Full Judgment Text
NEUTRAL CITATION NO. 2023/DHC/001375
* IN THE HIGH COURT OF DELHI AT NEW DELHI
th
% Date of order : 15 February, 2023
+ O.M.P.(I) (COMM.) 20/2023
AFFLE INDIA LIMITED ..... Petitioner
Through: Mr. Rajshekhar Rao, Senior
Advocate with Mr. Bharat Chugh,
Mr. Siddharth Shivkumar, Mr.
Areeb Amanullah and Ms. Prachi
Dubey, Advocates
versus
TALENT UNLIMITED ONLINE SERVICES PRIVATE
LIMITED AND ANOTHER ..... Respondents
Through: Mr. Darpan Wadhwa, Sr. Advocate
with Mr. Sandeep Das, Mr. Vipin
Tyagi, Ms. Kritika Mundra and
Mr. Sankalp Udgata, Advocates
CORAM:
HON'BLE MR. JUSTICE CHANDRA DHARI SINGH
O R D E R
CHANDRA DHARI SINGH, J (Oral)
I.A. 3061/2023 (for condonation of delay of 3 days in filing of rejoinder)
1. The instant application has been filed on behalf of the petitioner
under Section 151 of the Code of Civil Procedure, 1908 seeking
condonation of three days’ delay in filing the rejoinder.
2. Learned senior counsel for the respondent submitted that he has no
objection if the application is allowed. In view of the above, the instant
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Digitally Signed
By:GAURAV SHARMA
Signing Date:24.02.2023
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application is allowed and the delay of 3 days in filing of rejoinder is
condoned.
3. Rejoinder filed by the petitioner be taken on record.
4. Accordingly, the application stands disposed of.
O.M.P.(I) (COMM.) 20/2023
1. The present petition has been filed on behalf of the petitioner under
Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as the Act, 1996) seeking the following reliefs:
“a. issue an interim and / or an ad-interim injunction in
favour of the Petitioner and against the Respondents
restraining Respondents Nos. 1 and 2 from terminating the
Global Monetization Partnership Agreement dated 8.8.2020
(“GMPA”) alongwith its two addendums dated 14.02.2022
(“GMPA-1”) and 29.08.2022 (“GMPA-2”) until the
Arbitral Tribunal is constituted and till the pendency of
proceedings before the Arbitral Tribunal;
b. pass such other order(s) as it may deem fit and proper in
the facts and circumstances of the case.”
2. Mr. Rajshekhar Rao, learned senior counsel appearing on behalf of
the petitioner submitted that the petitioner is a multinational technology
firm that offers its services to brands and business-to-consumer
enterprises. The respondent no. 1, on the other hand, is a Company that
creates and develops input tools for mobile platforms, including virtual
keyboards like Bobble Keyboard, Mint Keyboard, etc. It is submitted that
the petitioner holds the biggest percentage of shares of respondent no. 1
i.e., 26.24%.
3. It is submitted that in May, 2020, the respondent no. 2 contacted
the petitioner on behalf of respondent no. 1 to seek an investment,
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NEUTRAL CITATION NO. 2023/DHC/001375
collaboration, or synergy. A few months later, the petitioner invested in
respondent no. 1.
4. It is submitted by learned senior counsel on behalf of the petitioner
th
that on 8 August, 2020, the parties agreed to execute a Global
Monetization Partnership Agreement (GMPA) in order to increase
respondent no. 1's income.
5. It is submitted that in accordance with the GMPA, the respondents
had to make "Touch Points" in accordance with Clause 1.12 on the virtual
keyboard namely "Bobble Properties" enabling the petitioner to display
advertisements for its advertisers, collect advertising money, and divide
that revenue with respondent no. 5.
6. Learned senior counsel appearing on behalf of petitioner submitted
that as per clause 1.3 of the contract, respondent no. 1 was entitled to a
portion of the profits made from the aforementioned Touch Points.
7. It is further submitted that clauses 7.3 and 7.5 of the GMPA gave
petitioner the right to determine the consideration payable to respondent
no. 1 and the right to deduct, set-off, claw back, or charge back any
money that respondent no. 1 may have earned through dishonest or illegal
means (or through actions that violate the GMPA) and that it may owe to
the petitioner under the Agreement.
