HONASA CONSUMER LIMITED vs RSM GENERAL TRADING LLC

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 5 August 2024
Pronounced on: 20 August 2024

+ O.M.P.(I) (COMM.) 214/2024 & I.A. 32362/2024, I.A. 32363/2024, I.A. 35026/2024

HONASA CONSUMER LIMITED …..Petitioner
Through: Mr. Rajiv Nayar, Sr. Advocate
with Ms. Amita Gupta Katragadda, Mr. Omar Ahmad, Mr. Vikram Shah, Mr. Nayani Aggarwal, Mr. Karan Motiani, Ms. Isha Choudhary, Ms. Aashna Gupta, Mr. Manthan Nagpal and Ms. Kamakshi Puri, Advs.

versus

RSM GENERAL TRADING LLC …..Respondent
Through: Mr. Mudit Sharma, Ms. Nandini Sharma, Mr. Parvez A. Khan and Mr. Abhishek Rathi, Advs.

CORAM:
HON’BLE MR. JUSTICE C. HARI SHANKAR

J U D G M E N T
% 20.08.2024

A Prefatory Note

1. This is one of the worst instances of abuse of the legal process, in commercial litigation, that this Court has had the misfortune of encountering.

2. The petitioner and respondent entered into an Authorized Distributorship Agreement1, whereunder the respondent was to distribute the petitioner’s products in the Middle East and Africa. The contract specifically envisaged resolution of disputes by arbitration, to be governed by the Arbitration and Conciliation Act, 19962, with New Delhi as the arbitral venue. The contract separately contained a clause conferring exclusive jurisdiction, in respect of all matters relating to the contract, on courts in New Delhi. The contract also specified that it was to be interpreted in accordance with Indian law which was, therefore, both the governing and the curial law.

3. The respondent, in clear and mala fide breach of all these covenants, filed a suit in the Court of First Instance, Dubai3, alleging breach of the ADA by the petitioner, and is now the holder of a decree by the Dubai Court which, applying Dubai law to the dispute, has found the petitioner guilty of breach of the ADA and mulcted the petitioner with damages of AED 25,071,991, equivalent to ? 57,17,65,947 (at the conversion rate of ? 22.80 to 1 AED as applicable today).

4. The respondent acknowledges, in its written submissions, without as much as blinking an eyelid, that, by this stratagem, it has rendered the arbitration agreement, as well as all other contractual covenants between the parties, unworkable. To quote the exact submission of the respondent:

“In the present case, there cannot be any arbitration as there has been a determination by a Court of Law and an arbitrator cannot be Court of Appeal.”
(Emphasis supplied)

Thus, there is a candid acknowledgement, by the respondent, that, by approaching the Dubai Court in stark violation both of the arbitration as well as the exclusive jurisdiction clauses in the ADA, the respondent has rendered the arbitration agreement unworkable.

5. The petitioner has moved this Court under Section 94 of the 1996 Act, seeking an injunction against the respondent from enforcing the decree of the Dubai Court, so that it can proceed to invoke the contractually envisaged remedy of arbitration to resolve its disputes with the respondent. The respondent contends, however, that no such order can be passed under Section 9 of the 1996 Act, and that the Court can only sit back and watch, helplessly, the brutal guillotine, by the respondent, of the right of the petitioner to invoke the contractually envisaged arbitral mechanism, to which the petitioner and respondent had, ad idem, appended their signatures.

6. A pointer to the mala fides with which the respondent acted is to be found in the wholly unnecessary impleadment, by the respondent, of certain entities situated in the UAE, and including allegations of collusion between the petitioner and the said entities, so as to justify approaching the Dubai Court. This attempt has, however, backfired, as the Dubai Court has specifically found the allegation of collusion to be unfounded, and that none of the defendants in the suit, except the petitioner, is liable towards the respondent, and has, therefore, confirmed damages only against the petitioner. This further underscores the legally abusive nature of the respondent’s acts.

7. The manner in which the respondent acted, in manifest breach of the covenants of the ADA, and with the transparent intention of frustrating a possible arbitration, is shocking, to say the least.

Facts

8. The contract between the parties

8.1 On 30 July 2020, the petitioner and the respondent entered into an ADA. Clauses 2, 2.1, 2.2, 4.5, 15, 15.1, 15.2, 16, 16.3, 22, 22.1 (iii), 24.5(ii) and (iii) and 24.7 of the ADA read thus:

“2. APPOINTMENT OF THE DISTRIBUTOR

2.1 The Company hereby grants to the Distributor the right to market and distribute the Products in the Territory in compliance with the brand guidelines of the Company and all Applicable Laws including those relating to the procurement, storage, sale and advertising of the Products. The specific commercial terms are more fully set out in the Schedule 1 hereto.

2.2 The Distributor agrees to act in such capacity and exercise its rights and perform its obligations in accordance with the terms and conditions of this Agreement. The Distributor undertakes to comply with certain conditions prescribed by the Company in relation to the distribution of the Products, which may be supplemented by the Company from time to time and shall sell and market the Products only within the Territory. Any additional/ future conditions will be implemented through mutual discussion and agreement.

*****

4.5 The description, quantity and price of the Products shall be set forth in the Purchase Orders. Upon execution, each Purchase Order shall be governed by the terms and conditions of this Agreement, which shall be incorporated therein by reference and the terms and conditions set out in the relevant Purchase Order. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions set out in the relevant Purchase Order, the terms and conditions of this Agreement shall take precedence to the extent of such inconsistency. Where a term in a Purchase Order which is explicitly agreed by the Company and expressly states to take precedence over a clause in the Agreement, such a term of the Purchase Order will take precedence.

*****

15. LEGAL RELATIONSHIP

15.1 During the continuance of this Agreement, the Distributor shall be entitled to use the title “MAMAEARTH AUTHORISED DISTRIBUTOR” but such use shall be in accordance with the Company’s policies in effect from time to time. Before using such title (whether on Distributor’s business stationery, advertising material or elsewhere), the Distributor shall submit to the Company proof prints and such other details as the company may require. The Company may in its own discretion grant or withhold the permission for such proposed use.

15.2 This Agreement defines the legal relationship between the Company and the Distributor and their respective responsibilities in the purchase and sale of Products and nothing in this Agreement shall render the Distributor a partner or agent of the Company. The Distributor is an independent contractor buying and selling the Products in its own name and at its own risk. The Distributor shall not bind or purport to bind the Company to any obligation nor expose the Company to any liability nor pledge or purport to pledge the Company’s credit. Further no Party shall have any right, power or authority to act for or to bind or commit to assume any obligation or responsibility on behalf of any other Party.

16. TERMINATION

16.3 Notwithstanding anything else contained herein, this Agreement may be terminated by either Party at any time without any cause, by the giving of notice in writing to the other at least 90 (ninety) days prior to the effective date of such termination.

