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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, J.
Vijay Kumar Munjal & Ors. - Appellants
Versus
Pawan Munjal & Ors. - Respondents
Arb.P. 975/2021 and Ia Nos. 12836/2021 & 14638/2021
Decided On : 17-02-2022
The court allowed the petition and appointed an Arbitral Tribunal of three members to adjudicate the disputes between the parties. The court held that the disputes were arbitrable and that the arbitration agreement was valid and enforceable. The court also held that the petitioners were not required to exhaust the mediation process before invoking the arbitration clause.
Fact of the Case:
The petitioners, who belong to the F1 Family Group, alleged that the respondents, who belong to the F3 Family Group, violated the terms of the FSA and TMNA by using the trademark "Hero" in respect of Electric Vehicles. The petitioners claimed that under the terms of the FSA and TMNA, the F1 Family Group has the exclusive right to use the trademark "Hero" for the business in certain goods being "electric /environment friendly vehicles i.e., non-fuel land vehicles and components and related infrastructure and services in relation thereto ". They claimed that the F3 Family Group has the exclusive right to use the trademark "Hero" in respect of the business that are allocated to their share under the FSA but cannot use the trademark "Hero" or any variant thereof in respect of Electric Vehicles.
Finding of the Court:
The court held that the disputes were arbitrable and that the arbitration agreement was valid and enforceable. The court also held that the petitioners were not required to exhaust the mediation process before invoking the arbitration clause.
Issues: 1. Whether the disputes were arbitrable? 2. Whether the arbitration agreement was valid and enforceable? 3. Whether the petitioners were required to exhaust the mediation process before invoking the arbitration clause?
Ratio Decidendi: 1. The court held that the disputes were arbitrable because they arose out of or in connection with the FSA and TMNA, which were arbitration agreements. The court also held that the disputes were not in rem, as they did not affect the rights of any third party. 2. The court held that the arbitration agreement was valid and enforceable because it was signed by all of the parties, it was in writing, and it was for a lawful purpose. 3. The court held that the petitioners were not required to exhaust the mediation process before invoking the arbitration clause because the mediation process was not a condition precedent to arbitration.
Final Decision: The court allowed the petition and appointed an Arbitral Tribunal of three members to adjudicate the disputes between the parties.
JUDGMENT
Vibhu Bakhru, J. - Introduction
1. The petitioners have filed the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 (hereafter 'the A&C Act'), inter alia, praying that an arbitrator be appointed, on behalf of the respondents, to adjudicate the disputes that have arisen between the parties in relation to the Family Settlement Agreement dated 20.05.2010 (hereafter the 'FSA') and Trade Marks and Name Agreement dated 20.05.2010 (hereafter the 'TMNA').
2. The Munjal Family, a well-known business family, comprises of family members of four brothers (since deceased) - Late Shri Dayanand Munjal, Late Shri Satyanand Munjal, Late Shri Brij Mohan Lall Munjal and Late Shri Om Prakash Munjal (hereafter the 'Munjal Brothers').
3. The petitioners state that the Munjal Brothers established the business of bicycle spare parts in Amritsar, India in 1944. In 1956, the Munjal Brothers commenced manufacturing key components of bicycle and established a manufacturing plant in Ludhiana. Over a period of time, the Munjal Group diversified its business in the automotive sector, manufacture of bicycles and its components, and the financial sector including other such services. The Munjal Group comprises of several operating and investment companies ('Munjal Group Companies'), Hindu Undivided Families of the members of the Four Family Groups ('Munjal HuFs'), partnerships ('Munjal Partnerships'), trusts ("Munjal Trusts") and association of persons ('Munjal AoPs'). The Munjal Group Companies, Munjal HuFs, Munjal Partnerships, Munjal Trusts and Munjal AoPs are hereafter collectively referred to as the 'Munjal Group Entities'.
4. The petitioners state that the Munjal Group started using the name / brand / trademark "Hero" and its variants in connection with its businesses from 1953 onwards. On 13.06.1966, the Munjal Brothers, through their partnership firm, M/s. Hero Cycles Industries, applied for and obtained registration of the trademark "Hero" in Class 12 under application no. 235780. Further, the Munjal Brothers/entities of the Munjal Group also applied for registration of other trademarks containing the word "Hero" and/or its variants.
5. It is stated that on 02.03.1993, the Munjal Brothers established a firm, named Hero Exports. The said entity is engaged in exporting bicycles under the brand/trademark "Hero" to certain specified territories. Thereafter, in the year 2007, members of the Munjal Family commenced the business of Electric Vehicles under the brand/ trademark "Hero" and its variants through the firm Hero Exports.
6. By the year 2010, the Munjal Group had significantly expanded its business operations and other activities.
The Agreements
A. The FSA
7. The Munjal Family, comprising of four Family Groups, entered into the FSA (Family Settlement Agreement) on 20.05.2010 through their respective family heads (referred to as the 'Patriarchs'). The four Family Groups were designated as the F1 Family Group (Late Dayanand Family Group); F2 Family Group (Satyanand Family Group); F3 Family Group (Brijmohan Lall Family Group); and F4 Family Group (Om Prakash Family Group).
8. The heads of the family felt - and the same was accepted by the other family members of the Munjal Family - that it is inevitable that "the second and third generations below the Patriarchs harbour diverse interests, different ambitions and varying perceptions as to, inter alia, the strategic direction, growth and governance of the Munjal Group Entities, and... due to uneven growth, differing perceptions and expectations, and ambitions including matters relating, amongst others, to the strategic direction, growth and governance of the Munjal Group Entities, differences arising in future in the succeeding generations of Munjal Family Members could not be ruled out".[1] They were of the view that "where the family grows in this manner, with diverse members spanning two generations running different segments of the business, family disputes tend to arise
The court emphasized the duty to uphold family arrangements and give full effect to such arrangements instead of disturbing them on technical or trivial grounds.
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....
The Court emphasized that all disputes and questions of maintainability should be settled together by the arbitrator, and the Court should not venture into the plea of limitation and other issues rai....
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 ....
Only parties explicitly named in the arbitration agreement can be compelled to arbitration; failure to properly notify other potentially affected parties nullifies their obligation under the agreemen....
The conciliation process under the Arbitration Agreement was not mandatory, and the petitioner's attempts at mutual consultation satisfied the requirements of the contract.
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