1. Indus Renaissance Partners Entertainment Pvt. Ltd. and Mr.Anshuman Kapur, defendants 1 and 2 have filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as Act, for short) for disposal/dismissal of the Suit filed by Ministry of Sound International Ltd, the plaintiff herein on the ground that the disputes are covered by the arbitration clause between the parties. The plaintiff, as per the plaint, is a private company incorporated under the laws of Ireland.

2. The plaintiff and the defendant no.1 admit execution of the Agreement dated 7th December, 2006 granting licence to defendant no.1 to use its trademarks/copyright in respect of Ministry of Sound, The Ministry, Ministry, MOS and logo of the plaintiff and to run a night club by the name of The Pyramid.

3. Agreement dated 7th December, 2006 incorporates Clause 29 under the heading Governing law, Jurisdiction and Dispute Resolution. The said Clause reads as under:-

29. Governing Law, Jurisdiction and Dispute Resolution.

29.1 This Agreement is governed in all respects in accordance with English law and shall be construed and take effect as an agreement made in England.

29.2 The Licensee shall conduct its business under this Agreement in a lawful manner and will faithfully comply with all applicable laws or regulations for the conduct of its business.

29.3 The parties agree that, in the event of any dispute arising out of or in connection with this Agreement which the parties are unable to resolve in the normal course, the parties agree that the matter shall be referred to the Licensor Representative and Licensee Representative. The Licensor Representative and Licensee Representative shall meet to attempt resolution. Should they not resolve the matter within 10 Business Days then each party shall escalate the issue to its board of directors.

29.4 If the parties have not resolved the dispute within 30 Business Days of the matter first being referred to the Licensor Representative and Licensee Representative for resolution then each party shall be free to pursue the rights granted to it by this Agreement in respect of such matter.

29.5 For avoidance of doubt, clauses 29.3 and 29.4, shall not prevent either party from:

(a) Seeking injunctive relief in the case of any breach or threatened breach by the other of any obligation of confidentiality or infringement by the other of any Intellectual Property; or

(b) Commencing any proceedings where this is necessary to avoid any loss of a claim due to the rules on limitation of actions.

29.6 Subject to the foregoing, any dispute arising out of or in connection with this Agreement shall be submitted to the arbitration in London of the London International Court of Arbitration (LICA) under and in accordance with the Arbitration Act 1996 and the LICA Rules in force at the date of such submission, which Rules are deemed to be incorporated by reference within this Clause. The tribunal shall consist of a sole arbitrator.

4. Defendant nos. 1 and 2 rely upon the said arbitration Clause and submit that the disputes cannot be resolved in a civil litigation before this Court. The defence of the plaintiff in the reply is:

(a) Defendant nos. 3-5 are not parties to the arbitration agreement.

(b) Arbitration Clause 29.6 is subject to Clause 29.5(a) relating to breach of obligation of confidentiality or infringement of intellectual property right and therefore non arbitrable.

(c) Conduct of defendant by filing CS (OS) 1223/2008 and waiver.

(d) Section 45 and not Section 8 of theis applicable.

5. The last objection relates merely to the heading of the application as mentioned in the cause title. A wrong heading in the cause title will not result in dismissal of the application. It is admitted by the learned counsel for the parties that Part II, Chapter I of the is applicable as the plaintiff is a company incorporated in Ireland and defendant no.1 is a company registered in India and defendant no.2, is an Indian national residing in India. It will not be proper to dismiss the application merely because a wrong provision of the is mentioned in the cause title. Pleadings as made satisfy requirements of Section 45 of the. I am not therefore inclined to dismiss the application for quoting a wrong Section/provision in the cause title. I may note here that Section 45 of the Act, does not require filing of an application and mere request by a party is sufficient (See, observations of this Court in Bharati Televentures Private Ltd versus DSS Enterprises Private Ltd and others reported in 123 (2005) DLT 532 [LQ/DelHC/2005/1339] , para 11, page 550).

