Case Note & Summary
The appellant, Arnav Enterprises, filed an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, challenging the ad-interim relief granted by the learned Single Judge in favor of the respondent, IOSIS Spa & Wellness Private Limited, under Section 9 of the Act. The respondent had approached the court seeking interim measures to prevent the appellant from terminating the franchise agreement and from interfering with the respondent's possession and operation of the franchise center. The respondent claimed that it was engaged in the business of running wellness centers under the brand name 'IOSIS' and that the appellant approached it for a franchise in December 2018. After negotiations, a Letter of Intent was issued on 5 March 2019. The respondent alleged that the appellant issued a notice of termination on 31 July 2020, purportedly for breach of the franchise agreement, which the respondent disputed. The learned Single Judge granted ad-interim relief restraining the appellant from terminating the agreement and from interfering with the respondent's possession. The appellant argued that the respondent had breached the agreement and that no prima facie case was made out. The court, after considering the submissions, held that the respondent had made out a strong prima facie case, the balance of convenience was in its favor, and irreparable loss would be caused if the relief was not granted. The appeal was dismissed, and the ad-interim relief was confirmed.
Headnote
A) Arbitration - Interim Measures - Section 9 of the Arbitration and Conciliation Act, 1996 - Grant of ad-interim relief - The court considered whether the respondent had made out a prima facie case for grant of interim injunction restraining termination of franchise agreement and interference with possession. Held that the respondent had a strong prima facie case, balance of convenience was in its favor, and irreparable loss would be caused if relief was not granted (Paras 1-10).
B) Contract Law - Franchise Agreement - Termination - Prima Facie Case - The appellant issued a notice of termination alleging breach of franchise agreement. The respondent disputed the breach and claimed that the termination was illegal. The court found that the respondent had made out a prima facie case that the termination was not in accordance with the terms of the agreement (Paras 3-8).
C) Arbitration - Interim Measures - Balance of Convenience - Section 9 of the Arbitration and Conciliation Act, 1996 - The court held that the balance of convenience was in favor of the respondent as the franchise center was operational and termination would cause substantial loss to the respondent's business and reputation (Paras 9-10).
Issue of Consideration
Whether the learned Single Judge was justified in granting ad-interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, restraining the appellant from terminating the franchise agreement and from interfering with the respondent's possession and operation of the franchise center.
Final Decision
The appeal was dismissed. The ad-interim relief granted by the learned Single Judge on 30 July 2020 and 26 October 2020 was confirmed.
Law Points
- Section 9 of the Arbitration and Conciliation Act
- 1996
- Prima facie case
- Balance of convenience
- Irreparable loss
- Interim measures
- Franchise agreement
- Termination of agreement
- Breach of contract
Case Details
2021 LawText (BOM) (04) 34
Arbitration Appeal (L) No.7255 of 2020
Mr. Vikrant Shetty alongwith Ms. Sakina Electricwala i/by M/s Taurus Legal, Advocates for the Appellant/Applicant. Ms. Fatima Barodawalla alongwith Mr. Uttam S. Rane, Mr. Laxman Bhinda, Mr. Vikram Ahirwar, Advocates for the Respondent.
IOSIS Spa & Wellness Private Limited
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Nature of Litigation
Appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against an order granting ad-interim relief under Section 9 of the Act in a franchise dispute.
Remedy Sought
The appellant sought to set aside the ad-interim relief granted by the learned Single Judge restraining the appellant from terminating the franchise agreement and from interfering with the respondent's possession and operation of the franchise center.
Filing Reason
The appellant challenged the ad-interim relief granted under Section 9 of the Arbitration Act, arguing that the respondent had not made out a prima facie case and that the balance of convenience was not in its favor.
Previous Decisions
The learned Single Judge granted ad-interim relief on 30 July 2020 and 26 October 2020, restraining the appellant from terminating the franchise agreement and from interfering with the respondent's possession and operation of the franchise center.
Issues
Whether the learned Single Judge was justified in granting ad-interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, restraining the appellant from terminating the franchise agreement and from interfering with the respondent's possession and operation of the franchise center.
Submissions/Arguments
The appellant argued that the respondent had breached the franchise agreement and that no prima facie case was made out for grant of interim relief.
The respondent argued that the termination was illegal and that it had a strong prima facie case, balance of convenience was in its favor, and irreparable loss would be caused if relief was not granted.
Ratio Decidendi
The court held that the respondent had made out a strong prima facie case, the balance of convenience was in its favor, and irreparable loss would be caused if the interim relief was not granted. Therefore, the learned Single Judge was justified in granting ad-interim relief under Section 9 of the Arbitration and Conciliation Act, 1996.
Judgment Excerpts
By this appeal filed under section 37 of the Arbitration and Conciliation Act, 1996 (for short “the Arbitration Act”) the appellant (original respondent) has impugned the order dated 30th July, 2020 and 26th October, 2020 passed by the learned Single Judge thereby granting ad-interim measures in favour of the respondent (original petitioner) under section 9 of the Arbitration Act.
It was the case of the respondent that the respondent is engaged in the business of running wellness centers under the brandname and trademark of “IOSIS”.
It was the case of the respondent that the appellant approached the respondent for franchise of the respondent in the month of December, 2018.
The respondent issued a Letter of Intent on 5th March, 2019 in favour of the appellant for setting up and operating the franchise center.
Procedural History
The respondent filed Arbitration Petition (L) No.426 of 2020 under Section 9 of the Arbitration and Conciliation Act, 1996 seeking interim relief. The learned Single Judge granted ad-interim relief on 30 July 2020 and 26 October 2020. The appellant filed Arbitration Appeal (L) No.7255 of 2020 under Section 37 of the Act challenging the said orders. The appeal was heard and reserved on 7 April 2021 and pronounced on 20 April 2021.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 9, Section 37
