Delhi High Court
Ngc Network India Pvt Ltd vs Orangefish Entertainment ... on 18 September, 2018
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment reserved on: 06.09.2018
Judgment pronounced on: 18.09.2018
+ O.M.P.(I) (COMM.) 326/2018
NGC NETWORK INDIA PVT LTD ..... Petitioner
Through: Mr. Dayan Krishanan, Sr. Adv. Mr.
Sahil Sethi, Ms. Sneha Jain, Ms.
Snehima Jauhari, Mr. Devvrat Joshi
and Mr. Sanjeevi, Seshadri.
versus
ORANGEFISH ENTERTAINMENT
PRIVATE LIMITED ..... Respondent
Through: Mr.Suhail Dutt, Sr.Adv. with R.S.
Mittal and Mr. Ankur Manchanda
CORAM:
HON'BLE MR. JUSTICE RAJIV SHAKDHER
RAJIV SHAKDHER, J.
Preface
1. This action encapsulates a war of attrition which has been going on
between two entities since August, 2017. The relationship between the
petitioner and the respondent emanates from a Memorandum of
Understanding dated 16.10.2012 (hereafter referred to as 'MOU'). The
MOU was followed by an Addendum dated 01.12.2015 (in short
'Addendum'). The Addendum was executed to essentially extend the tenure
OMP (I) (COMM) No.326/2018 Pg. 1 of 65
of the MOU. Broadly, under the MOU, the parties herein were required to
organize India Bike Week Event (in short 'ÍBW Event'). This event, it
appears, has been conducted annually by the parties, as indicated above,
without a hitch in Goa from February, 2013 till February, 2016. The annual
event of 2016 was followed by a mini event which was also held in and
about 20/21st February, 2017.
1.1 As indicated above, the dispute between the parties erupted in
August, 2017 when, according to the petitioner, it became aware of the fact
that the respondent had filed an application with the Registrar of Trade
Marks for registering the trademark 'India Bike Week' (in short 'IBW'),
exclusively, in its own name. It is vis-à-vis this aspect of the matter qua
which parties had approached Courts even on an earlier occasion to assert
their rights in consonance with the terms of the MOU.
Backdrop
2. The background in which the instant action has been instituted in this
Court is, broadly, as follows:
OMP (I) (COMM) No.326/2018 Pg. 2 of 65
2.1 On 16.10.2012, the petitioner and the respondent entered into an
MOU. The IBW Event, as indicated above, was organized by the parties
each year between February, 2013 and February, 2016.
3. It appears that the petitioner was aggrieved by steps taken by the
respondent to have the IBW trademark registered solely in its own name.
4. This led to the petitioner issuing a termination notice dated
24.08.2017. By this notice the petitioner, inter-alia, asserted that the
breaches committed by the respondent had brought about immediate
cessation of the MOU. Since, the petitioner was of the view that, it was a
'non-defaulting" party, it called upon the respondent to sell its share in the
IBW trademark/Event for INR 1 million.
5. The respondent, on the other hand, fired its own missive vide e-mail
dated 24.08.2017. The respondent alleged that the petitioner was in breach
of the terms of the MOU. The respondent, thus, threatened the petitioner, in
effect, with termination of the MOU within a period of 15 days in the event
the alleged breaches were not rectified.
5.1 The petitioner issued an interim response to this communication of
the respondent and, inter alia, informed the respondent about cessation of
OMP (I) (COMM) No.326/2018 Pg. 3 of 65
the MOU. It appears that thereafter, in and about September, 2017, the
respondent, albeit, unilaterally, without consulting the petitioner announced
the dates for the 2017 IBW Event.
6. This action of the petitioner, as it appears, propelled the respondent
into issuing a formal termination notice dated 09.09.2017. The termination
notice, clearly, indicated that the MOU would cease to have effect upon
expiry of the notice period of 15 days.
7. The petitioner, on the other hand, to ventilate its grievance and exists
its rights approached the Additional District Judge, Gurugram (in short
'ADJ') with a petition under Section 9 of the Arbitration and Conciliation
Act, 1996 (in short '1996 Act'). This petition was numbered as: Arb. Case
No. 54/2017.
8. Parallelly, the petitioner issued a response to the respondent's
termination notice. In this communication, the petitioner called upon the
respondent to cease and desist from exploiting the IBW trademark.
Furthermore, the petitioner also triggered the arbitration agreement
incorporated in clause XIII of the MOU and proposed appointment of a
sole Arbitrator.
OMP (I) (COMM) No.326/2018 Pg. 4 of 65
9. Even while the petitioner was awaiting the respondent's response to
its suggestion for appointment of an Arbitrator, the Additional District and
Sessions Judge rendered it is decision on the petitioner's application
preferred under Section 9 of the 1996 Act vide order dated 16.11.2017.
The learned ADJ dismissed the Section 9 petition filed by the petitioner,
inter alia, on the ground that it had failed to make out a prima facie case
and that the balance of convenience was also not in favour of the petitioner
apart from the fact that injuncting the 2017 IBW Event would cause
irreparable harm to the respondent. The learned ADJ, however, directed the
respondent to maintain accounts with respect to the Event that it proposed
to hold so that they could be produced before the Arbitrator at the time of
adjudication.
10 Being aggrieved, the petitioner carried the matter in appeal to the
Punjab and Haryana High Court. The appeal came up for hearing for the
first time on 22.11.2017, when, the learned Single Judge passed the
following order:
"It is contended that the effect of Clause 10 of the
Memorandum of Understanding (MOU) dated 16.10.2012 has
OMP (I) (COMM) No.326/2018 Pg. 5 of 65
been illegally ignored by the learned Additional District Judge,
Gurugram, while dismissing the application for temporary
injunction vide impugned order dated 16.11.2017. Learned
counsel for the respondent-caveator submits that in view of the
urgency of the matter, without going into the merits of the
contention, his clients are ready and willing to work out
workable modalities for the successful holding of the event,
subject to the ultimate' decision by the Arbitrator·.
In response, counsel for the appellant is not averse to such an
arrangement at this stage.
List on 24.11.2017 for further consideration.
Let the parties to file an affidavit detailing the modalities
thrashed out on the date fixed.
To be shown in the urgent list."
(emphasis is mine)
11 As directed, the matter was listed on the board of the learned Single
Judge on 24.11.2017. On the said date, counsel for the parties, placed for
OMP (I) (COMM) No.326/2018 Pg. 6 of 65
consideration of the Court a joint statement dated 23.11.2017. Furthermore,
counsel for the parties not only sought modification of the order dated
16.11.2017 passed by the learned ADJ but also sought a further direction
that the appeal be disposed of as having being rendered infructuous.
11.1 Accordingly, the learned Single Judge, keeping in mind the
submissions of the counsel and the joint statement placed before him,
modified the order dated 16.11.2017, passed by the ADJ, and disposed of
the appeal as having being rendered infructuous. Furthermore, the learned
Judge explicitly stated that the parties would be bound by the stand taken
before him.
12. Given this background, it would be necessary to cull out, verbatim,
the joint statement dated 23.11.2017 as extracted in the judgment of the
learned Single Judge as much has been said on behalf of the parties as to
the nature of interim arrangement they intended to put in place till the final
adjudication of their inter se disputes took place.
" · For ready reference the joint statement dated
23.11.2017 reads as under:-
" That NGC Network (India) Pvt. Ltd. & Orangefish
Entertainment
OMP (I) (COMM) No.326/2018 Pg. 7 of 65
Pvt . Ltd. Jointly held the IPR as defined in Clause 1.3 of
the MoU dated l6th October, 2012. Disputes have arisen
with regard to the same and the same is subject matter of
determination in Arbitmtion. Adequate notice or mention
of this shall be made by Orangefish Entertainment Pvt.
Ltd. on the website www. Indiabikeweek.in, Facebook
Page, Twitter Page of 1ndia Bike Week as well as on the
website of Orangefish Entertainment Pvt. Ltd. being
www. Seventyemg.com. The disclaimer to the contrary
posted by Orangefish Entertainment Pvt. Ltd. shall be
removed/deleted from the above websites/facebook and
twitter handle.
Orangefish Entertainment Pvt Ltd. shall maintain
ledger account while trading as Seventy EMG for
organizing the Event 'India Bike Week' on 24-25th
November, 2017 and shall preserve the accounts which
can be audited by NGC Network (India) Pvt Ltd.
Orangefish Entertainment Pvt. Ltd. shall render its
audited accounts with the Arbitrator for IBW 2017 on or
before 25th December, 2017.
NGC Network (India) Pvt. Ltd., and Orangefish
Entertainment Pvt. Ltd., post conduct of the IBW 2017
event on 24-25 November, 2017 shall not directly or
indirectly organize India Bike Week event as defined in
Clause 1.1 of the MoU or use the IPR as defined under
Clause 1.3 of the MOU uptill the arbitration proceedings
commence and for a period of one
week thereafter, subject to a maximum of two months
from today. Both the parties will be at liberty to move an
appropriate application including an application under
Section 17 of the Arbitration and Conciliation Act, 1996
before the Arbitrator for appropriate Orders.
The present statement would be without prejudice
to rights of both the parties to raise all pleas in all
forums including before the Arbitrator both at the interim
stage as well as final hearing and the statement made
would have no bearing in the said adjudication.
