Delhi High Court

M/S Sagar Rtna Restaurants Pvt Ltd vs Tarseem Kumar & Ors on 29 February, 2016

Author: V. Kameswar Rao

*      IN THE HIGH COURT OF DELHI AT NEW DELHI
                                      Date of decision: February 29, 2016
+      O.M.P. 1064/2012

       M/S SAGAR RTNA RESTAURANTS PVT LTD
                                         ..... Petitioner
                    Through: Mr. Vijay Nair, Mr. Rahul
                             Malhotra, Advs.

                           versus

       TARSEEM KUMAR & ORS
                                                     ..... Respondents
                           Through:    Mr. Ravi Gupta, Sr. Adv.
                                       with Mr. Manoj Gupta, Adv.
                                       for the applicant/Shree
                                       Rathnam Restaurants.
                                       Mr.Anil K.Khaware, Mr.
                                       Abhinav, Advs. for D-1 to 3

CORAM:
HON'BLE MR. JUSTICE V.KAMESWAR RAO
V.KAMESWAR RAO, J.

IA 14211/2015

1. By this order, I shall dispose of IA 14211/2015, which has been

filed by M/s Shree Ratnam Restaurants Pvt. Ltd. (SRRP) The prayers in

the application, are, as under:-

"(i) That the receiver cannot interfere in the working and day to day operation of the Shree Rathnam Outlet at Rohini post 30.04.2015;

(ii) That the receiver / auditor cum manager cannot obstruct or demand any information with regard to the working of Shree Rathnam Restaurant at Rohini after 30.04.2015;

(iii) That the Hon'ble Court may clarify that the appointment of arbitrator shall exist till the validity of the initial agreement between the parties i.e. agreement dated 01.05.2005;

(iv) Such other and further order(s) which may this court deems fit and proper in the facts and circumstances of the case."

2. Suffice to state, that this petition was disposed of on April 17,

2013, when this Court had appointed Sh. J.P. Sharma, Additional District

& Sessions Judge (Retd.) as receiver as regard to the affairs and conduct

of the restaurant business by the respondents themselves or through M/s.

Shree Rathnam Restaurants Pvt. Ltd. (SRRP) in the premises i.e. 33, 35

& 36, Pocket C-9, Sector 7, Rohini, Delhi. Subsequently, two

applications being IA No.497/2014 & IA No.17214/2013 were filed by

SRRP, the applicant herein for modification of the order dated April 17,

2013 and the other by the petitioner for appointment of new receiver.

This Court in IA 17214/2013 in para 11 has passed the following order:-

"11. Having heard the learned counsel for the parties, insofar as IA 17214/2013 seeking appointment of Receiver is concerned, I note that Mr. R.C.Yaduvanshi, Retd. ADJ had tendered his resignation on September 9, 2013. The learned counsel for the parties during the submissions had stated that even Mr. Hitesh Luthra has resigned. The position which emerges is, with effect from September 9, 2013, no Receiver is in place to look after the affairs and conduct of the restaurant business for almost more than one year. I accordingly, appoint Mr. Padam Kant Saxena, Retd. Addl. District & Sessions Judge (Mobile No.9910384668) as the Receiver with regard to the affairs and conduct of the

restaurant, strictly in accordance with the order of this Court dated April 17, 2013. He would be entitled to the remuneration as fixed in the said order and would be at liberty to employ a suitable Manager of his own choice to look after the day-to-day affairs and conduct of the business of the restaurant. It is made clear that respondents and the applicant would cooperate with the Receiver in running the affairs and conduct of the restaurant, including the Manager so appointed by the Receiver."

