Delhi High Court
Kake Di Hatti vs Shree Foods And Ors on 13 January, 2022
$~5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 13.01.2022
+ ARB.P. 1060/2021
KAKE DI HATTI ..... Petitioner
Through Mr. Parvinder Chauhan Adv
versus
SHREE FOODS AND ORS ..... Respondents
Through Mr. Rajat Sang Sharma Adv.
CORAM:
HON'BLE MR. JUSTICE SURESH KUMAR KAIT
J U D G M E N T (oral)
1. The present petition has been filed under Section 11 of the Arbitration
and Conciliation Act, 1996 seeking appointment of sole Arbitrator to
adjudicate the disputes inter se the parties.
2. As per the averments made in petition, petitioner is a sole
proprietorship concern and is a brand in food and hospitality sector having
multiple chain of restaurants. Pertinently, owing to its established goodwill
and client base, respondents approached the petitioner seeking franchisee.
After detailed discussions, Franchisee Agreement dated 19.06.2019 was
entered between the parties. It is also averred that the franchise business was
commenced from the outlet located at C-9/12, Ground Floor, Sector-7,
Rohini, Delhi-110085. Respondents were required to pay a monthly royalty
fee @ Rs. 1,13,000/- and applicable GST to petitioner in terms of the
agreement. However, the respondents committed several breaches of the
agreements and the royalty fee has not been paid since January, 2020.
Consequently, petitioner issued a Defect Cure Notice dated 27.11.2020 to
respondents for defaults in compliance of obligations under Article 1.7 of
the Franchisee Agreement dated 19.06.2019 and called upon the respondents
to cure the defects. Despite service of the notice, no action was taken to cure
the defects. Petitioner then issued another Defect Cure Notice dated
31.12.2020, but again to no avail.
3. It is further averred that several people who visited the respondents'
outlet had complained of the substandard quality of food being served
therein. This was bound to happen as the respondents had stopped procuring
the exclusive spices and other material from the petitioner, which were
essential to maintain the quality and consistency of the exclusive taste that is
assured in the petitioner's products. As a result, petitioner's goodwill and
brand reputation was getting diminished. Thereafter, petitioner terminated
the agreement vide notice dated 24.02.2021 with effect from 08.01.2021.
4. It is also averred that vide the said Notice, petitioner invoked
Arbitration Agreement and invited the respondents to commence arbitration
proceedings under the aegis of Delhi International Arbitration Centre
(DIAC). However, respondents failed to do so. Even after the service of the
aforesaid Termination Notice dated 24.02.2021, respondents failed to cease
the operation of franchisee business.
5. Pertinently, in the interregnum, the petitioner also approached this
Court under Section 9 of the Arbitration and Conciliation Act in O.M.P. (I)
(COMM.) 232/2021, wherein vide order dated 02.09.2021, this Court
directed the respondents to cease to operate or conduct the franchise
business; and to cease, desist from using the petitioner's brand name(s)/
trade name(s)/ trademark(s), service mark(s), logo(s), style and/ or any
mark(s) which is deceptively similar; and to remove/ all signs and or
advertisements identifiable in any way with petitioner's trademark(s)/
name(s) till the next date of hearing. Hence, the present petition has been
filed.
6. During the course of hearing, learned counsel appearing on behalf of
respondents has agreed to appoint a Sole Arbitrator to adjudicate the dispute
between the parties subject to all issues to remain open before the learned
Arbitrator.
7. Accordingly, the present petition is referred to Delhi International
Arbitration Centre (DIAC) for appointment of Arbitrator as per rules.
8. Needless to say, the learned Arbitrator shall ensure compliance of
Section 12 of Arbitration and Conciliation Act, 1996 before commencing the
arbitration.
9. The present petition stands disposed of accordingly.
10. A copy of this order be sent to the learned Arbitrator for information.
(SURESH KUMAR KAIT)
JUDGE
JANUARY 13, 2022/rk