OMP (I) (COMM) No.326/2018 Pg. 8 of 65
Both the parties shall meet within one week from
today to discuss and decide the name of the Arbitrator".
12.1 A perusal of the joint statement would show that the parties bought
temporary peace, inasmuch as while the respondent was allowed to go
ahead with the 2017 IBW Event a caveat was entered, which was, that it
would maintain and preserve accounts which could be audited by the
petitioner, enabling, in effect, the production of audited accounts before the
learned Arbitrator on or before 25.12.2017.
12.2 Furthermore, parties also bound themselves to desist from organizing
directly or indirectly an IBW Event after the 2017 IBW Event (as defined
in clause 1.1 of the MOU) or use the Intellectual Property Rights (in short
'IPR') [as defined in clause 1.3 of the MOU] until the commencement of
arbitration proceedings and for a period of one week thereafter subject to a
maximum period of two months from the date when the joint statement was
executed inter se the parties.
12.3 Inter alia, the parties also agreed, as evident on a plain reading of the
joint statement, to convene a meeting for the purposes of zeroing down on
the name of the Arbitrator.
OMP (I) (COMM) No.326/2018 Pg. 9 of 65
13 It appears on 18.12.2017 the respondent conveyed to the petitioner
that it was agreeable that the disputes be referred to the Delhi International
Arbitration Centre (in short 'DIAC'). Evidently, this step was taken as
parties were unable to agree on their own as to who should act as the
Arbitrator for adjudication of disputes which had arisen between them.
14 While there is nothing on record to show as to what transpired
between 18.12.2017 and February, 2018 qua reference of the disputes to
the DIAC, the record does reveal that on 17.02.2018, the petitioner served a
cease and desist notice on the respondent.
14.1 This notice, as it appears, was, inter-alia, issued since the respondent
had put out in the public domain that it was going to hold an event, similar
to IBW Event, under the caption ''MOTOCAMP'' and for this purpose,
intended to use the IBW trademark.
14.2 In response thereto, the respondent issued a communication dated
28.02.2018 via its counsel. The stand taken by the respondent was that, it
was free to hold the event qua which grievance has been raised by the
petitioner as the order of the learned ADJ dated 16.11.2017, which had
OMP (I) (COMM) No.326/2018 Pg. 10 of 65
merged in the judgment dated 24.11.2017, passed by the learned Single
Judge of the Punjab and Haryana High Court, had worked itself out.
15. It appears that notwithstanding the stand taken by the parties in their
respective communications, the stand taken by them in the joint statement
before the Punjab and Haryana High Court weighed heavily on them and
consequently, parties entered into a fresh Arbitration Agreement dated
21.03.2018 (hereafter referred to as '2018 Arbitration Agreement‟). By
virtue of the 2018 Arbitration Agreement, the parties agreed that the
disputes which had arisen between them would be adjudicated upon by the
Arbitrator, albeit, under the aegis of the DIAC. This agreement was in line
with the discussion that the parties had in December, 2017, immediately,
after the disposal of the petitioner's appeal by the Punjab and Haryana High
Court.
16. As a result of this development, the petitioner, on 06.04.2018,
tendered a request to the Coordinator, DIAC, to initiate the process of
appointment of an Arbitrator. The petitioner also undertook to file its
Statement of Claim (in short 'SOC') with the DIAC in consonance with the
OMP (I) (COMM) No.326/2018 Pg. 11 of 65
DIAC Rules within a period of 15 days of its request or within such time
frame as may be specified by the Coordinator in that behalf.
17. The record shows that the DIAC invited the petitioner to file its SOC
vide communication dated 20.04.2018. Notably, a copy of this
communication was dispatched to the respondent.
18 As directed on 21.04.2018, the petitioner filed its SOC. The
petitioner followed it up by writing to the DIAC, on 27.04.2018, proposing
five names of former Supreme Court Judges for appointment of a sole
Arbitrator qua its disputes with the respondent.
19 Evidently, the DIAC, upon scrutiny of the SOC came to the
conclusion that the petitioner had failed to quantify its claims (a) to (d) in
monetary terms. This fact was communicated to the petitioner vide letter
dated 12.06.2018.
19.1 It appears that DIAC had brought this aspect to the notice of the
petitioner as quantification of claims in monetary terms would have
facilitated the fixation of fee that would have to be paid to the Arbitrator.
Importantly, by this very communication, the DIAC conveyed to the
OMP (I) (COMM) No.326/2018 Pg. 12 of 65
petitioner that it should choose an Arbitrator from a panel maintained by it.
For this purpose, the petitioner was requested to visit its website.
20 Upon the respondent receiving copy of the DIAC's communication
dated 20.04.2018, it advised its Advocate to respond to the said
communication. Accordingly, on 16.05.2018, the respondent's Advocate
wrote to the DIAC, making a grievance that the petitioner had not served
upon it the copy of the request dated 06.04.2018 and the documents, if any,
which accompanied the request, which included the 2018 Arbitration
Agreement executed between the parties. Furthermore, it was sought to be
brought to the notice of the DIAC that fees of the Arbitrator was to be
shared by the parties as stipulated in clause 6 of the Arbitration Agreement
and not in equal measure as was indicated in DIAC's letter.
21 The petitioner, it appears, in the meanwhile, vide e-mail dated
19.06.2018, suggested a panel of five names for appointment of a sole
Arbitrator.
22 Since, the process of appointment of the Arbitrator, was consuming
far too much time, the petitioner vide a letter dated 21.06.2018 called upon
the Coordinator, DIAC to appoint an Emergency Arbitrator. This
OMP (I) (COMM) No.326/2018 Pg. 13 of 65
communication, inter-alia, enclosed an application for grant of urgent
relief by the Emergency Arbitrator as also an application under Section 17
of the 1996 Act along with an amendment application.
22.1 It appears that the petitioner had filed an application under Section
17 prior to the request made for appointment of an Emergency Arbitrator in
the hope that the process of appointment of an Arbitrator would get
concluded at the earliest and in anticipation thereof, had suggested names
of five former Supreme Court Judges for appointment of a sole Arbitrator.
23 On 27.06.2018 DIAC called upon the respondent to either agree on
one of the names out of five, suggested by the petitioner for appointment of
a sole Arbitrator or in the alternative convey five names of its choice from
the panel maintained by it.
23.1 It appears that the respondent had also written a letter of even date
i.e. 27.06.2018, to the DIAC. Though, this letter is not on record what is
available on record is a communication dated 03.07.2018 issued by DIAC
in response to the said letter issued by the respondent. A perusal of the
DIAC's response would show that certain concerns were raised by the
respondent with regard to the request made by the petitioner for
OMP (I) (COMM) No.326/2018 Pg. 14 of 65
appointment of the Arbitrator. These concerns were sought to be addressed
by the DIAC vide its letter dated 03.07.2018.
24 In the interregnum, the petitioner, once again, on 02.07.2018 wrote
to the DIAC to expedite the process of appointment of an Arbitrator.
25 The respondent, on the other hand, via its Advocate's communication
dated 07.07.2018, reiterated its concerns with respect to the triggering of
the arbitration process by the petitioner and in this behalf adverted to the
DIAC's Rules and the 2018 Arbitration Agreement. The respondent, while
calling upon the DIAC to furnish a copy of the request made by the
petitioner and the copies of the documents appended to the said request,
sought time to file a reply and its counter claim.
25.1 Interestingly, the communication ended with a without prejudice
assertion that the 2018 Arbitration Agreement enabling the DIAC to
appoint an Arbitrator had ceased to have effect and therefore, the DIAC
had no 'jurisdiction', 'authority' or 'dominion' over the instant matter. The
respondent, thus, made it a point to convey to the DIAC that any
proceedings that it intended to conduct would be ''void'' and "invalid".
OMP (I) (COMM) No.326/2018 Pg. 15 of 65
26 This was followed by the respondent writing to the DIAC, on
13.07.2018, indicating its disapproval of the names suggested by the
petitioner and in turn, suggested its own set of names.
27 The petitioner, in order to expedite the process, on the very same
date via e-mail dated 13.07.2018, conveyed to the DIAC its consent to the
appointment of Hon'ble Mr. Justice K.S.P. Radhakrishnan, former Judge,
Supreme Court, as the sole Arbitrator from amongst the panel of names
suggested by the respondent.
28 Evidently, on 16.07.2018, the DIAC wrote to the learned Arbitrator
i.e. Hon'ble Mr. Justice K.S.P. Radhakrishnan, that the parties had agreed
to his appointment as the sole Arbitrator. Furthermore, by this very
communication, the DIAC called upon the Arbitrator to file its declaration
of acceptance and statement of independence as per Schedule IV of the
DIAC (Arbitration Proceedings) Rules. In addition thereto, the DIAC
indicated to the learned Arbitrator that the petitioner had already filed its
SOC along with an application under Section 17 of the 1996 Act. A copy
of this communication was dispatched to the Advocates of the petitioner
and the respondent.
OMP (I) (COMM) No.326/2018 Pg. 16 of 65
29 The petitioner claims that the copy of the DIAC letter dated
16.07.2018, addressed to the learned Arbitrator, was received by it only on
24.07.2018.
