Purform Limited vs Ok Play India Ltd. & Anr.
2014 Latest Caselaw 1447 Del

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                      Order delivered on: March 19, 2014

+            O.M.P. No.254/2014, I.A. Nos.4543/2014 & 4762/2014

      PURFORM LIMITED                                      ..... Petitioner
                   Through             Mr.Kamal Sawhney, Adv. with
                                       Mr.Radhuvendra Singh, Adv.

                           versus

      OK PLAY INDIA LTD & ANR                    ..... Respondents
                    Through  Mr.Rajshekhar Rao, Adv. with
                             Mr.Kapil Wadhwa & Mr.Atul
                             Shankar Vinod, Advs. for R-1.
                             Respondent No.2 already given up.

      CORAM:
      HON'BLE MR. JUSTICE MANMOHAN SINGH

MANMOHAN SINGH, J. (ORAL)

1. By this order, I propose to decide the abovementioned petition under Section 9 of the Arbitration and Conciliation Act, 1996 (in short, called the "Act") filed by the petitioner.

2. Brief facts of the case are that the petitioner entered into an agreement dated 4th July, 2008 with respondent No.1 in Delhi whereby the petitioner granted to said respondent, inter-alia, (a) an exclusive license to use the petitioner's intellectual property rights and know-how to manufacture and distribute the licensed products, such as, mannequins in India, and (b) a non- exclusive license to use the petitioner's intellectual property rights and know-how to manufacture and supply the licensed products, such as, mannequins to the petitioner for supply by the petitioner outside India. In

terms of Clause 4 of the agreement, the petitioner delivered to respondent No.1 aluminum moulds required by the said respondent to manufacture the licensed products, such as, the mannequins. As per Clause 4.3 of the agreement, the title to all the moulds was to remain with the petitioner and the risk in each mould was to be passed to respondent No.1 upon delivery to the said respondent and remain with respondent No.1 until the moulds are delivered back to the petitioner. The petitioner delivered to respondent No.1, 19 moulds pursuant to the agreement. Subsequently, the petitioner supplied and delivered 4 more moulds to respondent No.1 in February, 2012 pursuant to an agreement dated 7th February, 2012 to supply extra moulds between the petitioner and respondent No.1.

3. Disputes arose between the parties and various correspondences exchanged between them. Ultimately, the agreement was terminated by notice dated 15th November, 2013. The respondent No.1 has admitted this fact before the Court and also admitted the factual position in the e-mail dated 13th February, 2014 that the moulds are and will always be the exclusive property of the petitioner, and respondent No.1 has no intention whatsoever of retaining the same. After termination of the agreement, the petitioner requested respondent No.1 to return the moulds. The petitioner has a claim of royalty against respondent No.1. On the other hand, respondent No.1 states that the petitioner owed to the said respondent certain amount. The said aspect of disputes is to be adjudicated by the sole Arbitrator.

4. It is the admitted position that in various e-mails exchanged between the parties after the termination of the agreement, the petitioner was requesting respondent No.1 to return the moulds. Since the respondent No.1

did not hand over the moulds to the petitioner, the petitioner thereafter filed the present petition under Section 9 of the Act.

5. The present petition was listed before Court on 26th February, 2014. Prior to listing of the matter, respondent No.1 by e-mail dated 22nd February, 2014 asked the petitioner to inspect the moulds by 6.00 p.m. latest by 24 th February, 2014, failing which respondent No.1 would load the same in the shipping container, presuming that the petitioner would not want to carry out the inspection. The petitioner thereafter sent an e-mail dated 24th February, 2014 informing the respondent No.1 that the petitioner has filed the petition under Section 9 seeking certain directions against the respondent No.1 and the same was likely to be listed on 26th February, 2014. The petitioner in the petition has shown its concern and apprehended that the respondent No.1 may have already damaged the moulds. Thus, when the petition was listed before Court, the prayer was made for appointment of a Local Commissioner, for which the learned counsel for the respondents did not raise any objection. Accordingly, with the consent of the parties, Mr.Amiet Andley, Advocate was appointed as Local Commissioner, with the following directions:-

".....In view of the above, Mr.Amiet Andley, Advocate (Mobile No.9811151686) is appointed as Local Commissioner who will visit the place of ICD Tughlakabad, New Delhi today itself along with Mr.Maurice Purdy, Authorized Representative of the petitioner-Company who is also present in Court and put his seal in the container in question detailed above which would be identified by the respondent No.1. Thereafter, as agreed by respondent No.1, the container would be shifted to the factory of respondent No.1 in the presence of the Local Commissioner, the Authorized Representative of the petitioner-Company as well as the Advocate of the petitioner.

The Local Commissioner shall again visit at the factory of respondent No.1 when the said container will reach there. The container will be de-sealed in the presence of the Local Commissioner, Central Excise Officer, Authorized Representative of the petitioner-Company as well as the Authorized Representative of the respondent No.1-Company and the Advocate of the petitioner. All the Moulds lying in the said container be handed over to the Local Commissioner who shall keep the same at the safe place provided by the petitioner which is belonging to one Harcharan Josh Singh, C1 28, Malika Ganj, Old Delhi. The Local Commissioner shall be paid sum of Rs.30,000/- per visit which shall be borne by the petitioner. He will submit his report by the next date of hearing."

6. The above said order was complied with by the learned Local Commissioner who has also filed his report. At present, the moulds are in the possession of the Local Commissioner under the directions of the Court.