3. Insofar as IA 497/2014 is concerned, the same was filed by

SRRP in terms of liberty granted by the Division Bench of this Court in

FAO(OS) 293/2013 filed by the applicant herein, to approach this Court

to iron out the practical difficulties arising out, as a result of the order

dated April 17, 2013 with regard to working of the receiver, to which the

learned counsel for the petitioner herein had given his no objection. IA

497/2014 was considered by this Court and the following order was

passed in para 12 to 15 of the order dated February 24, 2015, which I

reproduce as under:-

"12. Insofar as IA 497/2014 is concerned, the said application has been filed by the applicant SRRP on January 07, 2014. The prayers made in the said application reads as under:

"In view of the above said it is therefore most humbly prayed that Hon‟ble Court may please to modify the terms of order dated 17.04.2013 in terms of order passed in FAO(OS) 293/2013 dated 23.08.2013 to the extent of:-

(a)Accounts to the extent of commission paid to the respondent i.e. 18% of net sales be directed to be furnished;

(b)The petitioner shall be restrained from interfering into the business of the applicant company; (c) Such other and further order(s) which may this court deems fit and proper in the facts and circumstances of the case."

13. Interestingly, the prayers would show that the same are beyond the liberty granted by the Division Bench in FAO (OS) 293/2013, which I reiterate that the same was to be for pointing out difficulties in working out implementation of the order and nothing more. No such prayer has been made. Rather, the prayers reveal an attempt to circumvent the order passed by this Court on April 17, 2013. In fact, this Court is of the view that, since no Receiver was in place, an application of this nature is not maintainable being pre-mature.

14. The submissions made by Mr. Ravi Gupta, learned Senior Counsel by drawing attention to the various proceedings held by the Receiver would not reveal that the Receiver/Auditor have exceeded their mandate. The endeavour of the Receiver has been to ensure the affairs and conduct of restaurant in terms of the orders passed by this Court. I do not say anything more on this.

15. Insofar as the submission of Ravi Gupta, the respondent Nos. 1 to 3 and the applicant being asked to reveal the confidential information, is concerned, I take on record the statement of Mr.Jagjit Singh, learned counsel that no such information would be asked for. In any case, whether a particular information is a relevant information, confidential information, need to be decided by the Receiver. Surely, the Receiver, would take into consideration the view of the parties before forming an opinion. No attempt should be made by the applicant to withhold any information on that ground. As I note from the order dated April 17, 2013, the Receiver is required to submit a report with accounts to the learned Arbitrator

which has to be taken into consideration, while making the award, I call upon the applicant to submit to the Receiver/Manager the relevant documents/record including the accounts,balance sheet and any information as required/asked for by the Receiver/Manager relevant to the Financial Year 2013-14, and thereafter,till date, with regard to the restaurant at Rohini, within 10 days from the date of this order. The record shall be collated and kept by the Receiver in his custody to enable him to prepare the report for submission to learned Arbitrator."

4. Suffice to state, that orders dated April 17, 2013 and February 24,

2015 were passed when the original term of the agreement of ten years,

till April 30, 2015, had not expired. I may state here that the agreement

was terminated on September 23, 2012. Mr. Ravi Gupta, learned Senior

Counsel for the applicant would state, that the agreement between the

petitioner and the respondent Nos.1 to 3 would have expired naturally on

April 30, 2015 and the petitioner could claim damages only for such

period till the original tenure of the agreement had survived till April 30,

2015. He would state, that in terms of order dated April 17, 2013 and

February 24, 2015 passed by this Court, the receiver held his office in

terms of the orders, the mandate of the receiver would also automatically

come to an end on the closing hours of April 30, 2015. He would refer

to the proceedings dated June 1, 2015, which aspect was brought to the

knowledge of the receiver but the receiver had directed the applicants to

provide all necessary documents and information beyond April 30, 2015.

