M/S Sultan Chand and Sons Pvt. Ltd v. Kartik Sharma

1. Present petition has been filed challenging the order dated 19th September, 2024 passed by the learned Single Judge in CS (OS) No.227/2023, whereby learned Single Judge has allowed the Respondent- Defendant to withdraw his application, being I.A. No. 36049/2024, filed under Section 8 of the of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’) seeking reference of the disputes in the suit for damages to an Arbitral Tribunal. The Appellant further seeks directions to consequently refer the parties to arbitration, in terms of the mandatory nature of Section 8 of the Act.

2. Learned counsel for the Appellant states that the Respondent- Defendant approached the Appellant with certain literary content claiming that the same has been authored by him. Believing the assertions of the Respondent-Defendant, the Appellant as well as certain authors associated with the Appellant invested time, money and resources to give the literary content a shape of a book.

3. He states that the Appellant and the Respondent-Defendant entered into a publication/ copyright sharing agreement dated 01st March, 2020, which incorporated an arbitration clause, in respect of two books namely (i) Essentials of Artificial Intelligence – Class VIII and (ii) Essentials of Artificial Intelligence – Class IX. He states that additionally, the Appellant also published a third book i.e. ‘Essential of Artificial Intelligence – Class X’ in respect of which no formal written agreement was entered into by the parties. He states that in 2020 – 2021, Appellant used its resources to market the books.

4. However, Appellant received several queries in 2022 that the books published by the Appellant were plagiarized and the material in the books was rampantly copied from various sources. He states that in April, 2023 Appellant was constrained to withdraw all books purportedly authored by the Respondent-Defendant from the market owing to the content being plagiarized.

5. He states that owing to the breach of the warranties/representations and the losses/damages suffered due to the Respondent-Defendant’s misrepresentation, the Appellant filed the subject suit for damages against the Respondent-Defendant on 08th April, 2023. He states that the Appellant inter alia sought damages to the tune of Rs.2.25 Crores from the Respondent-Defendant on account of fraud committed by him by claiming that he is the original author in respect of the books.

6. He states that on 11th April, 2023, Respondent-Defendant filed a criminal complaint under Section 63 of the Copyright Act, 1957 against the Appellant and also instituted a suit alleging copyright violation against the Appellant as well as certain authors being C. S. (Comm.) No.344/2023.

7. He states that on 10th May, 2023, Respondent-Defendant filed his written statement in the suit for damages and took the objection under Section 8 of the Act. He states that subsequently on 06th August, 2024, Respondent-Defendant filed I.A. No.36049 / 2024 under Section 8 of the Act for dismissal of the suit for damages and for reference of the disputes to arbitration wherein the Respondent-Defendant took a categorical plea that all disputes raised in the suit for damages are covered under the arbitration agreement without making any distinction in respect of the book for which there was no agreement.

8. He states that since the Respondent-Defendant had agreed for the composite suit to be referred to arbitration, the Appellant conceded and also filed an application i.e. I.A. No.38663/2024 agreeing to the request of reference to arbitration.

9. He, however, states that thereafter the Respondent-Defendant withdrew his application under Section 8 of the Act.

10. Learned counsel for the Appellant states that the amendment brought in Section 8 of the Act in the year 2015 makes it obligatory for the Court to refer the dispute to arbitration. In support of his submission, he relies upon the following judgments:- (a) Hindustan Petroleum Corpn. Ltd. vs. Pinkcity Midway Petroleums

“15. The question then would arise: what would be the role of the Civil Court when an argument is raised that such an arbitration clause does not apply to the facts of the case in hand? Learned counsel for the appellant contends that it is a matter which should be raised before the arbitrator who is competent to adjudicate upon the same and the Civil Court should not embark upon an inquiry in regard to the applicability of the arbitration clause to the facts of the case. While learned counsel appearing for the respondent contends that since the applicability of the arbitration clause to the facts of the case goes to the very root of the jurisdiction of the reference to arbitration, this question will have to be decided by the Civil Court before referring the matter to arbitration even in cases where there is admittedly an arbitration clause. The answer to this argument, in our opinion, is found in Section 16 of the Act itself. It has empowered the Arbitral Tribunal to rule on its own jurisdiction including rule on any objection with respect to the existence or validity of the arbitration agreement....” (b) Kalpana Kothari vs. Sudha Yadav & Ors. (2002) 1 SCC 203;

(c) Magma Leasing and Finance Limited and Anr. vs. Potluri

Madhavilata and Anr. (2009) 10 SCC 103;