*****

22. REPRESENTATIONS AND WARRANTIES

22.1 Each Party represents and warrants to the other Party that:

(i) It has all legal right, power and authority to execute this Agreement and carry out the terms, conditions and provisions hereof;

(ii) The execution, delivery and performance of this Agreement has been duly authorized by all requisite corporate and other actions and will not violate or contravene its charter documents, any material provisions or requirements of any government instrumentality or any Applicable Law or Approvals, or violate or contravene any provisions of any agreement, arrangement, document or instrument to which it is a party or by which it or its property may be bound or affected.

(iii) this Agreement constitutes the valid and binding obligation of such Party, enforceable in accordance with the terms hereof, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally;

(iv) no representation or warranty by such Party contained herein or in any other agreement, document or instrument furnished by or on behalf of such Party to the other Party contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make such representation or warranty not misleading in light of the circumstances in which it was made;

(v) there is no litigation pending or threatened to which it is a party that, if adversely determined, would have a material adverse effect on its financial condition or prospects or business or its ability to perform its obligations under this Agreement;

(vi) The representations and warranties contained in Clause 22.1 hereof are given and made on and as of the date hereof and shall survive the execution and delivery of this Agreement and no Party shall take any action or permit action to be taken which would cause any of such representations or warranties to be no longer true or correct in any respect during the subsistence of this Agreement.

*****

24.5(ii) Dispute Resolution

(ii) In the event of any question, dispute or difference arising under this Agreement or in connection therewith, the same shall be referred to the sole Arbitrator, to be appointed by the managing director of the Company. There will be no objection to any such appointment on the ground that the arbitrator has been appointed by the managing director of the Company to this Agreement. The award of the arbitrator shall be final and binding on both the Parties of the Agreement. In the event of such an arbitrator to whom the matter is originally referred, being transferred or vacating his office or being unable to act for any reason whatsoever, the managing director of the Company shall appoint another person to act as an arbitrator in accordance with terms of the Agreement and the person so appointed shall be entitled to proceed from the stage at which it was left out by his predecessors.

(iii) The arbitration shall be subject to Indian Arbitration and Conciliation Act, 1996 or amendments thereof. The arbitration proceedings shall be conducted in English. The venue of Arbitration shall be New Delhi, India.

*****

24.7 Law and Jurisdiction

This Agreement shall be governed by and construed in accordance with the laws of India and shall be subject to the exclusive jurisdiction of the New Delhi courts.”
(Emphasis supplied)

8.2 The ADA was amended by addendum dated 27 May 2021. Clauses 3.5 and 3.6 of the Addendum read thus:

“3.5. The provisions of Clauses 12 and 24 of the Agreement shall apply mutatis mutandis to this Amendment,

3.6. The Patties agree that this Amendment shall modify the Agreement only to the limited extent as specifically set out herein. Except as specifically and expressly amended by this Amendment all other provisions of the Agreement shall remain unchanged and in full force and effect and shall continue to remain applicable and binding on the Parties.”

8.3 Thus, under the ADA, the respondent undertook to market and distribute the petitioner’s product in Middle East and Africa. The ADA was executed in New Delhi on a stamp paper purchased at New Delhi. Clause 24.5 envisages the resolution of dispute arising under the ADA by arbitration, to be conducted as per the 1996 Act and fixes the venue of arbitration at New Delhi. Clause 24.7 specifies that the ADA would be governed by and would be construed in accordance with the laws of India and also confers exclusive jurisdiction in matters relating to the ADA, on Courts in New Delhi. Clause 3.5 of the addendum made these covenants applicable, mutatis mutandis, to the addendum as well.

9. By letter dated 17 October 2022, addressed to the respondent, the petitioner, invoking Clause 16.3, terminated the ADA w.e.f.5 17 January 2023. Following this, the petitioner addressed e-mails to the respondent on 18 October, 2022, 9 November 2022, 14 November 2022 and 24 November 2022, seeking full and final reconciliation of the dispute between them. These e-mails did not elicit any response form the respondent.

10. The Dubai suit

10.1 On 25 November 2022, the respondent filed Case 446/2022 before the Dubai Court, in which the order forming subject matter of dispute in the present petition has come to be passed on 16 May 2024.

10.2 The respondent included, as the second defendant in the Dubai Suit, Honasa Consumer General Trading LLC6, a subsidiary company of the petitioner based in Dubai.

10.3 The following paragraphs, from the Dubai Suit, merit reproduction in extenso:

“Subject Matter and Merits of the Subject Case:

First: Under an Exclusive Authorized Distributor Agreement dated 30/07/2020, entered into between the Plaintiff and the First Defendant, registered with the government competent departments in India. Under this agreement, Plaintiff was entrusted with marketing, distributing, and selling cosmetics and children’s products and many goods and services belonging to the First Defendant Company as its sole and exclusive distributor in the United Arab Emirates, the Middle East and Africa. This is done through the private distribution and …

Second: It was agreed between the two parties that the contract term is (36) months -three years – starting from 30/07/2020, it may be terminated by both parties when the reasons stipulated in Article (16) thereof are available, provided that this termination is preceded by a notification to the party whosoever desires to do so, a term of (60) days is given to eliminate this reason and settle it, so that if that period expires and this reason remains, the termination should be made.

Third: On 27/05/2021, the previously executed approved Distribution Agreement was amended by increasing the preliminary Agreement period from three years to five years, commencing from 01/05/2021. Subsequently, in Clause (2/4) was added to it the commitment of the First…

Fourth: In the middle of 2022, the First Defendant company breached the concluded contract with unreasonable grounds. This is also contrary to the contract clauses and amendments thereto with non-competition, and making the matter exclusive to the Plaintiff, when it has established a company that operates under the same name and trademark as the First Defendant, which is the Second Defendant Company.

Fifth: On 17/10/2022, the Second Defendant sent a letter of termination to the Plaintiff without reasonable justification, pretending and relying on the third paragraph of Article No. (16) of the agreement

Sixth: Whereas the act of the First Defendant involved breach of the duration of the contract and breaching as well all the obligations assigned to it, such as respecting the commercial nature of the contracts, and as its execution requires incurring the Plaintiff high costs. Where the Defendant’s contractual breaches came as follows:

Seventh: As a result of the breach of the First and Second Defendant, and after the Plaintiff submitted a huge investment amount, as well as, prepared and installed all the supplies of operation, marketing, selling, advertising, and concluding contracts with third parties in considering that it is an authorized distributor of the first defendant, the Plaintiff suffered huge damages. It is impossible to address such damages due to the Defendants’ breach of the contract period and breaching of the contractual obligations as a result of their complicity to cause damages to the Plaintiff Company as indicated above.”

