Epsilon Eduventures Private Limited v. Nikhil Goel

5. It is the petitioner’s contention that, in his ‘LinkedIn’ profile, the respondent has posted the following text and content representing and claiming that he is co-founder of the software:

6. For clarity, by the petitioner to manage

7. It is the employment petitioner of the petitioner permission respondent relation to petitioner, grievance respondent, intellectual or licensing

8. It is argued the respondent represent dispute that clarity, Mr. Swarup explains that the software petitioner for providing on-line educational manage coaching institute and sell on-line classes. petitioner’s case that at the time of employment relationship, the respondent was petitioner only the restricted right to represent petitioner company, which was a limited permission contained an implied, negative covenant respondent from claiming any rights or interests to the individual software products petitioner, including the Classplus software. grievance is, that by reason of the misrepresentation respondent, the petitioner is unable to commercially intellectual property in the software products, whether licensing to third parties. argued on behalf of the petitioner, that the respondent is permitted under the terms that he was co-founder of the software that is arbitrable and falls within the ambit software is a product used educational services inter-alia classes. of severance of their was permitted by the himself as co-founder limited right; and such covenant enjoining the interests whatsoever in products developed by the software. The petitioner’s misrepresentation made by the commercially exploit the whether by assignment the dispute as to whether of the agreement to software in question, is a ambit of clause 5 of the settlement-cum waiver-agreement, whereby parties have agreed to refer their disputes to arbitration. Clause 5 reads as under: ”5. Dispute Resolution. The Party and the Company agree that any and all disputes under this agreement, and pertaining to the validity of this Agreement, or of the terms of settlement and waiver of claims hereunder, shall be exclusively adjudicated by reference to arbitration by a sole arbitrator appointed mutually between the parties hereto. In the event, the parties fail to mutually appoint the sole arbitrator with thirty (30) day from notice of dispute given by either party, the arbitrator shall be appointed as per the provisions of the Arbitration and Conciliation Act, 1996 read with rules framed thereunder. The arbitration proceedings shall be conducted in Delhi in accordance with applicable laws of India and specifically with reference to the Arbitration and Conciliation Act, 1996. The arbitration proceedings shall be in the English language. The award of the arbitrator shall be substantiated in writing. The arbitrator shall also be entitled to decide on the costs of the arbitration proceedings. The award of the arbitrator shall be binding on the parties subject to the applicable laws, and the award shall be enforceable in any competent court of law.” (emphasis supplied)

9. It is submitted that there is no dispute as to the fact that the territorial jurisdiction in relation to the arbitral process lies with the courts of law in Delhi; and therefore there is no impediment to the disputes being referred to arbitration by this court appointing an arbitrator in the present proceedings. Respondent’s Arguments

10. Opposing the appointment of an arbitrator however, Mr. Ankit Virmani, learned counsel appearing for the respondent submits that clause 1 of the settlement-cum-waiver agreement specifically and expressly states that the services of the respondent were valuable to the growth and development of the company and permits the respondent to represent himself as co-founder and Chief Operation Officer; and that the petitioner cannot object to the respondent using the designation/capacity that he held at the company. It is argued that as a sequitur, there is no negative covenant or prohibition on the respondent asserting what he was engaged in doing in the course of his employment; and that therefore, the respondent is well within his rights to represent himself as a co-founder of the Classplus software, in the making of which he was engaged.

11. Alternatively, it is submitted, that even if the petitioner entertains the grievance that the respondent cannot do so, such grievance is not a dispute that arises from the settlement-cum-waiver agreement and is therefore not amenable to arbitration under clause 5 thereof.

12. It is Mr. Virmani’s submission that the theory of an implied negative covenant has been conjured-up by the petitioner only to bring the alleged dispute within the purview of the settlement-cum-waiver agreement.

13. Counsel also argues, that as is evident from the relevant portion of his. ‘LinkedIn’ profile (as extracted above), the respondent is only claiming to be a ‘co-founder’ of Classplus software and not as a ‘coowner’ of the software. It is argued that therefore, even if there is a negative covenant, as the petitioner contends but the respondent denies, that negative covenant only prohibits the claim of ‘ownership’ in respect of the software; but the respondent has not made any such claim to ownership. It is also pointed-out that in legal notice dated 28.09.2020 issued by the petitioner to the respondent, the petitioner itself said that the brand and trademark ‘Classplus’ belongs solely and exclusively to another company called M/s Bunch Microtechnologies Pvt. Ltd; which means that neither the petitioner nor any of its employees have any rights whatsoever in or to the software. Absent any rights in the software belonging to the petitioner, it has no locus standi to make any claim or even to file the present petition.

14. It is also argued, that assuming all circumstances against the respondent, it is inexplicable how an assertion that the respondent is a co-founder of the software can tarnish the reputation or dilute the prestige of the petitioner or of M/s Bunch Microtechnologies Pvt. Ltd. or their trademark or brand name or cause any financial loss. Other contentions, which ex-facie appear to relate to the merits of the disputes between the parties, have also been raised on behalf of the respondent.

15. Mr. Virmani has also stressed that in the backdrop of what the respondent contends are inconceivable grievances against him, the petitioner is attempting to drag the respondent into arbitration proceedings, which would entail huge costs, which the respondent can ill-afford; pointing-out that the petitioner on the other hand is a wellfunded corporate entity. The respondent would therefore be hard put to defend wholly unnecessary and futile arbitration proceedings. Judgments relied upon by the Petitioner

16. In support of its position, the petitioner cites Mcdermott International Inc vs. Burn Standard Co. Ltd., 1 and Sudarshan Trading Co. vs. Government of Kerala[2], to contend that any dispute or conflict in the interpretation or construction of a contractual term itself constitutes a dispute arising from or pertaining to a contract.