5. On the other hand, learned counsel for the petitioner/non applicant

would state, that the receiver having been appointed by this Court on

April 17, 2013, which order was challenged by the respondents 1 to 3 as

well as by the applicant herein SRRP was not interfered with. Rather,

the applicant herein withdrew the appeal to approach this Court to work

out the practical difficulties arising out, as a result of order dated April

17, 2013 with regard to working of the receiver. He would also state,

that the purpose of appointing the receiver was to get proper accounts of

sales and profits so that the learned Arbitrator arrive at a proper and just

conclusion for deciding the issue of losses suffered by the petitioner due

to illegal dispossession w.e.f. September 24, 2012. He would also state,

that the appointment of receiver and the duties, which the receiver has to

perform are not depending upon the expiry of terms of the agreement on

April 30, 2015. He would also state, that in terms of clause 20 of the

agreement between petitioner and the respondents, the respondents could

not use the name of 'Sagar Ratna' or any other name identical to it, and

also restricted to continue the restaurant business, which would expire at

least in the year 2019, and the receiver is required to be in place to get

the true accounts and the proceedings of receiver is to be continued till

the final disposal of the arbitration proceedings.

6. On the other hand, Mr. Ravi Gupta, learned Senior Counsel for the

applicant would draw my attention to the claims filed by the petitioner,

which I reproduce as under:-

"CLAIM-I A. That as already explained above, the respondents had allegedly terminated the franchisee agreement by alleged letter dated 23.09.2012. The said agreement is contrary to terms and conditions of the agreement between the parties. In any case, even otherwise it was illegal. This Hon‟ble Tribunal may, therefore, be pleased to declare that termination of franchisee agreement, by letter dated 23.09.12 sent by the respondents to the petitioner company, received on 25.09.2012 to be illegal, mala fide, null and void.

CLAIM-II That as per terms and conditions of the agreement applicable between the parties, the respondents cannot run any Restaurant business in any name, including in the name of „Shree Rathnam‟ through them or for a period of 7 years of alleged termination i.e. 23.09.12, as per clause 20 of the agreement between the parties, which the respondents have violated. The respondents in collusion with Shree Rathnam Restaurants Pvt. Ltd. which have been formed by ex-employees of the claimant at the instance/behest of previous owner Sh. Jayaram Banan of Sagar Ratna Restaurant, did not allow the petitioner to run Sagar Ratna restaurants from the premises in question from 24.09.2012 and overnight started a new restaurant on 24.09.2012 in the name of „Shree Rathnam‟, by trespassing the premises and dispossessing the claimant company from the premises in question. The respondent in collusion with their associates „Shree Rathnam‟ hijacked, the staff of the petitioner company and committed theft of various plant & machinery, equipments, documents, cash of Rs.2.5 lakhs and raw material/stock. All this was done by the respondents in conspiracy with ex- employees of the petitioner company, who had resigned from the petitioner company, who had resigned from

the petitioner company in March, 2012 and even the employees, who at that time, were already working at Sagar Ratna outlet Rohini, Sector-7, Delhi. The said action of respondents is totally illelgal, mischeous and mala fide. The respondents have, therefore, no right to run any restaurant on their own or through „Shree Rathnam‟ or through any third party from the premises in question. The respondents and its employees, successors, executors, agents, administrators, franchisees, representatives therefore, may be permanently restrained in any manner running any restaurant or any eating outlet in the name of „Shree Rathnam‟ or in any other name, through themselves in any capacity from the premises No.33, 35 & 36 Pocket C-9, Sector -7, Delhi, as per clause 20 of the agreement between the parties in any manner for seven years from 24.09.2012.

       CLAIM-III
       LOSSES       AND      DAMAGES          SUFFERED         BY
       PETITIONER COMPANY DUE TO BREACH OF
       AGREEMENT IN QUESTION BECAUSE THE
       INCIDENT OF DISPOSSESSION OF CLAIMANT ON
       24.09.2012
       C.     This claim is for losses and damages suffered by

petitioner company due to breach of agreement in question because the incident of illegal dispossession of petitioner company on 24.09.2012 and illegal actions in stealing the furniture, fixtures, gas bank, raw material and opening a Restaurant illegally, as already explained above. The claimant has suffered huge losses and damages, as the franchisee agreement was to continue minimum up to the year 2015, as per the agreement between the parties. The claimant has suffered huge loss of profit, because it could not run Sagar Ratna Restaurant for remaining balance 3 years from 24.09.2012 from the premises in question has been forced to open a new Sagar Ratna Restaurant next to the premises in question and for the said purpose has incurred huge expenses.