10.4 The respondent raised only one final claim in the suit, which was described thus:

Final Claims

Claim No.
Claim Description

1
In view of the above:

We kindly request the honorable court as follows: To admit the registration of the subject case, pay its prescribed fee, and setting the nearest hearing for its examination, and notify the two Defendants to appear to hear the following judgment:

First: Before adjudication of the case: To assign an expert specialized in the field of commercial agencies and distribution contracts to discuss the elements of the case, the breaches and deficiencies of the Defendants to implement the contract examine the serious damages incurred against the Plaintiff.

Second: Regarding the subject matter of the case:

To bind the two Defendants to pay the Plaintiff an amount of AED 45,000,000 (Forty Five Million Dirhams) in compensation for the financial and moral damages incurred as a result of the breach of the contract by the two Defendants, in addition to the legal interest at the rate of 5% from the date of the final judgment until the full payment.

Third: To bind the Defendants to pay fees, expenses, attorney’s fees

(Emphasis supplied).

11. Mr. Rajiv Nayar, learned Senior Counsel for the petitioner, points out that the Dubai Suit was entirely predicated on the allegation that the petitioner had breached the ADA, resulting in the respondent being entitled to damages. This position was, in fact, conceded by Mr. Sameer Jain, who had appeared on behalf of the respondent before this Court on 5 July 2024. Thereafter, however, the respondent has been represented by Mr. Mudit Sharma, learned Counsel, who seeks to distance himself from the concession made by Mr. Sameer Jain. According to Mr. Sharma, Mr. Jain is not correct, and there are allegations, in the Dubai suit, other than the allegation of breach of the ADA by the petitioner. This submission would be addressed presently.

12. Reply filed by the petitioner in the Dubai suit

12.1 The petitioner, on receiving notice from the Dubai Court, filed its reply to the Dubai Suit on 8 February 2023. Specific objections to the maintainability of the Dubai Suit were raised by the petitioner, inter alia on the ground that the ADA contained clauses envisaging resolution of disputes thereunder by arbitration, to be conducted as per the 1996 Act with the venue of arbitration fixed at New Delhi; requiring the agreement to be governed by and construed in accordance with Indian law; and conferring, on Courts in New Delhi, exclusive jurisdiction to deal with all disputes arising under the ADA. It was further contended that the inclusion of Honasa Trading as the second defendant in the Dubai Suit was a mischievous attempt at invoking, perforce, the jurisdiction of the Dubai Court, whereas, in actual fact, Honasa Trading had nothing to do with the dispute.

12.2 The petitioner, therefore, prayed before the Dubai Court, that the Dubai Suit be dismissed with costs.

13. Subsequently, on 16 March 2023, the respondent impleaded, in the Dubai Suit, two additional defendants; Mr. Tarun Aggarwal, Manager of Honasa Trading, stating that he was the person responsible for sending the termination notice dated 17 October 2022 and; M H Projects LLC, with whom the petitioner had contracted consequent on termination of the ADA with the respondent.

14. The judgment of the Dubai Court

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14.1 By judgment dated 16 May 2024, the Dubai Court decreed the Dubai Suit in favour of the respondent and against the petitioner. It is unnecessary to reproduce the entire judgment. Suffice it to state that it is not disputed, even by learned Counsel for respondent, that the Dubai Court applied Dubai law to the dispute and held that, as per Dubai law, the petitioner was guilty of breach of the ADA, entitling the respondent to damages.

14.2 At the very outset of the judgment, the Dubai Court has noted the request of the respondent “to appoint an expert specialized in the field of commercial agencies and distribution contracts to investigate the elements of the case, to ascertain the Defendants’ breach of contract and to examine the severe damages incurred by the Plaintiff”. On merits, the Dubai Court has ruled as under:

“On 17/10/2022, the Second Defendant issued a termination notice to the Plaintiff without justification, citing Clause three of article (16) of the agreement, despite the illegality of this action, which explicitly states: “Notwithstanding anything else contained herein, either party may terminate this agreement at any time without cause by providing written notice to the other party at least 10 days prior to such termination.” The true understanding of this Clause relates to the parties’ right to terminate the agreement upon the specific conditions listed in article (16). Furthermore, this notice conflicts with the agreement’s amendment, which requires a pre-termination notice and a 12-month remediation period for any breaches or violations, making the termination notice invalid and non-compliant with the agreed timelines.

Additionally, none of the conditions justifying termination were met. The First Defendant’s actions constituted a breach of the contract’s duration, violating all contractual obligations, which involved incurring substantial financial costs by the Plaintiff to honor the agreement. The contractual breaches by the First Defendant include: (1) colluding with the Second Defendant to undertake the same tasks and activities as the Plaintiff, violating the exclusivity Clause in Clause (4/2) of the agreement’s addendum, which entails the First Defendant’s commitment not to engage commercially or communicate with any person involved in similar activities as the Plaintiff; (2) appointing other distributors in various Gulf countries during the contract period, contrary to Clause 1/2 of the agreement and 3/4 of its addendum, as evidenced by the attached correspondences, and appointing another distributor in Qatar; (3) violating the contract duration as specified in the addendum, where the initial term is five years starting from 1/5/2021, without justification or grounds for termination, contrary to the agreed termination mechanism and the 12-month remediation period for any errors; (4) the First Defendant personally relocating stock from the Plaintiff’s warehouses to a new partner and distributor, despite the purchase and full payment of those goods; (5) supplying products that did not meet the required quality standards and were expired, based on consumption standards recognized by relevant authorities.”
(Emphasis supplied)

14.3 In holding that the petitioner was guilty of breach of contract entitling the respondent to damages, the Dubai Court relied on the opinion of the experts appointed by it. This reliance is reflected in the following passages from the judgment of the Dubai Court:

“In execution of the previous preliminary judgment, the appointed expert carried out their assigned task and submitted a report concluding that it was evident the First Defendant appointed the Plaintiff (the distributor) to market, distribute, and sell products using the First Defendant’s trademarks according to the distribution agreement dated 20/07/2020. Subsequently, both parties agreed to amend some commercial terms of the agreement, leading to the execution of an amendment to the authorized distributor agreement on 27/5/2021. The expert could not clearly and accurately determine whether the Plaintiff breached their obligations under the exclusive distribution agreement and its amendment mentioned above. The expert clarified that the First Defendant property terminated the agreement based on a termination notice dated 17/10/2022, in accordance with the Clause allowing for termination (16.3), confirming the validity and enforcement of the termination by the First Defendant. After reviewing the submitted documents, the expert found them unclear, making it difficult to provide a precise and clear technical opinion on the extent of the damage suffered by the Plaintiff. Based on the available documents and evidence, the expert could not provide a definitive and accurate opinion on the breaches by either party. It was not clear to the expert if either party had breached their obligations under the exclusive distribution agreement dated 20/07/2020, as amended on 27/05/2021.

