Dr. Amit George, Mr. Rajiv Kumar, Mr. Rupam Jha, Mr. Adhishwar Suri, Ms. Ibamsara v. M/S J.S. HOSPITALITY SERVICES PVT. LTD

Judgment

1. The present appeal under Section 37(1)(a) of the Arbitration and Conciliation Act, 19961, read with Section 13(1-A) of the Commercial Courts Act, 2015 has been filed by the appellant assailing the order dated 28.08.2024 passed by the learned District Judge (Commercial Court-02), South West District, Dwarka, New Delhi, in CS (COMM) Signature Not Verified 1 <The Act= hereinafter Signed By:GUNN Signing Date:24.11.2025 19:22:24 FAO (COMM) 174/2024 No. 286/2023, whereby the application filed by the appellant under Section 8 of the Act in CS(COMM) No. 392/2024 was dismissed.

2. For the sake of convenience, parties are referred by the same name as they were before the learned Commercial Court. Factual context

3. The appellant, who is the defendant in the civil suit pending before the learned Commercial Court claims to be a family partnership firm constituted under a partnership deed dated 12.12.2022 between (i) Mr. Sanjay Sharma, (ii) his son, Mr. Sahil Sharma, and (iii) his nephew, Mr. Tanish Sharma. Under the said deed, Mr. Sanjay Sharma holds a 50% share, while Mr. Sahil Sharma and Mr. Tanish Sharma hold a 25% share each. The registered office of the appellant/defendant firm is at 18/20, WEA, 1st Floor, Karol Bagh, New Delhi–110005.

4. The defendant has been in the business of running a restaurant since 18.10.2023 at 2nd Floor, Plot No. 6, Pankaj Arcade, Pocket-4, Sector-11, Dwarka, New Delhi–110075, under the trade name <Pind Balluchi=.

5. The respondent, who is the plaintiff in the pending civil suit before the learned Commercial Court, is a company incorporated under the Companies Act, 1956, having its registered office at FA-9, 10, 11, Unitech Metro Walk, Near Rithala Metro Station, Sector-10, Rohini, Delhi–110085. The plaintiff claims to be engaged in the hospitality business and running various restaurants under multiple brands Signature Not Verified Signed By:GUNN Signing Date:24.11.2025 19:22:24 FAO (COMM) 174/2024 specialising in Indian cuisine. It is the plaintiff9s case that it has acquired substantial goodwill and expertise in the field of running restaurants.

6. The plaintiff claimed to be the registered proprietor of the trademark <Pind Balluchi= under Classes 16, 29, 30, 32 and 43 and has received several national and regional tourism awards from governmental as well as private bodies. According to plaintiff, the mark <Pind Balluchi= enjoys nationwide goodwill and distinctiveness in the restaurant sector. It is also stated that Mr. Jaspal Singh Chadha serves as the Chairman and Managing Director of the plaintiff company.

7. It was averred by the plaintiff that on 18.07.2024, an official of the plaintiff, while travelling from Dwarka, noticed a restaurant operating under the name <Pind Balluchi,= and upon availing its services received an invoice bearing the name and details of the

defendant. Thus, on the basis of the said invoice, the plaintiff asserted that the defendant was using the trademark <Pind Balluchi=.

8. The plaintiff9s case was that the defendant was neither licensed nor otherwise authorized to use the trademark/trade name <Pind Balluchi=. The plaintiff alleged that such unauthorised use amounted to infringement and passing off and would have adverse effects on the plaintiff company. It was further alleged that the unauthorized use of the plaintiff9s registered trademark caused financial loss, dilution of reputation to the plaintiff, and misled members of the public into believing that the defendant9s restaurant was associated with or formed part of the plaintiff9s chain. Signature Not Verified Signed By:GUNN Signing Date:24.11.2025 19:22:24 FAO (COMM) 174/2024

9. In the aforesaid background, the plaintiff instituted a Civil Suit No. 392/2024 seeking (i) a decree of permanent injunction restraining the defendant from using the trademark <Pind Balluchi= or any other deceptively similar mark; (ii) a decree of mandatory injunction directing the defendant to return or surrender all material, menus, hoardings, signages, bills, invoices, packaging, etc. bearing the impugned mark; and (iii) consequential reliefs.

