Delhi High Court

Trinath Khera & Anr. vs M/S. Aditya Birla Nuvo Ltd. & Ors. on 18 July, 2011

Author: Manmohan Singh

*             THE HIGH COURT OF DELHI AT NEW DELHI
%                                    Judgment delivered on: 18.07.2011

                 ARBITRATION PETITOIN NO. 188/2010

TRINATH KHERA & ANR.                           ..... Petitioners
               Through: Petitioner No.1 in person.

                                      versus


MS/ ADITYA BIRLA NUVO LTD. & ORS.             ..... Respondents

Through: Mr Harish V. Shanker, Adv.

CORAM:-

HON'BLE MR JUSTICE MANMOHAN SINGH

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

MANMOHAN SINGH, J

1. This petition has been preferred under Section 11 of the

Arbitration and Conciliation Act, 1996 to seek the appointment of any

former judge of this Court as the sole arbitrator to adjudicate the disputes

and differences which have arisen between the parties. The facts of the

case are that the petitioner a sole proprietorship concern has been in the

business of clothing accessories specializing in cuff links and neck ties

sine the year 1982. The respondents are a well known Public Limited

company having their offices at many places in India including Delhi and

are engaged in the retail sale of garments and wearing accessories.

2. It is averred in the petition, that in the year 2004, the

respondents proposed to the petitioner to work together as licensor and

licensee in respect of "cuff links" for the respondent's brand known as

"Peter England" and the trade mark licensed user agreement dated

03.01.2005 was executed between the parties. However, the "Peter

England" project turned out to be a failure as some of the distributors of

the respondents did not make payments against the goods supplied. Thus,

the petitioner decided to terminate the said agreement by completing

requirements on each side.

3. As per the petitioner, in the meantime, the respondents made a

fresh proposal to the petitioner, that in future, the petitioner shall work

with the respondents directly and not through their distributors. The

respondents convinced the petitioner that he will be able to recover

"Peter England" losses through their premium brands like "Louis

Phillippe", "Van Heusen" and "Allen Solly". Therefore, the petitioner

agreed to work afresh. The respondents on 10.08.2005 gave the final

shape to the proposal by modifying the earlier "Peter England" agreement

on the lines discussed and agreed by the parties. The respondents gave a

printed copy to the petitioner and took an identical copy of the same to

Bangalore for getting it reproduced on the requisite stamp paper which

was available only in Bangalore.

4. Further it is stated, that the petitioner was told by the

respondents that their legal cell at Bangalore may change the settings of

sentences and paragraphs, but the terms of agreement shall remain the

same. But, the respondents never sent the formal agreement papers to the

petitioners. The petitioner, apart from following the matter over telephone

sent letter dated 29.08.2005 and emails on 06.09.2005 and 09.09.2005 to

the respondents asking them to send the agreement. On 09.09.2005 the

respondent, sent an email to the petitioner, stating that for the moment

they will make said agreement valid till March 2008, and since the

agreement is not ready, the petitioner may use the said letter dated

09.09.2005 of the respondent for the purpose of import. Thereafter, the

petitioner sent a detailed letter dated 05.11.2005 to the respondents

requesting them to expedite the execution of the agreement.

5. It is submitted by the petitioners that though the formality of

signing the agreement dated 10.08.2005 did not take place, yet it has

been acted upon by the respondents in its spirits till December 2008 and

clause 8 of the said agreement is the arbitration clause.

6. According to the petitioner, during the course of business,

various disputes arose between the parties and a substantial amount of

money is owed to the petitioner by the respondents. Therefore, the

petitioner served the notice dated 25.05.2010 to the respondents for

appointment of the sole arbitrator for settlement of disputes and claims.

7. In the reply filed by the respondents, it is stated, that the

agreement dated 03.01.2005 could not work due to various reasons and

the business under the same was discontinued. The respondent on being

requested by the petitioner permitted the petitioner to supply cuff links

and other accessories under their brands "Louis Phillippe", "Van

Heusen". However, despite both the parties negotiating over a draft, the

agreement could not be executed. Thereafter the transactions that took

place between the parties were based on the terms and conditions of the

unsigned agreement between the parties and the respondents have been

regularly making payments to the petitioners since 2005 which includes

payments towards direct purchases and also for license sales since 2005.

8. The main objections of the respondents for grant of relief in

the present petition are as under:

i. This Court has no jurisdiction to entertain the present

petition.

ii. There is no written arbitration agreement between the

parties and the Arbitration Act does not permit a

petition before this Court on the basis of oral

agreement.

iii. Several claims made by the petitioners are admittedly

time barred.

9. As far as the first objection of the respondents is concerned,

there is a specific averment made by the petitioners, that the business

proposal and acceptance of orders between the parties were concluded in

Delhi. The terms of agreement dated 10.08.2005 were agreed upon,

concluded, accepted and written at Delhi. From the material produced by

the petitioners, it also appears that various payments including bank e-

transfer in favour of the petitioners were released in Delhi. Some of the

payments have also been released in favour of the petitioners from the

respondents' office located in Delhi. The petitioners are also residing

and carrying on business in Delhi. The supplies made by the petitioners

to the respondents' retail outlets were accepted by the respondents in

Delhi. One of the instances relied upon by the petitioners is Annexure P-

7, the letter dated 14.11.2006 issued by the respondents, wherein the

suggestion was made to the petitioners to collect the payment cheque

from Birla Corporate office at 4th floor, UCO Bank Building, Parliament

Street, New Delhi-110001. There is no denial about Annexure P-7 by the

respondents. Therefore, the objection raised by the respondents is

without any substance and cannot be accepted.