The claimant company has invested huge amount for

opening a new Sagar Ratna Restaurant outlet, next door. The claimant company has suffered loss of reputation and goodwill of Sagar Ratna Restaurant business because of abrupt dispossession on 24.09.2012, as no Sagar Ratna Restaurant could run till 12.11.2012 for about 2 months, because of its total closure and this is caused loss of reputation, huge loss of sale. New outlet Sagar Ratna Restaurant was opened on 12.11.2012 near the premises in question, the respondents and their associates during this closure period were representing to public at large/customer that Sagar Ratna Restaurant has been converted/changed into Shree Rathnam Restaurant. The sale of the claimant at the present premises is now less than half of what is was getting in the Sagar Ratna Restaurant, which was earlier being run from the premises in question up to 23.09.2013. In total there is a claim of Rs.2,00,64,399/- (Rupees Two Crores Sixty Four Thousand three hundred Ninety Nine only) tentatively assessed by the claimant, subject to further amount which is accruing in favoaur of claimant, towards losses and damages suffered by the claimant company from 24.09.2012 onwards till orders of closure of the restaurant run from the premises in question as sought for in the previous paras are passed by this Hon‟ble Tribunal. The damages have also to be assessed by this Hon‟ble Tribunal after obtaining the report of Ld. Receiver appointed by the Hon‟ble Delhi High Courts, which is to be submitted to this Hon‟ble Tribunal, who is getting all account audited from day one and has to control the affairs of Shree Rathnam Restaurant. The claimant is entitled to future business lo9sses, which it will be suffering till directions of closure, are passed by this Hon‟ble Tribunal. The Tribunal has to consider receiver‟s report in respect of earnings of Shree Rathnam Restaurant from 24.09.2012 till the order of closure are passed and award to petitioner.

CLAIM-IV D. In addition to the above, the claimant is entitled

to rendition of accounts from the respondents from 24.09.2012 onwards. The Ld. Receiver appointed by the Hon‟ble Delhi High Court in terms of order dated 17.04.2013 namely Sh. R.C.Yadhuvanshi, ASSJ (Retd.) has to completely take over the Shree Rathnam Restaurant and has to look after the affairs of the said Shree Rathnam Restaurant. The Hon‟ble Receiver has already held a meeting with the representative of petitioner company and respondents and taken some sale figures and has appointed an Auditor. The respondents till date have not produced the records of previous expenses of the Restaurant till date. The Receiver appointed by the Hon‟ble Court has also to submit his report with accounts, including after his completely taking over Shree Rathnam Restaurant business from the premises in question to the Arbitrator. All the profit so earned by the respondents themselves or through Shree Rathnam Restaurant or by Shree Rathnam Restaurant are liable to be reimbursed to the claimant towards the damages including future damages / losses, which are likely to be incurred by the claimant.

CLAIM-V E) That the claimant is also entitled to interest @18% P.A. on the aforesaid amount as claimed of Rs.2,00,64,399/- (Rupees Two Crores Sixty Four Thousand three hundred Ninety Nine only) above but not restricted to said amount and also on further additional amount which will found due after the Ld. Receiver report is considered by this Tribunal and final amount is awarded, till realization.

CLAIM-VI F) Cost of litigation from filing of case in Delhi High Court including arbitration and receiver cost be also awarded."

