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IN THE HIGH COURT OF DELHI
C. HARI SHANKAR, J.
Hero Electric Vehicles Private Limited & Another – Appellant
Versus
Lectro E-Mobility Private Limited & Another – Respondent
CS(COMM). No. 98 of 2020 & I.A. No. 3381 of 2020
Decided On : 02-03-2021
The Delhi High Court held that the dispute between the parties was arbitrable and referred the matter to arbitration. The Court held that the dispute arose out of and in connection with the Family Settlement Agreement (FSA) and Trade Mark and Name Agreement (TMNA) entered into between the parties, and that these agreements contained valid arbitration agreements. The Court also held that the dispute was not in the nature of an action in rem, and that the plaintiffs were not estopped from seeking arbitration by virtue of their earlier conduct.
Fact of the Case:
The plaintiffs, Hero Exports and Hero Electric Vehicles Pvt. Ltd., filed a suit against the defendants, Lectro E-Mobility Pvt Ltd and Hero Cycles Ltd., alleging infringement of their trademarks “Hero” and “Hero Electric”. The defendants filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (the 1996 Act), seeking reference of the dispute to arbitration, in terms of the arbitration agreements contained in the FSA and TMNA.
Finding of the Court:
The Court held that the dispute between the parties was arbitrable and referred the matter to arbitration. The Court held that the dispute arose out of and in connection with the FSA and TMNA, and that these agreements contained valid arbitration agreements. The Court also held that the dispute was not in the nature of an action in rem, and that the plaintiffs were not estopped from seeking arbitration by virtue of their earlier conduct.
Issues: 1. Whether the dispute between the parties was arbitrable? 2. Whether the plaintiffs were estopped from seeking arbitration by virtue of their earlier conduct?
Ratio Decidendi: 1. The Court held that the dispute between the parties was arbitrable, as it arose out of and in connection with the FSA and TMNA, which contained valid arbitration agreements. 2. The Court held that the plaintiffs were not estopped from seeking arbitration by virtue of their earlier conduct, as the dispute was not in the nature of an action in rem.
Final Decision: The Court allowed the defendants' application under Section 8 of the 1996 Act and referred the dispute to arbitration. The Court also held that the plaintiffs were not estopped from seeking arbitration by virtue of their earlier conduct.
JUDGMENT :
(Video-Conferencing)
1. M/s Hero Electric Vehicles Pvt. Ltd. and M/s Hero Exports are the plaintiffs in CS (Comm) 98/2020, and M/s Lectro E-Mobility Pvt Ltd and Hero Cycles Ltd. are the defendants. The suit essentially seeks a decree of permanent injunction, restraining the defendants from dealing, in any manner, in electric bikes having a throttle, using “Hero” or any mark deceptively similar thereto, as a trademark, brand name or tradename, in any manner as would infringe the said mark, or result in passing off, of the defendant’s electric bikes having a throttle, as those of the plaintiffs.
2. The defendants (Lectro E-Mobility Pvt. Ltd., referred to, hereinafter, as “Lectro” and Hero Cycles Ltd) have filed IA 3381/2020 under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the 1996 Act”), seeking reference of the disputes, forming subject matter of the suit, to arbitration.
3. This judgement disposes of IA 3381/2020 as well as CS (Comm) 98/2020, after having heard arguments at length led, on behalf of the plaintiffs, by Mr. Sudhir Chandra, learned Senior Counsel and, on behalf of the defendants, by Mr. Akhil Sibal, learned Senior Counsel. Written submissions have also been filed, more than once, by both sides.
The controversy in the suit
4. Plaintiff No. 2 Hero Exports claims to have started its business of electric vehicles, and to have launched battery fitted electric cycles and electric scooters, in 2007, under the well-known trademarks “Hero” and “Hero Electric”. The marks “Hero” and “Hero Electric” were registered by the Registry of Trade Marks, in favour of Plaintiff No. 2, under Class 12 of the Schedule to the Trade Marks Rules, 2002, in 2008. The details of such registration have been tabulated, in the suit, thus:
| S. No. | Trademark | Date of filing of application for registration | Goods in respect of which mark registered |
| 1 | “IMAGE” | 10th November, 2008 | Environment friendly electric bikes and parts, fittings and accessories thereof |
| 2 | “IMAGE” | 24th November, 2008 | Bikes, electric bikes, motor bikes and parts, fittings and accessories thereof, tires, tubes and flaps for all such goods included in Class XII |
| 3 | “IMAGE” | 24th November, 2008 | Environment friendly electric bikes and parts, fittings and accessories thereof |
| 4 | “IMAGE” | 24th November, 2008 | Environment friendly electric bikes and parts, fittings and accessories thereof |
5. At the time of filing of the applications for the aforesaid registrations, Hero Exports was a partnership firm of all members of the Munjal Group. Vide a Family Settlement Agreement (referred to, in the suit as well as hereinafter, as “FSA”) dated 20th May, 2010, however, the businesses of the group were divided among four Family Groups, designated as F-1, F-2, F-3 and F-4. The plaintiff asserts that, as per Schedule 7 to the FSA, Hero Exports, along with its business, was transferred to the F-1 group. The plaintiffs belong to the F-1 group, whereas the defendants belong to the F-4 group.
6. On 20th May, 2010 itself, parallelly with the FSA, a “Trade Mark and Name Agreement” (referred to, in the suit as well as hereinafter, as “TMNA”), was executed, which assigned the right to use the trademark “Hero”, and its variants, among the Family Groups, in relation to the products and services to which the business of each group catered, to the exclusion of other groups. The plaintiff asserts that the TMNA conferred, on the F-1 group, the exclusive right to use the trademarks “Hero” and “Hero Electric”, and its variants, on all electric vehicles, including electric bikes.
7. On 31st July, 2010, the partners of Hero Exports incorporated Plaintiff No. 1 as a new company, initially named Hero Eco Vehicles Pvt. Ltd., and, later, Hero Electric Vehicles Pvt. Ltd., to conduct the business of electric vehicles.
Decree for permanent injunction - Cancelled Assignment of trademark - Termination of Agreement - Assignment of trademark is by a contract and not by a statutory act. It does not involve any exercise ....
A court can refer disputes to arbitration under Section 8 of the Arbitration Act if a valid arbitration agreement exists, even if issues relate to non-arbitrable rights, provided they stem from contr....
Arbitral Tribunal is competent to decide on its own competence – Plea of fraud must be serious in nature in order to oust jurisdiction of Arbitrator.
The existence of an arbitrable dispute, the validity of the arbitration agreement, and the existence of an arbitrable dispute are to be determined by the arbitral tribunal.
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