30 The petitioner, after a gap of nearly a week, wrote to the
Coordinator, DIAC, that there had been no further movement in the
constitution of the Arbitral Tribunal and that there was urgency in the
matter on account of continued usage of the IBW trademark by the
respondent, causing detriment to its interest.
31 Evidently, while the matter regarding the consent of the learned
Arbitrator was hanging fire, on 07.08.2018, the respondent advertized on
the social media that tickets for the 2018 IBW Event would be available
from 15.08.2018. For this purpose, it encouraged the viewers to visit its
website WWW. INDIABIKEWEEK.IN.
32 Given this provocation, the petitioner moved this Court by way of
the instant petition. The petition came for hearing for the first time before
me, on 14.08.2018, when an ad interim order was passed against the
respondent injuncting it from selling tickets with the trademark "India Bike
OMP (I) (COMM) No.326/2018 Pg. 17 of 65
Week", "The Biker's Festival", "IBW2018" and "#Indiabikeweek" or any
other mark which was deceptively similar to the foregoing marks.
33 The respondent, it appears, carried the matter in appeal to the
Division Bench. The said appeal was numbered as: FAO(OS)(COMM)
No.187/2018. The appeal was disposed of by the Division Bench vide
order dated 21.08.2018. In short, the Division Bench after noticing that the
returnable date fixed before me was 06.09.2018 exhorted the parties to
have the instant petition heard and disposed of on merits.
34 The respondent, since then, has filed its reply to the petition.
Submissions of counsel
35 In support of the petitioner's case, arguments have been advanced by
Mr. Dayan Krishnan, Senior Advocate, instructed by Mr. Sahil Sethi, while
submissions on behalf of the respondent have been made by Mr.Suhail
Dutt, Senior Advocate instructed by Mr. R.S. Mittal.
36 The arguments advanced by Mr. Krishnan can, broadly, be
paraphrased as follows:
OMP (I) (COMM) No.326/2018 Pg. 18 of 65
36.1 The IPR which emanated from the MOU was a joint property of the
parties. The parties were required to share the benefit emanating from the
IPR in the ratio of 60:40. The petitioner, under the MOU, is thus, entitled
to 40% share in the said joint property. This aspect is provided for in
Clauses I (1.3) & (1.7), Clause IV (1) and Clause V(6) of the MOU.
36.2 Furthermore, in the event of breach by either party, the 'non-
defaulting' party under clause IX of the MOU is empowered to buy out the
shares of the defaulting party for a maximum value of INR 1 million.
36.3 In the instant case, since the respondent had breached the terms of
the MOU by filing the application for registration of the subject trademark
without prior written consent or approval of the petitioner, the petitioner
was left with no choice but to terminate the MOU vide notice dated
24.08.2017. Therefore, the respondent's notice to terminate dated
24.08.2017, followed by a termination notice dated 09.09.2017 can have no
effect as the MOU had already been terminated by the petitioner.
36.4 The respondent has repeatedly violated the terms and conditions of
the MOU. This aspect came to the fore in July/August, 2017 when the
respondent attempted to and was successful in holding the 2017 IBW Event
OMP (I) (COMM) No.326/2018 Pg. 19 of 65
to the detriment of the petitioner‟s interest. Though, the petitioner sought
to protect its rights, as conferred upon it under the MOU, it failed to stop
the respondent from holding the 2017 IBW Event as the respondent had
gone too far in having third parties invest in the Event.
36.5 Given these circumstances, the petitioner had agreed to the disposal
of its appeal in the Punjab and Haryana High Court, based on an
understanding that till the rights in the IBW trademark/Event are finally
adjudicated upon by an Arbitrator, no precipitate action would be taken by
either party which could affect the interest of the other party. The
respondent, however, has chosen to, once again, embark on a course which
is wholly detrimental to the petitioner‟s rights under the MOU by
proposing to hold the 2018 IBW Event on 30.11.2018-01.12.2018.
36.6 Since, the parties could not agree on the appointment of a sole
Arbitrator, it was decided to have the arbitration proceedings conducted
under the aegis of the DIAC. The fact that the respondent agreed to this
suggestion is evident upon a bare perusal of the e-mail dated 18.12.2017,
addressed by the respondent to the petitioner. The intention of the parties to
OMP (I) (COMM) No.326/2018 Pg. 20 of 65
have the DIAC involved in the arbitration process got morphed into a
formal agreement, that is, the 2018 Arbitration Agreement.
36.7 However, even while the process of appointment of an Arbitrator
was on, the respondent precipitated the matter by advertising the sale of
tickets for the 2018 IBW Event. This unwarranted act of the respondent
propelled the petitioner to approach this Court for grant of injunctive relief.
36.8 The petitioner was constrained to move the Court as despite having
filed an application under Section 17 of the 1996 Act, as far back as on
21.06.2018 and an application for appointment of an Emergency Arbitrator
on 21.06.2018 with the DIAC, there was no movement in the matter. Due
to the dilatory tactics adopted by the respondent and the failure of DIAC to
move with alacrity in appointing an Emergency Arbitrator, the petitioner‟s
remedy under Section 17 of the 1996 Act had been rendered inefficacious.
37 On the other hand, Mr. Suhail Dutt, vigorously pressed for dismissal
of the petition and/or vacation of the interim order dated 14.08.2018. In
support of his prayers, Mr. Dutt advanced the following arguments:
37.1 The petitioner having approached the District Court at Gurugram, in
the first instance, by way of a petition under Section 9 of the 1996 Act, this
OMP (I) (COMM) No.326/2018 Pg. 21 of 65
Court would have no jurisdiction in view of the provisions of Section 42 of
the very same Act.
37.2 The contention that the Courts in Gurugram would have the
exclusive jurisdiction in the matter was sought to be supported by Mr. Dutt
by relying upon clause 9 of the 2018 Arbitration Agreement. Mr. Dutt
submitted that if clause 9 of the 2018 Arbitration Agreement were to be
read with clause XIII (which contained the arbitration clause) of the MOU,
it would be clear that the said clause had only been modified and not
superseded. In other words, according to Mr. Dutt, the jurisdictional Court
for filing of such a petition remained the Courts at Gurugram.
37.3 The Learned counsel went on to contend that the 2018 Arbitration
Agreement only changed the venue of the arbitration to Delhi without
affecting the exclusive jurisdictional clause contained in the MOU. In
support of this contention, reliance was placed by Mr. Dutt on the judgment
of the Supreme Court in: M/s Emkay Global Financial Services Ltd Vs.
Girdhar Sondhi, 2018 (10) SCALE 15.
37.4 Besides this, according to the counsel, the 2018 Arbitration
Agreement had ceased to operate in terms of clause 7 as arbitration
OMP (I) (COMM) No.326/2018 Pg. 22 of 65
between parties had not commenced within 30 days. It was stated that
neither the arbitration notice was served, as envisaged under Section 21 of
the 1996 Act and nor was a request given in accordance with Rule 3 of the
DIAC Rules nor was the same served on the respondent within the
stipulated period; as a matter of fact, the request has not been served on the
respondent till date.
37.5 The joint statement made by the parties before the Punjab and
Haryana High Court barred both parties from holding either an IBW Event
and/or from making use of the IPR for a maximum period of two months,
which came to an end on 23.01.2018. Therefore, the ex parte order dated
14.08.2018 was obtained by the petitioner on a clear misrepresentation of
facts and hence, the same ought to be vacated.
37.6 The petitioner, on the principle analogous to the doctrine of res-
judicata, is barred from filing successive petitions under Section 9 of the
1996 Act for the very same relief. The proceedings initiated before the
District Court at Gurugram, which culminated with the disposal of the
appeal by the Punjab and Haryana High Court was not limited to the 2017
OMP (I) (COMM) No.326/2018 Pg. 23 of 65
IBW Event. The order of the learned ADJ was not set aside but was only
modified by the Punjab and Haryana High Court.
37.7 Since, the Arbitral Tribunal was already in place w.e.f. 23.07.2018,
by virtue of the provisions of Section 9 (3) of the 1996 Act, the present
petition ought to have been dismissed in limine. This fact was in the
knowledge of the petitioner, which was, however, dishonestly, not
conveyed to the Court while securing the ex-parte order.
37.8 Assuming, without admitting, that the petitioner was unaware of the
constitution of the Arbitral Tribunal, even then, the bar under Section 9 (3)
of the 1996 Act would apply. The present petition, not being maintainable,
ought to be dismissed and the interim order be vacated.
37.9 The termination of the MOU by the petitioner was malafide on
account of the following:
(i) Firstly, the petitioner was aware since, January, 2013, that the
respondent had filed a trademark application. In this behalf, reference was
made to the documents appended by the respondent at pages 53 to 55 of its
document file.
OMP (I) (COMM) No.326/2018 Pg. 24 of 65
(ii) Secondly, the MOU was terminated by the petitioner without
providing for a 15 days cure period as mandated in clause VIII (3) of the
MOU.
(iii) Thirdly, filing of the trademark application in the sole name of the
respondent was merely a procedural issue and, therefore, sudden
termination of the MOU by the petitioner on this ground alone without
prior discussion or notice to the respondent, was mala fide and contrary to
the terms of the MOU.