10. Upon institution of the suit, summons were issued to the defendant in the suit and notice was also issued in the application under Order XXXIX Rules 1 and 2 of the Code of Civil Procedure, 19082, filed by the plaintiff. After the appearance of the learned counsel for the defendant, the learned Trial Court, vide order dated 16.08.2024, allowed the plaintiff9s application under Order XXXIX Rules 1 and 2 of the CPC, 1908, and granted an ad interim ex parte injunction restraining the defendant from using the trademark <Pind Balluchi=.

11. As a consequence of the aforesaid interim order, the defendant was restrained from using the said trademark in respect of the restaurant business being run from 2nd Floor, Plot No. 6, Pankaj Arcade, Pocket- 4, Sector-11, Dwarka, New Delhi–110075.

12. On 21 August 2024, the defendant filed two applications: (i) under Order XXXIX Rule 4 of the CPC, seeking vacation of the interim order dated 16.08.2024; and (ii) under Section 8 of the Act, along with Signature Not Verified 2 <The CPC=, hereinafter Signed By:GUNN Signing Date:24.11.2025 19:22:24 FAO (COMM) 174/2024 a copy of the Memorandum of Understanding3 dated 22.06.2022, invoking the power of the court to refer the parties to arbitration. Additionally, vide the said application under Section 8, the defendant sought exemption under Section 8(2) of the Act from filing the original MOU, asserting that the original MOU was in possession of the plaintiff for filing before the <IPR registry=, as stated in Clause 12 of the MOU.

13. In response to the application filed by the defendant under Section 8 of the Act seeking reference of the parties to arbitration, the plaintiff asserted that no MOU dated 22.06.2022, as alleged by the defendant, was ever signed by the plaintiff and that the original document had not been produced by the defendant for this very reason. An affidavit to this effect was also filed by Mr. Jaspal Singh Chadha, wherein he stated that he had not signed the MOU dated 22.06.2022, as alleged by the defendant, and that the said document was forged and fabricated.

14. The learned Trial Court, vide the impugned order dated

28.08.2024, dismissed the defendant9s application filed under Section 8 of the Act and refused to refer the parties to arbitration.

15. The defendant, being aggrieved by the impugned order dated

28.08.2024, has preferred the present appeal before this Court. Impugned Order

16. The main issue for determination before the learned Commercial Court was whether the allegations of forgery, pertaining to the MOU Signature Not Verified 3 <MOU= hereinafter Signed By:GUNN Signing Date:24.11.2025 19:22:24 FAO (COMM) 174/2024 dated 22.06.2022, that contained the arbitration clause, renders the dispute non-arbitrable. The issue formulated by the learned Commercial Court in the impugned order is reproduced below for convenience: <Whether on the allegations of plaintiff that the MOU dated 22.06.2022, having the arbitration clause, is a forged and a fabricated document, dispute becomes non-arbitrable and the application under Section 8 of the Arbitration and Conciliation Act, 1996 is required to be dismissed or not?=

17. The learned Commercial Court, relying on the judgment of the Supreme Court in A. Ayyasamy v. A. Paramasivam & Ors.4, noted that although the Act does not expressly exclude any category of disputes from arbitration, judicial precedents have carved out certain exceptions, including cases involving fraud, criminal offences of a public nature, disputes arising out of illegal agreements, and matters relating to status, such as divorce.

18. The learned Commercial Court observed that mere allegations of fraud in the pleadings are not sufficient to oust the jurisdiction of the arbitral tribunal. However, where allegations of fraud or forgery are of a serious and complex nature that permeate the entire contract or go to the very validity of the arbitration agreement itself, such disputes are non-arbitrable and must be adjudicated by a Civil Court.

19. The learned Commercial Court reiterated that, as held in A. Ayyasamy (supra), a <strict and meticulous inquiry= into the allegations of fraud is required, and only when the Court is satisfied that the allegations are grave and demand extensive evidence, should the Signature Not Verified 4 (2016) 10 SCC 386 Signed By:GUNN Signing Date:24.11.2025 19:22:24 FAO (COMM) 174/2024 dispute be adjudicated by a Civil Court rather than being referred to arbitration.