6. The objection (a) of the plaintiff is based on the decision of the Supreme Court in Sukanya Holdings Pvt. Ltd. versus Jayesh H. Pandya and another reported in (2003) 5 SCC 531 [LQ/SC/2003/495] ). The said decision relates to Section 8 of theand it was held that a subject matter of a suit cannot be bifurcated. One part of the suit cannot be referred to arbitration and the remaining part or part subject matter of the cause continues before a Civil Court. Section 8 of therequires that the entire subject matter of suit should be the subject matter of the arbitration agreement. It is only when the entire subject matter of the suit is covered and is subject matter of the arbitration agreement that Section 8 of theis applicable. It was observed that division or bifurcation of the subject matter, one to be decided by the arbitrator and the other to be decided by the Civil Court would inevitably delay the proceedings. The object and purpose of arbitration is speedy disposal of cases and reducing the cost of litigation would be frustrated by bifurcation of cause of action, besides there being a possibility of conflict of decisions.

7. There is some difference in the language of Sections 8 and 45 of the. While Section 8 refers to a matter, which is subject matter of the arbitration agreement, Section 45 of therefers to action in a matter in respect of which the parties have an arbitration agreement. However for the purpose of deciding the present matter, I have proceeded on the basis that the decision in the case of Sukanya Holdings (supra) equally applies to Section 45 of the. On careful examination of the said decision and the averments made in the plaint, I am however not inclined to accept the second objection on merits. Paragraphs 1 to 17 of the plaint elaborates business activities of the plaintiff, its goodwill, popularity, labels, logos, etc. in which the plaintiff claims intellectual property rights in form of copyright and trademark. It is also claimed that its trademarks, Ministry of Sound, Ministry of Sound with device of crown, The Ministry, Ministry, MOS, - labels, etc. are registered in India. Plaintiff in paragraph 18 onwards in the plaint states that they had entered into an Agreement dated 7th December, 2006 with defendant no.1 under which a licence was granted to defendant no. 1 to run the night club Pyramid and use the trademarks / marks of the plaintiff and logos in connection with the said night club. It is further stated that by notice dated 8th August, 2007, the licence was terminated and thereafter/henceforth defendant no.1 was not entitled to use the said trademarks in terms of the said licence. It is alleged that defendant no.1 has also failed to pay the licence fee.

8. Allegations against defendant nos.4 and 5 in the plaint are to be found in para 22 thereof. The relevant portion reads:-

An order of injunction becomes even more imperative in view of a new night club which Defendants Nos. 1 and 2 are planning to open in collaboration with Defendants Nos.4 and 5.

9. Learned counsel for the defendant no.1 during the course of hearing on the application has stated that defendant nos. 1 and 2 have no intention of entering into any agreement with defendant nos. 4 and 5 and the said statement was taken on record. The statement is binding on defendant nos. 1 and 2.

10. With regard to defendant no.3, orders have been passed in I.A. no.5596/2008. Learned counsel for defendant no.3 on 8th September, 2008 had stated that his client was not aware of inter se disputes between the plaintiff and defendant nos.1 and 2 and that the said defendant will not sponsor any event in which the trademark/mark/logo of the plaintiff is a subject matter without verification and acknowledgment from the plaintiff. Learned counsel for the plaintiff thereupon had taken time to get instructions, on whether on the basis of the said statement the suit can be disposed of. On 23rd October, 2008, learned counsel for the plaintiff had stated on instructions that the statement made by defendant no.3 was acceptable and the suit can be disposed of on the basis of the said statement. Accordingly, I.A. No.5596/2008 was disposed of by a separate order on 23rd October, 2008 holding that defendant no.3 would be bound by the statement made. In view of the above factual position, I do not think the present application under Section 45 of theis liable to be dismissed on the ground that defendant nos. 3-5 are not parties to the arbitration clause. I may, however, observe that while applying the ratio of Sukanya Holdings (supra), courts may in a given case examine this question with reference to substance and not merely form of plaint lest in a case a plaintiff may deliberately, intentionally introduce parties to get over the arbitration agreement. Each case, therefore, has to be scrutinized carefully. The Supreme Court in the said case emphasized that bifurcation of the subject matter of the suit is not permissible and the entire matter in the suit should come within the ambit of the arbitration clause. In paragraph 15 of the judgment it was held as under:-

15. The relevant language used in Section 8 is: in a matter which is the subject of an arbitration agreement. The court is required to refer the parties to arbitration. Therefore, the suit should be in respect of a matter which the parties have agreed to refer and which comes within the ambit of arbitration agreement. Where, however, a suit is commenced as to a matter which lies outside the arbitration agreement and is also between some of the parties who are not parties to the arbitration agreement, there is no question of application of Section 8. The words a matter indicate that the entire subject- matter of the suit should be subject to arbitration agreement.

(emphasis supplied).

First objection is accordingly rejected.