38 The respondent was forced to terminate the MOU after giving 15
days notice to cure the breaches, as the petitioner had failed to bring
sponsors, or to promote, or even publicize the IBW Event.
38.1 Therefore, the petitioner being the defaulting party, the respondent
became the absolute owner of the IPR on tendering the stipulated amount,
equivalent to, INR 1 million to the petitioner in terms of clause IX(b) of the
MOU. The petitioner‟s contention that the IPR could not be used without
its consent had no merit as the MOU, admittedly, now stands terminated
and the respondent has become its absolute owner in terms of clause IX (b)
of the MOU.
OMP (I) (COMM) No.326/2018 Pg. 25 of 65
38.2 The continuance of the ex-parte order passed by this Court is causing
hardship and prejudice to the respondent as the entire work connected with
organizing the 2018 IBW Event has reached a standstill. The dates of 2018
IBW Event were announced on 11.07.2018. The sale of the tickets was to
commence on 15.08.2018, in view of the size of the annual Event, which is
being organized in Goa. The Event is expected to be attended by over
7500 bikers, 100 clubs and 75 exhibitors who hail from India and abroad.
Given the scale, necessary arrangements have to be completed, on an
expedited basis. Since, numerous sponsors for the 2018 IBW Event are in
the process of signing agreement(s) with the respondent, any hindrance in
the form of an interim order would have them back out from their
commitment(s).
38.3 The necessary arrangements, which include, inter-alia, tying up with
media agencies and ticketing agencies etc. have already been put in place
including the venue where the Event is to be held. The petitioner was
aware, all along, that the respondent would be holding the 2018 IBW Event
at the end of the year and, therefore, had managed to impact its interest by
delaying the initiation of arbitration proceedings, including the triggering
of Section 9 proceedings. The petitioner is not interested in organizing the
OMP (I) (COMM) No.326/2018 Pg. 26 of 65
annual Event, an aspect which has been recorded by the ADJ in its order
dated 16.11.2017. The respondent is the sole and exclusive inventor and
organizer as also responsible for conceptualizing the IBW Event and,
therefore, has an exclusive and superior interest in the IPR as well as in
keeping intact the value and reputation of the Event.
38.4 It is in the petitioner‟s interest that the subject mark is used and, in
case the petitioner succeeds in the arbitration proceedings, it will be
entitled to the 40% of the revenue/profits, in terms of the MOU. There is no
merit in the petitioner‟s plea that the Event be injuncted. The respondent
will, as, in the previous year, render accounts to the learned Arbitrator qua
the 2018 IBW Event as and when it is called upon to do so by the learned
Arbitrator.
38.5 The fact that the petitioner was aware of the alleged misuse of the
IPR is evident from its cease and desist notice dated 17.02.2018. Since, the
respondent refuted the same and followed it up by reply dated 28.02.2018,
the petitioner ought to have approached the Court and taken recourse to an
appropriate remedy at the earliest. The respondent is willing to publish a
OMP (I) (COMM) No.326/2018 Pg. 27 of 65
suitable disclaimer in respect of the pending disputes on its website, tickets
etc. and also to keep accounts, as indicated above.
39. In rejoinder, Mr. Krishnan stressed the point that the petitioner was
unaware of the letter dated 16.07.2018 issued to the learned Arbitrator till
its receipt on 24.07.2018. The fact that the petitioner was keen in having
the arbitration process expedited was sought to be brought to fore by Mr.
Krishnan, once again, by adverting to its letter dated 31.07.2018 addressed
to the DIAC. The fine point that Mr. Krishnan sought to make, is that, via
letter dated 16.07.2018, the DIAC, had called upon the learned Arbitrator
to given his consent and make a declaration in terms of Schedule IV of the
DIAC Rules, and therefore, the Arbitral Tribunal would get constituted
only when the petitioner had notice of occurrence of such an eventuality.
39.1 Furthermore, Mr. Krishnan made it a point to lay stress on the fact
that the petitioner was unaware of the purported declaration dated
23.07.2018, said to have been issued by the learned Arbitrator on which
reliance was placed by the respondent to show that the Arbitral Tribunal
had been constituted. In any event, according to Mr. Krishnan, the
supposed declaration dated 23.07.2018, which had been placed on record,
OMP (I) (COMM) No.326/2018 Pg. 28 of 65
was an unsigned document which did not reflect that the learned Arbitrator
had accepted his appointment. Given this position, Mr. Krishnan contended
that the bar under Section 9 of the 1996 Act would not apply in this case.
39.2 As regards the contention raised on behalf of the respondent that this
Court had no jurisdiction in the matter, in view of the fact that the 2018
Arbitration Agreement only changed the venue of Arbitration from
Gurugram to Delhi, Mr. Krishnan submitted to the contrary. It was the
learned counsel‟s contention that the exclusive jurisdiction clause obtaining
in the MOU ceased to have an effect with the execution of the 2018
Arbitration Agreement as the parties intended to change both, the seat as
well the venue from Gurugram to Delhi. In support of his submission, that
this court had the jurisdiction, reliance was placed by the learned counsel
on the judgment of the Supreme Court in Bharat Aluminium Co. Vs.
Kaiser aluminium Technical Services Inc1, (2012) 9 SCC 552.
"... 96. Section 2(1)(e) of the Arbitration Act, 1996 reads as under:
"2. Definitions.--(1) In this Part, unless the context otherwise requires--
(a)-(d)***
(e) „Court‟ means the Principal Civil Court of Original Jurisdiction in a district, and includes the High
Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions
forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not
include any civil court of a grade inferior to such Principal Civil Court, or any Court of Small Causes;"
We are of the opinion, the term "subject-matter of the arbitration" cannot be confused with "subject-
matter of the suit". The term "subject-matter" in Section 2(1)(e) is confined to Part I. It has a reference
and connection with the process of dispute resolution. Its purpose is to identify the courts having
OMP (I) (COMM) No.326/2018 Pg. 29 of 65
39.3 With regard to the other submission that the instant petition was
barred, in view of the provisions of Section 42 of the 1996 Act, learned
counsel submitted that the earlier petition under Section 9 was filed in
pursuance to the arbitration agreement which was incorporated in the MOU
whereas the subject petition is filed pursuant to the 2018 Arbitration
Agreement. It was contended that the two petitions pertained to different
arbitration agreements and different cause of action and hence Section 42
of the 1996 Act could not come in the way of the subject petition being
pursued by the petitioner in this Court.
39.4 As regards the argument of balance of convenience, put forth by the
respondent, Mr. Krishnan submitted that in view of flagrant breach of the
MOU by the respondent, the petitioner had exercised its option under
supervisory control over the arbitration proceedings. Hence, it refers to a court which would essentially
be a court of the seat of the arbitration process. In our opinion, the provision in Section 2(1)(e) has to be
construed keeping in view the provisions in Section 20 which give recognition to party autonomy.
Accepting the narrow construction as projected by the learned counsel for the appellants would, in fact,
render Section 20 nugatory. In our view, the legislature has intentionally given jurisdiction to two courts
i.e. the court which would have jurisdiction where the cause of action is located and the courts where the
arbitration takes place. This was necessary as on many occasions the agreement may provide for a seat of
arbitration at a place which would be neutral to both the parties. Therefore, the courts where the
arbitration takes place would be required to exercise supervisory control over the arbitral process. For
example, if the arbitration is held in Delhi, where neither of the parties are from Delhi, (Delhi having
been chosen as a neutral place as between a party from Mumbai and the other from Kolkata) and the
tribunal sitting in Delhi passes an interim order under Section 17 of the Arbitration Act, 1996, the appeal
against such an interim order under Section 37 must lie to the courts of Delhi being the courts having
supervisory jurisdiction over the arbitration proceedings and the tribunal. This would be irrespective of
the fact that the obligations to be performed under the contract were to be performed either at Mumbai or
at Kolkata, and only arbitration is to take place in Delhi. In such circumstances, both the courts would
have jurisdiction i.e. the court within whose jurisdiction the subject-matter of the suit is situated and the
courts within the jurisdiction of which the dispute resolution i.e. arbitration is located. ...."
OMP (I) (COMM) No.326/2018 Pg. 30 of 65
Section IX(b) of the MOU and had, thus, become the sole owner of IBW
Event. In other words, at this juncture, according to Mr. Krishnan, the
respondent had no right in the IPR. Furthermore, learned counsel submitted
that the respondent chose, if at all, to invest the 2018 IBW Event, knowing
fully well that the IPR created under the MOU, if not the sole property,
was, in the very least, a joint property and that the respondent could not be
permitted to canvass argument of creation of third party and financial
difficulty, after having embarked on a similar course in 2017.
39.5 Mr. Krishnan, was at pains to point out that it cannot be that each
year the respondent would violate the petitioner‟s right and because it
claims to have invested funds and third party rights are involved, it would
force the hand of the Court to put in place an ad-interim arrangement till
the dispute is finally adjudicated upon by the Arbitrator.
39.6 In fact, Mr. Krishnan contended that since the learned Arbitrator has
fixed 18.09.2018 as the date of hearing, no prejudice would be caused to
the respondent, if the interim order is continued as the 2018 IBW Event is
scheduled to be held only on 30.11.2018-01.12.2018.
