Karnataka High Court
3M India Limited vs M/S Karcare on 21 February, 2026
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COMAP No. 185 of 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF FEBRUARY, 2026
PRESENT
THE HON'BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
COMMERCIAL APPEAL NO. 185 OF 2025
BETWEEN:
1. 3M INDIA LIMITED
HAVING ITS REGISTERED OFFICE AT:
PLOT NO. 38 - 51
ELECTRONIC CITY
HOSUR ROAD
BENGALURU - 560 010
Digitally signed HAVING ITS CORPORATE OFFICE AT:
by PRABHAKAR
SWETHA 5TH FLOOR, MARKSQUARE
KRISHNAN
61, ST MARKS ROAD
Location: High
Court of BENGALURU - 560 001
Karnataka
REPRESENTED BY ITS
NATIONAL SALES MANAGER
MR. U.V. SESHU SAI BABU
...APPELLANT
(BY SRI SHUJATH AHMED, ADVOCATE)
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COMAP No. 185 of 2025
AND:
1. M/S KARCARE
A PARTNERSHIP FIRM
HAVING ITS REGISTERED OFFICE AT:
NO. 1 & 2, VAISHNAVI LAYOUT
VIDYARANYAPURA
BENGALURU - 560 097
REPRESENTED BY ITS PARTNERS
MR. RAMAKRISHNA RAO
P. & MR. P.V.V.R.
SURESH KUMAR
...RESPONDENT
(BY SRI SAMPATH BAPAT, ADVOCATE)
THIS COMMERCIAL APPEAL IS FILED UNDER SECTION
13 (1-A) OF THE COMMERCIAL COURTS ACT, 2015, R/W.
SECTION 37 1(A) OF THE ARBITRATION AND CONCILIATION
ACT, 1996 PRAYING TO PASS AN ORDER TOWARDS SETTING
ASIDE THE IMPUGNED JUDGMENT DATED 18.01.2025
PASSED BY THE HON’BLE LXXXIV CITY CIVIL AND SESSIONS
JUDGE, AT BENGALURU (COMMERCIAL COURT – CCH- 85), IN
COM.A.P. NO.136 OF 2024 & ETC.
THIS COMMERCIAL APPEAL HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT, COMING ON FOR
PRONOUNCEMENT THIS DAY, JUDGMENT WAS
PRONOUNCED AS UNDER:
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COMAP No. 185 of 2025
CORAM: HON’BLE MR. VIBHU BAKHRU, CHIEF JUSTICE
and
HON’BLE MR. JUSTICE C.M. POONACHAC.A.V. JUDGMENT
(PER: HON’BLE MR. VIBHU BAKHRU, CHIEF JUSTICE)
1. The appellant [hereafter, ‘3M’] has filed the present appeal
under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996
[A&C Act], impugning an order dated 18.01.2025 passed by the
learned LXXXIV Additional City Civil and Sessions Judge,
Bengaluru [Commercial Court] in Com. A.P. No.136/2024.
2. The respondent [hereafter, ‘KAR’] had filed the said
application to set aside the award dated 03.06.2024 in A.C.Nos.
452/2022, 453/2022 and 454/2022 [impugned award] delivered
by an Arbitral Tribunal comprising of a sole arbitrator [Arbitral
Tribunal]. The current commercial appeal (COMAP No.185/2025),
pertains to the claims made in A.C.No.452/2022.
3. The impugned award is a common award passed in three
arbitral proceedings. The Arbitral Tribunal had noted that the
evidence and documents relied upon by the parties were common
and therefore, the disputes involved are materially similar.
Accordingly, the three arbitral proceedings were consolidated.
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COMAP No. 185 of 2025
4. KAR was a claimant before the Arbitral Tribunal and had
raised several claims arising from the franchise agreement entered
into by the parties. The parties had entered into a Memorandum of
Understanding dated 30.11.2015 and, pursuant thereto, entered
into a Franchise Agreement dated 29.02.2016 [FA 2016].
Subsequently, parties entered into a Memorandum of
Understanding [MOU] dated 04.04.2017 and, in furtherance of the
said MOU, entered into a franchise agreement dated 06.12.2018.
The said agreement was not stamped; therefore, the parties
entered into a similar agreement on 31.12.2018 [FA 2018], which
was duly stamped.
5. Under the FA 2016 and FA 2018, KAR was authorised to set
up and operate Car Care Centres [CCC/s] for providing detailing
services under the 3M brand [Franchise Business] using 3M
products and use the brand name 3M in respect of the authorised
units.
