The court upheld the validity of damages awarded to the respondent based on implied findings of invalid termination, interpretation of the liquidated damages clause, and quantification of damages.

JUDGMENT

O.M.P. (COMM) 57/2017

1. This petition under Section 34 of the Arbitration and Conciliation Act, 1996 [hereinafter, "the Act"], is directed against an arbitral award dated 18.08.2012, rendered by a sole arbitrator. The learned arbitrator has adjudicated disputes between the parties under an agreement dated 31.12.2008 [hereinafter, "the Contract"]. By the impugned award, the respondent has been awarded a sum of Rs.1,37,80,987/- by way of damages, arrears towards license fee and study material, and costs, alongwith interest @ 9% per annum with effect from the date of filing of the claim.

A. Facts.

2. The respondent is a company engaged in the business of providing educational services through class room coaching as well as online training for various competitive examinations like Common Admission Test [CAT] and Common Law Admission Test [CLAT]. The arbitral proceedings concern license granted to the petitioner to conduct and deliver courses at three professional learning centres of the petitioner in Lucknow, Uttar Pradesh under the respondent's brand name. A Contract dated 31.12.2008, for one of the centres, has been placed on record. The Contract was for the period 01.01.2009 to 31.12.2012.

3. Prior to execution of the aforesaid Contract, the respondent had similar contracts with an individual by the name of Mr. Satyam Shankar Sahai. The first contract dated 14.11.2002 commenced on 01.01.2003 and was valid until 31.12.2005. It was extended by a second contract on 01.01.2006 until 31.12.2008, during the pendency of which Mr. Sahai established the petitioner-company and transferred all rights and liabilities with regard to the second contract in the name of the petitioner-company. The Contract dated 31.12.2008 was entered into between the petitioner-company and the respondent after the expiry of the second contract.

4. According to the respondent, the petitioner and Mr. Sahai, its Managing Director, started exploring the possibility of establishing a competing business in January, 2009 under the brand name "Team Satyam". It is averred that, on 24.02.2010, a representative of the respondent visited the petitioner's centre for which the license was granted and found banners marketing "Team Satyam", and not the respondent's brand.

5. On 27.02.2010, the petitioner issued a notice to the respondent terminating/rescinding the Contract, on the ground of alleged breaches committed by the respondent. This notice was received by the respondent on 03.03.2010. The respondent, in turn, issued a notice dated 29.03.2010 to the petitioner, calling upon it to stop using any data/information with regard to the respondent's students, and to stop using its trademarks, logos, name, etc., as well as to hand over the documents and records of the centre and unused study materials to it. The petitioner replied to the said notice by a legal notice dated 14.04.2010, relying upon the rescission of the Contract by the petitioner's communication dated 27.02.2010. It was stated therein that the petitioner was not using the respondent's brand name or study materials.

6. According to the respondent, however, the petitioner commenced similar courses under the brand name "Team Satyam" from the same location at which it was running a centre under the respondent's brand name. The respondent thereafter approached this Court by way of a petition under Section 9 of the Act [O.M.P. 138/2010], in which the Court recorded a statement of the petitioner herein on 24.05.2010, to the effect that it was not carrying on a competitive business as alleged by the respondent, and that "Team Satyam" was not in any way connected with it. The petitioner was bound down to these statements. The respondent also filed O.M.P. 213/2010 under Section 9 of the Act, for certain other reliefs.

7. The Contract contained an arbitration clause [Clause 17.1], which provided for adjudication of disputes by the Chairman of the respondent-company. In view thereof, the respondent referred