OMP (I) (COMM) No.326/2018 Pg. 31 of 65
39.7 In sum, the contention of Mr. Krishnan was that, if the respondent is
allowed to sell the tickets for the 2018 IBW Event till final adjudication of
disputes, indeterminable third party rights would get embedded, which
would further only complicate the matter. According to Mr. Krishnan,
balance of convenience lay with the petitioner and not the respondent.
Analysis and Reasons.
40 I have heard the arguments of learned counsel for the parties as also
carefully examined the record.
41 What emerges upon the perusal of the record and on consideration of
the submissions advanced by the counsel over which, there is largely no
dispute is as follows:
(i) That in and about October, 2012 an MOU was executed between the
parties concerning holding of an annual IBW Event and sharing of IPR
generated therefrom, in 60:40 ratio. Forty percent (40%) share going to the
petitioner.
OMP (I) (COMM) No.326/2018 Pg. 32 of 65
(ii) That the respondent had taken steps, albeit, unilaterally to seek
registration of IBW trademark/event by filing an application with the Trade
Mark Authority on 10.12.2012, albeit, in its own name.
(iii) That apparently, respondent, sent an e-mail dated 14.01.2013
through, its Finance Manager, one, Mr. Deepak Bhagne, to Mr. Manoj Jain,
said to be connected with the petitioner, informing him, inter alia, that
"membership fee amounting to INR 56,000 for trademark registration had
been paid".
(iv) That the respondent had issued a notice dated 24.08.2017 wherein,
inter alia, it informed the petitioner that if it failed to remedy the breaches
pointed out in the notice within a period of 15 days, then, it would have no
other alternative but to terminate the MOU and the Addendum.
Furthermore, it also indicated to the petitioner that if termination of the
MOU and the Addendum became effective, it would be entitled to acquire
petitioner's share/interest under the MOU by making the payment as
stipulated in clause IX of the MOU.
(v) That the petitioner issued a termination notice of its own of even date
i.e. 24.08.2017.
OMP (I) (COMM) No.326/2018 Pg. 33 of 65
(vi) That the respondent, after the 15 days notice period was over, served
a termination notice dated 09.09.2017, on the petitioner, since, according to
it, breaches pointed out had not been cured.
(vii) Given the aforesaid circumstance, petitioner had approached the
District Court at Gurugram to have the 2017 IBW Event injuncted. This
endeavour of the petitioner failed as the learned ADJ vide order dated
16.11.2017, dismissed the Section 9 petitioner, albeit, with a direction to
the respondent to maintain accounts for production before the Arbitrator.
(viii) That the matter was carried in appeal by the petitioner, to the Punjab
and Haryana High Court, which was disposed of vide judgment dated
24.11.2017, based on a joint statement of the parties dated 23.11.2017. The
interim arrangement put in place by the parties, pending final adjudication
of inter se disputes received the imprimatur of the Court.
(ix) In pursuance, of the interim arrangement, on 18.12.2017, the
respondent sent an e-mail to the petitioner, whereby it agreed in principle
that the disputes obtaining between them could be adjudicated under the
aegis of DIAC.
OMP (I) (COMM) No.326/2018 Pg. 34 of 65
(x) The Parties entered into a fresh arbitration agreement i.e. the 2018
Arbitration Agreement. Via this agreement, the parties agreed that the sole
Arbitrator would be appointed by the DIAC in accordance with its rules.
Parties further agreed that the sole Arbitrator which the DIAC would
appoint would be that former Judge of the Supreme Court who had not,
previously, acted as an Arbitrator for either party or their affiliates. Parties
also agreed that the venue of arbitration would be Delhi and, ordinarily, the
place where DIAC was located i.e. at the High Court of Delhi at New
Delhi. Clause 6 of the 2018 Arbitration Agreement also provided the
manner in which the burden of fee would have to be shared by the parties.
Clause 7 of the very same agreement provided that the said agreement
would remain valid and binding between the parties only if arbitration was
initiated within a period of 30 days of signing of the agreement.
Interestingly, clause 8 of the 2018 Arbitration Agreement laid emphasis on
the fact that the said agreement would be applicable only in respect of
arbitration conducted under the aegis of the DIAC and not before any other
forum/institution. Furthermore, clause 9 of the 2018 Arbitration Agreement
indicated that clause XIII of the MOU shall continue to apply and will be
OMP (I) (COMM) No.326/2018 Pg. 35 of 65
binding on the parties except insofar as it was modified by the said
agreement.
(xi) Consequent thereto, a request for constituting an Arbitral Tribunal
was made by the petitioner to the DIAC vide communication dated
06.04.2018. An acknowledgement was issued by the DIAC vide letter
dated 20.04.2018. By this communication, DIAC required the petitioner to
propose names of Arbitrator, albeit, from its own panel.
(xii) The petitioner filed its SOC with the DIAC on 21.04.2018. This was
followed by an e-mail dated 27.04.2018, whereby the petitioner provided a
panel of Arbitrators from which appointment could be made by the DIAC.
(xiii) On 16.05.2018, the respondent via its Advocates wrote to the DIAC
raising certain procedural objections.
(xiv) On 21.06.2018, the petitioner applied to DIAC for appointment of an
Emergency Arbitrator. The request was accompanied by an application for
interim relief.
(xv) On 02.07.2018, the petitioner, once again, wrote to the DIAC to
expedite the process of commencement of arbitration proceedings. This
OMP (I) (COMM) No.326/2018 Pg. 36 of 65
was followed by a letter dated 12.07.2018 wherein, once again, it was
brought to the notice of the DIAC that the respondent‟s actions taken vis-à-
vis the 2018 IBW Event were causing detriment to its interest.
(xvi) On 13.07.2018, the petitioner conveyed its consent to one of the five
names suggested by the respondent for being appointed as an Arbitrator via
its letter dated 12.07.2018 addressed to DIAC. Accordingly, the petitioner
in its letter gave consent to the appointment of Hon'ble Mr. Justice K.S.P.
Radhakrishnan, former Judge, Supreme Court as an Arbitrator in the
matter.
(xvii) The DIAC vide letter dated 16.07.2018, wrote to Hon'ble Mr. Justice
K.S.P. Radhakrishnan, former Judge, Supreme Court that parties had
agreed to his appointment as an Arbitrator. Furthermore, by this letter, the
DIAC also requested the learned Arbitrator to file a declaration of
acceptance and statement of independence as per Schedule IV of the DIAC
Rules.
(xviii) The petitioner, however, claims (and there is no proof to the
contrary) that it received DIAC's letter dated 16.07.2018 only on
24.07.2018.
OMP (I) (COMM) No.326/2018 Pg. 37 of 65
(xix) On 24.07.2018, the DIAC appears to have received the declaration
from the learned Arbitrator, which, apparently was signed by him on
23.07.2018. The petitioner claims that it had no knowledge of the
document dated 23.07.2018. The petitioner also claims that the document
dated 23.07.2018, on the face of it, does not bear the signature of DIAC
and, therefore, would not establish that the learned Arbitrator has, in fact,
given his consent.
(xx) On 31.07.2018, the petitioner, once again, addressed a letter to the
DIAC, wherein it expressed its concern that the matter had not moved
forward since the receipt of DIAC‟s letter dated 16.07.2018. This letter, in
fact, is relied upon by the petitioner to buttress its contention that it was
unaware of the fact that document dated 23.07.2018 had come into
existence.
(xxi) On 07.08.2018, the respondent proclaimed on the social media that
the tickets for 2018 IBW Event would be available from 15.08.2018 on its
website. This communiqué exhorted interested person to visit its website
WWW. INDIABIKEWEEK.IN.
(xxii) The instant petition was moved in Court on 14.08.2018.
OMP (I) (COMM) No.326/2018 Pg. 38 of 65
ISSUES:
42 Given the aforesaid facts and circumstances, to my mind, the
following issues arise for consideration:
(i) Whether the petitioner was aware of the constitution of the Arbitral
Tribunal? If so, what would be the consequences of such a fact having
come the knowledge of the petitioner?
(ii) Would the bar under Section 9 (3) of the 1996 Act apply, even if a
party is unaware of the constitution of the Arbitral Tribunal and seeks
interim relief from the Court by filing a petition under Section 9 of the
1996 Act?
(iii) Would this Court have jurisdiction to entertain the instant petition,
given the fact that under clause XIII of the MOU, exclusive jurisdiction
with regard to arbitration proceedings, including interim reliefs as available
under Section 9 of the 1996 Act, vested with Courts at Gurugram?
(iv) Is the instant petition not maintainable in view of the petitioner
having approached the District court at Gurugram in an earlier round in
view of the provisions of Section 42 of the 1996 Act?
(v) Was the ex-parte interim order dated 14.08.2018 obtained by the
petitioner by resorting to misrepresentation?
OMP (I) (COMM) No.326/2018 Pg. 39 of 65
(vi) Was the petitioner entitled to injunction as prayed for in the facts and
circumstances of the instant case?
