Delhi High Court
Siddhast Intellectual Property ... vs The Controller General Of Patents ... on 11 January, 2021
$~6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Judgment:11th January, 2021
+ ARB.P. 45/2021 & I.A. 343/2021
SIDDHAST INTELLECTUAL PROPERTY
INNOVATIONS PVT LTD ..... Petitioner
Through: Mr Anukul Raj, Ms Nikita Raj
and Mr Diwakar Goel,
Advocates.
versus
THE CONTROLLER GENERAL OF PATENTS
DESIGNS TRADEMARKS (CGPDTM) ..... Respondent
Through: Mr Praveen Kumar Jain,
Advocate.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
[Hearing held through video conferencing]
VIBHU BAKHRU, J. (ORAL)
1. Issue notice. Mr Jain, learned counsel accepts notice on behalf
of the respondent.
2. The petitioner has filed the present petition, inter alia, praying
that an arbitrator be appointed to adjudicate the disputes that have
arisen between the parties in respect of a contract between the parties.
3. The respondent (Controller General of Patents, Designs and
Trademarks, through Ministry of Commerce and Industry,
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Government of India) had issued a Request for Proposal (RFP) on
23.11.2012 inviting proposals for providing access to patent database
and development of customized Integrated Search Platform (ISP),
termed as IPATS. Pursuant to the RFP, the petitioner submitted its
proposal, which was examined by a committee constituted for the said
purpose. The said committee in its report, accepted the petitioner‟s
proposal and the petitioner was declared as a successful bidder. This
was communicated to the petitioner by a letter dated 29.01.2013 and
the work order was placed on it. In terms of the work order, the
petitioner was required to complete the works, which are set out
below:-
"a. Providing access to patent database covering the
records of all countries/intergovernmental
organisations mentioned in the PCT Minimum
Documentation under Rule 34.1 of Regulations
under the PCT, along with a search platform(s) for
PL and NPL and the related interface(s) within one
month from the date of award of contract and in
any case providing an Integrated Search Platform
(ISP) and the related interface for information
retrieval through multiple databases, websites and
information systems covering both patent and non-
patent literature, within three months from date of
award of contract and
b. Developing a customized ISP, termed as IPATS, as
per the requirements of the Indian Patent Office
(IPO), within one year from the date of award of
contract, is awarded to you."
4. Subsequently, the parties also entered into an agreement on
24.05.2013 (hereafter „the Contract‟). The Contract includes an
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arbitration clause. The same is reproduced below:-
"31. That whenever there is a dispute arising out of or
in relations of the agreement, either party may notify
the other party in writing of the existence of the dispute
specifying in reasonable detail the nature of the dispute
and the expected resolution. Upon such notification the
following terms shall apply:
(a) either party shall nominate its senior personnel
(Nominated Personnel) to attempt to resolve the
dispute;
(b) the parties shall cause the Nominated Personnel
to make efforts in good faith to amicably resolve
the dispute; and
(c) only if the Nominated Personnel are unable to
resolve the dispute within 30 days of both parties
having notified the Nominated Personnel, either
party may require the dispute to be conclusively
resolved by way of independent arbitration.
(d) if any dispute or differences arises, the
settlement of which is not hereinbefore provided
for, the same may be referred for arbitration as
per the Arbitration and Conciliation Act, 1996.
The award passed in arbitration proceeding may
be final and binding on the parties to this
agreement."
5. The petitioner claims that disputes have arisen in connection
with the Contract and the same are liable to be referred to arbitration.
6. On 08.03.2018, the respondent had sent a letter alleging that the
IPATS applications executed by it had failed to comply with the
requirements. It was further alleged that the requisite test reports were
unsatisfactory and the petitioner was given a final opportunity to
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rectify the same. The petitioner contests the said assertions.
7. On 23.03.2018, the petitioner sent a notice through its advocate
invoking the provisions of Clause 31 of the Contract and nominating
one of its Directors, Taru Nagauri, as its nominee for an amicable
resolution of the disputes. The petitioner also called upon the
respondent to nominate its representative for the aforesaid purpose.
8. Pursuant to the aforesaid request, a committee was constituted
of the senior representatives of the respective parties to resolve the
disputes amicably. On 11.05.2018, a notice was issued informing the
petitioner that the first meeting of the said committee would be held
on 08.06.2018.
9. Although the committee had held a few meetings, it is apparent
the said disputes were not resolved.
10. On 04.04.2019, the petitioner sent another letter invoking the
arbitration clause. The respondent responded to the said notice by
alleging that the petitioner was not keen to resolve the disputes. It had
quit the resolution process and thus breached the agreement.