On 16/10/2023, the Plaintiff’s representative submitted a defense memorandum requesting the court to: first, disregard the expert’s conclusions, treating them as null and void, particularly as the assigned tasks did not provide any clear information for the court to rely on the report as evidence in the case. Second, to appoint a different expert specialized in the field of commercial agencies and trademarks or appoint a specialized dual committee from the relevant authorities in the commercial agencies section of the Ministry of Economy in Dubai, with a new retainer, to re-examine the elements of the lawsuit in light of the submitted objections and all the documents previously submitted by the plaintiff in their explanatory and rebuttal memoranda. The aims were to establish: 1. The legality of terminating the distribution contract with the Plaintiff by the Defendants. 2.Whether the First Defendant adhered to the contract terms regarding termination and notified the Plaintiff of any breach and allowed a remediation period of twelve months without rectifying this breach. 3. Whether the First Defendant appointed a new distributor without adhering to the contract terms and the termination mechanism, and whether the new distributor colluded in this knowing fully of the Plaintiff’s role as the distributor of those products, continuing to market, distribute, and sell the First Defendant’s products labeled with the Plaintiff’s name, which constitutes a blatant infringement. 4. The Plaintiff’s entitlement to the claimed compensation amount for the material and moral damages suffered due to the breach of contract terms. Additionally, the Plaintiff requested, according to Article 1/121 of Law of Evidence No. 35 of 2022, to summon the expert to discuss their report’s conclusions, particularly regarding the termination’s validity, and to confront them with the contractual obligation in the contract amendment and the necessity of notification by the First Defendant of the Plaintiff’s breaches and adherence to the remediation period. This was necessary since the Defendants had not presented any document proving that the First Defendant notified and adhered to the twelve-month remediation period stipulated in the contract amendment, especially since the expert explicitly stated in section 3/5 of their conclusions: “The expert clarified that based on the submitted documents and available evidence … “. The expert cannot provide a final opinion on whether any breaches occurred by either party in the lawsuit. It was not clear to the expert if either party had breached their obligations within the scope and boundaries of the exclusive distribution agreement dated 20/07/2020 and amended on 27/05/2021. Thirdly, on the subject of the lawsuit: ruling in favor of the Plaintiffs requests as stated in their original lawsuit and their incidental requests, and ordering the Defendants to pay the fees, expenses, and attorney’s fees.

On 16/11/2023, the court ruled in a public hearing, before deciding on the inclusion request, defenses, and the main issue, to reassign the task to the previously appointed expert or another expert if necessary. The expert was to examine the Plaintiffs objections detailed in their rebuttal memorandum against the final expert report, submitted to this court on 16110/2023. Accordingly, the appointed expert carried out the assigned task and submitted a report concluding that there were commercial transactions between the First Defendant and “Abu Issa Holding” (before the termination notice date), constituting a breach of the distribution agreement dated 20/07/2020 and the amended authorized distributor agreement dated 27/05/2021, which granted the Plaintiff the right to distribute and market the First Defendant’s products within the agreed geographical area (Middle East and Africa). The expert clarified that the First Defendant terminated the agreement correctly and in accordance with the termination notice dated 17I10/2022, following the Clause allowing for termination (16.3), confirming the validity and enforcement of the termination by the First Defendant. The expert opined that the objections/violations concerning the sale of the First Defendant’s product (Mama Earth) without removing the Plaintiff’s label, which remains on the products to date, fall outside the scope of the agreement between the parties. The termination period expired under the notice dated 17/10/2022, making any post-termination violation an independent act requiring separate investigation and handling outside the scope of this lawsuit. Additionally, there were attached correspondences from the Plaintiff regarding administrative and organizational aspects of the relationship between the parties, which the expert did not consider to be violations or breaches of the agreement. Upon examining the documents, the expert found a letter of no objection dated 11/04/2022 from the First Defendant appointing M H Projects LLC (the newly included party) as the authorized distributor of the Mama Earth brand in the UAE, effective 19/01/2023, after the legal termination notice period ending on 17/01/2023. The expert left the matter of these facts for the Court’s discretion. Additionally, the expert noted an email sent on 28/09/2022 by (Vijith – Plaintiff’s representative), showing the email address (Plaintiff’s domain rsmtrades), indicating the communication and offer originated from the Plaintiff, not the First Defendant. The company name was not “Rabha”; rather, the recipient was named “Rabha.” Furthermore, there were correspondences from the First Defendant to a company in Oman (Enhance Group) and a company in Yemen (Al Jabal Group) regarding offering the First Defendant’s products, and communications/understandings between the First Defendant and “Saria” regarding distribution within Saudi Arabia. According to Clause (2.4) of the amendment to the authorized distributor agreement dated 27/05/2021, “provided that the distributor fulfills its obligations under paragraph 4 of Schedule 1, the company agrees that it will not commercially engage or negotiate with any person engaging in similar activities to benefit from the services as stipulated under this agreement, and the distributor must act as the exclusive distributor of the products in the territory.” The expert left the determination of the breach to the court’s discretion.”

Indian law, by which the ADA was contractually governed, needless to say, can never leave the determination of the existence of breach to any “expert”, and any such decision would invalidate the judgment in its entirety, as suffering from serious abdication, by the Court, of its judicial function.

14.4 Significantly, the Dubai Court, in the following passage from its judgment, exonerated, completely, all defendants in the suit, except the present petitioner:

“Similarly, there is no proof that the Plaintiffs replacement was a result of collusion between the First Defendant (the principal) and the new distribution agent/second joined party (MH Projects LLC), pursuant to Article 10 of the Commercial Transactions Law. Consequently, the effects of terminating and amending the exclusive distribution agreement do not extend to the second and third Defendants and the joined parties, but only to the first Defendant company, which is the other party to the contractual relationship with the Plaintiff Therefore, the second and third Defendants and the joined parties are not liable for the claimed compensation, making the objection raised by them valid. Consequently, the court rules the dismissal of the case against them for lack of proper standing, without the need to explicitly state this in the ruling.”
(Emphasis supplied)

14.5 The judgment concludes thus:

“The court ruled as follows:

1. Acceptance of the inclusion of both Tarun Agarwal Jaipur Shankar Agarwal and M H Projects LLC as parties to the lawsuit, procedurally.

2. Regarding the substance of the case and the ruling: The First Defendant is hereby obligated to pay the Plaintiff an amount totaling AED 25,071.991 as compensation for the damages incurred, along with legal interest at a rate of 5%, starting from the date of issuance of the final judgment until full payment. The First Defendant is also ordered to cover the fees, expenses, and an additional one thousand dirhams for attorney’s fees, while rejecting any other requests.”

14.6 Thus, even as per the Dubai Court, the inclusion of defendants other than the present petitioner in the suit was unnecessary, and none of the said defendants was liable in any manner towards the respondent -plaintiff. The petitioner alone has been found complicit in the alleged breach of the ADA, and it is the petitioner alone who has been directed to pay damages.

