Scope of Court’s jurisdiction while examining an application under Section 8 of the Arbitration and Conciliation Act 1996: Delhi High Court
The Delhi High Court has passed a judgment on 02-03-2021 in the case of Hero Electric Vehicles Pvt. Ltd & Anr. Vs Lectro E-mobility Pvt. Ltd. & Anr. CS(COMM) 98/2020. Justice C. Hari Shankar disposed of the petition.
FACTS OF THE CASE
M/s Hero Electric Vehicles Pvt. Ltd. and M/s Hero Exports are the plaintiffs in CS (Comm) 98/2020, and M/s Lectro E-Mobility Pvt Ltd and Hero Cycles Ltd. are the defendants. The suit essentially seeks a decree of permanent injunction, restraining the defendants from dealing, in any manner, in electric bikes having a throttle, using “Hero” or any mark deceptively similar thereto, as a trademark, brand name or tradename, in any manner as would infringe the said mark, passing off, of the defendant’s electric bikes having a throttle, as those of the plaintiffs
The defendants (Lectro E-Mobility Pvt. Ltd., referred to, hereinafter, as “Lectro” and Hero Cycles Ltd) have filed IA 3381/2020 under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the 1996 Act”), seeking reference of the disputes, forming subject matter of the suit, to arbitration.
This judgement disposes of IA 3381/2020 as well as CS (Comm) 98/2020, after having heard arguments at length led, on behalf of the plaintiffs, by Mr. Sudhir Chandra, learned Senior Counsel and, on behalf of the defendants, by Mr. Akhil Sibal, learned Senior Counsel. Written submissions have also been filed, more than once, by both sides.
The controversy in the suit:
Plaintiff No. 2 Hero Exports claims to have started its business of electric vehicles, and to have launched battery fitted electric cycles and electric scooters, in 2007, under the well-known trademarks “Hero” and “Hero Electric”. The marks “Hero” and “Hero Electric” were registered by the Registry of Trade Marks, in favour of Plaintiff No. 2, under Class 12 of the Schedule to the Trade Marks Rules, 2002, in 2008. The details of such registration have been tabulated, in the suit.
At the time of filing of the applications for the aforesaid registrations, Hero Exports was a partnership firm of all members of the Munjal Group. Vide a Family Settlement Agreement dated 20 th May, 2010, however, the businesses of the group were divided among four Family Groups, designated as F-1, F-2, F-3 and F-4. The plaintiff asserts that, as per Schedule 7 to the FSA, Hero Exports, along with its business, was transferred to the F-1 group. The plaintiffs belong to the F-1 group, whereas the defendants belong to the F-4 group.
On 20th May, 2010 itself, parallelly with the FSA, a “Trade Mark and Name Agreement” (referred to, in the suit as well as hereinafter, as “TMNA”), was executed, which assigned the right to use the trademark “Hero”, and its variants, among the Family Groups, in relation to the products and services to which the business of each group catered, to the exclusion of other groups. The plaintiff asserts that the TMNA conferred, on the F-1 group, the exclusive right to use the trademarks “Hero” and “Hero Electric”, and its variants, on all electric vehicles, including electric bikes.
On 31st July, 2010, the partners of Hero Exports incorporated Plaintiff No. 1 as a new company, initially named Hero Eco Vehicles Pvt. Ltd., and, later, Hero Electric Vehicles Pvt. Ltd., to conduct the business of electric vehicles. Thereafter, asserts the plaint, the business of electric vehicles was entirely conducted, by Hero Exports, through Plaintiff No. 1 Hero Electric Vehicles Private Limited (hereinafter referred to as “HEVPL”). It is further asserted that Hero Exports gave a license to HEVPL to use the trademarks of Hero Exports in respect of electric vehicles, and also to proceed against third parties who sought to infringe the said trademark.
In courts view, while examining the aspect of arbitrability of the dispute, or the existence of a valid arbitration agreement binding the parties, in exercise of its jurisdiction under Section 8, the Court has always to remain alive to the fact that it is exercising the very same jurisdiction which the Arbitral Tribunal is empowered to exercise. Court should not, therefore, exercise jurisdiction, under Section 8 or Section 11, qua these aspects, in such a manner, as would completely erode or efface the authority of Arbitral Tribunal to rule thereon. It is only, therefore, where the Court finds the case to be “chalk and cheese”, and where referring the matter to the arbitral process would be opposed to public interest or public policy, and a futility ex facie, that the Court should nip the request for referring the dispute to arbitration in the bud. Else, the authority of the Arbitral Tribunal to adjudicate on these aspects is required to be respected, given the raison d’ etre, and fundamental philosophy, of the 1996 Act.
In the present case, the existence of a valid arbitration agreement, between the parties, is not in dispute, to the extent that Clauses 19.5 of the FSA and 5.6 of the TMNA provide for settlement of disputes, between or among the Family Groups, relating to the FSA and TMNA, by mediation, failing which by arbitration, in accordance with the 1996 Act. I am only required to examine, therefore, whether Mr. Sudhir Chandra has been able to make out a case which can convincingly discredit the request, by Mr. Sibal, to refer to the present dispute to arbitration, in accordance with the said covenants.
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JUDGMENT REVIEWED BY ABHINAV CHATURVEDI