7. As regards the issue of respondent No.1's decision to return the moulds to New Zealand, the learned counsel for respondent No.1 has referred Clause 4.3 of the agreement between the parties which reads as under:-

".....risk in each Mould passes to the Licensee upon delivery to the Licensee and remains with the Licensee until the Mould is delivered back to Purform."

8. Learned counsel for respondent No.1 states that in terms of the contractual requirements, the moulds are required to be returned to New Zealand. Thus, the respondent No.1 while dispatching the moulds got the same inspected by the Excise Department and had also taken out the requisite insurance for the export of the moulds. The respondent No.1 has filed the copy of the ARE-I Form dated 25th February, 2014 with insurance

documents as Annexure R-4. Counsel states that the respondent No.1 has to deposit the said amount within 30 days. On the other hand, the learned counsel for the petitioner states that it was the liability of the respondent No.1 and not the petitioner. However, he has no objection if the claim of this amount be raised before an Arbitrator who will decide the same as per the agreement.

9. When the matter was taken up on 11th March, 2014, the time was taken by the respondent No.1 to file the reply to the petition. However, the learned counsel for respondent No.1 fairly conceded that incase, Mr.Maurice Purdy, who is the authorized representative of the petitioner-Company, would produce the requisite authorization in his favour by the petitioner- Company in accordance with law, the respondent No.1 has no objection if the moulds as sealed by the Local Commissioner are returned to the petitioner through him.

10. The petitioner has filed the original resolution of the Directors of the petitioner-Company, dated 12th March, 2014 which is duly signed by other Directors of the Company. Petitioner's counsel states that Mr.Maurice Purdy has been authorized to take possession of any articles or moulds on behalf of the petitioner-Company. I have been informed by the counsel that Mr.Maurice Purdy is one of the Directors of the petitioner-Company. The other two Directors are his wife and son. There is no other Director in the petitioner-Company. The Resolution filed is duly signed by both Directors, i.e. Mr.Purdy's wife and son. Not only that, the petitioner has also filed the original Special Resolution of Shareholders, dated 12th February, 2014.

11. The respondent No.1 has also not produced any contrary evidence to show that any third party interest is involved in the Company and who are

not agreeable to release of moulds in favour of the petitioner-Company. The only apprehension of respondent No.1 is that in due course, any liability may not be levied to the effect that the moulds have been returned to an unauthorized person of the petitioner-Company.

12. It is the admitted position that the agreement is signed by Mr.Maurice Purdy on behalf of the petitioner-Company. All the correspondences exchanged between the parties are sent by Mr.Maurice Purdy. The moulds were sealed by the Local Commissioner in the presence of Mr.Maurice Purdy. He is one of the Directors of the petitioner-Company. He himself has signed the petition on behalf of the Company as well as supporting affidavit. The remaining two Directors, namely, Ms.Benjamin Purdy and Mr.Karen Lesley Purdy are his wife and son. The resolution on their behalf has been filed. Thus, there is no impediment for returning the moulds. Certain objections are raised by the learned counsel for respondent No.1 about the validity of the resolution of shareholders including that there is no stamp or seal of the Company thereon. But the fact remains that the respondent No.1 is admitting that the moulds in question are owned by the petitioner-Company. The respondent No.1 has no objection if the same be handed over to the petitioner-Company. Therefore, the objection is without any force in this regard. Even otherwise, the respondent No.1 admittedly has no interest in the said moulds.

13. In view of the above, it is directed that the moulds sealed by the Local Commissioner and retained in his possession be returned to Mr.Maurice Purdy on behalf of the petitioner-Company within two weeks from today who will give the receipt thereof on behalf of the petitioner-Company to the Local Commissioner along with an undertaking by way of affidavit that he is

receiving the said moulds on behalf of the petitioner-Company and there would be no liability whatsoever towards respondent No.1 with regard to the moulds in question and it would be taken that the same have been received by the petitioner-Company through Mr.Purdy.

14. As far as the other interim relief prayed in the petition is concerned, the same is not opposed by the learned counsel for the respondent No.1. Thus, the respondent No.1 is restrained from manufacturing any mannequins in terms of Clause 5.11 of the Agreement.

15. Learned counsel for both the parties, after obtaining instructions from their respective clients, have given their consent that Mr.G.P.Thareja, retired Addl. District Judge (Mobile No.9899664642) be appointed as sole Arbitrator to decide the disputes and differences between the parties. Ordered accordingly. The parties are at liberty to file their claims and counter-claims before the sole Arbitrator who will also consider the claim of the petitioner with regard to the fee paid to the Local Commissioner and similarly, the claim of the amount, if any, deposited by the respondent No.1 under ARE-I Form. The respondent No.1 is granted liberty to raise such claim before the sole Arbitrator apart from other claims and counter-claims. As agreed, the arbitration proceedings are to be conducted under the aegis of the Delhi High Court Arbitration Centre and the fee of the learned sole Arbitrator will also be paid as per the Rules maintained by the said Arbitration Centre. The parties shall appear before the learned sole Arbitrator on 17th April, 2014 for directions.

16. The present petition is accordingly disposed of along with other pending applications.

17. Copies of this order be given dasti to the learned counsel for the parties and copies of the same be also communicated to the sole Arbitrator as well as to the Delhi High Court Arbitration Centre forthwith.

(MANMOHAN SINGH) JUDGE MARCH 19, 2014