8. Learned senior counsel appearing on behalf of the petitioner
submitted that respondent no. 1 was unwilling to take any precise
commitments regarding the provision of certain placements of the
petitioner's advertisements or their frequency. Yet, the petitioner's ability
to satisfy its income obligations depends heavily on these precise
placements of Advertisements in key areas.
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By:GAURAV SHARMA
Signing Date:24.02.2023
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NEUTRAL CITATION NO. 2023/DHC/001375
9. It is submitted by learned senior counsel appearing on behalf of the
petitioner that in the context of this connection, advertisements (as
defined by Article 1.2 of the GMPA) consist of two main parts:
i. First , the icon, picture, or graphic element (supplied by the
advertisers), which should be displayed on touch points like
the emoticon bar icon.
ii. Second , the user is instantly sent to the underlying URL or
link given by the advertiser when clicking or touching the
symbol, picture, or graphic.
10. Learned senior counsel appearing on behalf of the petitioner
submitted that the ribbon pointed above was supposed to direct the user to
the underlying URL(s) as provided by the advertisers. It is further
submitted on behalf of the petitioner that the petitioner suddenly learned
that this was not the way the advertisements on the Bobble Properties
(digital/virtual keyboard) worked. The respondent No. 1 had altered the
advertisement by sending it to its own App Discovery Hub rather than the
advertiser's website.
11. In order to strengthen his arguments, learned senior counsel
appearing on behalf of the petitioner relied upon the above-shown
pictorial representation. While elaborating the said pictorial
representation, it has been pleaded by way of illustration that the ‘ribbon’
pointed by the arrows above, comprises of an image representing the
brand “makemytrip”, when a user says anything pertinent or linked to
this advertisement, this shows on the emoticons bar. The symbol or
emblem should take the user to the Google Play Store so they may
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Signing Date:24.02.2023
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NEUTRAL CITATION NO. 2023/DHC/001375
download the makemytrip App after clicking it. It is submitted that
according to the GMPA-1, this is how things were intended to work. In
light of the example elaborated above, the aforementioned was the
process to be followed however; the user upon clicking on the flashed
logo would be taken to the Bobble App Discovery page and would be
served content there.
12. It is submitted that it is public knowledge that the respondents
unilaterally changed the links given by the Advertisers through the
Software Development Kit ("SDK") on the emoticons bar icon to direct
users to a Bobble link or App Discovery Page in place of and instead of
the links provided by the Advertisers. It is further submitted that this
would defeat both the advertiser's and the user's intent and result in a
significant loss of revenue.
13. Learned senior counsel appearing on behalf of petitioner submitted
that for the purposes of Clause 1.6, which defines fraudulent activity, this
anomaly made these impressions, invalid, misleading, and false because
the advertisers did not provide the Bobble links, and users who clicked on
these impressions were misled into visiting a Bobble product page
(known as the Discovery Hub) rather than the URL links of the
advertisements, which point directly to the Google Play Store, as
provided by Affle's SDK.
14. It is submitted by learned senior counsel appearing on behalf of the
petitioner that when the user clicks on the icon advertisement and is
supposed to be taken to the advertiser landing page (being the Play store),
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Signing Date:24.02.2023
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NEUTRAL CITATION NO. 2023/DHC/001375
respondent no. 1 blocks the click and redirects them to the discovery hub
instead. This is done by tampering with the advertisement content/service
and creating a special code that, simply put, covers the icon.
15. It is submitted that the petitioner being aggrieved by the acts of the
respondent, the petitioner was forced to order an internal audit to look
into the amount of money that was overpaid to the respondents for these
unlawful/invalid advertisements. Advertisements were not delivered on
emoticons bar suggestions, and as a result, these transactions were not
approved, according to the internal audit.
16. It is further submitted that the revised revenue sharing ratio, which
was to be applied after GMPA-1 was to be 65% with the respondent no. 1
and the rest with the petitioner, was accidentally not incorporated in the
programme, and consequently, the respondent no. 1 was overpaid. Also,
certain reductions had to be made in order to prevent undue enrichment.
