Hero Cycles Limited v. Ultra Motors India Private Ltd

Order Dasti. S. RAVINDRA BHAT,J APRIL 29, 2008 dkg 8 of 8

* IN THE HIGH COURT OF DELHI AT NEW DELHI + O.M.P. 225/2008 and I.A. 5068/2008 April 29, 2008 HERO CYCLES LIMITED ..... Petitioner Through Mr. A.S. Chandhiok, Sr. Advocate with Mr. Sumant Batra, Mr. Sanjay Bhat, Mr. Nitin Sharma, Advocates versus ULTRA MOTORS INDIA PRIVATE LTD ..... Respondent Through Mr. Rajiv Nayar, Sr. Advocate, Mr. Sandeep Sethi, Sr. Advocate with Mr. Vineet Malhotra, Mr. Pragyan Sharma, Advocates CORAM: MR. JUSTICE S. RAVINDRA BHAT 1. Whether reporters of local papers may be allowed to see the judgment? Yes. 2. To be referred to the Reporter or not? Yes. 3. Whether the judgment should be reported in the Digest? Yes. Mr. Justice S. Ravindra Bhat (Open Court) I.A. 5068/2008 (Exemption) Allowed subject to all just exceptions. 1. Issue notice. Mr. Vineet Malhotra, learned counsel accepts notice. With the consent of counsel for the parties, the petition was heard finally. 2. This petition under Section 9 of the Arbitration and Conciliation Act seeks interim 1 of 8 measures against the respondent. The reliefs sought are to restrain the defendants from: "a) Selling UMIL EV Kits to any party of manufacturing electric vehicles in India; b) Selling electric vehicles in the categories of high speed and low speed products forming subject-matter of the Agreement; c) Holding the National Dealers Convention at Goa on 3rd and 4th May, 2008 or any such meeting of dealers and not to convene any such or other meeting of joint-dealers in future till conclusion of arbitration proceedings; d) Using the trademark and or brand name of the Petitioner for the sale of any of its products including Velociti or on any of its stores; e) Maligning the image, reputation and good will of the Petitioner in the market or spreading rumors against the Petitioner in any manner including dossier or correspondence to joint-dealers, press releases, statements etc. f) Any other claim as this Court may deem fit in the facts and circumstances of the present case." 3. The facts necessary for the present proceeding are that the petitioner (hereafter called "Hero") entered into an Agreement for Technical Collaboration and Joint Marketing with the respondent (hereafter referred to as "UMIL") on 29.9.2006. In terms of the agreement, Hero, a well known manufacturer and distributor of bicycles and other such like products in India, contracted with UMIL for developments of specified products i.e. E-bike, E-Moto and E-Scooty. These were described in Clauses 10,11 and 12 of the definition clause. The parties provided for various terms such as supply prices, terms of payments, warranties intellectual properties etc. Articles 7.1, 7.2 and 7.4 reads as follows: "7.1 This is an exclusive agreement. Subject to clause 2.6, HCL shall not seek to procure or actually procure similar products of the same category EV Kit, from any third party, other than UMIL, during the term of this agreement. 7.2 UMIL shall not offer the E-bike, E-moto, or E-scooty to any person or 2 of 8 entity other than HCL under the Ultra Motor brand in the Territory during the Term of this Agreement. 7.3 xxx xxx xxx 7.4 UMIL shall have the right to supply UMIL EV Kits to other parties in the Territory for the Term of the Agreement. However, UMIL will maintain fair pricing policy with such suppliers so that it does not reduce the competitiveness of HCL EVs." 4. The chapter succeeding the above provision dealt with Joint Marketing. Article 12 specifically provided for a distribution and retail plan. Article 12.2 envisioned three models of marketing i.e. a) HCL-UMIL joint dealerships. b) Ultra EV stores c) HCL EV Stores 5. Clause 12.3 provided for joint dealership. In terms of this stipulation, the agreements to be entered into with dealers were to be jointly entered into by "Hero" and "UMIL". The "UMIL" had an equal right in approval of such dealerships. Article 12.3(f) enabled Hero to maintain and control the relationship i.e. joint-dealerships. Clause 12.4, 12.5 and 12.6 provided for the other m