11. The objection (b) pertains to the scope of arbitration and whether the subject matter of the present suit is covered by the said arbitration clause. Clause 29 of the Agreement dated 7th December, 2006 has been quoted above. The Clause provides that in case of disputes, the parties will try and resolve the same in normal course and then through mediation/talks between their representatives and on their failure to resolve the matter within 10 business days, through their Board of Directors. However, in case the disputes are not resolved in 30 business days, then each party will be free to pursue their rights granted under the Agreement.

12. Clause 29.5 stipulates that inspite of Clauses 29.3 and 29.4 for resolution of disputes within 30 business days, a party can seek injunctive relief in case of breach or threat to breach of obligation of confidentiality or infringement of intellectual property rights. Sub-clause (b) of Clause 29.5 is not applicable and is not relevant. The object and purpose behind Clause 29.5(a) is not to bar or prevent a party from seeking injunctive relief of the nature specified, even when 30 business days period for resolving disputes has not lapsed. The jurisdiction of the Court to grant injunctive relief is not barred for disputes or a cause is pending settlement under clauses 29.3 and 29.4 and 30 business days period has not expired.

13. Clause 29.6 is the arbitration clause and is widely worded. It stipulates that any dispute arising out of or in connection with the agreement will be submitted to arbitration of a sole arbitrator of London International Court of Arbitration. The said Clause begins with the word subject to foregoing. The case of the plaintiff is that the aforesaid clause is subject to Clause 29.5 and therefore suit for injunction for breach or threatened breach of obligation of confidentiality or infringement of intellectual property rights is not barred and cannot be made subject matter of arbitration. I have examined the said contention but I am unable to accept the same. The object of Clauses 29.3 and 29.4 is that a party to the agreement should not in a haste initiate arbitration proceedings but try and resolve their disputes. For this 30 business days are considered to be sufficient and after expiry of the said period, the parties are at liberty to pursue their rights granted under the Agreement. Clause 29.5(a) seeks to protect parties within the said 30 business days dispute resolution period and therefore makes specific reference to Clauses 29.3 and 29.4. Even within this period of 30 days, injunctive relief can be prayed for and granted by a party moving to the court. Viewed in this manner, Clause 29.5(a) does not seek to limit the subject matter of arbitration. Subject matter of arbitration is the entire Agreement dated 7th December, 2006 and all disputes arising out of or in connection with the said Agreement have to be adjudicated and decided by arbitration. Questions relating to intellectual property rights and obligation of confidentiality can be made subject matter of arbitration. If the plea of the plaintiff is accepted, then in view of the decision of the Supreme Court in Sukanya Holdings (supra) a suit for injunction in respect of obligation of confidentiality or infringement of intellectual property rights with addition of prayers and other reliefs including damages will result in complete bar to arbitration. This was certainly not the intention of the parties and is not the intention behind the arbitration clause. The subject matter of the arbitration clause is the entire agreement, which in substance is an agreement authorizing use of the mark, names etc. which are essentially intellectual property matters. A contract providing for arbitration is a commercial document inter parties and must be interpreted in a manner as to give efficacy by adopting a common sense approach rather than pedantic or legalistic interpretation. Reasonable construction should be adopted.

14. The words subject to the foregoing.. in Clause 29.6 indicates that the arbitration clause should not be invoked till representatives of the parties have tried amicable resolution of the disputes and 30 business days period has expired. These words also predicate that the arbitration clause can be invoked and instituted even when a party has sought injunctive relief in a court to prevent breach or threatened breach of obligation of confidentiality or infringement of intellectual property rights. In other words, arbitration agreement continues to subsist and can be invoked even when an injunctive relief is applied and prayed for by a party under Clause 29.5 (a).

15. Section 9 of thepermits and allows a party to an arbitration clause to obtain interim injunction even before arbitration proceedings have commenced but a party intends to commence or invoke the arbitration clause. Under Section 9 of the Act, the Courts have the power to grant injunctive relief even before arbitration has commenced.