17. Learned senior counsel appearing on behalf of petitioner submitted
that due to deception on their part and an unintentional factual error, the
respondent no. 1 was in unjust enrichment of these sums and was
obligated to reimburse the petitioner. The respondent no. 1 was properly
nd
informed of the instance vide email dated 22 December, 2022.
18. It is submitted that the respondents disagreed with this reasonable
request and announced their intention to unilaterally and unjustly
th
terminate the agreement vide notice dated 11 January, 2023.
19. Learned senior counsel appearing on behalf of petitioner submitted
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Signing Date:24.02.2023
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that the respondent no. 1 is in material violation of the GMPA-1, and in a
typical instance of "pot calling the pot black" and taking advantage of its
own wrong, has threatened to take the most drastic action reasonably
possible by terminating the GMPA.
20. It is submitted that as the respondent is suspected of terminating
the GMPA in an irregular manner, the current petition is presented in
order to obtain an injunction preventing respondent no. 1 from doing so
while the Arbitral Tribunal is being constituted and its proceedings are
still ongoing.
21. Per contra , Mr. Darpan Wadhwa, learned senior counsel appearing
on behalf of the respondents vehemently opposed the instant petition and
submitted that the instant petition filed on behalf of the petitioner, is
devoid of any merit and should be dismissed.
22. It is further submitted that for Android-based devices, the
respondent no. 1 created the Bobble Keyboard app in the late summer of
2016. The software was widely praised and gradually amassed a sizeable
user base. As a result, several financial and strategic investors also
expressed a lot of interest and made to the respondent considerable
proposals. It is further submitted that the petitioner, in order to make an
investment in the respondent company, approached the same through one
of its officers namely, Mr. Ayush Aggarwal.
23. Learned senior counsel appearing on behalf of respondent
submitted that the petitioner made a lot of exaggerated claims and
promised the answering respondent that by designating the petitioner as
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Signing Date:24.02.2023
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NEUTRAL CITATION NO. 2023/DHC/001375
the "exclusive Ad monetization partner" and integrating the petitioner's
SDK with the company's application, the respondent would be able to
produce a sizeable amount of long-term advertising revenue.
24. It is submitted that precisely stated, the parties' understanding of
the Agreement was that the respondent would select certain locations on
its keyboard for the petitioner's advertisements to appear, and the
petitioner would embed its SDK there. According to the GMPA, these
Advertisements may take the shape of static graphics or links that may be
clicked. The petitioner was required to provide the respondent a part of
the advertising revenue. It is further submitted that the clickable and non-
clickable advertisements have been published since the Agreement's
establishment. The petitioner always had the full knowledge and
awareness of the form and manner in which the Advertisements were
disseminated.
25. Learned senior counsel appearing on behalf of respondent
submitted that the respondent believes that the plan described above was
designed to harm the respondent. The respondent has a reasonable
suspicion that the revenue statistics were fabricated in order to fulfill their
desire to buy respondent company’s shares at a significantly reduced
price.
26. It is submitted that when the respondent started to uncover and
decipher the plan of the petitioner, the petitioner started creating fictitious
concerns under several agreements made between the parties, including
the GMPA.
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Signature Not Verified
Digitally Signed
By:GAURAV SHARMA
Signing Date:24.02.2023
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27. It is further submitted that in this pretext, the petitioner started
making GMPA related claims against the respondent which were
unjustified and lacked merit. It is also submitted that these accusations are
wholly false and are made only to harass a small firm which lacks the
means to compete with a powerful behemoth like the petitioner. It is
submitted that it is a reasonable apprehension of the respondent that the
petitioner has used extortionate litigation against start-ups in the past,
following a similar pattern, and is doing so even in the instant case.