7. According to him, the aforesaid claims would reveal that the claim

of the petitioner before the learned Arbitrator is primarily for the period

ending April 30, 2015. He has also drawn my attention to para 24 of the

reply filed by the petitioner to this application wherein the petitioner has

stated that the petitioner is not claiming any losses or damages beyond

April 30, 2015, the original date when the tenure of the agreement had to

expire. According to him, this is sufficient to hold that in the absence of

a claim beyond April 30, 2015 the purpose of the receiver to continue

beyond that date is meaningless.

8. Having heard the learned counsel for the parties, suffice to state,

that the clarification sought for by the applicant in this application, of

order dated April 17, 2013 and February 24, 2015, surely does not flow

from the said orders as the issue, which has been raised by the applicant

in this application was not a subject matter of the earlier application filed

by the applicant being IA 497/2014. That apart, I note that in the order

dated April 17, 2013, this Court while appointing the receiver, had in

para 6, noted the consent of both the parties that the receiver is to be

appointed till such time, the dispute and differences between the parties

are settled by the Arbitrator. If that be so, the applicant today cannot

submit that pursuant to the expiry of date of April 30, 2015, even though

proceedings are continuing, the receiver has lost his mandate. The

challenge of the applicant to the order dated April 17, 2013 in FAO (OS)

293/2013 culminated in the order of withdrawal with liberty to work out

the practical difficulties arising out, as a result of the order dated April

17, 2013. In any case, the submission made by Mr. Ravi Gupta that the

claim of the petitioner before the learned Arbitrator, on the basis of para

24 of the reply to contend, are not for damages beyond a period of April

30, 2015 would appear, on a first blush, very appealing. But on a closure

look to the averments made in claim No.II, the petitioner does say that

the respondent Nos.1 to 3 could not have run the restaurant business in

the name of 'Shree Ratnam' for a period of 7 years of alleged

termination on September 24, 2012 as per clause 20 of the agreement

between the parties, which the respondents have violated. In fact, there

is a prayer made by the claimant to permanently restrain the respondents

1 to 3 (herein) from running any restaurant or any eating outlet in the

name of 'Shree Ratnam' or in any other name from the premises No.33,

35 & 36 Pocket C-9, Sector -7, Delhi, as per clause 20 of the agreement

in any manner for seven years from September 24, 2012. The petitioner

in claim No.III would state as under:-

"..............In total there is a claim of Rs.2,00,64,399/- (Rupees Two Crores Sixty Four Thousand three hundred Ninety Nine only) tentatively assessed by the claimant, subject to further amount which is accruing in favoaur of claimant, towards losses and damages suffered by the claimant company from 24.09.2012 onwards till orders of closure of the restaurant run from the premises in question as sought for in the previous paras are passed by this Hon‟ble Tribunal.

The damages have also to be assessed by this Hon‟ble Tribunal after obtaining the report of Ld. Receiver appointed by the Hon‟ble Delhi High Courts, which is to be submitted to this Hon‟ble Tribunal, who is getting all account audited from day one and has to control the affairs of Shree Rathnam Restaurant. The claimant is entitled to future business lo9sses, which it will be suffering till directions of closure, are passed by this Hon‟ble Tribunal. The Tribunal has to consider receiver‟s report in respect of earnings of Shree Rathnam Restaurant from 24.09.2012 till the order of closure are passed and award to petitioner."

9. It is clear that the petitioner's claim is premised on the fact that for

seven years, the respondents could not have run the restaurant or an

eating outlet in the name of Shree Ratnam, which would be till 2019, or

at least till such time it is directed to be closed. In fact, the aforesaid

would also show, the petitioner has said the claim for damages of

Rs.2,00,64,399/- is tentative. It is also stated in the claim No.III, the

damages have also to be assessed by the Arbitrator after obtaining the

report of the receiver appointed by this Court. The aforesaid also

reveals, the claimant has also sought future business losses, which it will

be suffering till directions of closure are passed by the learned

Arbitrator. So, it is not a case of the petitioner in the claim petition, that

the losses and damages are confined to period till April 30, 2015. The