Adidas INDIA Marketing PVT. LTD. vs. Amit Makhecha Proprietor M/S Drashti Trading

Facts

The petitioner, M/s Adidas India Marketing Pvt. Ltd., filed a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996, seeking the appointment of an arbitrator to resolve disputes arising from a Franchise Agreement dated January 1, 2016, with M/s Drashti Trading. The respondent initially raised objections, including that the petition was not maintainable against Mr. Amit Makhecha, who was incorrectly identified as the sole proprietor of M/s Drashti Trading. The respondent contended that Mrs. Hiralben Amitbhai Makhecha was the actual sole proprietor, as evidenced by a GST Registration Certificate. The petitioner subsequently sought and was granted leave to amend the petition to implead M/s Drashti Trading, Mrs. Hiralben Amitbhai Makhecha, and Mr. Amit Makhecha as respondents. The respondent did not appear on the date of the hearing.

Held

The Court allowed the petitioner's application for amendment, thereby rectifying the initial misjoinder and making the petition maintainable against M/s Drashti Trading, Mrs. Hiralben Amitbhai Makhecha, and Mr. Amit Makhecha. The Court found that the invocation notice dated August 5, 2021, was validly issued to M/s Drashti Trading at the address specified in Clause 23.11 of the Franchise Agreement, with Mr. Amit Makhecha being the designated attention person. Regarding the time-bar issue, the Court held that the petitioner's timeline of communications, starting from an email on October 11, 2018, followed by subsequent notices and the petition filing on November 26, 2021, indicated that the claims, invocation, and petition filing were within the 3-year limitation period. Furthermore, the Court noted that any contention regarding limitation would be a mixed question of fact and law to be decided by the arbitrator. Addressing the validity of the arbitration clause, the Court observed that the respondent implicitly admitted the existence of an arbitration clause, and the petitioner had not attempted a unilateral appointment, thus obviating the objection based on the Perkins Eastman judgment. The Court was satisfied that a valid arbitration agreement existed, the Court had territorial jurisdiction, and the disputes were not ex-facie non-arbitrable. Consequently, the Court allowed the petition and appointed Mr. Anant N. Haksar, Senior Advocate, as the sole arbitrator.

Key Issues

1. Whether the petition for the appointment of an arbitrator is maintainable against the originally impleaded respondent, Mr. Amit Makhecha, given the contention that he is not the sole proprietor of M/s Drashti Trading, and if not, whether the subsequent amendment to implead the correct parties resolves this issue. (Section 11(5) of the Arbitration and Conciliation Act, 1996). The petitioner argued that the amendment rectifies the initial misidentification and makes the petition maintainable against all relevant parties. The respondent argued that the original petition was not maintainable. 2. Whether the invocation notice dated August 5, 2021, issued to Mr. Amit Makhecha, is valid and forms a basis for the present petition, considering the respondent's assertion that he is not the proprietor. (Section 11(5) of the Arbitration and Conciliation Act, 1996). The petitioner contended that the notice was sent to the address and person specified in Clause 23.11 of the Franchise Agreement. 3. Whether the claims sought to be raised are time-barred, considering the dates of the Franchise Agreement, the notice of demand, and the filing of the petition. (Limitation Act, 1963). The petitioner argued that the claims, invocation, and petition filing are within the 3-year limitation period, and any dispute regarding limitation is a mixed question of fact and law for the arbitrator. 4. Whether Clause 25.2 of the Franchise Agreement, which provides for arbitration, is invalid due to its contemplation of appointment of an arbitrator by the petitioner's Managing Director, citing the Supreme Court verdict in Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd. The petitioner argued that this objection is obviated as they have filed a petition for appointment of an arbitrator by the Court, not a unilateral appointment. The respondent argued the clause was invalid.