Allowed

Dogfather India Private Limited v. M/S J.B. Enterprises

Rajasthan HC23 Aug 2024ARBAP/115/2023

Case brief

AI extract

What is this about?

The High Court allowed a Section 11 application under the Arbitration and Conciliation Act, 1996, for the appointment of a sole arbitrator. Relying on Section 11(6A) and recent Supreme Court precedents, the Court confirmed the existence of an arbitration agreement in the parties' franchise contract despite the respondent's non-appearance and alleged termination of the agreement.

What did the court decide?

Application allowed; appointment of Mr. Umesh Kumar Sharma as sole arbitrator to adjudicate the dispute between parties.

Dogfather India Private Limited Vs M/S J.B. Enterprises — Arbitration | Rajasthan HC (2024)

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[2024:RJ-JP:35895]

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HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR

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S.B. Arbitration Application No. 115/2023

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Dogfather India Private Limited, Through Its Authorized Representative Mr. Aziz Khan S/o Mr. Mustaq Khan, Having Its Registered Office At 147 B, Ram Gali No. 2, Rajapark, Jawahar Nagar, Jaipur, Rajasthan, 302004.

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----Applicant

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Versus

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M/s J.B. Enterprises, Shop No. 3,4, Plot No. 5, Ground Floor, Khanna Chambers, Chandanbari Yojana-Iind, Near Sector-Ii, Girdhar Marg, Malviya Nagar, Jaipur-302017 Through Its Proprietor Manpreet Kaur W/o Irshad Ali, R/o 53, Ekta Marg, Ghat Gate Road, Adarsh Nagar, Janta Colony, Jaipur-302004 (Raj.).

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----Non-applicant

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For Petitioner(s) : Ms. Anamika Bishnoi for Mr. Gaurav Singh For Respondent(s) : None present

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HON'BLE MR. JUSTICE SUDESH BANSAL Order

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23/08/2024

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Applicant has filed this application under Section 11 (5) r/w Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter for short “the A&C Act, 1996”) for appointment of a sole Arbitrator to adjudicate and settle the dispute between parties arising out of franchise agreement dated 27.05.2021.

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It has been contended that under the terms and conditions incorporated in the franchise agreement dated 27.05.2021, nonapplicant acquired franchise to operate store in the name of Dogfather but committed default in making payments to the applicant therefore, a legal notice dated 14.03.2023 was served by the applicant company upon the non-applicant demanding due amount of Rs.12,89,504/-. This notice was replied by nonapplicant vide reply notice dated 01.04.2023.

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It has been contended that since non-applicant did not make payment of the due amount, as such the franchise agreement stood terminated but even thereafter non-applicant continued to use the google access, marks, goodwill and system provided by the applicant company to run the store using the name of Dogfather. Therefore, the applicant had to file an application under Section 9 of the A&C Act, 1996 before the commercial Court and then after serving a legal notice dated 21.04.2023, invoking the arbitration clause, contained in the franchise agreement in clause 10, has filed the instant application.

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Counsel for applicant has drew attention of this Court towards clause 10 of the Franchise Agreement, which reads:-

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“ 10. Arbitration

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10.01 Arbitration Except as specifically otherwise provided in this agreement, the parties and their principals, employees and agents agree that any and all disputes arising out of or relating to this agreements between them shall be first arbitrate by one arbitrator appointed by parties to the agreement bearing half of the costs. If the dispute is not resolved by arbitration then the parties may go in the court of law within the Jaipur Jurisdiction.

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10.02 No. Limitation on Injunctive Relief Nothing contained in this Agreement shall limit either party’s right to obtain provisional, injunctive, or equitable remedies.”

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Thus, it has been prayed that in order to settle the dispute about the due claim and wrongful use of the Dogfather by nonapplicant, despite termination of the franchise agreement, an Arbitrator be appointed.

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After service of notice of present application upon nonapplicant, no one has put in appearance on behalf of the nonapplicant.

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Heard counsel for the applicant and perused the record.

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From perusal of the record and pleadings of the Arbitration Application, prima facie it appears that a Franchise Agreement dated 27.05.2021 was executed between applicant and nonapplicant. Thereafter, the applicant served one legal notice dated 14.03.2023 upon the non-applicant which was replied on 01.04.2023 by the non-applicant. Though in the reply notice, nonapplicant accepted his signature and execution of the franchise agreement in favour of applicant yet alleged to amend the few clauses of the franchise agreement in respect of non-refundable royalty and security deposit and took a plea that because the relevant clause of franchise agreement was not amended, therefore, he withdrew his consent to be franchise of applicant.

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As per office report, notice of Arbitration Application has been duly served upon non-applicant but no one has put in appearance nor reply to the Arbitration Application has been filed by and on behalf of non-applicant.