16. Clause 29.1 states that the Agreement would be governed in all respects by English Law and shall be considered and taken effect as an agreement made in England. Section 44 of the English Arbitration Act, 1996 stipulates that unless otherwise agreed, a party can approach courts for the purpose of and in relation to arbitration proceedings in matters stipulated in Sub-section (2). Sub section 2(e) allows a court to grant interim injunction. Dealing with this aspect, Russell on Arbitration (22nd Edition, pages 265-67) has examined the question of injunctive relief. It has noticed that the English Arbitration Act authorizes arbitration Tribunals to grant injunctive relief and an arbitration Tribunal has the same power as courts unless there is an agreement to the contrary. The courts also have power to grant injunctive relief under Section 44(2)(e) of the English Arbitration Act, 1996 and the said power is required to be exercised in cases of urgency as there is bound to be some delay in establishment of a tribunal and then for a party to apply for an interim award/order granting interim relief. Read and understood in the above context, the entire subject matter of the suit is subject matter of the arbitration clause and the arbitration clause does not exclude from its purview matters of confidentiality and/or infringement of intellectual property rights. Clause 29.5(a) permits a party to seek and get injunctive relief but does not seek to modify or restrict the scope of the arbitration clause i.e. for any dispute arising out of or in connection with the arbitration agreement. It is clarified that I have not examined Clause 29.5(b) with reference to Clause 29.6 as they do not arise for consideration.

17. During the course of arguments, learned counsel for the plaintiff submitted that defendant nos. 1 and 2 had filed a civil suit being suit no.1223/2008 titled M/s. Indus Renaissance Partners Entertainment Pvt. Ltd. versus Elevate Entertainment Pvt. Ltd and Ministry of Sound International Ltd. in this Court and therefore they have abandoned the arbitration clause. I may note here that this plea is not specifically taken in the reply filed by the plaintiff. Under Section 45 of the Act, if a Court comes to the conclusion that a matter in a suit is the subject matter of an agreement under Section 44 of the Act, it shall refer the parties to arbitration on a request being made. Request, however, can be declined when the agreement is null and void, inoperative or incapable of being performed. I have already examined the said aspect while dealing with the second ground and have held that the agreement in question is not null and void or inoperative. The expression incapable of being performed will include cases where the parties have waived or abandoned the arbitration clause by invoking jurisdiction of a civil court. In such cases where a party has decided to give go bye and novated the arbitration clause, they cannot later on be permitted to turn around and invoke the arbitration clause when civil proceedings are initiated by the other side. However, the facts of the present case and the suit filed by the defendant no. 1 and 2 being CS(OS).No.1223/2008 may be noticed.

18. The present Suit was filed on 5th February, 2008 and by Order dated 18th February, 2008, notice was issued to the defendant. An ex parte injunction order was also passed on the same date. The present application for reference to arbitration was filed on or about 4th March, 2008. Subsequent thereto, defendant no.1 filed their written statement on 24th April, 2008. Written statement also makes specific reference to Clause 29.6 of the Agreement and the fact that the defendant nos. 1 and 2 have filed the present application.

19. Long after filing of the present application, defendant nos. 1 and 2 also filed a civil suit against the plaintiff on 3rd July, 2008. The said Suit was with the following prayers:-

i) a decree of permanent injunction restraining the defendants, their directors, assignees, employees, servants, agents and all other persons action on their behalf from using in any way the trade mark i.e. Ministry of Sound and its logo and also be restrained from holding any events on 5th July, 2008 or in future under the brand name of Ministry of Sound or its logo;

ii) a decree of damages to the tune of Rs.21 lacs for harm caused to the goodwill and reputation of the plaintiff may be passed in favour of the plaintiff and against the defendants;

iii) costs of the present proceedings be awarded to the plaintiff;

20. The said suit has been withdrawn by the defendants on 23rd October, 2008 stating, inter alia, that the matter between the parties is covered by arbitration clause. I do not think by filing the civil Suit, the defendants 1 and 2 have abandoned or waived their rights under the arbitration clause. All along, defendant nos. 1 and 2 had been pressing for the present application and had not abandoned the same, though I find that the conduct of defendant nos. 1 and 2 in filing the civil suit is rather peculiar and not in consonance with their stand in the present suit. Defendant nos. 1 and 2 may be guilty of trying to take contradictory stand but they did not abandon or waive their right to have the disputes resolved by arbitration. Abandonment or acquiescence or waiver is not established. Defendant nos. 1 and 2 have all along pressed this application and have not given up their rights under the arbitration clause.

