The court's decision emphasized the significance of prior filings under the Arbitration and Conciliation Act in determining the need for mutual amicable discussions and negotiation before resorting to arbitration.

ORDER :

Sanjeev Narula, J.

1. The present petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 seeks the appointment of an Arbitrator for the adjudication of the dispute that is stated to have arisen between the parties. The arbitration clause is contained in the General Conditions of Contract (GCC) of the franchise agreement, in Article VIII which reads as under:

"All dispute and differences relating to payment of any nature shall be settled through mutual amicable discussions and negotiation, which the Parties undertake to conduct for at least a period of 10 days from the date of receipt of such notice of such dispute from the aggrieved Party. If efforts at conciliation fail then any dispute arising out of or in connection with this Agreement shall be referred to and finally resolved by the arbitrator mutually appointed as per the Arbitration & Conciliation Act. The provisions of the Arbitration & Conciliation Act, 1996 shall govern the arbitration proceedings. The venue for arbitration will be Delhi. All arbitration proceedings shall be conducted in English. The arbitration award shall be final and binding on the Parties, without recourse to further appeals and shall be entered in the Court of competent jurisdiction for enforcement against the Parties and their respective successors in business and/or permitted assigns as applicable. Each Party shall be responsible for its own legal costs and other costs such as travel and stay during the course of arbitration. Only the common costs such as arbitrator's fees and venue expenses shall be shared equally between the two Parties.

Provided however that during the pendency of the arbitration proceedings both Parties shall continue to fulfill their obligations under this Agreement save and except such obligations that may be the subject matter of the arbitration. Any breach of this undertaking by a Party shall be deemed to be a material breach of this Agreement and the non breaching Party shall be entitled to all remedies available to it, whether under this Agreement, contract, law or equity and each such remedy shall be independent."

2. The Respondents have not filed reply to the present petition. However, learned Counsel for the Respondents on instructions states that the existence of the Arbitration Agreement is not disputed. The invocation of the Arbitration Clause is also a matter of record, and has been replied by the Respondents.

3. Petitioner is in the business of running and operating a chain of vegetarian restaurants under the name of "Sagar Ratna". It executed the franchise agreement dated 6th June 2018 with the Respondents whereby the Respondent was appointed as a franchisee. As per the terms of the franchise agreement, the Respondents were inter alia liable to pay franchise commission. It is the case of the Petitioner that the Respondents defaulted in making the payments on regular basis and the Petitioner has to recover the franchise fee from the Respondents towards the franchise fee. The Respondents, however disputes the liability. It is thus clear that the disputes and differences have arisen between the parties that now require to be adjudicated.

4. Learned counsel for the Respondents is raising another objection that the Petitioner could not resort to the Arbitration Clause, having not first exhausted the remedy of conciliation as provided in the Arbitration Clause. The Respondent in its reply to the invocation notice from the Petitioner did not express a desire to amicably settle the disputes. The reply to the notice reads as under:

"My client Ms D.S. Foods through its Partner Mr. Anjum Goyal and Tarsem Kumar having Registered office at SCO No. 489, Sector 35-C, Chandigarh, has placed before me your notice dated 27.2.2019 issued under the instructions of Sh. Anjum Goyal and Tarsem Kumar partners of-Ms. D.S. Foods having, Registered office at SCO No. 489, Sector 35-C, Chandigarh and accordingly under the instructions of my client, I hereby reply to