TaxTMI 
TaxTMI 
2021 (3) TMI 245
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....close to 1500 ADSs, who have now set up their own networks, and are in the category of Silver/ Gold/ Platinum/ Sapphire/ Emerald. From 2015, the renewal process for existing ADSs became automatic, each year, without payment of any fee. The respondent issued a Code of Ethics and Rules of Conduct in 2015 to govern the terms of the relationship between the respondent and the ADSs. The respondent also started promoting registration of Preferred Customers (PCs) directly through the respondent's website, as customers of the concerned ADS. 3. On the requirement of the respondent, necessary documents were executed by the petitioners including contract for distributorship, setting out the terms and conditions of the distributorship, and to inter alia confirm the Code of Ethics and Rules of Conduct, Legal Entity Authorisation Form (LEAF) etc. Since then, the contract of the petitioners has been renewed from time to time. The petitioners recorded client volume/sales from their ABO account. The petitioners have also received income on the sales generated by them for the months of January to March, 2019 by the respondent. However, in April, 2019, upon logging into the respondent's webs....
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....ll endeavour to settle any dispute or difference arising out of or in connection with the Direct Seller Contract through mutual discussions within 30 days of such dispute arising. The Direct Seller agrees that in the event it is not satisfied by any decision of Amway, or in the event that any issue raised by the Direct Seller has remained unresolved for a period of more than two months, and / or during the subsistence of this agreement or upon or after its termination, any issue or dispute that the Direct Seller may have regarding the interpretation or operation of the clauses of this arrangement or any issues arising there from shall be referred to Grievance Redressal Committee set up by the company. Any dispute, difference or claim remaining unresolved post reference to the Grievance Redressal committee discussions shall be submitted to binding arbitration under the provisions of the Indian Arbitration and Conciliation Act, 1996. The venue of such arbitration shall be at New Delhi and the award of the Arbitrator shall be final and binding on all Parties. Subject to the above, courts at New Delhi shall alone have jurisdiction in relation to the Direct Seller Contract and matters c....
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....of 1996 is not appealing in view of my conclusion in the above paragraph." 4. It was held that since the central management and control of this association or body of individuals is exercised only in India under Section 2(1)(f)(iii), the dispute is not an international commercial arbitration, as a result of which the High Court has jurisdiction under Section 11(6) to appoint an arbitrator. Justice Brijesh Sethi, a retired Judge of the Delhi High Court was, therefore, appointed as sole arbitrator. 5. Shri Parag Tripathi, learned Senior Advocate appearing on behalf of the appellant, has argued that his predecessor's plea in the High Court was incorrectly turned down in that this case is really governed by Section 2(1) (f)(i) and not by Section 2(1)(f)(iii). Once it is found that a party to an arbitration agreement is an individual who is a national of, or habitually resident in, any country other than India, it is not necessary to go to any other sub-clauses of Section 2(1)(f), and as it is clear that the respondents, who applied to the High Court under Section 11(6), are individuals who are nationals of and habitually resident in the USA, would fall under Section 2(1)(f)(i), t....
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....ship. No other business may be conducted by such an entity." xxx xxx xxx "3.17 Husband and Wife Distributorships: If both husband and wife wish to become Direct Sellers, they must be sponsored together for a single Distributorship. Husbands and wives may not be sponsored in different Lines of Sponsorship. Husbands and wives may not sponsor each other. If one spouse is already a Direct Seller, the other spouse, upon electing to become a Direct Seller, must join the same Distributorship as his or her spouse. 3.17.1 A husband and wife shall operate their Distributorship as a single entity. Therefore, each is held accountable for the actions of the other so far as the Rules of Conduct are concerned regardless of whether a husband or wife is active in the distributorship or not." xxx xxx xxx "4.13 Franchises and Territories: No Direct Seller shall represent to anyone that there are exclusive franchises or territories available under the Amway Sales and Marketing Plan. No Direct Seller shall represent that he or she, or anyone else has the authority to grant, sell, assign, or transfer such franchises or to assign or designate territor....
