M/S Pothys Retail Private Limited vs. M/S Evolve Business Ventures
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M/s Pothys Retail Private Limited (Petitioner) filed a Civil Miscellaneous Petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking the appointment of a sole arbitrator. The dispute arose from a Retail Partner Agreement dated 17.12.2018 between the Petitioner and M/s Evolve Business Ventures (Respondent). The Petitioner had deposited a security deposit of Rs. 1,31,20,000/-. The Airport Authority of India (AAI) terminated the Respondent's license on 16.02.2022. The Petitioner alleged that the Respondent failed to indemnify them from losses and refused to refund the security deposit and rent advance. After issuing an arbitration notice on 20.01.2023, which the Respondent did not reply to, the Petitioner approached the High Court.
Held
The Court held that the Petitioner had made out sufficient grounds to refer the dispute to arbitration. The existence of the Retail Partner Agreement dated 17.12.2018, which contained an arbitration clause (Article 13.2), was undisputed. The termination of the Respondent's license by the AAI and the subsequent failure of the Respondent to refund the security deposit and rent advance constituted a dispute that fell within the scope of the arbitration agreement. The Petitioner had duly invoked the arbitration clause by issuing a notice, and the Respondent's failure to respond further supported the need for arbitration. The Court found that the Petitioner had fulfilled the prerequisites for seeking the appointment of an arbitrator under Section 11(6) of the Act. The Court also noted the Respondent's submission that a similar nomination had been made in a connected matter and did not object to the appointment of an arbitrator. Therefore, the Court answered the point for consideration in the affirmative.
Key Issues
1. Whether the Petitioner has made out a ground to refer the dispute to an Arbitrator in terms of Article 13.2 of the Retail Partner Agreement dated 17.12.2018, as per the provisions of the Arbitration and Conciliation Act, 1996? Petitioner's arguments: The Petitioner contended that the AAI terminated the Respondent's license, leading to a dispute over the refund of the security deposit and rent advance. The Respondent failed to refund the amounts despite reminders and did not respond to the arbitration notice. Therefore, an arbitrator should be appointed to resolve the dispute. Respondent's arguments: The Respondent submitted that in similar circumstances, the Court had already passed an order nominating Sri. Kukkaje Ramakrishna Bhat, Retd. District Judge, as an Arbitrator. The Respondent did not object to the nomination of an arbitrator.
Sections Cited
Section 11(6), Section 21
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Cause title — parties, addresses and appearances
ORAL ORDER
This Civil Miscellaneous Petition is filed under Section 11(6) of the Arbitration and Conciliation Act, 1996 (herein after referred to, as Act, 1996 for short) for the appointment of an arbitrator to resolve the dispute between the parties to the petition in terms of Article 13.2 of the Retail Partner Agreement dated 17.12.2018. 2. Brief facts, leading rise to the filing of this petition are as follows:
The petitioner entered into a Retail Partner Agreement dated 17.12.2018 with the respondent to build, HC-KAR NC: 2025:KHC:21807 generate and maintain a store at a general retail outlet at International and Domestic departure at Chennai International Airport. As per the retail partner agreement, refundable and interest-free security deposit of a sum of Rs.1,31,20,000/- (Rs.82,80,000/- for domestic departure and Rs.48,40,000/- for International departure), the petitioner deposited the security deposit to the respondent bank account, bearing No.915020014427171 in Axis Bank, Jayanagar on 29.10.2018. Due to certain modifications in the section relating to payment of rent, an addendum to the rental agreement on 23.09.2019 was executed. The Airport Authority of India (hereinafter referred to as ‘AAI’ for short) terminated the license of the respondent on 16.02.2022 for a retail outlets at Chennai Airport and the respondent did not adhere to the agreed terms in indemnifying the petitioner from any loss. As the license of the respondent has been terminated, the petitioner requested to refund the security deposit and rent advance along with interest. The respondent failed to refund the HC-KAR NC: 2025:KHC:21807 security deposit. After several reminders, the petitioner invoked Arbitration Clause by issuing an Arbitration notice dated 20.01.2023. The said notice was duly served on the respondent. The respondent did not reply to the arbitration notice. Hence, this petition.
Heard the arguments of the learned counsel for the petitioner and the respondent.
Learned counsel for the petitioner submits that AAI terminated the license of the respondent and thus, the petitioner requested a refund of the security deposit and rent advance with interest. The respondent failed to refund the deposit despite several reminders. She submits that the petitioner has invoked an Arbitration Clause by issuing a notice under Section 21 of the Act, 1996, the proposing the names of the Arbitrators. She submits that respondent did not reply to the Arbitration Notice. Hence, she prays to nominate the Arbitrator to resolve the dispute between the parties to the petition. HC-KAR NC: 2025:KHC:21807
Per contra, learned counsel for the respondent submits that in similar circumstances, this Court has already passed an order nominating Sri. Kukkaje Ramakrishna Bhat, Retd. District Judge, as an Arbitrator.
