A litigant can take different stands at different times but cannot take contradictory stands in the same case. A party cannot be permitted to approbate and reprobate on the same facts and take inconsistent shifting stands consistently. Having questioned the maintainability of the arbitration agreement, earlier, the party challenging it cannot rely on the agreement in a later proceeding. This remarkable judgment was passed by the Delhi High Court in the matter of SAGAR RATNA RESTAURANTS PVT. LTD V D S FOODS & ORS. [CM(M) 71/2021 & CMs 3098/2021, 10016/2021] by Honourable Justice Navin Chawla.
This petition was filed to challenge the order passed by the learned District Judge, (Commercial Court-02), South District, whereby they allowed the application of the respondents filed under Section 8 of the Arbitration and Conciliation Act, 1996 and referred the parties to arbitration and subsequently dismissed the suit filed by the petitioner as not maintainable.
The petitioner is a registered owner of the trademark “SAGAR”, “RATNA” and “SAGAR RATNA” which have been duly renewed by the petitioner from time to time. The petitioner contends that it entered into a Franchise Agreement and a Supplementary Agreement with the respondents wherein the respondents were appointed as Franchisees and granted a license to use the said trademark. As certain disputes arose; the petitioner claims to have sent a cease-and-desist notice to the respondents to terminate the Franchise Agreement and thereafter filed a petition under Section 9 of the Act and restrained respondents from using the trademark of the petitioner.
The petitioner thereafter invoked the Arbitration Agreement and on the failure of the respondents to agree to the appointment of an arbitrator. But the respondents challenged that. So, the tribunal had refused to grant interim protection to the petitioner, accepting the objection of the respondents and observing prima facie doubt on the maintainability of the arbitration, the petitioner filed an application before the learned Arbitrator, praying for leave to withdraw the arbitration claim to institute a civil suit. However, the respondents challenged that too therefore the petitioner submitted that the respondent has succeeded in their plea on lack of arbitrability of the dispute, cannot now challenge the maintainability of the suit as well.
The Court noted that a bare perusal of the above sequence of events would show that the respondents have been taking inconsistent stands at different stages, as per their convenience.
The HC relied on Suzuki Parasrampuria Suitings Pvt. Ltd. v. Official Liquidator of Mahendra Petrochemicals Ltd. (In Liquidation) & Ors., (2018) 10 SCC 707 and Amar Singh vs. Union of India, (2011) 7 SCC 69 and asserted that inconsistent pleas by the litigants will be not entertained in courts of law.
“This Court wants to make it clear that an action at law is not a game of chess. A litigant who comes to court and invokes its writ jurisdiction must come with clean hands. He cannot prevaricate and take inconsistent positions.”
Also, HC stated that arbitration is an Alternate Dispute Resolution mechanism that is resorted to by the parties with their consent. So if the respondents have, in the earlier instance, clearly envisaged an intent not to be bound by the Arbitration Agreement so far as the claim of the petitioner to the trademark is concerned. The petitioner has now accepted that opposition and has invoked the ordinary jurisdiction of a Civil Court seeking enforcement of its rights in the trademark. Thus, it is evident that both the parties have become ad idem that the dispute raised by the petitioner is not arbitrable in nature, the parties could not have been referred to arbitration.
Therefore, the impugned order of the Civil Court warrants an interference and hence cannot be sustained and is set aside.