Issue No. (i)
43 Insofar as this issue is concerned, in my view, the material placed
before me persuades me to come to the conclusion that the petitioner was
unaware of the fact that the declaration dated 23.07.2018 had been received
by the DIAC on 24.07.2018. The preponderance of probability propels me
to conclude that the petitioner had no knowledge that the learned Arbitrator
had given his consent in response to the DIAC‟s letter of 16.07.2018. The
communication dated 24.07.2018 sent by the petitioner to the DIAC,
wherein it indicated to DIAC that it had received DIAC‟s communication
dated 16.07.2018 only fortifies the conclusion that I have reached in this
behalf. The fact that the petitioner wrote to the DIAC on 31.07.2018
indicating therein that there has been no movement in the matter after the
DIAC‟s letter of 16.07.2018 would only further strengthen the probability
that the petitioner was unaware of the DIAC having received the
Arbitrator‟s declaration dated 23.07.2018. As a matter of fact, during the
course of arguments, Mr. Dutt had conceded that the document dated
23.07.2018 was generated by the respondent after carrying out an
OMP (I) (COMM) No.326/2018 Pg. 40 of 65
inspection of the file maintained by the DIAC. A bare perusal of the
document would show that it is not a copy of the original. I had called for
the original document from the DIAC. The original declaration bears the
signature of the learned Arbitrator, whereas the document put before the
Court simply bears the endorsement "Sd" instead of the signature of the
learned Arbitrator.
43.1 Therefore, as indicated above, this issue would have to be decided in
favour of the petitioner.
Issue No. (ii)
44 As regards the aforesaid issue, the argument advanced by Mr. Suhail
Dutt was that even if the petitioner was unaware of the factum of the
constitution of the Arbitral Tribunal, the bar under Section 9 (3) of the 1996
Act would apply and, hence, the petition was not maintainable. It would be
appropriate, at this juncture, to extract the relevant part of Section 9:
"9 Interim measures, etc. by Court.- (1) A party may,
before or during arbitral proceedings or at any time after
the making of the arbitral award but before it is enforced in
accordance with section 36, apply to a court-
xxxxxxx
OMP (I) (COMM) No.326/2018 Pg. 41 of 65
(3) Once the arbitral tribunal has been constituted, the
Court shall not entertain an application under sub-section
(1), unless the Court finds that circumstances exist which
may not render the remedy provided under section 17
efficacious."
44.1 A bare perusal of Sub-Section (3) of Section 9 would show that once
an Arbitral Tribunal has been constituted, the Court, ordinarily, would not
entertain an application for interim relief unless the Court comes to the
conclusion that circumstances obtain which have rendered the remedy
under Section 17 of the 1996 Act inefficacious.
44.2 Having said so, in this case, what is required to be noticed, is that, at
the point in time when the petition under Section 9 was instituted, the
petitioner verily believed that the Arbitral Tribunal was not constituted. An
explicit assertion to that effect, even according to the respondent, has been
made in the petition. The reason articulated in the petition for approaching
the Court was that the petitioner had failed to obtain interim relief despite
having made a request to the DIAC, as far back as on 21.06.2018.
44.3 Furthermore, what made matters worse from the point of view of the
petitioner was that despite having made a request for appointment of an
Emergency Arbitrator pending constitution of the Arbitral Tribunal vide
OMP (I) (COMM) No.326/2018 Pg. 42 of 65
communication dated 21.06.2018, there was no real alacrity shown in the
matter by the DIAC.
44.4 The DIAC, instead of dealing with the request for appointment of an
Emergency Arbitrator, processed, in the usual and ordinary course, the
petitioner's earlier request for constitution of the Arbitral Tribunal.
44.5 The petitioner being keen to hasten the process of the constitution of
the Arbitral Tribunal, immediately, upon receiving a copy of the
respondent‟s letter dated 12.07.2018, seeking consensus on one of the five
names suggested by it, agreed to one of the names via a return
communication dated 13.07.2018.
44.6 Despite the petitioner showing acute keenness in the constitution of
the Arbitral Tribunal, the same was not constituted with due expedition.
The petitioner being unaware of the fact that the DIAC had received the
Arbitrator's declaration of independence on 24.07.2018, had, in my view,
every reason to approach this Court for grant of ad-interim relief, as the
relief under Section 17 of the 1996 Act, though sought, was not
immediately made available to it. Delay and lack of knowledge about the
constitution of the Arbitral Tribunal, in my opinion, provided sufficient
ground to the petitioner to approach this Court via the instant petition.
OMP (I) (COMM) No.326/2018 Pg. 43 of 65
Therefore, in the instant case, in my view, the bar of Section 9 (3) of the
1996 Act would not apply, as was sought to be contended by Mr. Dutt.
44.7 I must also indicate at this juncture that at one point, it was
suggested by Mr. Krishnan that since, according to the respondent, the
Arbitral Tribunal had been constituted and the matter was posted before the
learned Arbitrator on 18.09.2018, this application could be placed before
the learned Arbitrator for appropriate orders. Mr. Dutt, however, did not
agree to the suggestion made by Mr. Krishnan and pressed for the dismissal
of the petition or in the very least, vacation of the interim order on the
grounds articulated by him.
44.8 Given the foregoing discussion, this issue would also have to be
decided in favour of the petitioner.
Issue No. (iii)
45 Insofar as the aforesaid issue is concerned, two important aspects
have to be borne in mind. First, the scope and ambit of Clause XIII of the
MOU. Second, as to how Clause XIII was impacted by the 2018
Arbitration Agreement. For the above said purpose, it would be necessary
to extract Clause XIII of the MOU and relevant clauses of the 2018
Arbitration Agreement i.e. Clauses 1, 3, 5, 8 & 9:
OMP (I) (COMM) No.326/2018 Pg. 44 of 65
"A) MOU
XIII. ARBlTRATION
If any dispute arises between the Parties hereto during
the subsistence of this MoU or thereafter, the Parties
shall try and resolve the dispute amicably failing which
the dispute shall be referred to arbitrator appointed
mutually by both parties as per the Arbitration and
Conciliation Act.
l. The venue of the arbitration shall be Gurgaon (lndia).
2. The proceedings of arbitration shall be in the English
language,
3. The Arbitrator's award shall be substantiated in
writing. The costs of arbitration procedure shall be borne
equally by the parties.
4. The Parties hereto shall submit to the Arbitrator's
Award and the award shall be enforceable in any
competent court of law.
Subject to the above provisions, the Courts having
jurisdiction under the provisions of the Arbitration and
Conciliation Act, 1996, to determine all matter which the
Court is entitled to determine under the Act, including,
without limitation provision of interim reliefs under the
provisions of Section 9 of the Arbitration and
Conciliation Act, 1996, shall exclusively be the courts at
Gurgaon, India."
OMP (I) (COMM) No.326/2018 Pg. 45 of 65
B) 2018 Arbitration Agreement
1 The Parties agree to submit all disputes arising
from, connected with and/or in relation to the Agreement
to arbitration in accordance with the Rules of the DAC.
3 The Parties agree that the venue of the arbitration
proceedings shall be. at Delhi and ordinarily at the Delhi
International Arbitration Centre located at the High
Court of Delhi, New Delhi, India.
5 This Arbitration Agreement is executed only for
purpose of the present intended arbitration. This
Arbitration Agreement will have no application or effect
on any future arbitration proceedings between the
Parties.
8 It is clearly understood that this Arbitration
Agreement shall be applicable only in respect of an
arbitration conducted under the aegis of DAC in terms
referred above and not before any other
forum/institution.
9 The Parties agree that the Arbitration clause being
clause XIII of the Agreement, except in so far as modified
by this Arbitration Agreement, shall continue to apply
and be binding on the parties."
45.1 A perusal of Clause XIII of the MOU would show that no seat of
arbitration was explicitly agreed to by the parties. However, in sub-clause
OMP (I) (COMM) No.326/2018 Pg. 46 of 65
(1) of Clause XIII, the venue of the arbitration, at the relevant point in time,
was indicated as Gurugram. Sub-clause (4) of Clause XIII also provided,
as would be apparent upon reading of the extract culled out above, that the
Award could be enforced in any competent Court of law.
45.2 Furthermore, the proviso to Clause XIII of the MOU states that
subject to the aforementioned provisions, the Courts at Gurugram would
have the exclusive jurisdiction including with regard to matters which came
within the ambit of Section 9 of the 1996 Act.
45.3 The argument advanced on behalf of the respondent is that in view of
the provisions of Clause 9 of the 2018 Arbitration Agreement, the
provisions made in the proviso to clause XIII of the MOU which conferred
exclusive jurisdiction on the Gurugram Courts remained unaffected despite
the execution of 2018 Arbitration Agreement. In order to appreciate this
contention, what one has to gather is the intention of the parties, given the
facts and circumstances obtaining in the present case. Clearly, no part of
cause of action, at any given point of time, arose in Gurugram. This fact
has to be kept in mind while taking cognisance of another fact, which is,
OMP (I) (COMM) No.326/2018 Pg. 47 of 65
that though the petitioner has its registered office at Gurugram, admittedly,
respondent's registered office is located in Mumbai.
