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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
BIREN VAISHNAV, J.
Ajitkumar Tribhovandas Patel – Petitioner
Versus
Asit Anilbhai Patel – Respondent
Petition Under Arbitration Act No. 79 of 2021
Decided On : 14-07-2023
Civil Procedure Code, 1908 – Order VI Rule 16 – Arbitration & Conciliation Act, 1996 – Section 11 – Indian Contract Act, 1872 – Section 27 – Amendment – Appointment of arbitrator – Non Compete Agreement – Held, Coming to alternative submission of respondents with regard to dispute not being arbitrable due to pendency of trade mark suit, what is evident in considering suit in question is that, it is case of Ammann India Limited, plaintiff, that defendants are using trade mark “Apollo” by entering into conflicting business of manufacturing asphalt based road construction equipments under identical trade mark of Apollo – Suit, therefore, is basically one pertaining to infringment of a trade mark by petitioners vis-a-vis concerned plaintiff who is not a party to arbitration agreement and certainly therefore, based on such a suit, it cannot be said by referring matter to arbitration there will be splitting of causes because subject matter of suit and subject matter of dispute which is sought to be referred to arbitration are completely different – Arbitration Petition allowed.
JUDGMENT :
BIREN VAISHNAV, J.
1. This petition filed under Section 11 of the Arbitration & Conciliation Act, 1996, (hereinafter referred to as “the Act of 1996”) has been filed by the petitioners praying for appointment of an arbitrator.
2. Facts in brief are as under:
2.2 The Non Compete Agreement dated 01.08.2011 was amended on 06.07.2015 by which it was agreed that the Ammann Group of Companies will be exempted from the non compete laws by which the respondents were prevented from entering into the business of concrete. It appears that on 25.01.2021, the respondents issued a notice to the petitioners contending that by virtue of the Non Compete Agreement dated 01.08.2011 which was subsequently amended on 18.06.2015 it had come to their notice that the petitioners have started manufacturing or selling of the products relating to asphalt which the Non Compete Agreement prevented them to do. By the notice therefore, the petitioners were asked to stop immediately dealing in such products.
2.3 To the notice, the petitioners responded on 05.02.2021 contending that there is no breach of any agreement and that the petitioners could not be restricted to manufacture construction equipments relating to asphalt. It was their contention too that the agreement was void as it was hit by Section 27 of the Indian Contract Act. The response further indicated that even when the Tri Party Agreement was entered, the respondents had sold their entire share to the group in Switzerland, and therefore, there is no restriction from manufacturing construction equipments for application of asphalt. The dispute having been so raised, by such a response, the petitioners invoked the arbitration clause calling upon the respondents to appoint one of the named arbitrators.
2.4 The respondents, through an advocate, on 09.03.2020 responded relying on the Non Compete Agreement and also on the Tri Partite Agreement, it was the case of the respondents that the petitioners could not after receiving consideration in light of the relaxation of the non compete clause, in respect of the third party turn around.
3. Mr. K.G. Sukhwani, learned counsel appearing for the petitioners would submit that the Non Compete Agreement dated 01.08.2011 is void and not enforceable. He would further submit that once the amendment was made in the Non Compete Agreement, by which, Annexure ‘B’ was not to apply to the company Ammann Apollo India Limited, the petitioners were wrongfully blamed of having committed breach of any agreement as the petitioners cannot be restricted to manufacture the construction equipments for concrete application but can also manufacture construction equipments for asphalt and other road construction equipments.
3.1 Mr. Sukhwani, learned counsel for the petitioners, would further submit that by relying on arbitration clause connected to the Non Compete Agreement and submit that even if the Non Compete Agreement was hit under the provisions of the Contract Act and so unconscionable, the arbitration clause in the agreement was a stand alone clause of the parties, therefore, were bound to settle their inter se disputes by invoking the mechanizm under the Act of 1996.
3.2 Mr. Sukhwani, learned counsel for the petitioners, would further submit that merely because consideration pursuant to the Tri Partite arrangement had been paid would not by itself disqualify the petitioner from invoking the arbitration clause. In support of his submissions that the
A valid arbitration agreement exists even if the underlying contract's enforceability is disputed, and courts must limit their inquiries to the existence of such agreements before appointing arbitrat....
The court affirmed the enforceability of an arbitration agreement and the jurisdiction under Section 11 of the Arbitration and Conciliation Act, despite challenges regarding the validity of signature....
The main legal point established in the judgment is the court's authority to appoint a Sole Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996, and the discretion to leave disp....
The main legal point established in the judgment is the importance of party autonomy in arbitration, the enforceability of the entire arbitration clause, and the conditional acceptance of arbitration....
The court upheld the Doctrine of Severability and Kompetenz-Kompetenz principle, affirming the independence of the arbitration clause from the main contract and the competence of the arbitral tribuna....
The arbitration agreement binds all parties, including non-signatories, and disputes must be referred to arbitration despite objections on limitation and jurisdiction.
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