Tripura High Court Modifies Injunction in Jewellery Franchise Dispute, Orders Security for Claimed Amount

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Case Name

Aranyak Jewellers Pvt. Ltd. & Ors. vs. Shyam Sundar Co. Jewellers Pvt. Ltd.(High Court of Tripura, Agartala)

Commercial Appeal No. 02 of 2024

Date: 11th February 2025

Key Takeaways

• The High Court allowed the appellants to secure the disputed amount (over ₹2.41 crores) by providing a bank guarantee and depositing gold ornaments, instead of keeping their bank accounts frozen.
• The court emphasized the importance of balancing the interests of both parties while the main suit is pending.
• The decision was based on mutual agreement between the parties, as recorded in affidavits.
• The court set a clear process for valuing and safeguarding the gold ornaments, involving a court-appointed valuer and safe custody in a bank locker under court supervision.
• The order of the Commercial Court freezing the bank accounts was set aside, and the trial court was directed to expedite the main suit.

Issue

Should the appellants’ bank accounts remain frozen as security for the alleged dues, or can the claimed amount be secured by alternative means (bank guarantee and gold deposit) pending the outcome of the main suit?

Facts

• Parties:
• Appellants: Aranyak Jewellers Pvt. Ltd., Manojit Choudhury, and Banasree Choudhury (operating a jewellery business in Tripura).
• Respondent: Shyam Sundar Co. Jewellers Pvt. Ltd. (a reputed jewellery firm with operations in Tripura and Kolkata).
• Background:
• In 2005, the appellants entered into an oral franchise agreement with the respondent to operate a jewellery shop under the respondent’s brand, with certain conditions (e.g., exclusive sales, joint advertising).
• The respondent supplied gold ornaments to the appellants on approval basis and invested capital in the business.
• Over time, the appellants allegedly deviated from the agreement by not using the respondent’s brand name, not contributing to advertising, and opening a new shop under a different name (Aranyak Jewellers Pvt. Ltd.).
• The respondent claimed the appellants owed them a significant sum and were misusing their brand and goodwill.
• Legal Proceedings:
• The respondent filed a suit seeking a money decree of ₹7,05,23,740 (principal) plus ₹3 crores in damages, and a perpetual injunction to restrain the appellants from misusing their brand.
• The Commercial Court granted an ex-parte temporary injunction on 29.06.2024, freezing the appellants’ bank accounts to the extent of ₹2,41,86,671.
• The appellants’ request to vacate the injunction was rejected on 14.08.2024, leading to this appeal.

Arguments

Appellants (Aranyak Jewellers & Directors)

• Proposed to secure the disputed amount by providing a bank guarantee and depositing gold ornaments of equivalent value, rather than having their bank accounts frozen.
• Asserted their willingness to comply with court directions without prejudice to their defense in the main suit.

Respondent (Shyam Sundar Co. Jewellers)

• Agreed to the alternative security arrangement, provided the gold ornaments were properly identified, valued by an expert, and kept in a secure bank locker under court supervision.
• Sought assurance that the security would be sufficient and properly safeguarded.

Key Legal Precedents

• Statutory Reference:
• The appeal was filed under Section 13(1A) of the Commercial Courts Act, 2015.
• The respondent’s application to vacate the injunction was under Order XXXIX Rule 4 of the Code of Civil Procedure (CPC).
• No specific case law names were cited in the judgment. The court’s reasoning was based on statutory provisions and the mutual agreement of the parties.

Judgement

• The High Court set aside the Commercial Court’s order freezing the appellants’ bank accounts.
• Instead, the appellants were directed to:

1. Deposit a bank guarantee of ₹50 lakhs with the trial court within two weeks, using funds from the previously frozen accounts.
2. Deposit gold ornaments worth ₹1,91,86,671 (purchased from the respondent) within two weeks, to be kept in a bank locker under the trial court’s supervision.
3. The trial court was instructed to appoint a suitable valuer to verify the purity and value of the gold ornaments within six weeks.
4. After compliance, the trial court should modify its earlier order and expedite the main suit.

• The appeal was disposed of with these directions, and no order as to costs was made.

FAQs

Q1: Why did the court set aside the order freezing the bank accounts?

A: The court found that the appellants’ proposal to secure the claimed amount through a bank guarantee and gold deposit was a fair alternative, especially since both parties agreed to it. This approach balanced the interests of both sides while the main dispute is resolved.

Q2: What happens to the gold ornaments deposited as security?

A: The gold ornaments will be kept in a bank locker under the trial court’s supervision. An expert valuer will be appointed to verify their value and purity, ensuring the security is adequate.

Q3: Does this judgment decide the main dispute?

A: No, this judgment only addresses the interim security for the claimed amount. The main suit regarding the alleged dues and misuse of brand will be decided later.

Q4: What legal provisions were relied upon?

A: The court referenced Section 13(1A) of the Commercial Courts Act, 2015, and Order XXXIX Rule 4 of the CPC for the interim relief and appeal process.

Q5: What does this mean for the parties?

A: The appellants get access to their bank accounts (except for the amount used for the bank guarantee), while the respondent’s claim is secured by the bank guarantee and gold deposit. The main dispute will proceed in the trial court.