45.4 In the MOU, the parties provided for Gurugram to be the venue and
conferred exclusive jurisdiction on Gurugram Courts subject to the other
provisions including the sub-clause (I) and (4) of Clause XIII of the MOU,
which, as indicated above, provided that the venue of arbitration would be
in Gurugram and the Award could be enforced in any competent Court of
law. Therefore, if the MOU had continued to operate and the 2018
Arbitration Agreement had not been executed by the parties then a petition
under Section 9 could lie, perhaps, only in the Courts in Gurugram. This
would be so, as the proviso to Clause XIII which conferred exclusive
jurisdiction on Gurugram Courts, was subject to the provisions preceding
the proviso.
45.5 However, with the execution of the 2018 Arbitration Agreement, the
parties consciously changed the venue to Delhi and went on to emphasizes
that arbitration would be held ordinarily where the DIAC sits, which is
within the precincts of this Court i.e. High Court of Delhi. Clause 8 of
2018 Arbitration Agreement lays stress on the fact that the said agreement
OMP (I) (COMM) No.326/2018 Pg. 48 of 65
would be applicable only in respect of an arbitration conducted under the
aegis of DIAC. There is no provision regarding jurisdiction of Courts, in
the 2018 Arbitration Agreement. Therefore, keeping in mind the
conspectus of the provisions incorporated in the MOU pertaining to
arbitration and those which obtain in the 2018 Arbitration Agreement
coupled with the fact that no part of cause of action arose in Gurugram, in
my opinion, the intention of the parties was to fix the seat of arbitration
where DIAC is located, which is, Delhi. The argument advanced on behalf
of the respondent that the provision in the MOU with regard Gurugram
Courts having exclusive jurisdiction survives despite execution of 2018
Arbitration Agreement, in my opinion, fails to take into account the fact
that the said provision was itself subject to what was stated in the preceding
clauses including the clause in the MOU which fixed the venue of the
arbitration at that point in time at Gurugram. Since, the venue was
changed, the conferment of exclusive jurisdiction, in the Courts located in
Guguram failed to have any efficacy for the parties. The parties, to my
mind, as indicated above, intended to fix Delhi as the seat of arbitration.
45.6 The decision in M/s Emkay Global Financial Services Ltd, to my
mind, is distinguishable as a perusal of paragraph 5 of the said judgment
OMP (I) (COMM) No.326/2018 Pg. 49 of 65
would show that under the National Stock Exchange bye laws, relevant
authorities prescribed Regulations for "creation of seats of arbitration for
different regions, or prescribing geographical locations for conducting
arbitrations and prescribing the Courts which will have the jurisdiction
for the purposes of the Act". In that case, the Arbitrator had held sittings
in Delhi and thereafter delivered the Award, presumably, at Delhi. A
Section 34 petition was filed in the District Court at Delhi, which was
rejected on the ground that the jurisdiction in relation to disputes arising
under the bye laws of National Stock Exchange was vested in the Civil
Courts at Mumbai. Pertinently, Chapter VII of clause (1)(a) of the National
Stock Exchange byelaws, inter alia, provided that any deal entered whether
through automated trading system or via any proposal for buying and
selling would be deemed to have been entered at the computerized
processing units at Mumbai and the place of execution of the contract as
between the trading members would be at Mumbai. The trading members
of the Exchange under the said bye laws were expressly directed to record
on their contract note that they had excluded the jurisdiction of all other
courts, save and except, that of Civil Courts in Mumbai in relation to any
dispute arising out or in connection or in relation to contract notes.
OMP (I) (COMM) No.326/2018 Pg. 50 of 65
45.7 Clearly, in Emkay's case the cause of action, which arose out of
contract notes or qua any deal entered though automated trading system
was agreed to be located in Mumbai. Therefore, the exclusive jurisdiction
clause in that case gave supervisory jurisdiction to Courts located in
Mumbai as against those in Delhi where the Arbitrator had only held
sittings. As indicated above, this judgment would not help the cause of the
respondent, especially in the circumstances that after the MOU, the 2018
Arbitration Agreement was executed between the parties which did not
confer exclusive jurisdiction on any Court much less Courts at Gurugram.
46 Therefore, this issue would also have to be answered in favour of the
petitioner and against the respondent.
Issue No. (iv)
47 In view of the foregoing discussion with regard to issue No. (i), I am
of the view that there can be no bar in the petitioner prosecuting the instant
action. The earlier arbitration agreement which obtained between the
parties and formed part of the MOU, was novated with the execution of the
2018 Arbitration Agreement. The instant action has been filed based on
the 2018 Arbitration Agreement and not on the basis of arbitration
OMP (I) (COMM) No.326/2018 Pg. 51 of 65
agreement which stood incorporated in Clause XIII of the MOU. The
earlier petition under Section 9 was filed based on Clause XIII of the
MOU. The instant petition is, in fact the first petition under the 2018
Arbitration Agreement. Therefore, to my mind, the bar of Section 42
would not come in the way of the petitioner prosecuting the instant
petition.
47.1 Consequently, this issue is also decided in favour of the petitioner
and against the respondent.
Issue No. (v)
48 As regard the aforementioned issue, Mr. Dutt drew my attention to
the judgment dated 24.11.2017, passed by the learned Single Judge of the
Punjab and Haryana High Court. Based on what is stated in the said
judgement, Mr. Dutt emphasized the fact that the ex-parte order dated
14.08.2018 had been obtained by the petitioner by misrepresenting the
facts.
48.1 Pertinently, in the order dated 14.08.2018, I had recorded Mr.
Krishnan's submission that the sale of tickets for the subject Event i.e. 2018
OMP (I) (COMM) No.326/2018 Pg. 52 of 65
IBW Event, was contrary to the "understanding" arrived at between the
parties which was reflected in the order dated 24.11.2017.
48.2 Thereafter, in the very same order, I had extracted a part of the
judgment dated 24.11.2017, on which, Mr. Krishnan had placed reliance.
Mr. Dutt, based on the very same extract, argued that a perusal of the
extract would show that the parties had agreed that they will not, directly or
indirectly, organize an IBW Event or use the IPR, as adverted to in the
MOU, up until such time arbitration proceedings commence and for a
period of one week thereafter, subject to maximum of two months from
that date. It was, thus, Mr. Dutt's contention that since the stipulated
maximum period of two months had expired on 23.01.2018, the
understanding had dissolved and, hence, could not have formed the basis of
the ex parte order.
48.3 To my mind, this submission of Mr. Dutt loses sight of two
important aspects. Firstly, the contention made before me by Mr. Krishnan
was that there was an "understanding" between the parties that they would
not organize an IBW Event or use the IPR till the arbitration proceedings
commence and this understanding was sought to be disturbed by the
OMP (I) (COMM) No.326/2018 Pg. 53 of 65
respondent, even though, to the knowledge of the respondent steps had
been taken to have an Arbitrator appointed.
48.4 The documents filed with the petition including the e-mail dated
18.12.2017, addressed by the respondent to the petitioner, was clearly
indicative of the fact that the respondent, in principle, had agreed to
arbitration being conducted under the aegis of the DIAC.
48.5 Therefore, it was sought to be contended on that date (and this
continues to be the contention of the petitioner before me, even today) that
the respondent without waiting for the Arbitral Tribunal to be constituted
had embarked upon a course which disturbed the understanding arrived at
between the parties on 23.11.2017, which translated into the judgment of
Punjab and Haryana High Court dated 24.11.2017.
48.6 Given these facts and the foregoing discussion, I am of the
unequivocal view that there was no misrepresentation made by the
petitioner while seeking to press for an ex-parte injunction.
48.7 Accordingly, in my opinion, there is no merit even in this contention
advanced on behalf of the respondent. The same is, accordingly, rejected.
OMP (I) (COMM) No.326/2018 Pg. 54 of 65
48.8 This issue is also decided in favour of the petitioner and against the
respondent.
Issue No. (vi)
49 This issue pertains to merits of the petition, inasmuch as, whether or
not in the given facts and circumstances of the case, the petitioner should
be granted injunctive relief. For this purpose, one would have to examine
the relevant provisions of the MOU. The relevant provisions of the MOU,
to my mind, are Clause I (1.3), Clause IV (1) and Clause X (1). For the
sake of convenience, the aforementioned provisions of the MOU are
extracted hereafter:
"I DEFINITIONS AND INTERPRETATION
In this MOU, (including the Recitals) unless the context
clearly indicates and intention to the contrary, a word or and
expression, which denotes a natural person shall include an
artificial person (and vice versa) any one gender shall include
the other genders, the singular shall includes the plural (and
vice verse) and the following words and expressions shall bear
the meanings assigned to them below (and cognate words and
expressions shall bear corresponding meanings):
xxxxxxxx
OMP (I) (COMM) No.326/2018 Pg. 55 of 65
1.3. "IPR" shall mean the trademarks India Bike Week, IBW
(both as a word-mark as well as a logo/label mark if
applicable), and copyright in all artistic and literary works
created in relation to the Event, and shall include nil
associated rights in the nature of intellectual property rights
(for instance, goodwill, exploitation and modification rights).
