IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1ST DAY OF AUGUST, 2019 BEFORE THE HON’BLE MR.JUSTICE B.VEERAPPA CIVIL MISCELLANEOUS PETITION No.251/2018 BETWEEN:
M/s LEVEL 7 A PROPRIETARY CONCERN BY ITS PROPRIETOR, Mr. DWIPEN ACHARAYA, NO.5, DEVARAJ NIWAS, 7TH ROAD, NEXT TO HDFC SANTA CRUZ EAST, MUMBAI-400055 ...PETITIONER (BY SRI AJAY KUMAR M., ADV.) AND:
1. M/s GO GO CREATIONS PVT. LTD., OFFICE NO.5, KHB INDUSTRIAL AREA, 2ND CROSS, YELAHANKA, BANGALORE-560106 BY ITS MANAGING DIRECTOR 2. M/s GO GO TRENDS PRIVATE LITD., OFFICE NO.5, KHB INDUSTRIAL AREA, 2ND CROSS, YELAHANKA, BANGALORE-560106 BY ITS MANAGING DIRECTOR …RESPONDENTS (BY SRI H.T.NATARAJ, ADV. FOR R-1; R-2 SERVED BUT UNREPRESENTED.) THIS C.M.P. IS FILED UNDER SECTION 11(5) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO APPOINT Ms. SMITA SINGH, ADVOCATE, HAVING HER OFFICE AT NO.111, RAMANASHREE CHAMBERS NO.37, LADY CURZON ROAD AS SOLE ARBITRATOR TO ARBITRATE THE DISPUTE BETWEEN THE PETITIONER AND THE RESPONDENTS UNDER THE CONSULTANCY AGREEMENT VIDE ANNEXURE-A, DATED 20.10.2014 AND ANNEXURE-B DATED 15.06.2016 AND ETC.
THIS C.M.P. COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R The petitioner has filed the present Civil Miscellaneous Petition under the provisions of Section 11(5) of the Arbitration and Conciliation Act, 1996 to appoint a Sole Arbitrator to adjudicate the dispute between the parties in terms of Clause 12(2) of the Consultancy Agreements dated 20.01.2015 and 15.06.2016 as per Annexures – A and B entered into between the parties.
2. It is the case of the petitioner that the petitioner is the proprietor of M/s Level 7, Consultancy and Marketing Firm based in Mumbai. The respondents approached the petitioner for engaging them as consultants in order to promote and market their apparel and accessories brand named as ‘Anti Gravity’. Accordingly, a Consultancy Agreement was entered into between respondent No.2 and the petitioner on 20.01.2015. The Consultancy Agreement was put in effect for a period of ten months from 08.01.2015 to 08.11.2015. However, as per Clause 2, the said agreement could be actually extended for further period. It is further case of the petitioner that the respondents wanted to bring about the changes to the terms of the Consultancy Agreement and as such, another agreement dated 15.06.2016 came to be executed between the parties renewing the existing/previous consultancy agreement as noted supra. on 27.03.2017, respondent No.2 called the petitioner to his office and informed that the company had planned to shutdown the operation for its brand “Anti Gravity”. Respondent No.2 issued another email dated 07.04.2017 informing the petitioner that after many discussions, the respondents had agreed to pay the petitioner his remuneration as per the agreement until 15.05.2017 and from May 15th to June 15th they would be paying only 50% of the retainer fee.
3. It is further case of the petitioner that it was shocked to receive email on 24.05.2017 stating that the respondents would not make payment for retainership fee of the previous month as they had not received the payment from multi brand outlets and that only after the payments were realized that they would be paying retainership and the commission amount. Therefore, the petitioner issued legal notice dated 25.01.2018 demanding for payment of retainership fee pending since March 2017 till June 2017, totaling Rs.5,25,000/-. The Commission charges to be paid since October 2016 at Rs.3,00,000/- and expenses pending since April 2016 totaling Rs.2,00,337/-, in all Rs.10,25,337/- excluding interest.
4. The respondents issued reply on 30.04.2018 denying any liability. Therefore, the petitioner was forced to issue another legal notice dated 30.04.2018 invoking arbitration clause as per Clause 12(ii) for referring the dispute to a sole arbitrator and nominating the sole arbitrator to arbitrate the claims of the petitioner. The respondents issued reply notice on 06.06.2018 denying the case of the petitioner and further denying the existence of the agreement itself though they admitted its contents at para No.8 of the reply notice. Therefore, the petitioner is before this Court.
5. I have heard the learned counsel appearing for the parties.
6. Sri. Ajay Kumar M, learned counsel for the petitioner contended that there is no dispute with regard to the Consultancy Agreements dated 20.01.2015 and 15.06.2016 entered into between the parties and there exists clause 12(2) for arbitration of any dispute. He would further contend that the petitioner received reply notice from the respondents denying the case of the petitioner though they admitted the contents in para 8. Therefore, he has issued legal notice as contemplated under the provisions of Section 7(5) of the Arbitration and Conciliation Act, 1996. Therefore, he submits that there is no impediment for this Court to appoint arbitrator as mentioned by the petitioner in the Civil Miscellaneous Petition.
7. Per contra, Sri. H.T. Nataraj, learned counsel for respondent No.1 contended that the very Civil Miscellaneous Petition filed is not maintainable and the petitioner is not agreeing with the nomination made by the respondents and he fairly submits that any other independent arbitrator from the Arbitration Centre can be appointed to resolve the dispute between the parties.
8. The said fair submission is placed on record.
9. Respondent No.2 is served and unrepresented.
10. Having heard the learned counsel for the parties, existence of Consultancy Agreement dated 20.01.2015 and 15.06.2016 entered into between the parties is not in dispute. In the agreement clause 12(2) refers to resolution of dispute between the parties, which reads as under:-
“12. GOVERNING LAW AND DISPUTE RESOLUTION:
1. This Agreement shall in all respects be governed by and construed in accordance with the laws of India.
2. All disputes, differences, claims or questions whatsoever which shall either during the continuance of this Agreement or afterward arise between the Company and the Consultant or between their respective representatives or between any party to these presents and the representatives of the other party touching these presents or the construction or application thereof or any clause or thing herein continued or any account or liability between the parties hereto or as to any act, deed or omission of any of the parties hereto in any way relating to these presents shall be referred to a single arbitrator in case the parties agree upon one, otherwise to two arbitrators one to be appointed by each party to the dispute and the two arbitrators to jointly appoint the third. The arbitration shall be before the sole or three arbitrators, as the case may be and shall be held in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification or re- enactment thereof for the time being in force and the arbitration proceedings shall be held and conducted in Bangalore.”
11. It is also not in dispute that the petitioner has complied the provisions of Section 7(5) of the Arbitration and Conciliation Act, 1996 by issuing legal notice. Though the contents of the notice have been admitted and have not been denied in the reply, the existence of the agreement has been denied by the respondents. In view of the admitted fact that the Consultancy Agreements are not in dispute, the existence of arbitration clause is not in dispute, though the respondents have not agreed with the nomination made by the petitioner, this Court can appoint any other independent learned Arbitrator.
12. In view of the aforesaid reasons, the Civil Miscellaneous Petition is allowed. Sri. M. Nagarajan, Retired Judicial Member, CAT, is appointed as sole arbitrator to adjudicate the dispute in terms of Clause 12(2) of the Consultancy Agreements dated 20.01.2015 and 15.06.2016 entered into between the parties.
13. The Registry is directed to send the copy of this order to the learned Arbitrator and the Arbitration Centre for reference forthwith.
Sd/- JUDGE PMR