28. Learned senior counsel appearing on behalf of the respondent
submitted that the instant petition filed by the petitioner is malicious and
barred by law. The following are the grounds that have been raised on
behalf of the respondent, in order to support the said contention:
i. Since the petitioner has violated the agreement's key provisions,
the requested relief is forbidden.
ii. Since the Agreement constitutes a determinable contract, the
requested remedy is precluded .
iii. The claim is precluded since any harm caused can be properly
made up for by damages.
iv. The requested remedy is ineligible because it entails the ongoing
work that a court cannot monitor.
v. The restrictions laid down in Micro, Small and Medium
Enterprises Development Act, 2006 prevent the relief.
vi. It fails to meet the requirements for a prima facie case, the balance
of convenience being in favour of the petitioner, and that of
irreparable harm being caused.
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Signature Not Verified
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By:GAURAV SHARMA
Signing Date:24.02.2023
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29. During the course of arguments, learned senior counsel appearing
on behalf of the parties have fairly conceded that the dispute involved is
arbitral in nature and have no objection if this Court appoints an arbitrator
for redressal of disputes between the parties.
30. Learned senior counsel appearing on behalf of the petitioner prays
for liberty to file an appropriate application before the Arbitral Tribunal
in accordance with Section 17 of the Act, 1996. It is further submitted
that status quo may be granted in favour of the petitioner to injunct the
respondent from terminating the GMPA and other agreements executed
between the parties.
31. Heard learned senior counsel for the parties and perused the record.
32. There is also no controversy as to the contents of the instant
dispute being arbitrable in nature. The learned senior counsels also have
no objection if this Court appoints a tribunal to adjudicate the disputed
that has arisen between the parties qua the subject matter in question.
33. As agreed on behalf of the parties, it is evident that the parties
intend this Court to refer the disputes to arbitration, by appointing a sole
arbitrator. In view of the request made on behalf of the parties, all the
disagreements arising between the parties are referred to arbitration, by
appointing an arbitral tribunal. Hence, the following order:
ORDER
(i) Justice R.S. Chauhan, former Chief Justice, Uttarakhand
High Court is appointed as the sole arbitrator to adjudicate
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the disputes between the parties which have arisen under the
th
Global Monetization Partnership Agreement dated 8
August, 2020;
(ii) The learned sole arbitrator, before entering the arbitration
reference, shall ensure the compliance of Section 12(1) of
the Arbitration and Conciliation Act, 1996;
(iii) The learned sole arbitrator shall be paid fees as prescribed
under the Delhi International Arbitration Centre (DIAC)
(Administrative Cost And Arbitrators Fees) Rules, 2018 as
th
amended on 15 November, 2022;
(iv) At the first instance, the parties shall appear before the
learned sole arbitrator within 10 days from today on a date
which may be mutually fixed by the learned sole arbitrator;
and
(v) All contentions of the parties are expressly kept open.
34. In view of the averments made by the parties, this Court finds it
pertinent to direct the petitioner to file an appropriate application under
Section 17 of the Act, praying for the reliefs as sought in the instant
petition, before the appointed tribunal within 15 days from the date of this
Order.
35. This Court is also of the opinion that since the essence of the
dispute between the parties is contained in the GMPA, it is imperative to
direct the parties to maintain status quo , till the aforementioned
application is decided by the Arbitral Tribunal. The Arbitral Tribunal is
directed to decide the said application as expeditiously as possible. It is
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Signing Date:24.02.2023
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NEUTRAL CITATION NO. 2023/DHC/001375
however made clear that in case, the application as directed herein is not
preferred by the petitioner with the prescribed period, the stay shall
automatically stand vacated.
36. The petition is disposed of in the aforesaid terms along with
pending applications, if any.
37. Nothing stated hereinabove shall however amount to any
expression on the merits of case.
38. The order be uploaded on the website forthwith .
A copy of the order be forwarded to the learned sole arbitrator on the
following address:
Justice R.S. Chauhan,
Former Chief Justice, Uttarakhand High Court
D-31, II Floor, Nizamuddin East
New Delhi - 110013
Mobile No. - +91- 7022891674
E-mail Id – office.jrsc@gmail.com
CHANDRA DHARI SINGH, J
FEBRUARY 15, 2023
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Signature Not Verified
Digitally Signed
By:GAURAV SHARMA
Signing Date:24.02.2023
18:21:12