2018 Supreme(Del) 2182
IN THE HIGH COURT OF DELHI AT NEW DELHI
NAVIN CHAWLA, J.
Little Millennium Education Pvt. Ltd - Petitioner
Versus
Monica Lalchand Vaswani & Anr. – Respondents
O.M.P.(I) (COMM.) 272 of 2018
Decided On : 26-07-2018
For the Petitioner: Ms. Amrita Singh & Ms.Bhavna Gandhi, Advs.
The main legal point established is that disputes arising from the Franchise Agreement should be resolved through arbitration as per the Arbitration Agreement, as provided under the Arbitration and Conciliation Act.
Headnote:
Arbitration and Conciliation Act - Franchise Agreement - Section 9
Fact of the Case:
The petitioner entered into a Franchise Agreement with the respondents granting them a license to operate 'Little Millennium Centre' using the 'Little Millennium Programme' and the trade mark 'Little Millennium'. The petitioner terminated the agreement due to non-payment of royalty, leading to counter claims by the respondents.
Finding of the Court:
The court found that the termination of the Franchise Agreement and the merits of the counter claims should be determined by an Arbitrator as per the Arbitration Agreement in the Franchise Agreement.
Issues: The issues revolved around the termination of the Franchise Agreement, non-payment of royalty, and the counter claims raised by the respondents.
Ratio Decidendi: The court held that the terms of the Franchise Agreement indicated that the issues should be determined through arbitration as per the Arbitration Agreement.
Final Decision: The court passed an Interim Order in favor of the petitioner, directing the parties to proceed with arbitration as per the Arbitration Agreement.
NAVIN CHAWLA, J.
1. This petition has been filed under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) inter alia making the following prayers:-
(a) restrain the Respondents and their agents, representatives, employees, officials etc. from representing, in any manner whatsoever, to the world at large, that the Respondents are franchisee of the Petitioner or are in any manner associated with the Petitioner;
(b) restrain the Respondents from using the brand name, trademarks, logos, designs, copyright materials including Know-How manuals, training resources, teaching aids and materials, curriculum books, Franchisee Kit etc. and other intellectual properties of the Petitioner;
(c) direct the Respondents to return to the Petitioner all Know- How manuals, training resources, teaching aids and materials, curriculum books, Franchisee Kit etc. which were provided by the Petitioner to the Respondents for the purposes of the Franchisee Agreement or which came into the power or possession of the Respondents under, pursuant to, or in connection with the Franchisee Agreement; and also direct the Respondents to return to the Petitioner all letter-heads, visiting cards, carry bags and other promotional material which may bear any tradename/trademark/logo/trade descriptor of the Petitioner;
(d) direct the Respondents to issue a certificate to the Petitioner, certifying that no written or electronic copies of the Know-How Manuals remain in the possession of the Respondents and that the Respondents have ceased to use the Know-How Manuals;
(e) allow the Petitioner to inspect the books of accounts and other records of the Respondents from April 2017 till such time as the Respondents continue to operate under the Petitioner's brand name;”
2. In spite of service of notice, the respondents have not entered appearance.
3. It is the case of the petitioner that the petitioner had entered into a Franchise Agreement dated 18.05.2016 with the respondents inter alia granting a license to the respondents to operate “Little Millennium Centre” using the “Little Millennium Programme” as also to use the trade mark “Little Millennium” at the said Centre. The said license is non exclusive in nature and specifically provides that incase of termination of the license/Franchise Agreement, the respondents shall cease to use the trade mark “Little Millennium” and/or the Intellectual Property and Know-How of the petitioner. The relevant Clauses of the Franchise Agreement are reproduced hereinunder:-
“2.1 In consideration of the payment by the Franchise to the Franchisor of the Franchisee Fees as agreed hereunder and in consideration of the Franchise agreeing to pay the Franchisor continuing or recurring fee by way of royalty, upon the dates and manner hereinafter mentioned, the Franchisor hereby grants a personal, non-exclusive, non-transferable, non-assignable and limited franchise to the Franchisee to operate the Little Millennium Centre by implementing the Little Millennium Program, and to use only the Trade Name Little Millennium at the said Centre and to conduct the Centre on terms and conditions of this Agreement for the duration of the term of this Agreement. The Franchisee agrees not to use any other trade name, logo and trademark in the conduct of the said Little Millennium Centre. The Franchisee further undertakes not to claim any rights, titles or interest to the Trade Name at the time of termination of this Agreement and all rights in the said Trade Name shall belong, lie and vest in perpetuity with the Franchisor.
2.2. The Franchisee shall conduct the Little Millennium Program in strict accordance with.
2.2.1. The specifications, instructions, standards and requirements of the Franchisor set forth in the know-how Manuals (as may be updated/amended or elaborated from time to time and supplied to the Franchise