Delhi High Court Upholds Arbitral Referral Of Trademark & Passing Off Dispute Involving "Pind Balluchi" Restaurant

The Delhi High Court Bench of Justices Om Prakash Shukla and C. Hari Shankar have allowed the Section 8, Arbitration and Conciliation (“ACA”) application seeking referral for arbitration between M/s Triom Hospitality (“Triom”) and M/s J.S. Hospitality Services Pvt. Ltd. (“J.S.”) regarding the registered trademark of the famous “Pind Balluchi” restaurants. Facts The Appellant i.e. Triom filed the present petition under Section 37, ACA challenging the order dated 28.08.2024 passed by District Judge (Commercial Court-02), Dwarka whereby the application filed by Triom under Section 8, ACA was dismissed. (“Impugned Order”). Triom is a partnership firm running a restaurant under the name “Pind Balluchi” at Dwarka, Delhi. The Respondent i.e. J.S., is a registered company and the proprietor of the trademark “Pind Balluchi” in multiple classes and operates a nationwide chain of restaurants specializing in Indian cuisine. J.S. claimed to enjoy substantial goodwill and expertise in the field of running restaurants. On 18.07.2024, an employee of J.S. discovered that Triom was operating a restaurant under the same name without authorization. Consequently, J.S. instituted a civil suit in the Commercial Court contending that Triom was guilty of trademark infringement and passing off. It was further alleged by J.S. that unauthorized use of its registered trademark caused financial loss, dilution of reputation and misled the members of public into believing that Triom's restaurant was associated with “Pind Balluchi” chain. The Court vide order dated 16.08.2024 granted ad interim injunction restraining Triom from using the mark “Pind Balluchi”. Against this, Triom filed – i) an application to vacate the injunction and ii) an application under Section 8, ACA seeking reference to arbitration based on an alleged MOU between the parties dated 22.06.2022 containing an arbitration clause. J.S. denied having executed the MOU and alleged that it was forged and fabricated. The Commercial Court concluded that J.S. had prima facie not executed the MOU and several circumstantial evidences supported the allegation of fabrication. Accordingly, the Commercial Court dismissed the Section 8, ACA application filed by Triom vide the Impugned Order, holding that dispute was non-arbitrable. Therefore, Triom preferred the present appeal against the Impugned Order before the High Court under Section 37(1)(a), ACA. Contentions The Senior Counsel for the Triom submitted that under Section 8(1), ACA, the Court has a positive obligation to refer the parties to arbitration unless it finds that prima facie no valid agreement exists. The Senior Counsel further clarified that mere allegations of fraud, complexity of transactions or disputed facts do not by themselves divest the arbitral tribunal of its jurisdiction. On the other hand, the Senior Counsel for J.S. argued that the trial court can examine the prima facie existence and validity of an arbitration agreement. It was argued that the Court under Section 8 can prima facie examine the alleged arbitration agreement and it has discretion to refuse to refer the parties for arbitration. The Counsel further submitted that even if there is a prima facie absence of validity of arbitration agreement, such absence is, by itself is sufficient to render the dispute non arbitrable. Observations The Court observed that the core issue which required its consideration was whether the Commercial Court was justified in rendering the matter to be non-arbitrable in view of the allegation of forgery of the arbitration agreement. The Court observed that based on precedents an analysis of prima facie existence of an arbitration agreement and its validity means refusing referral in a limited number of cases where the reference is ex-facie frivolous and where it is certain that the disputes are non-arbitrable. The Court cited precedents like Mayavati Trading Private Limited v Pradyut Deb Burman, 2019 SCC OnLine SC 1164 to hold that even cases pertaining to allegations of fraud or forgery or any wrongdoing arising out of civil or contractual relationships are arbitrable. The Court further noted that the Commercial Court had undertaken an extensive examination of evidences which was impermissible at the stage of a Section 8, ACA application. Such an approach runs contrary to both the letter and spirit of Section 16, ACA as well as the principle of kompetenz-kompetenz. It was held that in the present case, the allegation of forgery by itself were not sufficient for the referral court to hold the dispute to be non-arbitrable. The fact that parties had a pre-existing commercial relationship which was not denied by either party, made the examining of the signatures on the MOU an essential enquiry which could neither have been entertained nor overlooked by the Commercial Court. The Court observed that the present...

Delhi High Court Upholds Arbitral Referral Of Trademark & Passing Off Dispute Involving "Pind Balluchi" Restaurant

Arpita Pande

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Delhi High Court Upholds Arbitral Referral Of Trademark & Passing Off Dispute Involving "Pind Balluchi" Restaurant

Arpita Pande

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INR 1099+GST

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This is a premium content
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