PARADIGM FRANCHISING PVT LTD Vs. KRISHNA CONTINENTAL

JUDGEMENT

(1.) THIS petition under Section 9 of the Arbitration and Conciliation Act, 1996 ( for short, "the Act") has been preferred by the petitioner seeking following reliefs:

(2.) BRIEF facts for the purpose of deciding this petition are that the applicant/petitioner and the respondent entered into a business conducting agreement dated 10th May 2005 whereby the applicant was allowed to run a restaurant in Krishna Continental Limited in an area of 2003. 40 sq. ft. on the ground floor and 1790. 89 sq. ft. on the lower ground floor in the brand name of bennigan's Restaurant. The applicant has the franchise rights from Metro Media group of USA for use of this brand name. As a consideration for running this restaurant in the hotel, the applicant was to pay an amount of Rs. 4. 5 lac per month or 25% of the net sale, whichever was higher. The applicant has also deposited a sum of Rs. 27 lac as security amount with the respondent and gave post dated cheques on 1st May 2006 for Rs. 13. 50 lac for increased security amount. The term and renewal clause of the agreement, specified that the initial term of agreement was 12 years commencing from 1st May 2005 expiring at the end of 12th year. The payment of conducting fees/consideration was to start from 1st july 2005 since the applicant/petitioner was to make the premises ready for its operation. In the renewal clause, it was stated that the conducting fees shall be enhanced by 20% after every three years of the last fees paid. The agreement was not to be terminated by either party for the initial three years period, thereafter the applicant could terminate the agreement by giving six months written notice to the respondent, which could be given after expiry of initial period of 3 years. On expiry of 12 years period, the parties were to enter into a fresh agreement on mutually acceptable terms and in absence of any fresh agreement after 12 years, the applicant was to remove commodities from the premises along with the equipment etc.

(3.) ONE of the terms of the agreement was that the conducting fees was to be paid by the applicant on monthly basis by 7th of each subsequent month after tds deduction as applicable and in case of any delay in remitting the conducting fees, a penal interest @ 18% per annum was chargeable for the delayed period. In the event of default in payment of conducting fees for more than 60 days, the respondent was to get full authority to terminate the contract notwithstanding the other rights available to the applicant under the agreement.