All IPR shall be jointly held in Sharing Ratio as tenants-in-
common, and neither Party shall have the right to alienate its
share or deal with the IPR in any manner without the written
consent of the other Party. "
IV RESPONSIBILITIES
1. 70 EMG shall be solely responsible for filing and obtaining
all IPR protections with all relevant authorities within the
Territory, and also for defending the said IPR against any
infringement, subject to written notice and agreement with
NGC for each such filing and/or infringement defense and
any expenses incurred for the same shall be entitled to be
deducted as expenses from the Profit. It has been explicitly
agreed between the Parties that the IPR shall remain the joint
property of both Parties in the Sharing Ratio and that either
Party will not represent anything to the contrary. Any breach
of this clause shall lead to immediate cessation of this MoU
and shall specifically prohibit either Party from conducting
OMP (I) (COMM) No.326/2018 Pg. 56 of 65
any business as is envisaged under this MoU or any business
similar in nature and intent of this MoU.
X. NON-COMPETITION AND NON-SOLICITATION
I . The Parties undertake that during the tenure of this MoU
and for a period of twelve (12) months after the termination of
this MoU neither Party nor any of its affiliates, associates,
agents or representatives, shall directly or indirectly organize
the Event or any event, which may be competitive with the
Event.
(emphasis is mine)
49.1 A bare perusal of Clause I (1.3) would show that the IPR emanating
from the MOU i.e. trademark "India Bike Week", "IBW" both, Word-Mark
as well as logo/label mark and the copy right in all artistic work and literary
works created in relation to the Event, and all associated rights in the nature
of IPR, were to be jointly held by the parties as tenants-in-common.
Neither party, as per the said clause, could alienate its share or deal with
the IPR in any manner without the written consent of the other party.
49.2 As per Clause IV (1), the responsibility for filing and obtaining IPR
protection with the relevant authorities and defending the IPR against the
infringement, was the sole responsibility of the respondent subject to the
OMP (I) (COMM) No.326/2018 Pg. 57 of 65
petitioner being notified in writing about such filing or institution of
infringement action (s) etc. The expenses, if any, incurred in that behalf by
the respondent were to be deducted from the profits that would be earned
by the parties.
49.3 Clearly, Clause IV (1) provided that the IPR would remain the joint
property of the parties in the sharing ratio provided in the MOU and that
neither party would represent anything to the contrary. More importantly,
Clause IV (1) also provided that in case of breach of the provisions of the
said clause, there would be an immediate cessation of the MOU with both
parties being injuncted from conducting any business as envisaged under
the MOU or, any business similar in nature and/or intent.
49.4 Clause X (1) which is a non-compete clause provides that during the
tenure of the MOU and for a period of 12 months post its termination
neither party or any of its agents, affiliates, associates or representatives
shall, directly or indirectly, organize the IBW Event or any other Event
which may compete with the subject Event.
49.5 Clearly, a conjoint reading of the aforesaid clause establishes that the
IPR which emanated pursuant to the Events organized in the past, based on
OMP (I) (COMM) No.326/2018 Pg. 58 of 65
the understanding incorporated in the MOU, were to remain a joint
property of the parties. The prescribed ratio under the MOU was 60:40.
The 60% share being conferred upon the respondent and the balance 40%
on the petitioner. The MOU in no uncertain terms sets out that the parties,
insofar as the IPR were concerned, were tenants-in-common. This aspect is
reflected in Clause I (1.3) and Clause IV (1) of the MOU.
49.6 As a matter of fact, as adverted to above breach of the conditions of
clause IV (1) was designed to cause "immediate cessation" of the MOU.
The concomitant consequences of which were (and that is something which
is provided in Clause IV (1) itself) that both parties were prohibited from
conducting any business as was envisaged under the MOU.
49.7 The facts, as delineated above, would show that the respondent, in
fact, had made an application for registration with Trademark Authority,
albeit, in its sole name on 10.12.2012. This is a document which the
respondent has brought on record. The respondent, in terms of Clause IV
(1), could not have done so without the written consent of the petitioner.
The respondent was clearly in breach of its obligation. To get over this
impediment, it was sought to be argued on behalf of the respondent that the
OMP (I) (COMM) No.326/2018 Pg. 59 of 65
petitioner was aware of the registration. For this purpose, reliance was
placed by the respondent on the e-mail dated 14.01.2013. This document,
inter-alia, refers to payment of membership fee of INR 56,000 for
trademark registration. This document has also been brought on record by
the respondent. To my mind, the e-mail dated 23.01.2013 would not by
itself help the respondent in answering the charge made against it that it
could not have approached the Trademark Authority for registration of the
IPR depicting itself to be the sole proprietor without the explicit written
consent of the petitioner.
49.8 Knowledge about the payment of fees for filing the application, in
my opinion, is not the same thing as knowledge of the contents of the
application filed before the Trademark Authority by the respondent, with
respect to ownership of the IPR. There is no good reason why the petitioner
would give up its share in the IPR property without reasonable recompense.
No document has been filed by the respondent on record which would
show that for filing the application for registration of the trademark the
petitioner's written consent had been obtained.
OMP (I) (COMM) No.326/2018 Pg. 60 of 65
49.9 As indicated above, since the respondent was in breach with regard
to the fundamental term contained in the MOU, which is, that the IPR
would continue to remain the joint property of the parties, the MOU ceased
to have effect.
50 Resultantly, the respondent brought about a situation whereby it
could not have exploited the IPR. As a matter of fact, therefore, contrary to
the argument advanced by Mr. Dutt that the petitioner's termination notice
dated 24.08.2017 did not give an opportunity to cure the defect, in my
view, is an argument which is not sustainable. Clause VIII (3) of the MOU,
in my opinion, cannot whittle down the provisions of Clause IV (1) which
specifically provides that breach of the provisions contained in the said
clause would bring about the "immediate cessation" of the MOU.
Therefore, Clause VIII (3) of the MOU, in my view, would apply to
breaches other than those which fell within the ambit of Clause IV (1).
50.1 The other argument of Mr. Dutt that the respondent had invested
time and money in the 2018 IBW Event and, therefore, the injunction order
should be vacated and the respondent should be allowed to hold the Event
subject to the condition that it would maintain accounts, which would be
OMP (I) (COMM) No.326/2018 Pg. 61 of 65
produced before the Arbitrator cannot be accepted. The reason I say so is
that the respondent, as correctly argued by Mr. Krishnan, appears to present
the petitioner as well the Court with fait accompli for holding out that since
time and money has been invested, the annual Event should be allowed to
continue subject to the final adjudication of the disputes between the
parties. The 2017 IBW Event was allowed to be continued with the
understanding that the parties would have their disputes adjudicated before
the next annual event. Record shows that the respondent has not displayed
necessary alacrity in having the dispute adjudicated.
50.2 I am, therefore, not inclined to vacate the interim order on the ground
of balance of convenience. The petitioner, on the other hand, has been able
to demonstrate that it has a strong prima-facie case. The contention of the
petitioner that the IPR is a joint property and that it has a 40% share in the
same and with the breach, it has the right to claim full ownership has,
prima facie, a great amount of merit. The petitioner has also been able to
demonstrate, at this stage at least, that registration of IPR was sought to be
made by the respondent in its sole name, albeit, without the written consent
of the petitioner bringing about a breach of the fundamental term of the
MOU.
OMP (I) (COMM) No.326/2018 Pg. 62 of 65
50.3 Furthermore, in my view, the balance of convenience, if at all, is in
the favour of the petitioner since the petitioner cannot put in a situation
where its rights in the IPR get completely diluted with repeated infraction
of the understanding arrived at between the parties which stands
incorporated in the MOU. To my mind, if the respondent is allowed to
hold the Event this year as well on the terms that it will maintain accounts,
it would amount to rewarding a party which has embarked on a course that
is plainly in the teeth of the explicit provisions of the MOU.
50.4 Having regard to the aforesaid, this issue is also decided in favour of
the petitioner.
50.5 Before I conclude, there are two aspects which need to be addressed.
First, whether the petitioner delayed the institution of the present petition?
To my mind, the answer has to be in the negative. The reason being that
while it is true that the petitioner had issued a cease and desist notice in
February, 2018 for earlier breaches by the respondent, the immediate cause
of provocation was the uploading of information on the social media by the
respondent that the tickets for 2018 IBW Event would be available from
OMP (I) (COMM) No.326/2018 Pg. 63 of 65
15.08.2018. Therefore, in my view, the petitioner had approached the court
in time, contrary to what is suggested on behalf of the respondent.
50.6 As regards the argument that the 2018 Arbitration Agreement had
come to an end because the Arbitral Tribunal was not constituted within 30
days, to my mind, this is an argument which is thoroughly misconceived.
The petitioner had, as is evident from a narration of events set out above,
taken every possible step for appointment of an Arbitrator beginning with
placing its request with the DIAC qua the same on 06.04.2018, which was
a date that fell well before the expiry of 30 days from the date of execution
of the 2018 Arbitration Agreement.
Reliefs
51 Thus, having regard to the foregoing discussion, I am inclined to
grant interim reliefs to the petitioner in terms of prayer clause (a) & (b) as
set out in the instant petition, which would continue to obtain during the
pendency of the arbitration proceedings.
52 Needless to say, nothing stated by me hereinabove will come in the
way of the final adjudication of the disputes pending between the parties.
OMP (I) (COMM) No.326/2018 Pg. 64 of 65
53 The petition is disposed of, accordingly, in the aforesaid terms.
RAJIV SHAKDHER
(JUDGE)
SEPTEMBER 18, 2018
A
OMP (I) (COMM) No.326/2018 Pg. 65 of 65