15. The petitioner has filed statutory Appeal 984/2024, challenging the judgment of the Dubai Court, before the Dubai Court of Appeal. The appeal is presently pending.

16. In the meanwhile, the respondent has moved the Dubai Court for executing the judgment in the Dubai Suit.

17. It is in these circumstances that the petitioner has filed the present petition before this Court under Section 9 of the 1996 Act, seeking the following reliefs:
“It is, therefore, most respectfully prayed that, for the reasons stated hereinabove and pending the arbitration proceedings between the parties, this Hon’ble Court may be pleased to: –

(a) Pass an order of injunction prohibiting the Respondent from initiating and/or continuing any and all proceedings in relation to and arising out of the Authorized Distributor Agreement before the Courts/other statutory authorities of Dubai/ United Arab Emirates;

(b) Pass an order of injunction prohibiting the Respondent from initiating and/or continuing any actions or applications in connection with the enforcement or interpretation of the judgement passed by the Courts of First Instance, Dubai on May 16, 2024 (i.e., the Dubai Judgment) in India and elsewhere;

(c) Pass an order of injunction prohibiting the Respondent from initiating any actions or applications in connection with the enforcement or interpretation or performance of the terms of the Authorized Distributor Agreement or any provision thereof including the termination or invalidity of the same, in violation of the Arbitration Agreement and/ or the exclusive jurisdiction clause of the Authorized Distributor Agreement;

(d) Pass an order that in the event the Petitioner is directed by the Dubai Court or any other Court to deposit an amount or provide security pursuant to the Dubai Judgment, the Respondent shall, within one week of passing of the said order/ direction, secure such amount by depositing an equivalent amount with the Registrar General of this Hon’ble Court, and the Petitioner be allowed to withdraw the said amount; and

(e) Pass such other order and/or direction as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case and in the interest of justice.”

18. Vide order dated 5 July 2024, this Court granted ad interim protection to the petitioner, by restraining the respondent from proceeding to execute the decree of the Dubai Court against the petitioner, within the territorial jurisdiction of this Court or elsewhere. That interim protection continues till date.

19. However, given the importance of the issue, the matter was finally heard with the consent of the learned counsel for the parties, after permitting the learned counsel to place on record written submissions.

20. I have heard Mr. Rajiv Nayar, learned Senior Counsel for the petitioner, and Mr. Mudit Sharma, learned counsel for the respondent, at length. I have also perused the written submissions filed by learned counsel.

Rival Contentions

21. Submissions of Mr. Rajiv Nayar for the petitioner

21.1 Mr. Nayar submits that the respondent’s act of instituting the Dubai suit against the petitioner was clearly oppressive and vexatious. The suit was instituted in rank violation of Clauses 24.5(ii) and (iii) and 24.7 of the ADA, which had also been made applicable to the Addendum dated 27 May 2021. The allegation of the respondent against the petitioner, in the Dubai suit, was a breach of the ADA, and nothing else. The lis, therefore, fell entirely within the four corners of the ADA, which was contractually required to be construed in accordance with Indian law. The ADA also conferred exclusive jurisdiction in matters relating to the ADA on courts in New Delhi, and envisaged resolution of disputes by arbitration, seated in New Delhi. The very institution of the suit in Dubai was, therefore, in mala fide breach of the ADA, and was an obvious attempt to frustrate the petitioner from seeking relief against the respondent in arbitration by presenting the petitioner with a fait accompli. Where the proceedings in the foreign court are ex facie oppressive and vexatious, an anti-suit injunction must follow, submits Mr. Nayar, relying on para 24(2) of Modi Entertainment Network v WSG Cricket PTE7 and para 30 of Essel Sports Pvt Ltd v BCCI8.

21.2 In an oblique attempt to justify approaching the Dubai Court, the respondent submits Mr. Nayar, had mischievously impleaded, as defendants in the Dubai Suit, entities who had nothing to do with the dispute, as has been found by the Dubai Court itself. This is apparent from the fact that the decree that has ultimately come to be passed is only against the petitioner, and the Dubai Court has returned a specific finding that none of the other defendants before it were liable in any way towards the respondent. In support of his contention that the respondent could not, by thus impleading irrelevant parties, frustrate the arbitration agreement, Mr. Nayar relies on para 50 of the judgment of the Supreme Court in Booz Allen & Hamilton Inc v SBI Home Finance Ltd9, paras 103 and 107 of Rakesh Malhotra v Rajendra Kumar Malhotra10 and paras 12 to 14 of Damco India Pvt Ltd v Samtel Glass Ltd11.

21.3 Mr. Nayar further submits that, even if the defendants impleaded in the Dubai Suit were to be presumed to be necessary or relevant parties, that would still not justify the respondent instituting the suit in Dubai, ignoring the arbitration clause in the ADA, as the impleading of non-signatories in arbitral proceedings is permissible, and the Arbitral Tribunal is well within its authority to allow such impleadment in an appropriate case. These decisions were required, as per the provisions of the ADA, to be taken by the Arbitral Tribunal in accordance with the 1996 Act. Mr. Nayar relies, in this context, on paras 10 and 15 of Sumitomo Heavy Industries Ltd v ONGC Ltd12, and paras 71 to 73 of Reliance Industries Ltd v UOI13. For the proposition that the Arbitral Tribunal was possessed of the jurisdiction to decide on the issue of inclusion or exclusion of non-signatories, Mr. Nayar cites paras 169 and 170.12 of Cox & Kings Ltd v SAP India Pvt Ltd14, para 14 of Vistrat Real Estates Private Limited v Asian Hotels North Ltd15, and paras 15 and 18 of Moneywise Financial Services Pvt Ltd v Dilip Jain16. Even if, for any reason, the dispute raised by the respondent in the Dubai suit were to be regarded as not amenable to arbitration because of the necessity to include non-signatories, the respondent would, nonetheless, have, in view of the exclusive jurisdiction Clause 24.7 in the ADA, to pursue its remedy before the civil court in New Delhi by way of original proceedings, and not in Dubai.

21.4 The decree of the Dubai Court, submits Mr. Nayar, effectively frustrates the arbitration clause in the ADA and renders it impossible for the petitioner to seek resolution of the dispute in accordance therewith. It is, therefore, oppressive and vexatious to the petitioner, justifying grant of an anti-execution injunction by this Court. Reliance has been placed, in this context, on para 96 of the judgment of this Court in Interdigital Technology Corporation v Xiaomi Corporation17.

