SANJAY KISHAN KAUL, J. (Oral)

CM No.11407/2012 (Exemption)

Allowed subject to just exceptions.

FAO (OS) No.290/2012

The respondent filed a suit for permanent injunction seeking a restraint against infringement of a registered trademark, infringement of copyright, passing off of damages, rendition of accounts of profits, delivery up, etc. qua the trademark/words IMS of the respondent. The respondent claims to be a leading player in management entrance test coaching with specific focus on Common Admission Test (CAT). In the course of business, the respondent entered into arrangements to carry out its business through its business partners and franchisees, making available its proprietary and copyrighted course material and the benefit of its trademark IMS. One such arrangement was arrived at with the appellant under an agreement dated 1.4.2007, which was valid for a period of three (3) years. On expiry of the said agreement by efflux of time a fresh agreement was executed on 1.4.2010 on similar terms & conditions. This agreement was to be valid till 31.3.2013. However, this agreement was mutually terminated prematurely in terms of a document called Exit Paper. This Exit Paper dated 1.2.2011 records the mutually agreed terms bringing the arrangement inter se the parties to an end.

It appears that prior to institution of the suit, the respondent complained about the appellants breach of the contractual obligations contained in the Exit Paper dated 1.2.2011 including the use of the trademark IMS but to no avail, resulting in institution of the suit.

The appellant filed IA No.818/2012 under Section 8 of the Arbitration & Conciliation Act, 1996 predicated on clause 20, an arbitration clause, incorporated in both the agreements dated 1.4.2007 and 1.4.2010. This application has been dismissed by the impugned order dated 16.4.2012 of the learned single Judge.

We have heard learned counsels for the parties. It is the say of learned counsel for the appellant that in view of wide arbitration clause, the dispute inter se the parties was liable to be referred to arbitration. Learned counsel contends that the Exit Paper dated 1.2.2011 does not bring to an end the arbitration clause but only terminates the agreement inter se the parties by mutual consent (we may notice that no challenge is laid to the Exit Paper dated 1.2.2011).

Learned counsel in this behalf relies upon the judgment of the Supreme Court in The Branch Manager, M/s. Magma Leasing & Finance Limited and Anr. Vs. Potluri Madhavilata & Anr. (2009) 10 SCC 103. Learned counsel contends that the Supreme Court has held that the mere termination of the agreement on account of alleged breach, does not bring the agreement qua resolution of disputes by arbitration to an end.

The question for adjudication as framed in para 1 by the Supreme Court itself of the said judgment reads as under:

“1. The core question that falls to be determined in this appeal by special leave is : does the arbitration agreement survive for the purpose of resolution of disputes arising under or in connection with the contract even if its performance has come to an end on account of termination due to breach?”

Learned counsel also specifically draws strength from the observations made in para 12, wherein the Supreme Court referred to its earlier decision in the case of National Agricultural Cooperative Marketing Federation India Ltd. Vs. Gains Trading Ltd., (2007) 5 SCC 692, wherein it was held that qua a contract which was abrogated by mutual agreement, that in such eventuality, the arbitration clause does not come to an end.

We are unable to agree with the submissions of learned counsel for the appellant, though there can be no dispute about the legal proposition propounded aforesaid and the law laid down by the Hon’ble Supreme Court. In fact, there is no quibble over the legal proposition that the arbitration clause would survive the termination/cessation of an agreement and the disputes perta