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....Amway Direct Seller's home market. Durables (e.g. water treatment systems, air treatment systems) may not be carried from one market to another under any circumstances. The Amway Direct Seller order must not be for more than a reasonable amount of product: under 300 USD annually. The personal use exclusion may not be used as a businessbuilding strategy." 9. In what is referred to as the "Legal Entity Authorisation Form", what was filled up was "Legal Entity Authorisation Form: Sole Proprietor". The said form which was filled in by the respondents reads as follows: "LEGAL ENTITY AUTHORISATION FORM: SOLE PROPRIETORSHIP Where an Amway Independent Business ("Amway Business") will be operated in India via a Sole Proprietorship (the "Entity") held by a Resident Indian, Non-Resident Indian ("NRI"), Person of Indian Origin ("PIO") or Overseas Citizen of India ("OCI"), the Sole Proprietorship must, through the sole proprietor (the "Sole Proprietor"), complete this Legal Entity Authorisation Form for Amway Business Owners (the "Entity Agreement") and submit it to Amway India Enterprises Pvt. Ltd. ("AIE"). The Sole Proprietor must agree to remai....
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.... Ethics that they are to operate only as a single entity. The form that was filled in made it clear that the respondents applied to become a distributor as a sole proprietorship, it being made clear that the husband, Ravindranath Rao Sindhia, was the sole proprietor / "primary applicant", the wife, Indumathi Sindhia, being a "co-applicant". 12. However, Ms. Arora argued, from a reading of the Code of Ethics and correspondence between the parties, that there was no international flavour whatsoever to the transaction as the business that is to be conducted can be conducted only in India, an exception being made only for personal use under clause 4.16.1. Most importantly, the address of the so-called sole proprietorship in all the correspondence between the parties was the address of the Bangalore office of the sole proprietorship. 13. Ms. Arora also strongly relied upon the judgment of this Court in Larsen & Toubro Ltd.-SCOMI Engineering Bhd v. MMRDA, (2019) 2 SCC 271. This Court was concerned with an agreement between the MMRDA, an Indian company, and a consortium of Larsen and Toubro, an Indian company together with Scomi Engineering Bhd, a Malaysian company. The argument tha....
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....s, under the same contract. An interim award made by the arbitrators qua different claims arising under the same contract had made it clear that the claim could be filed only in the name of the Consortium and not separately, as was contended by Shri Jain's client. The preliminary issue framed on this count was "whether the claimants are entitled to file this claim as Claimant 1 and Claimant 2 or only as the Consortium of L&T and Scomi Engineering Bhd?" The High Court of Bombay agreed with the interim award of the arbitrators, and held as follows: (L&T Ltd. case [L&T Ltd. v. MMRDA, 2016 SCC OnLine Bom 13348] , SCC OnLine Bom para 10) "10. Considering the terms and conditions of the contract as well as the decision cited by Mr. Ankhad, in my opinion, in the facts and circumstances of the present case, it is not open for the petitioners to rely upon their independent identities while dealing with the respondent and that they will have to deal with the respondent as a Consortium only. Therefore, there is no infirmity in the impugned order. For the same reason the present petition as filed would also not been maintainable. Hence, the same is dismissed." 12. Shri Go....
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....become distributors of Amway products in India as a sole proprietorship concern under the relevant forms issued by the appellant, read with the Code of Ethics referred to hereinabove. In Ashok Transport Agency v. Awadhesh Kumar, (1998) 5 SCC 567, this Court has clearly held that a sole proprietary concern is equated with the proprietor of the business as follows: "6. A partnership firm differs from a proprietary concern owned by an individual. A partnership is governed by the provisions of the Indian Partnership Act, 1932. Though a partnership is not a juristic person but Order XXX Rule 1 CPC enables the partners of a partnership firm to sue or to be sued in the name of the firm. A proprietary concern is only the business name in which the proprietor of the business carries on the business. A suit by or against a proprietary concern is by or against the proprietor of the business. In the event of the death of the proprietor of a proprietary concern, it is the legal representatives of the proprietor who alone can sue or be sued in respect of the dealings of the proprietary business. The provisions of Rule 10 of Order XXX which make applicable the provisions of Order XXX to ....