21.5 Mr. Nayar points out that the petitioner has, at all times, opposed the assumption of jurisdiction by the Dubai Court, over the dispute raised by the respondent in the Dubai Suit. It was pointed out, before the Dubai Court, that the ADA required disputes arising within its confines to be resolved by arbitration, seated in New Delhi, and that there was a separate exclusive jurisdiction clause in the ADA, conferring exclusive jurisdiction, in respect of all matters relating to the ADA, on courts in New Delhi. It could not, therefore, be said that the petitioner had in any way acquiesced to the proceedings before the Dubai Court.

21.6 Nor, submits Mr. Nayar, could the petitioner be said to have approached this Court after undue delay as, had the petitioner approached this Court while the Dubai suit was pending, there was every likelihood of the petitioner being told to convince the Dubai Court that it had no jurisdiction, in the first instance. That attempt having failed, the petitioner has no option but to approach this Court.

21.7 Mr. Nayar submits that the Dubai Court judgment is inherently unsustainable in law. The Dubai Court has admittedly applied Dubai law to the dispute, in the teeth of Clause 24.7 of the ADA. There is, in fact, no reference, in the entire judgment of the Dubai Court, to Clause 24.7, which confers exclusive jurisdiction in matters relating to the ADA on courts in New Delhi. Rather, without adverting to the said clause, the judgment of the Dubai court holds that it has territorial jurisdiction, as the ADA was executed within the Dubai Emirate.

21.8 Mr. Nayar further submits that the petitioner is entitled to seek, in proceedings under Section 9 of the 1996 Act, enforcement of the arbitration clause in the ADA. Mr. Nayar has placed reliance, in this context, on the judgment of the Supreme Court in Bhatia International v Bulk Trading SA18 and submits that, applying the law declared in that case, the petitioner can invoke Section 9 for all reliefs except stay of the arbitration clause itself. He specifically refers, in this context, to the stipulation, following Section 9(1)(e), conferring, on the Section 9 Court, “the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it”. Mr. Nayar further places reliance, in support of his submissions, on the decisions in OT Africa Line Ltd v Magic Sportswear Corp19, Gray v Hurley20, Deutsche Bank AG v Highland Crusader Offshore Partners LP21, Specialised Vessel Services Ltd v MOP Marine Nigeria Ltd22, Times Trading Corporation v National Bank of Fujairah23 and the judgment dated 1 November 2021 of the High Court of Bombay in Majmudar & Partners v Michael Marshall24. Relying on paras 42 to 50 of Essar House Pvt Ltd v Arcellor Mittal Nippon Steel India Ltd25 and paras 15 to 17 of Supertrack Hotels Pvt Ltd v Friends Motels Pvt Ltd26, Mr. Nayar submits that any such interim measure of protection, as may be “just and convenient”, may be granted under Section 9, if the circumstances so warrant.

21.9 The principle of comity of courts, submits Mr. Nayar, cannot inhibit grant of relief in a case such as this, where the foreign court is clearly exercising jurisdiction in violation of the terms of the agreement between the parties. Besides, where parties, by agreement, confer exclusive jurisdiction on one court, the principle of comity of courts advices effectuating the agreement and conferring jurisdiction on the court on which jurisdiction has been conferred ad idem by the parties. Mr. Nayar cites, in this context, para 8 of the judgment of the Court of Appeal in AIG Europe SA v John Wood Group PLC27 . He further relies on paras 96, 98 and 127 of the judgment of this Court in Interdigital Technology Corporation to submit that the principle of comity would play little part where injunction is sought against action which is oppressive to the applicant.

22. Submissions of Mr. Mudit Sharma for the respondent

22.1 Responding to the submissions of Mr. Nayar, Mr. Mudit Sharma, learned Counsel for the respondent, advances a preliminary objection to the maintainability of the present petition. He submits that, as the Court exercising jurisdiction under Section 9 does not enjoy the power of a civil court, it cannot grant an anti-enforcement injunction, injuncting the enforcement of a decree passed by a foreign court. He relies, for this purpose, on Fuerst Day Lawson Ltd v Jindal Exports Ltd28, which declares the 1996 Act to be a self-contained code. He also relies on Section 529 of the 1996 Act, which specifically proscribes intervention, by any judicial authority, save and except as provided in Part I thereof. The court exercising jurisdiction under Section 9 cannot, therefore, act ex debito justitiae, beyond the confines of the jurisdiction that Section 9 confers.

22.2 Orders passed under Section 9 have, moreover, he submits, to be in aid of the final claim in the arbitral proceedings. The anti-enforcement injunction that the petitioner seeks is not in aid of any final claim in any proposed arbitral proceedings. Para 10 of the notice dated 25 July 2024, issued by the petitioner to the respondent under Section 21 of the 1996 Act reads thus:

“10. In view of the aforesaid facts and circumstances, it is clear that, RSM, is in breach of the following terms of the Agreement:

a. Clause 16.3 whereby either party to the Agreement had the right to terminate the Agreement at any time without cause, by giving due notice;

b. Clause 24.5(i) whereby the parties had a good faith obligation to resolve the dispute by way of mutual discussion;

c. Clause 24.5(ii) and Clause 24.5(iii) whereby the parties agreed that in the event the disputes are not resolved through mutual discussion, the disputes were to be settled through arbitration which is subject to the Arbitration Act and the venue of the arbitration is New Delhi; and

d. Clause 24.7 whereby the parties expressly agreed that the Agreement will be governed by Indian laws and shall be subject to the exclusive jurisdiction of the New Delhi courts.”

The reliefs that the petitioner seeks, submits Mr. Sharma, are enumerated in para 10 of the above notice, and the anti-enforcement injunction that the petitioner was seeking cannot be said to be in aid of any of the said reliefs.

22.3 In any case, submits Mr. Sharma, there can be no question of any arbitration at this stage, as the lis between the parties stands adjudicated by the Dubai Court, competently acting within its jurisdiction, and an appeal, against the said decision, at the instance of the petitioner, is pending. Any re-agitation of the issue already decided by the Dubai Court would be barred by constructive res judicata.

22.4 Pointing out, further, that Section 17 of the 1996 Act confers, on the arbitral tribunal, the same powers as may be exercised by the court under Section 9, Mr. Sharma submits that, if Section 9 were to be regarded as empowering the court to stay the enforcement of the decree passed by the Dubai Court, the same power would be available with an arbitrator under Section 17 which, obviously, would be a legally unacceptable consequence.

22.5 In support of these submissions, Mr. Mudit Sharma places reliance on paras 43, 46, 48, 56, 60 and 61 of the judgment of the UK Supreme Court in Ust-Kamenogorsk Hydropower Plant JSC v AES Ust-Kamenogorsk Hydropower Plant LLP30.