11. The petitioner sent another letter dated 18.04.2019, once again
setting out its claims and invoking the arbitration clause.
12. On 11.01.2020, the petitioner issued a formal notice for
referring the disputes to arbitration. The petitioner claimed that a sum
of 13,82,570 USD along with interest @ 18% was owed by the
respondent to it. Admittedly, the respondent has not taken any steps
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for constitution of an Arbitral Tribunal pursuant to the said notice. It
responded by sending a letter dated 14.02.2020, once again alleging
that the petitioner had quit the resolution proceedings for which the
committee had been formed.
13. Mr Jain, learned counsel appearing for the respondent does not
dispute the existence of the arbitration agreement or that the
negotiations for an amicable resolution of the disputes have failed.
He, however, opposes the present petition on the ground that this court
has no jurisdiction to entertain the present petition. He contends that
in terms of the Contract between the parties, the courts at Mumbai
would have exclusive jurisdiction in respect of any inter se disputes
between the parties.
14. Mr Jain referred to Clause 40 of the RFP and submitted that in
terms of the said Clause, the parties had agreed that the courts at
Mumbai would have exclusive jurisdiction. In addition, he submitted
that the head office of the respondent was in Mumbai; the Work Order
had been issued to the respondent from Mumbai; and all payments
were made to the petitioner from Mumbai. He submitted that in view
of the above, only the courts at Mumbai would have the jurisdiction to
entertain the present application under Section 11 of the Arbitration
and Conciliation Act, 1996 (hereafter „the Act‟).
15. Admittedly, the works in terms of the Contract were executed in
Delhi. There is no dispute that the Contract in question was
performed in New Delhi. Further, it is also admitted that the
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proceedings for amicable resolution of the disputes in terms of Clause
31 of the Contract took place in New Delhi. The learned counsel for
the petitioner also pointed out that the letter dated 08.03.2018, alleging
a deficiency in the performance of the Contract was issued by
respondent‟s office at New Delhi.
16. Clause 40 of the RFP, which is relied upon on behalf of the
respondent, reads as under:-
"40. Jurisdiction
The disputes, if any, arising between the successful
applicant and CGPDTM shall be resolved amicably,
failing which shall be referred to an Arbitrator, mutually
acceptable to both parties, appointed by the CGPDTM as
per the Arbitration and Conciliation Act, 1996.
Alternatively, this shall be subject to the exclusive
jurisdiction of courts at Mumbai."
17. The Contract provides that the RFP and the documents are a
part of the Contract. However, the said clause cannot be considered as
a part of the Contract as the Contract has an exhaustive dispute
resolution mechanism and does not contemplate the disputes between
the parties be adjudicated in courts. Thus, the said clause which
provides for adjudication of disputes by arbitration or in the alternative
in courts at Mumbai, stands effectively overridden by Clause 31 of the
Contract.
18. Even if it is assumed that Clause 40 of the RFP is applicable, a
plain reading of the aforesaid Clause does not support the contention
that the parties had agreed that the courts at Mumbai would have
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exclusive jurisdiction in respect of the arbitral proceedings. The said
clause indicates that the parties had agreed that the disputes would be
resolved through arbitration and in the alternative, in the courts at
Mumbai. The Contract entered into subsequently includes an
arbitration clause as has been set out above. The said Contract does
not mention that the seat of arbitration would be Mumbai or that the
courts at Mumbai would have exclusive jurisdiction in respect of the
arbitral proceedings.
19. Concededly, the meetings of the committee constituted to
amicably resolve the disputes, in terms of clause 31 of the Contract,
had taken place in Delhi. It is, thus, clear that part of the Dispute
Resolution Clause (Clause 31 of the Contract) has been performed in
Delhi. In view of the above, the contention that this court does not
have jurisdiction to entertain the present petition is unmerited and is,
accordingly, rejected.
20. Since, there is no dispute that there is an arbitration agreement
between the parties to refer all disputes arising out of or in relation to
the Contract dated 24.05.2013 to arbitration, this court considers it
apposite to allow the present petition.
21. Accordingly, Justice Brijesh Sethi, Former Judge of Delhi of
High Court of Delhi, (Mobile No.9910384669) is appointed as the
Sole Arbitrator to adjudicate the disputes that have arisen between the
parties arising out of or in relation to the Contract. This is subject to
the Arbitrator making a disclosure under Section 12(1) of the Act and
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not being ineligible under Section 12(5) of the Act.
22. The parties are at liberty to approach the Arbitrator for further
proceedings.
23. The petition is allowed in the aforesaid terms.
VIBHU BAKHRU, J
JANUARY 11, 2021
MK
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