] before the Division Bench of this Court against the said order referring the parties to arbitration. However, the said appeal was dismissed as withdrawn.
Contention of respondents:
Ms Anjali J. Manish, learned counsel appearing for GTPL, sought to oppose the present petition on the following:
- she submitted that GTL has expressed no intention to refer the disputes to arbitration. According to her, this is evident from the fact that GTL had issued a notice terminating the Trademark License Agreement, on 13.02.2021 but had taken no steps to refer the disputes to arbitration till GTPL filed the suit.
- Second, she submitted that the disputes between the parties are not private disputes and therefore, cannot be referred to arbitration. She contended that the disputes were in rem and not in personam as the disputes related to Registered Trademarks.
- She also submitted that irreparable loss would be caused to the GTPL in the event an injunction as sought for was granted.
- She submitted that GTPL is and was always ready and willing to pay royalty to GTLin terms of the Trademark License Agreement, as amended by the Amendment Agreement and therefore, the said agreements could not be terminated on the ground that the representative of the parties had not met after December, 2020.
Observation and Judgement of the court:
The following observation has been made by the hon'ble court:
1 The contention that GTL is not interested in referring the disputes to arbitration and has not shown any indication for doing so is wholly insubstantial and, is liable to be rejected.
2. GTPL‟s contention that the disputes between the parties are not arbitrable and therefore, the present petition is not maintainable, is bereft of any merit. The disputes arising out of the Trademark License Agreement as amended by the Amendment Agreement are contractual disputes and not disputes of a public nature, which cannot be arbitrated
3. The contention that the disputes are of a public nature as GTL had informed the National Stock Exchange, is also wholly unmerited.
4.It is apparent from the above that there was no specific demand made by GTL seeking any information regarding sales turnover. GTL had merely reserved its right to raise a separate invoice if there was any difference in the royalty payable based on the volume and value of the sales made.
In view of the above, the Court did not consider it apposite to grant the relief as sought for by GTL in the present petition. The petition is, accordingly, dismissed.
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