22.6 Mr. Sharma further submits that Article 8 of Federal Law (6) of 2018, governing arbitration in the UAE31, which is conceptually similar to Section 832 of the 1996 Act, has been taken into consideration by the Dubai Court in its judgment, as an application under the said Article had been filed by the petitioner before it. Article 8(2) of the UAE Arbitration Act does not preclude a party from commencing arbitration during the pendency of the suit or the Article 8 application. There was, therefore, submits Mr. Sharma, no embargo on the petitioner commencing arbitral proceedings even while the Dubai suit was pending, if it was being subjected to such great prejudice. Having not chosen to do so, the petitioner cannot now seek to interdict enforcement of the Dubai decree.

22.7 The circumstances in which a foreign judgment can be regarded as not conclusive, submits Mr. Sharma, are exhaustively enumerated in Section 1333 of the Code of Civil Procedure, 190834. Section 44A35 of the CPC deals with execution of a decree passed by a superior court in a reciprocating territory. Dubai, he submits, is a reciprocating territory, and the Dubai Court is a “superior court” within the meaning of Section 44A of the CPC. Grant of the relief sought by petitioner in this petition would, therefore, result in this Court, in exercise of the jurisdiction vested in it by Section 9 of the 1996 Act, usurping the jurisdiction otherwise vested in the executing Court by Sections 13 and 44A of the CPC.

22.8 The submissions of the petitioner, in fact, points out Mr. Sharma, directly invoke clauses (c) and (f) of Section 13 of the CPC. The pre-emptive decision on the enforceability of the decree passed by the Dubai Court, as sought by the petitioner, would amount to a finding by this Court under Section 13 of the CPC, while exercising jurisdiction under Section 9 of the 1996 Act. This is impermissible. Once a verdict stood rendered by the Dubai court, its enforceability has to be decided on the anvil of Sections 13 and 44A of the CPC. To that extent, the stage at which the present petition has been preferred by the petitioner is also of relevance. The petitioner cannot use Section 9 of the 1996 Act to stymie proceedings for execution of the decree passed by the Dubai court.

22.9 Mr. Sharma also invokes the principle of comity of courts which, he submits, would militate against grant of the reliefs sought by the petitioner. Mr. Sharma places reliance, in this context, on the judgment of the US Court of Appeal in Chevron Corporation v Hugo Gerardo Camacho Naranjo, Ja36.

22.10 Mr. Sharma disputes Mr. Nayar’s submission that the lis in the Dubai suit fell entirely within the corners of the ADA, or the arbitration clause contained therein. According to Mr. Sharma, the dispute in the Dubai suit travelled beyond mere performance or non-performance of the ADA. It was not, therefore, as though by instituting the suit in the Dubai Court, the respondent was agitating an issue which was squarely within the four corners of the ADA. Reliance is placed, in this context, on following passages from the decree of the Dubai Court:

“Considering that the actions of the first defendant constituted a breach of the contract for the entire duration of the agreement and a violation of all its obligations, which include respecting the commercial nature of these contracts and the financial costs incurred by the plaintiff, it is stated that the contractual breaches committed by the first defendant are as follows: (1) The first defendant, in collusion with the second defendant, agreed for the latter to perform the same tasks and functions as the plaintiff, which constitutes a violation of the exclusivity clause in executing the contract, as stated in clause (2/4) of the agreement appendix. This clause includes the first defendant’s undertaking not to engage commercially or communicate with any person involved in a similar activity to the plaintiff. (2) The first defendant, during the contract period, appointed other distributors in multiple locations in the Arabian Gulf region, in violation of paragraph 2/1 of the agreement and 2/4 its appendix, as evidenced by the attached correspondence, and appointed another distributor in the state of Qatar. (3) Violation of the contract term as stipulated in its appendix, which states that the initial period is 5 years starting from 01/05/2021, without any justified reason or basis for termination, contradicting the agreed-upon termination mechanism and a remedial period of 12 months if an error occurs. (4) The first defendant, on a personal basis, transferred the inventory of goods existing in the plaintiff’s warehouses to a new partner and another distributor, despite purchasing those goods and paying their full dues. (5) The first defendant supplied products that did not meet the required quality standards and were expired, according to the recognized consumption standards and requirements of the relevant authorities in this regard. Since the plaintiff has made a significant investment and has prepared and arranged all the necessary operational, marketing, sales, advertising, and contractual requirements with third parties based on its status as an authorized distributor of the first defendant, This has led to significant damage to the plaintiff that cannot be rectified, due to the breach committed by the first and second defendants regarding the contract duration and the violation of contractual obligations, resulting from their collusive actions causing harm to the plaintiff. The damages that warrant compensation are outlined in the attached statement of the account number (7) and as mentioned in the statement of the case.

The third defendant has been implicated based on their contract with the plaintiff and the negotiations related to the concluded and implemented contract. Subsequently, they established the second defendant company in Dubai, which involved fraudulent and deceptive actions that make them personally liable for paying the compensation owed to the plaintiff.
*****
And whereas, on the dates of 16/3/2023 and 24/4/2023, the plaintiff’s attorney submitted two defence memoranda, requesting the inclusion of Tarun Agarwal Gowry Shankar Agarwal as a new litigant in the case, on the grounds that he is the director of the second defendant company and actively manages it. It is stated that he was the party responsible for sending the termination letter and that he communicated with one of the plaintiff company’s employees, instigating him to provide the plaintiff’s customer lists and all marketing and distribution plans, which caused damage to the plaintiff company.
*****

And whereas, on the date of 21/6/2023, the plaintiff’s attorney submitted a defence memorandum, requesting the inclusion of MH Enterprises LLC as a new litigant in the case. They also requested an urgent division, based on the fact that the latter replaced them and became the party agreed upon by the first and second defendants as a new distributor responsible for marketing, distributing, and selling the products of the first defendant after terminating the contract with the plaintiff, without a valid reason, making them subject to the consequences of terminating the exclusive distribution contract and obligating them to compensate for the damages suffered, justifying their inclusion based on the Commercial Agency Law. In conclusion, their memorandum requests the following;: first: accepting the inclusion request formally, and second: urgently issuing an order for the imposition of a precautionary attachment on all products sold by the first and second defendants and currently in possession of the newly included defendant, with a label bearing the name of the plaintiff, to prevent any future legal disputes, and to obligate the intervened to refrain from doing so, and to compel him to remove any infringement that has occurred and remove the plaintiff’s name from the products being marketed and sold by them, and to instruct the…

In the presence of the litigants, the court issued the following verdict, firstly: accepting entering Tarun Agarwal Gowry Shankar Agarwal and MH Enterprises in the case in form.

Secondly: concerning the case subject and entering: the first defendant shall pay the plaintiff an amount of AED 25,071,991, as a compensation of any damage effected the latter, besides the legal interest of 5%, as of the date of the final verdict issued come into force, until full payment. The first defendant shall pay all fees and expenses of a thousand Dirhams in consideration of the fess of the attorney at law, other than that was rejected.”
(Emphasis supplied)

Thus, the respondent had, in the Dubai Suit, made out a clear case for proceeding against the defendants, impleaded in the said suit, who were not parties to the ADA.