17. It is submitted that an inquiry into the legal tenability and scope of a claim is the sole prerogative of the arbitral tribunal under section 16 of the A&C Act inter-alia under the principle of kompetenzkompetenz. It is argued that in Vidya Drolia vs. Durga Trading Corporation[3] and in Saksham Impex Pvt. Ltd vs. Akshat Kumar Anchan[4] the principles laid down are that a dispute is to be referred to arbitration where:

(i) The contentions relating to non-arbitrability are plainly arguable;

(ii) When a summary consideration of rival contentions by the referring court would be inconclusive and inadequate;

(iii) When facts are contested; and/or

(iv) When parties appear to adopted dilatory tactics or hinder the conduct of arbitral proceedings. Judgments relied upon by the Respondent

18. On the other hand, it is the respondent’s contention that Vidya Drolia (supra) holds that ex-facie meritless proceedings ought to be weeded-out at the threshold; and that in DLF Home Developers vs. Rajpura Home Pvt. Ltd and Anr.5, the Hon’ble Supreme Court has mandated that the limited jurisdiction under section 11 does not denude the court of its judicial functions to look beyond the bare existence of the arbitration clause and to cut the dead-wood and conduct a prima-facie review at the stage of reference, to weed-out any frivolous and vexatious claims to prevent wastage of public and private resources.

19. It is argued that in DLF Home Developers(supra), the Hon’ble Supreme Court has said that the High Court is not expected to act mechanically to deliver a purported dispute raised by the applicant to the doorstep of the arbitrator; and the court is not prevented from declining the prayer of reference if a dispute in question does not relate to the arbitration agreement. Analysis & Conclusions

20. This court has perused the arbitration clause and the relevant provisions of the settlement-cum-waiver agreement signed between the parties; and has given serious thought to the essential disputes raised by the petitioner with the respondent as to the respondent’s alleged claim of being co-founder of the software in question; and has tested it on the anvil of the scope and ambit of the arbitration agreement contained in clause 5.

21. Without delving deeper into the factual disputes and without expressing any opinion as to the merits or demerits of the contentions 2021 SCC OnLine SC 781 raised, what is seen on a prima-facie perusal of clause 1 is that that covenant expressly permits the respondent to representing himself as co-founder and Chief Operations Officer of the petitioner and says that the petitioner shall not object to such use by the respondent. The question whether the respondent was engaged and involved in the development of ‘Classplus’ software in question in his capacity as cofounder and Chief Operations Officer is a question of fact, that requires detailed consideration on merits, based upon evidence to be led by the parties. The question whether the petitioner permitting the respondent to represent himself as co-founder and Chief Operations Officer of the company also included the permission to represent himself as co-founder of the software, is again one of interpretation of the settlement-cum-waiver agreement, which is within the remit only of the arbitrator.

22. Broadly, the legal principle is that if one party asserts that there is a dispute; and the other party denies that there is such dispute, that itself is a dispute between the parties.

23. Whether or not the disputes alleged fall within the scope and ambit of the arbitration agreement has to be seen by a referring court but purely on a prima-facie basis, addressing the following questions:

(i) Is the arbitration agreement restricted only to certain specified disputes or is it worded in a manner so as to include within its fold any and all disputes arising from an agreement?

(ii) Do the contentions and counter-contentions raised by the parties emanate from their relationship under the agreement or outside of it? and

(iii) Are the disputes per-se non-arbitrable, which would be so if the disputes are such that they are required to be dealt with in-rem and not in-personam?

24. To be sure, in the present case, even the respondent does not dispute that it is not the owner of intellectual property rights in the software. In fact, if anything, it is the respondent’s own contention that by claiming in his ‘LinkedIn’ profile that he was co-founder of the software, he is not claiming ownership but only that he was engaged in the development of the software during his employment with the petitioner. Accordingly, this is not a dispute relating to intellectual property rights that would be non-arbitrable. This answers question No.

(iii) above.

25. Insofar as the question No.

(ii) is concerned, the respondent’s relationship with the petitioner in respect of his past employment, is governed entirely by the settlement-cum-waiver agreement; and any disputes arising from or in relation to such past employment, is therefore governed by the said agreement. It is therefore far-fetched for the respondent to contend that the dispute raised by the petitioner against his representing to be co-founder of the software does not arise from the settlement-cum-waiver agreement.

26. Addressing question No.

(i) therefore, as a sequitur it cannot be contended that such dispute is not amenable to arbitration under the arbitral mechanism provided in clause 5 of the settlement-cumwaiver agreement, which clause is cast in the widest possible words, to include “... any and all disputes under this agreement,... or of the terms of settlement and waiver of claims...”.

27. In view of the above discussion, the present petition is allowed.

28. Accordingly this court proposes to appoint Mr. B.B. Sawhney, Senior Advocate (Cellphone. No.9810041533) to act as sole arbitrator to adjudicate the disputes between the petitioner and the respondent.

29. The arbitrator shall be entitled to fee as stipulated in Fourth Schedule to the A&C Act or as may be agreed to by the parties with the learned sole arbitrator.

30. The petitioner is directed to approach the proposed sole arbitrator within 01 week; seek disclosures in terms of section 12 of the A&C Act; and to file the same before this court, before next date of hearing, with a copy to the opposing counsel.

31. List for further consideration on 31st May 2022.

ANUP JAIRAM BHAMBHANI, J. MAY 05, 2022