20. The learned commercial court also referred to the judgment of the Hon9ble Supreme Court in Vidya Drolia v. Durga Trading Corporation5, observing that courts, while exercising jurisdiction under Sections 8 and 11 of the Act, are empowered to undertake a prima facie review of the existence and validity of an arbitration agreement. It further noted that, as explained in Vidya Drolia (supra), a reference to arbitration to be refused only in clear cases of <deadwood= or where there is a prima facie non-existence of a valid arbitration clause.

21. The impugned order further observed that the decision of the Supreme Court in Re: Interplay between Arbitration Agreements under the Arbitration and Conciliation Act 1996 and the Indian Stamp Act, 18996, had no application to the facts of the case. It noted that the said decision dealt with the issue of insufficient stamping of agreements and held that such defects are curable at later stages, falling within the domain of the arbitral tribunal once the prima facie existence of an arbitration agreement is established. The learned Commercial Court further observed that, in the present matter, no issue of insufficient stamping had arisen and that the dispute pertained instead to an allegation of forgery, which, the Court held, stood on a different footing. Signature Not Verified 5 (2021) 2 SCC 1. 6 2023 SCC OnLine SC 1666 Signed By:GUNN Signing Date:24.11.2025 19:22:24 FAO (COMM) 174/2024

22. On the basis of the aforesaid judgments, the learned Commercial Court in the impugned order held that, while deciding an application under Section 8 of the Act, the Court is empowered to form a prima facie view on the existence and validity of the arbitration agreement/clause. It further held that where the agreement/clause is found to be non-existent, or where serious allegations of forgery are raised, the dispute becomes non-arbitrable and the Civil Court becomes the competent forum to adjudicate such issues, as they required detailed evidence.

23. In light of the material placed on record and the submissions made before the learned Commercial Court and upon noting the aforesaid judgments, the learned Commercial Court was of the prima facie view that the MOU dated 22.06.2022 had never been executed by the plaintiff. The reasons recorded in the impugned order for arriving at such finding is reproduced below:- <a) Firstly, the MOU dated 22.06.2022 has been entered into between Sh.Sanjay Sharma, Sh.Arun Gupta and plaintiff company through its Chairman Jaspal Singh Chadha and Sh.Jaspal Singh Chadha has filed on record an affidavit denying his signatures on the MOU dated 22.06.2022. b) Secondly, MOU dated 22.06.2022 does not have any stamp of the plaintiff company under the signatures of its Chairman Sh.Jaspal Singh Chadha, whereas in the earlier partnership agreement dated 28.06.2021 between Sh.Sanjay Sharma, Sh.Arun Gupta and plaintiff, forming partnership under the name and style of "Vatika Grand", which has been filed on record by plaintiff, the signatures of Sh.Jaspal Singh Chadha have been made under the plaintiff company's seal. c) Thirdly, plaintiff has also filed on record the Franchise agreement dated 11.12.2018 entered into with M/s.Khushi Enterprises and in Signature Not Verified Signed By:GUNN Signing Date:24.11.2025 19:22:24 FAO (COMM) 174/2024 the said agreement also, Sh.Jaspal Singh Chadha has signed alongwith the stamp of the plaintiff company. d) Fourthly, after the exit of plaintiff company from the partnership firm "Vatika Grand", the said firm was reconstituted vide partnership deed dated 18.08.2022 between Sh.Sanjay Sharma and Sh.Arnn Gupta and in the said re-constituted partnership deed, there was no reference made of the MOU dated 22.06.2022, entered into between plaintiff, Sh.Arun Gupta and Sh.Sanjay Sharma. e) Fifthly, in the alleged MOU dated 22.06.2022, the date of retirement of plaintiff from the partnership firm "Vatika Grand" is the day of execution of MOU dated 22.06.2022, whereas in the partnership deed dated 18.08.2022 between Sh.Sanjay Sharma and Sh.Arun Gupta, date of retirement of the plaintiff company has been 31.07.2022. mentioned f) Sixthly, the defendant has also filed on record a partnership deed dated 12.12.2022 creating partnership firm by the name of "Tri om Hospitality" to run a restaurant under the name and style of "Pind Balluchi" but even in the said document, there is no reference of the alleged MOU dated 22.06.2022, which allegedly grants right to Sh.Sanjay Sharma, one of the partners of Triom Hospitality, to run a restaurant by the name of "Pind Balluchi" in Dwarka, New Delhi. g) Seventhly, the plaintiff has also initiated criminal proceedings against defendant by filing a police complaint dated 24.08.2024 with the SHO, PS Sector-9, Dwarka, New Delhi with regard to cheating and forgery of MOU dated 22.06.2022 against Sh.Sanjay Shanna, one of the partners of Triom Hospitality, Sh.Arun Gupta and Sh.Dhannender Kumar, which shows that plaintiff has made serious forgery. allegations h) Eighthly, the defendant has not produced the original MOU dated 22.06.2022 as per the mandate of Section 8(2) of the Arbitration and Conciliation Act, 1996 nor has filed any application as per the proviso to Section 8(2) of the Arbitration and Conciliation Act, 1996 calling upon the plaintiff to produce the original agreement dated ~2.06.2022, which prima facie shows about the nonexistence of the MOU dated 22.06.2022. i) Lastly, defendant has relied upon clause 12 of the said MOU to show that it was kept by the plaintiff for submitting with the IPR Registry, whereas there was no such requirement of submitting MOU dated 22.06.2022 with the IPR Registry as this document was not affecting any right of the plaintiff regarding the ownership of tradename "Pind Balluchi".= Signature Not Verified Signed By:GUNN Signing Date:24.11.2025 19:22:24 FAO (COMM) 174/2024

