Case Law Details
Avantha Holdings Limited Vs CG Power and Industrial Solutions Limited (Delhi High Court)
FACTS OF THE CASE
The Respondent, a public limited company, entered into a Royalty Agreement with the Petitioner to use the Petitioner’s brand name Avantha. So, the Respondent had signed a brand licence and support agreement for the Avantha brand. The Respondent and Petitioner reached an agreement wherein the Respondent agreed to pay the Petitioner Brand Royalty calculated at 1% of the Petitioner’s Annual Consolidated Net Operating Revenue. The Petitioner claimed that the Respondent declined to pay the Brand Royalty and rescinded the agreement leveling specific allegations. Because of the above dispute, the Petitioner invoked the arbitration under Clause 18.6 of the Agreement. The Respondent contested and opposed the present petition because the subject disputes are not arbitrable. It was argued that the Securities and Exchange Board of India (SEBI) and Serious Fraud Investigation Office (SFIO) had to undertake an investigation into the dispute surrounding the fraud committed in connection to the petitioner company’s activities. The Respondent also argued that because the fraud case is still under investigation and the Civil Courts are also aware of the facts, the aforementioned conflicts cannot be arbitrated.
ISSUES
Whether the agreement, which is invalid on fraud, can be decided by the arbitration tribunal? Whether the Petitioner has the right to seek arbitration?
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