10. As regard the second objection raised by the respondents that

in case of signed written agreement between the parties, the law does

permit the petitioner to file the present petition before this Court seeking

relief for appointment of arbitrator on the basis of oral agreement

between the parties.

11. The petitioners submit that earlier agreement dated

03.01.2005 executed between the parties in respect of respondents' brand

Peter England" was not clicked on account of main reason that some of

the distributors appointed by the respondents did not pay any amount to

the petitioners against the goods supplied or made less payment and at

that time the petitioners expressed their intention to terminate the

agreement but before the agreement could be terminated, the respondents

came out with a fresh proposal that in future the petitioners shall work

with the respondents directly in the same fashion under Louis Phillippe,

Van Heusen and Allen Solly and the petitioners agreed for the same.

12. According to the petitioners, on 10.08.2005 while sitting in

their office the respondents corrected the earlier format for "Peter

England" and modified the same on the lines discussed and accepted by

the parties and also gave printed copy of the same to the petitioners. The

petitioners have placed the agreement dated 10.08.2005 as Annexure P-2.

The contention of the petitioners is that the fact of existence of agreement

and its enforcement has been acknowledged by the respondents in series

of correspondences, although a formal agreement was executed between

the parties. The contention of the petitioners is that from the

correspondence exchanged between the parties, one can infer about the

existence of the agreement. The petitioner No.1 appearing in person has

referred to the copy of the Annexure P-2 which was given to the

petitioners on 10.08.2005 and several documents and from

correspondence exchanged between the parties by way of letters, fax

messages and e-mails. Some of the documents have been filed by the

petitioners as Annexure P-3 and P-4 in support of their submissions.

Annexure P-3 is a copy of the respondents' e-mail dated 09.09.2005 and

attachment authorizing the petitioners as respondents authorized licenced

vendor. The copies of petitioners' couriered letter dated 29.08.2005, e-

mails dated 04/06.09.2005 and 09.09.2005 and registered letter dated

05.11.2005 are annexed as Annexure P-4. The extract of the said letters

read as under:

"Letter dated 29.08.2005

It is our privilege to have had your visit at our office on 10th instant and the discussion held. We request you to please look into the following:

01. The single piece 024 cuff-link samples sent by us to you on 02.08.05 through DTDC have not been received so far. Mr. Sandeep Saxena was reminded over the telephone as well.

02. The cuff-link pairs 06 sets sent on 20-07-05 for purpose of photography of P.E. have not been received.

03. We are waiting for the agreements in respect of V.H. and L.P.

E-mail dated 04/06.09.2005

Dear Mr Balan, During your visit at our office on 10-08-05, you had made a note for your record that Agreements in respect of Van Heusen and Luis Phillipe have to be sent to us. The brass tools in place of aluminium tools for better accuracy are likely to be ready by 08th instant. We are very much after getting VH boxes ready by the 15th. But deliveries can be possible only after we send the box manufacturers certified copy of our arrangement between you and us. Hence, it is very important to send us the agreements. In case agreements are likely to take some more time, you may send us letters confirming the arrangement.

E-mail dated 09.09.2005

The licensing agreement with VH and LP for a period of only one and a half years is not acceptable. It has to be for a minimum period of three years as discussed at the start of the development stage. One and a half years would take only to establish the product range. In case of PE, nine months have already passed, huge investments made by us, the sale and the recovery of the payment is hardly any during the last six months since the time the goods have been supplied.

Letter dated 05.11.2005

It is our privilege to have had your visit at our office on 10-08-2005. You were very kind to have modified PE format and framed an Agreement on the terms discussed and accepted. A typed copy was given to me for my record and the other one taken along by you for formal execution on the stamp papers which were to be purchased at Bangalore. I have drawn your valued attention a number of times. I also requested you through my

letter dated 29.08.2005 and through exchange of mails from both of us. It is very kind of you to have sent me letter dated 09 September 2005 on our business association but it does not speak of detailed terms of business as were accepted on 10.08.2005. I may also point out that Allen Solly name is missing in your letter of 09.09.05. I shall be grateful if you could spare some time and send me the agreements on stamp papers duly typed for my signatures as was done in case of Peter England. Thereafter you may send a copy of it to me duly signed by competent authority of your office for my record.

I would also like to invite your attention to the discussion we had on the subject of License Fee. Since I am not using your Brand Names on my products, hence there is no reasoning of your charging Royalty Fee from me. Your Brand Names are Showrooms. I am not using your Brand Name through my channels. Even otherwise, Royalty Fee does not form a part of terms of Agreement accepted by both of us. Please rectify and inform your accounts department."

13. The relevant portion of the admission made by the

respondents in Annexure P-9, i.e., e-mail dated 07.07.2010 reads as

under:

"As far as the appointment of arbitrator is concerned, it is you who has to name the "arbitrator" and not us as the dispute has arisen in your view and you have chosen to intatiate to issue a notice under Section 11(5) of the Arbitration an Conciliation Act, 1996."

14. In view of the above said admission, although the proposed

agreement dated 10.08.2005 was not signed by the respondents and

merely signed by the petitioners, but, due to correspondence exchanged

between the parties and admission on behalf of the respondents, I am of

the view that the agreement exists between the parties for adjudication of

the dispute between the parties.

15. As regards the objection raised by the respondents that the

claims of the petitioners are time barred, the said objection also has no

force in the presence of the respondents' letter dated 07.07.2010. In any

case, the said objection of the respondents about the claim being barred

by time can be raised before the arbitrator and the same would have to be

determined in accordance with law.