22.11 Mr. Sharma submits that the petitioner is effectively seeking enforcement of the arbitration agreement contained in the ADA, and, therefore, specific performance of the ADA, which cannot be sought in Section 9 proceedings. Reliance is placed, in this context, on para 17 of the judgment of the Division Bench of this Court in Bharat Catering Corporation v Indian Railway Catering and Tourism Corporation Ltd37.

22.12 Finally, submits Mr. Sharma, an anti-enforcement injunction is an extreme relief, which can be granted only in exceptional circumstances. The petitioner has not been able to make out a case justifying a prayer for grant of an anti-enforcement injunction of the decree passed by the Dubai court.

23. Further written submissions by the petitioner

23.1 Post reserving of judgment in this petition, the petitioner has filed short additional written submissions. While several of the earlier submissions have been reiterated, the petitioner seeks to distinguish the decisions in Ust-Kamenogorsk and Bharat Catering Corporation, on which Mr. Sharma has sought to place reliance. Ust-Kamenogorsk, it is submitted, was a case in which no arbitral proceedings were contemplated, whereas, in the present case, the petitioner has addressed a notice under Section 21 of the 1996 Act to the respondent, thereby initiating arbitral proceedings. Bharat Catering Corporation is sought to be distinguished by submitting that the petitioner is not, in the present case, seeking specific performance of the ADA, but is merely seeking an injunction restraining the respondent from enforcing the Dubai court decree.

23.2 The principle of comity of courts, it is submitted, is not affected by the relief sought by the petitioner, which is directed against the respondent, and not against the Dubai court or its decree. Rather, by seeking that the parties uphold the bargain into which they entered by way of the ADA, the petitioner, it is submitted, is enforcing the principle of comity of courts.

24. Further written submissions by the respondent

24.1 The respondent, too, has filed written submissions post reserving of judgment by this Court. They essentially deal with some of the decisions cited by Mr. Nayar. Gray, it is submitted, is a case in which anti-suit injunction, as sought, was refused, and the petitioner merely seeks to place reliance on certain observations made by the Court while referring to the earlier decision in Deutsche Bank. Deutsche Bank, the respondent submits, actually advocates against grant of indiscriminate anti-suit injunctions, which are destructive of the principle of comity of courts. It is further stated, in the said decision, that “the stronger the connection of the foreign court with the parties and the subject matter of the dispute, the stronger the argument against intervention”. OT Africa was a case in which the anti-suit injunction was sought within a month of institution of the suit in the foreign court. Bhatia International stands overruled in Bharat Aluminium Co v Kaiser Aluminium Technical Services Inc38; nonetheless, it is submitted that para 29 of Bhatia International supports the respondent. Majmudar & Partners was a decision passed by the Vacation Bench of the High Court of Bombay before any proceedings had been instituted in the foreign court.

24.2 Finally, the respondent places reliance on the decisions of the Supreme Court in Alcon Electronics Pvt Ltd v Celem SA of FOS 34320 Roujan39 and of this Court in Transasia Private Capital Ltd v Gaurav Dhawan40.

Analysis

25. The law is at times likened to a well known quadriped – unfairly both to the law and to the quadriped – but it cannot be made a spectacle of ridicule, which requires the Court to sit back and helplessly tolerate brutalization of the legal process by an unscrupulous litigant.

26. Not an iota of bona fides can be attributed to the respondent’s decision to sue the petitioner before the Dubai court; nor, consequently, can the respondent be permitted to capitalize on the outcome of the said decision. Allowing the respondent to do so would not only amount to condoning breach of the ADA with impunity, but would also permit the respondent to reap a windfall from the consequence of such breach.

27. Re. the plea of the lis in the Dubai suit not being restricted to the ADA

27.1 Mr. Sharma’s contention that the lis, in the Dubai suit, was not restricted to breach of the ADA, is obviously devoid of substance. The only cause of action pleaded in the Dubai suit was breach, by the petitioner, of Clauses 4/2, 1/2 and 3/4 of the addendum to the ADA, by allegedly allowing others to distribute the petitioner’s products in the UAE. The dispute, therefore, was entirely confined within the four corners of the ADA and its covenants, and was obviously a dispute which was arbitrable in terms of Clause 24.5(ii) thereof.

27.2 The respondent, in an obviously desperate attempt to escape the reference of the dispute to arbitration by the petitioner, impleaded, without any justification whatsoever, Honasa Trading and, later, Mr. Tarun Aggarwal, manager of Honasa Trading and M H Project LLC. It is obvious, even to a person unschooled in the niceties of the law relating to necessary and proper parties to a lis, that the impleadment of these additional defendants was without any justification whatsoever. The termination notice dated 17 October 2022 was issued by the petitioner, from its Gurgaon office. It makes no reference either to Honasa Trading or to Tarun Aggarwal, and the allegation that it had been issued at the instance of Honasa Trading, or was issued by Tarun Aggarwal, was obviously false, with a view to justify approaching the Dubai Court. The Dubai Court has, significantly, rejected, in no uncertain terms, the said allegations, and has held the added defendants to be in no manner responsible to the petitioner. Damages have, therefore, entirely been foisted on the petitioner and, by seeking to execute the Dubai decree, the respondent, too, acknowledges that it had unnecessarily impleaded the additional defendants. It is a matter of regret, therefore, that the respondent has the temerity, even before this Court, to again seek to justify the filing of the suit in Dubai on the ground that the additional defendants were necessary parties, merely because of unfounded and baseless allegations of collusion by which the respondent sought to embellish the suit, and which even the Dubai Court has not accepted.

27.3 The plea that the lis in the Dubai suit was not restricted to breach of the ADA by the petitioner is, therefore, unhesitatingly rejected.

28. Re. Sections 13 and 44A of the CPC

28.1 The reliance, by Mr. Sharma, on Sections 13 and 44A of the CPC is fundamentally misplaced on facts as well as in law. There are at least four reasons why the submissions of Mr. Sharma, predicated on these provisions, are liable to be rejected.

28.2 Firstly, Sections 13 and 44A of the CPC are not even applicable at this point, as they pertain to the executability of foreign decrees in India, and the respondent has not moved any Indian court for executing the Dubai decree. In fact, having moved the Dubai court for execution against the petitioner, it defeats comprehension as to how the respondent is citing Sections 13 and 44A of the CPC as a defence to the present petition. Even on facts, therefore, the reliance is both misplaced, and mistimed.

28.3 Secondly, the submission is predicated on a principle, unknown to the law, that, against one impugned action, there can be only one remedy. Law knows no such doctrine. Were the respondent to seek to execute the Dubai judgment and decree in India, the petitioner would unquestionably have the right to oppose the execution by all means known to law, which would include the grounds enumerated in Section