24. On a cumulative consideration of the above circumstances, the learned Commercial Court in the impugned order concluded that the plaintiff had prima facie established the non-existence of a valid arbitration agreement/clause in the form of the MOU dated 22.06.2022. The learned Commercial Court further observed that the allegations of forgery are serious in nature and as such the lis could be adjudicated only after examining detailed evidence, including forensic examination of signatures.

25. As the execution of the disputed MOU had been denied, the learned Commercial Court in the impugned order held that the controversy involved issues of forgery and fabrication which would require examination by handwriting or forensic experts. It further held that issues of such nature fall outside the scope of arbitral proceedings and lie within the jurisdiction of the civil court.

26. The impugned order further held that, even assuming the MOU dated 22.06.2022 to be genuine, the parties could not be referred to arbitration, as the defendant partnership firm was not a party to the said MOU. It noted that, under Section 8 of the Act, only the parties to an arbitration agreement can be referred to arbitration in respect of disputes arising from the terms of such agreement. Since the defendant partnership firm was not a signatory to the MOU dated 22.06.2022, the dispute relating to the alleged infringement of the plaintiff9s trademark by the defendant firm could not be referred to arbitration. The defendant9s application under Section 8 of the Act, therefore, came to be rejected. Signature Not Verified Signed By:GUNN Signing Date:24.11.2025 19:22:24 FAO (COMM) 174/2024 SUBMISSIONS BEFORE THIS COURT

27. Dr. Amit George, learned Counsel appearing on behalf of the defendant submitted under Section 8(1) of the Act, the Court must refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. It was argued that the provision only uses the expression prima facie, and therefore, where the facts are complex or the issues are triable, the matter must be referred to arbitration.

28. Learned Counsel for the appellant/defendant placed reliance on Pravin Electricals Pvt. Ltd. v. Galaxy Infra and Engineering Pvt. Ltd7, Cox and Kings Ltd. v. SAP India Pvt. Ltd8.,and on K. Mangayarkarasi v. N.J. Sundaresan9, to contend that once the court finds the existence of an arbitration agreement, it is under a positive mandate to refer the parties to arbitration, and that mere allegations of fraud, complexity of transactions, or disputed facts do not by themselves divest the arbitral tribunal of its jurisdiction.

29. It was further submitted that the present case involves triable issues that require a detailed examination of facts and evidence, and hence falls squarely within the scope of disputes that must be referred to arbitration under Section 8(1) of the Arbitration and Conciliation Act,

30. Per contra, Mr. J. Sai Deepak, learned Senior Counsel for the respondent/plaintiff submitted that there are serious allegations of