IN THE HIGH COURT OF JUDICATURE AT MADRAS
N. SATHISH KUMAR, J.
Chithra Kumar – Petitioner
Versus
Aarthi Amarendra – Respondent
O.P. No. 833 of 2017, A. No. 6390 of 2017
Decided On : 02-07-2019
Arbitration and Conciliation Act, 1996 – Section 34 ,34(2)(a)(vi) and 31(3) - Amendment Act, 2015, - Section 34(2A) and 28(3) - This claimant is an expert in beauty and wellness industry for over 25 years and is proprietor - Respondent who had returned from USA was trained by claimant in her Academy - She proposed to Claimant that they could start a salon and spa as a partnership, where Claimant would bring technical expertise and Respondent her corporate and IT background - Accordingly, partnership agreement came to be registered and partnership firm was named as "Veda Day Spa and Salon." - After rental agreement was executed Claimant began to recruit and train persons to run Spa and Salon - She has trained 35 persons - While receiving valuable inputs of Claimant for establishing business, Respondent began to object to persons suggested by Claimant for creating infrastructure doing interior etc - After enormous delay, business commenced - Since the Respondent had excluded the claimant from participating in the business, claimant was unaware if such permission had been obtained - Claimant has invested a sum - Besides she has also trained many prospective employees – Held, Learned Arbitrator has considered only Clause 21 - Clause 22 of agreement also makes it very clear that even as agreed to parties that retirement of a party will not dissolve partnership deed, remaining party will entitle to carry on business - Reading of two clauses, Clause 21 cannot be isolated, it should be read along with Clause 22 - When party is agreed to carry on business in partnership firm even after retirement or death it cannot be held that there was violation in using the firm name - Considering above aspect award of Arbitrator in this aspect is not only against terms of contract but also to fact that very amount itself was not claimed by claimant, which is not submitted in dispute - In view of same portion of amount awarded per month for illegal use of the firm name "Veda Day Spa and Salon" till the date of award is liable to be set aside - Accordingly it is set aside - In result, original petition is partly allowed. -The rest of the Award is confirmed - Connected Application is closed – Petition partly allowed.
(Prayer: Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Award dated 24.03.2017 rendered by the Tribunal and dismiss the claims of the claimant.)
1. Challenging the Award of the Learned Arbitrator the present Original Petition has been filed. For the sake of convenience the parties are referred as per their own rankings in the claim petition.
2. The brief facts leading to file this petition is as follows:
(a) This claimant is an expert in the beauty and wellness industry for over 25 years and is the proprietor of Salon Aarthi. The Respondent who had returned from USA was trained by the claimant in her Academy. She proposed to the Claimant that they could start a salon and spa as a partnership, where the Claimant would bring the technical expertise and the Respondent her corporate and IT background. Accordingly, partnership agreement came to be registered on 25.04.2013 and the partnership firm was named as "Veda Day Spa and Salon." After the rental agreement was executed on 22.06.2013 the Claimant began to recruit and train persons to run the Spa and Salon. She has trained 35 persons. While receiving the valuable inputs of the Claimant for establishing the business, the Respondent began to object to the persons suggested by the Claimant for creating the infrastructure doing the interior etc. After enormous delay, the business commenced on 28.12.2013. It was promoted as unit of "Salon Aarthi." Since the Respondent had excluded the claimant from participating in the business, the claimant was unaware if such permission had been obtained. The claimant has invested a sum of more than Rs.40 lakhs. Besides she has also trained many prospective employees.
(b) On 17.02.2014, the claimant issued an email suggesting that the operations of Salon and Spa be temporarily shut. However, the matter could not be settled. The accounts were never maintained by the Respondent, in fact the accounts were not disclosed to the Claimant. Thereafter, the claimant sent an email on 14.3.2014 calling for dissolution of partnership and appointment of an Arbitrator. The Respondent sent a reply through lawyer on 17.03.2014 admitting the investment of the claimant to the tune of Rs. 40 lakhs. As the dispute culminated into lodging a police complaint, the matter finally referred to the Arbitrator at the instance of the Court. The claimant made the following claim:-
(a) Investment amount with interest at 18% for 27 months
4000000 + 1620000
Rs. 5620000/-
(b) Loss of Profit on investment from business for 27 months
Rs. 5400000/-
(c) Claim on Expertise/Expert Advice:
Rs. 2400000/-
Naming the Salon as Veda
Inputs for designing the logo
Sourcing the top line of product
Recruiting staff
Training staff, Menu contents
Designing the lining the uniforms
Fine tuning the music and interiors
Billing software contents
Spa lining
Incorporation of a Zen garden
Client consultation training
Ordering and purchasing of stock
Maintaining inventory
System operation training
Purchase of furniture Light fitting
Training of staff for Veda salon
Rs. 1500000/-
Loss of reputation in business
Rs. 2000000/-
Mental agony caused by the actions of respondent including false police complaint and threats from various people
Rs. 2500000/-
Expenses incurred due to non- compliance of FRRO Procedures in respect of Spa Therapists by the respondent
Rs. 450000/-
Total
Rs. 19870000/-
3. It is the case of the respondent that it was the claimant who induced her to start the Salon and Spa. The respondent wanted to
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