Perused the records and considered the submissions of the learned counsel for the parties.
The point, that arises for consideration, is: “Whether the petitioner has made out a ground to refer the dispute to the Arbitrator in terms of Article 13.2 of the Retail Partner Agreement dated 17.12.2018 as per the provisions of Arbitration and Conciliation Act, 1996?”
There is no dispute regarding the execution of the Retail Partner Agreement between the petitioner and the respondent dated 17.12.2018. It is not in dispute that the respondent invited the petitioner to build a store for its range of merchandise at the general retail outlet at the Domestic and International departures in Chennai Airport HC-KAR NC: 2025:KHC:21807 at Domestic Terminal. The petitioner expressed the desire to enter into an agreement with the respondent to lease the space to build, operate and maintain the petitioner’s brand store, subject to and in accordance with the terms and conditions. Accordingly, the terms and conditions were set out in the Retail Partner Agreement dated 17.12.2018 and the lease was for a period of 36 months. It was agreed upon that as per the terms agreed between the parties, the petitioner agreed to pay a fee of either the fixed minimum monthly guarantee amount or 28% of the gross revenue generated at the store on a monthly basis, whichever is higher. The fee shall be exclusive of GST, which shall be payable in additional to the amount by the petitioner.
The AAI has terminated the respondent’s license on 16.02.2022. As per Article 11 of the agreement, the respondent should have indemnified the petitioner from any default by the respondent according to the said agreement. The AAI had extended an offer of having a HC-KAR NC: 2025:KHC:21807 contract agreement directly with the AAI for carrying out business in the premises of the Airport on a temporary basis. Despite not adhering to the agreed terms, in indemnifying the petitioner from any loss, the respondent issued a letter attaching Annexure-1, which falsely displayed a balance of Rs.26,84,685/- for both International and Domestic Terminals. It is stated that there is no outstanding amount to be paid by the petitioner to the respondent. The petitioner made an attempt to negotiate for the settlement in terms of the agreed Clause, they were also futile.
There is an Arbitration Clause in the Retail Partner Agreement dated 17.12.2018 which reads as follows: "13.2 Arbitration
1 Any Dispute, which is not settled by negotiation and conciliation, shall be resolved by final and binding arbitration. The arbitral tribunal shall consist of only 1 (one) arbitrator. The sole arbitrator shall be appointed mutually by both the parties. HC-KAR NC: 2025:KHC:21807
2 The arbitration shall be regulated under the provisions of the Arbitration and Conciliation Act, 1996. 13.2.3 A Party seeking to commence arbitration under this Clause shall first serve a written notice (an "Arbitration Notice"), specifying the matter or matters to be so submitted to arbitration, on the other disputing Parties hereto.
4 All arbitration proceedings shall be conducted in the English Language and the venue of arbitration shall be Bangalore, India. In connection with the arbitration proceedings, the Parties hereby agree to cooperate in good faith with each other and the arbitral tribunal, to use their best efforts to respond promptly to any reasonable discovery demand made by any Party and the arbitral tribunal. The language of arbitration shall be English.
5 The cost of the arbitration including fee of the arbitrator, administrative expenses etc., shall be shared equally by the disputing Parties. However, in the award, the arbitrator may award and direct payment of such costs to the successful Party by the losing Party in which case the award shall prevail."
The petitioner, by invoking an Arbitration Clause, issued an Arbitration Notice on 20.01.2023 proposing the names of the Arbitrators. The respondent did not reply to the Arbitration Notice. There is an Arbitration clause in the Retail Partner Agreement and a HC-KAR NC: 2025:KHC:21807 dispute arose between the petitioner and respondent and the same has to be resolved through Arbitration.
Learned counsel for the respondent submits no objection to nominate Sri. Kukkaje Ramkrishna Bhat, Retired District Judge as an Arbitrator. He also submits that in the other connected matter, Sri. Kukkaje Ramkrishna Bhat, Retd. District Judge is nominated as an Arbitrator by this Court.
In view of the above discussion, the petitioner has made out a ground to refer the matter to the Arbitrator to resolve the dispute between the parties to the petition. Hence, I answer the point for consideration in the affirmative.
Accordingly, I proceed to pass the following: ORDER (i) The Civil Miscellaneous Petition is allowed. HC-KAR NC: 2025:KHC:21807 (ii) Sri. Kukkaje Ramkrishna Bhat, Retired District Judge, is nominated as the Sole Arbitrator to resolve the dispute between the parties as per Clause 13.2 of the Retail Partner Agreement dated 17.12.2018 as per the provisions of the Arbitration and Conciliation Act, 1996 and Arbitration and Conciliation Rules. (iii) The office is directed to communicate this order to the learned Arbitrator and the Arbitration and Conciliation Centre, Bengaluru.
In view of the disposal of this petition, pending applications stand disposed of. (ASHOK S.KINAGI) JUDGE
BVK CT:KHV List No.: 1 Sl No.: 31
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.