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The franchise agreement in its clause No.10 contains arbitration agreement in respect of appointment of an Arbitrator to settle the dispute if arisen between the parties in relation to the present franchise agreement.

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It prima facie appears that the dispute between the parties has arisen and even if, the non-applicant may dispute the continuity of franchise agreement, yet in view of his admission about execution of franchise agreement, which contains an

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arbitration agreement as well, such dispute is to be adjudicated by the Arbitrator.

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The High Court being a referral Court, while exercising its powers under Section 11 of the A&C Act, 1996, is expected to look into the matter as to existence of an arbitration agreement between parties in view of clause 11(6A) of the A&C Act,1996 which reads as under:-

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“(6A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.”

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A seven judges’ Bench of the Hon’ble Supreme Court in recent judgment dated 13^th December 2023, delivered In Re: Interplay Between Arbitration Agreements Under The Arbitration and Conciliation Act 1996 And the Indian Stamp Act, 1989 [AIR 2024 SC 1] , has observed in Para Nos.152 & 154 that the omission of Section 11(6A), through Arbitration and Conciliation (Amendment) Act, 2019 (Act 33 of the 2019), has not been notified in the official gazette and therefore, the said provision continues to remain in full force. In this judgment, placing reliance on previous judgments of the Apex Court delivered in cases of Duro Felguera, S.A. Vs. Gangavaram Port Limited [(2017) 9 SCC 129] and Mayavati Trading Private Limited Vs. Pradyuat Deb Burman [(2019 8 SCC 714] , it has been held that the legislature confined the scope of reference under Section 11(6A) to the examination of existence of an arbitration agreement. It has been held that the referral Court

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only need to consider one aspect to determine the existence of an arbitration agreement- whether underlying contract contains arbitration agreement which provides for arbitration pertaining to the dispute which has arisen between parties to the agreement. Thus, this Court has to rely upon the provision of Section 11(6A) of the A&C Act, which is extracted hereinabove.

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It may be noted that Section 11(6A) was added by the Legislature by introducing the Arbitration and Conciliation (Amendment) Act, 2015 (Act 3 of 2016), and there was an impression that the provision of Section 11(6A) has been omitted vide Arbitration and Conciliation (Amendment) Act, 2019 (Act 33 of the 2019), but the present prevailing position about such proposition of law, has been clarified by the seven judges’ Bench of the Apex Court in the above referred judgment recently delivered on 13^th December 2023.

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In view of above discussion, this Court deems it just and proper to allow this Arbitration Application and to appoint an independent, impartial and neutral Arbitrator to adjudicate the dispute between the parties. 15. Accordingly, the present Arbitration Application succeeds and same is hereby allowed. This Court constitutes the Arbitration Tribunal of sole Arbitrator of Mr. Umesh Kumar Sharma, Retd. District Judge, Address:- C-601, Mewar Apartment Haldi Ghati Apartment Pratap Nagar Jaipur-302033 Phone No.9414323890; E- mail:- [email protected] , to adjudicate the dispute between parties in accordance with the provisions of the A&C Act, 1996.

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[ARBAP-115/2023]

The Arbitration fee shall be payable in accordance with the provisions, contained in the Manual of Procedure for Alternative Dispute Resolution, 2009 as amended by the Manual of Procedure for Alternative Resolution (Amendment), 2017 vide notification dated 23.03.2017 read with 4^th Schedule appended to the A&C Act, 1996.

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The Registry is directed to intimate the Arbitrator Mr. Umesh Kumar Sharma , Retd. District Judge for his approval. 18. Since no one has put in appearance on behalf of nonapplicant, Registry is also directed to send a copy of this order to the non-applicant through registered post for information.

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All other issues may be raised by the parties before the Arbitrator, which shall be considered in accordance with law.

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Since, as per Section 29A of the A&C Act, 1996, the arbitration proceedings are required to be concluded within the scheduled time, as stipulated therein, it is expected from the parties to appear before the Arbitrator on 10^th September 2024 or any other date, as informed by the Arbitrator to parties or agreed between parties with the consent of Arbitrator and to provide E-mail/ Contact Number/ Mobile Number of themselves as also of their authorized representatives/ lawyers, appearing on their behalf respectively, in order to facilitate the Arbitrator to send information to parties. The information sent by the Arbitrator on given address/ E-mail/ cellphone of parties, shall be treated as sufficient unless same is not changed.

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The instant application stands disposed of.

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(SUDESH BANSAL),J

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TN/156

Dogfather India Private Limited v. M/S J.B. Enterprises

Case brief

What is this about?

What did the court decide?

Dogfather India Private Limited v. M/S J.B. Enterprises

Case brief

What is this about?

What did the court decide?

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