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2013 (6) TMI 166 - HC - Indian LawsCompliance of terms of agreement - petition for seeking unconditional leave to defend the present suit - the plaintiff was licensed to use the brand name INDANA on payment of monthly license fee for a period of two years. The plaintiff paid a refundable security deposit of Rs. 50,00,000/- to the defendant as interest free security deposit in terms of the said agreement, which was to be refunded at the time of determination of the aforesaid agreement. Every agreement has to be read as a whole and the meaning of a clause has to be gathered from a reading of the entire agreement. The first part of the same clause mentions that Rs. 50,00,000/- is deposited as security deposit..... for due performance of the agreement . At this stage all the court has to examine whether if the facts as alleged by the defendant if duly proved, would afford a good and plausible defence to the plaintiff s claim. The relevant question would be whether the security amount has secured its end and is liable to be refunded/returned. The answer to this lies in the adjudication of dispute, i.e., whether there was due performance and/or violation of the agreement by plaintiff or defendant and its consequential effect on the rights and liabilities of both the parties inter se. All these issues are questions of fact which can only be established by way of trial once both the parties have led their evidence. Present application is allowed and defendant is granted unconditional leave to defend the suit.
Issues:
1. Application under Section 8 of Arbitration and Conciliation Act, 1996. 2. Application under Order 37 Rule 3(5) read with Section 151 CPC seeking unconditional leave to defend. 3. Interpretation of clauses in the agreement dated 9th September, 2010. 4. Applicability of Section 10 CPC in the proceedings. Analysis: Issue 1: Application under Section 8 of Arbitration and Conciliation Act, 1996 The defendant filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, seeking to refer the present suit to arbitration based on the arbitration clause in the Agreement dated 9th September, 2010. However, the court found that the defendant had waived its right to invoke the arbitration clause by filing a separate suit against the plaintiff related to the same agreement. Consequently, the court dismissed the application. Issue 2: Application under Order 37 Rule 3(5) read with Section 151 CPC The defendant filed an application under Order 37 Rule 3(5) seeking unconditional leave to defend the present suit for recovery of Rs. 50,00,000. The defendant cited various issues with the plaintiff's performance under the agreement, including the sale of poor-quality products and infringement of the trade mark. The court granted unconditional leave to defend, considering the need for a trial to determine the facts and defenses raised by both parties. Issue 3: Interpretation of clauses in the agreement dated 9th September, 2010 The court analyzed the relevant clauses of the agreement, particularly focusing on the clause related to the interest-free security deposit of Rs. 50,00,000. The court emphasized that the clause must be read in its entirety to understand its purpose and effect. It was noted that the refund of the security deposit was contingent upon due performance of the agreement, which required adjudication of facts regarding compliance by both parties. The court highlighted the need for a trial to determine whether the security amount should be refunded based on the performance of the agreement. Issue 4: Applicability of Section 10 CPC in the proceedings Following the grant of unconditional leave to defend to the defendant, the court applied Section 10 CPC to stay the present suit until the outcome of another suit (CS(OS) 1016/2011) involving similar issues between the same parties. The court found that the conditions for invoking Section 10 CPC were met, warranting a stay in the proceedings to avoid conflicting judgments and ensure a comprehensive resolution of the disputes raised in both suits.
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