DEVINDER KUMAR GUPTA Vs. REALOGY CORPORATION

JUDGEMENT

(1.) THIS is a suit for declaration, permanent injunction and damages. The plaintiff is the Chairman and Managing Director of defendant No. 2, which entered into an agreement with defendant No.1, whereby defendant No. 2 was granted exclusive licence/right to sub-licence the "Century 21" trademark and "Century 21 system" to real estate brokers in 5 out of 7 territories in India. Subsequently, the licence was extended to remaining 2 territories as well. The plaintiff vide Guarantee and Indemnification Agreement dated 24th October, 2007, guaranteed the payment obligations of defendant No. 2 to defendant No. 1. There is an arbitration clause in the agreement between defendant No. 1 and defendant No. 2, whereunder all controversies, disputes or claims arising in connection with, from or with respect to the agreement between them, unless resolved within 15 business days after either party notifying the other party of such controversy, dispute or claim, are to be submitted for arbitration to New York office of American Arbitration Association under its commercial arbitration rules and the arbitration proceedings are to be conducted in New York, before a panel of three arbitrators. Both the parties have to appoint one arbitrator each and the two arbitrators, so appointed, have to appoint a third arbitrator to act as Chairman of the Tribunal. In case of the failure of the respondent to nominate the arbitrator within 30 days from the date when claimants request for arbitration is communicated to it, the appointment is to be made by American Arbitration Association. If the two arbitrators fail to nominate the Chairman within 30 days from the date of appointment of second arbitrator, he has to be appointed by the very same Association. The arbitrators have the right to award or include in their award any relief which they deem appropriate under the circumstances, including without limitation, money damages etc.

(2.) THE case of the plaintiff is that there is no arbitration clause in the Guarantee and Indemnification Agreement to which he is a party and which is appended as Ex.-1 to the Sub Franchise Agreement. This is also the case of the plaintiff that there is no provision in Guarantee and Indemnification Agreement executed by him, whereby the provisions of Century 21 Sub Franchise Agreement would be incorporated in the Guarantee and Indemnification Agreement and at no point of time, he agreed to informal dispute resolution, arbitration or any other method of alternative dispute resolution.

(3.) IT is alleged that on 03rd March, 2011, the plaintiff received a pre-printed Notice of Demand for arbitration from the Attorneys of defendant No. 1, whereby he came to know that defendant No. 1 had initiated arbitration proceedings not only against defendant No. 2, but against him as well. The plaintiff also received a letter dated 08 th March, 2011 from International Centre of Dispute Resolution, claiming to be a division of American Arbitration Association, informing that the arbitration proceedings have been assigned to a Case Manager/Supervisor and called upon him to file response within 15 days. The plaintiff also received an e- mail dated 28th March, 2011 from the aforesaid Manager/Supervisor regarding appointment of Arbitrator. The plaintiff has now claimed Rs 30 lakhs as damages from defendant No. 1. He has sought a further declaration that he does not owe any money to defendant No. 1 and there is no subsisting arbitration agreement between him and defendant No. 1. He has also sought a declaration that the Notice for Demand of arbitration, sent by defendant No. 1, is null and void and has no effect. He has also sought injunction, restraining defendant No. 1 from claiming any money under the Guarantee and Indemnification Agreement dated 24th October, 2007. He has also sought injunction against defendant No.1 from claiming that the plaintiff is liable to make any payment in terms of Notice of Demand for arbitration, sent by it to American Arbitration Association in New York. He has also sought injunction against defendant No. 1 restraining it from taking any steps in relation to Notice of Demand for Arbitration. Vide IA No. 5447/2011, the plaintiff has sought a temporary injunction, restraining defendant No. 1 for commencement of, acting upon or continuing any arbitration proceeding pursuant to notice dated 01st March, 2011 demanding arbitration.