21. I may notice here the distinction between the language of Sections 8 and 45 of the. Section 8 of therequires an application to be filed by a party not later than submitting his first statement on the substance of the dispute. In Section 45 of the Act, there is no such requirement. Section 8(1) of theis differently worded and more liberal than Section 34 of the Arbitration Act, 1940 which required that an application for stay of the suit/legal proceedings should be filed before a party requests for and is granted any time for filing of a written statement or taking steps in the proceedings. It was observed in Rashtriya Ispat Nigam Ltd versus Verma Transport Company reported in (AIR 2006 SC 2800 [LQ/SC/2006/704] ) that the two Sections, i.e. Section 34 of the Arbitration Act, 1940 and Section 8(1) of theare different and the words not later than submitting first statement should be distinguished from the expression written statement as used in Section 34 of the Arbitration Act, 1940. If an application under Section 8(1) is filed before actually filing the first statement, the said application is maintainable and the same cannot be dismissed on the ground that the party has waived his right to invoke the arbitration clause or has acquiesced himself to jurisdiction of the Court. The Supreme Court has observed:-

36. The expression first statement on the substance of the dispute Contained in Section 8(1) of the 1996 Act must be contradistinguished with the expression written statement. It employs submission of the party to the jurisdiction of the judicial authority. What is, therefore, needed is a finding on the part of the judicial authority that the party has waived its right to invoke the arbitration clause. If an application is filed before actually filing the first statement on the substance of the dispute, in our opinion, the party cannot be said to have waived its right or acquiesced itself to the jurisdiction of the court. What is, therefore, material is as to whether the petitioner has filed his first statement on the substance of the dispute or not, if not, his application under Section 8 of the 1996 Act, may not be held wholly unmaintainable. We would deal with this question in some detail, a little later.

22. Section 45 of thedoes not refer to filing of first statement or written statement or a request for filing of written statement.

23. The two decisions relied upon by the plaintiff on the question of abandonment/waiver of rights, namely, Bharati Televentures (supra) and Raj and Associates versus VSNL reported in (113 (2004) DLT 318 [LQ/DelHC/2004/1413] ) are distinguishable. In both cases the parties had earlier invoked jurisdiction of civil courts ignoring the arbitration clause. In the case of Raj and Associates (supra), the plaintiff therein had filed a writ petition which was disposed of granting liberty to the plaintiff to initiate civil or arbitration proceedings and indisputably the plaintiff had filed a civil action for recovery of the dues instead of pursuing the path of arbitration. The defendant inspite of being fully conscious of the arbitration clause, resisted the civil suit and filed their counter claim. An arbitration clause, it is well settled does not bar/prohibit filing of a civil suit. The contesting party always has option to continue with the civil proceedings and give up the right to enforce the arbitration clause. If the contesting party files an application under Sections 8 or 45 of the, the parties are relegated to arbitration. Plaintiff takes a risk when he invokes jurisdiction of a civil court inspite of an arbitration clause. Thereafter, it is a wish and will of the defendant which determines whether civil proceedings should continue or the parties should be relegated to arbitration if conditions of the sections 8/45 of theare satisfied. Once, however, parties have consented and allowed civil proceedings to continue they cannot subsequently invoke the arbitration clause and make the dead clause alive after the same has been ignored and not invoked. In the case of Bharati Televentures (supra) it was held that once a party has invoked jurisdiction of a civil court, it cannot subsequently rely upon the arbitration clause. Once jurisdiction of the civil court is invoked by a party it tantamounts to abandonment of the arbitration Clause. These decisions are distinguishable for the reason that in the present case, the defendant nos. 1 and 2 had invoked the arbitration clause by filing the present application. and have been pressing the present application. Subsequent to filing of the present application, defendant nos. 1 and 2 did file a civil suit but the said suit has been withdrawn. If the defendant nos. 1 and 2 had filed a civil suit and thereafter subsequently filed the present application under Section 8/45 of the Act, the situation would have been different. Filing of the civil suit in the present case will not amount to abandonment or waiver of the right to invoke arbitration.

24. Accordingly, the present application under Section 45 of theis allowed and the parties are referred to arbitration.

25. This Court by Order dated 18th February, 2008 has granted interim injunction. The said interim injunction order still continues. The Order will continue further for a period of 60 days to enable the plaintiff to take appropriate steps by either initiating legal proceedings under section 9 of theor before the arbitrators. Similarly, defendant nos. 1 and 2 will be entitled to contest those proceedings on merits. It is clarified that this Court while adjudicating the present application has not gone into the merits and demerits of the interim order and also merits of the case inter se the parties. Any observation in this regard will not be binding on subsequent legal proceedings between the parties.

26. Accordingly, the application and the suit is disposed of. No order as to costs.