6. KAR opened three CCCs under FA 2016/FA 2018 at the
following locations:
(i) Electronic City (BPCL);
(ii) Amruthahalli (IOCL); and
(iii) Yelahanka.
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COMAP No. 185 of 2025
7. The present petition pertains to the CCC – BPCL at
Electronic City. KAR claimed that 3M had breached the terms of
the franchise agreement, resulting in KAR incurring losses.
Accordingly, KAR raised a claim for a sum of `2,28,50,000/- for
loss allegedly suffered in connection with the CCC operated at
Electronic City. In the aforesaid context, KAR raised the following
claims:
a) Actual Losses
I. Capital Expenditure Rs.45,00,000/-
II. Running Expenditure Rs.20,00,000/-
III. Products and other charges Rs.80,00,000/-
b) Existing Liabilities
I. Loans and Interest Rs.15,00,000/-
II. Refund of Bank Guarantee Rs.3,50,000/-
Illegally invoked
c) Loss of Profits
I. Rs.35,00,000/-
d) Other Losses
I. Good Will Rs.20,00,000/-
II. Mental agony Rs. 10,00,000/-
Total Rs.2,28,50,000/-
8. KAR also filed separate claims of `3,35,50,000/- in respect of
the CCC at Yelahanka and `2,57,50,000/- in respect of the CCC at
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COMAP No. 185 of 2025
Amruthahalli. As noted above, the impugned award is a common
award in respect of the claims in respect of the three CCCs.
However, separate applications were filed by KAR for setting aside
the impugned award. The learned Commercial Court allowed the
said applications by similarly reasoned but separate orders.
9. FA 2016 and FA 2018 included arbitration clauses. In view of
the claims and the disputes that had arisen, KAR issued a notice
dated 21.12.2020 calling upon 3M to appoint an arbitrator.
Thereafter, KAR filed a petition under Section 11 of the A&C Act
before this Court (Civil Miscellaneous Petition No. 161/2021)
seeking appointment of an arbitrator. Similar petitions were filed in
respect of claims relating to other CCC.
10. In the said proceedings, KAR relied on the Franchise
Agreement dated 06.12.2018, which was admittedly superseded by
FA 2018. 3M had participated in the said proceedings and
conceded to the appointment of an arbitrator to arbitrate the
disputes under FA 2018. The said contention was accepted, and
an Arbitral Tribunal was constituted.
11. Before the Arbitral Tribunal, KAR filed statement of claims
alleging that 3M had offered the Electronic CCC unit as a “flagship
unit”, representing that there was huge business potential owing to
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COMAP No. 185 of 2025
the IT and BT companies located in Electronic City. KAR alleged
that 3M had given a rosy picture of the business potential and lured
KAR into establishing the unit at Electronic City. KAR further
alleged that the store manager resigned abruptly without notice on
07.05.2018, and that the Technical Auditor of 3M who used to visit
the Electronic City unit had also left. KAR claimed that 3M failed to
take any action in this regard, and that the persons subsequently
suggested by 3M as replacements were not efficient enough to run
a “flagship unit”, resulting in the business declining. KAR also
alleged that 3M had failed to perform its obligations under the
franchise agreement, including failure to provide adequate training
to the personnel at the unit. It claimed that 3M was guilty of non-
performance and breach of contract, and of deceptively and
negligently misrepresenting the viability of the business and the
degree of support that would be provided.
12. KAR also claimed that it initially sent a notice making
combined claims in respect of all three franchise agreements.
Later, realising combing three franchise agreements together
leading to technical objection regarding maintainability of
arbitration. Therefore, separate notices were issued on 21.12.2020.
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COMAP No. 185 of 2025
13. 3M had filed its statement of defence raising several issues.
3M claimed that KAR was an unregistered firm and therefore, was
precluded from instituting action against 3M. It further claimed that
even if it was accepted that KAR was a registered firm, it could not
maintain any action as in terms of the partnership deed dated
07.03.2019 as its business was to “invest/purchase the
land/industrial land, hotels, stocks, forex, dealers, consultant, travel
agent, renting of properties etc.” The partnership deed did not
authorise KAR to carry on the Franchise Business which is
“automobile detailing, cleaning or maintaining of vehicles”. It also
stated that in FA 2018, KAR was described as a sole proprietorship
concern of Mr. Ramakrishna Rao. 3M claimed that the disputes
raised were not arbitrable as under the FA 2018, KAR had
undertaken to incur all costs and expenses for setting up the CCCs
and was solely responsible for developing and conducting its
business. 3M denied that it had breached any terms of FA 2018.
It also contended that the statement of claims did not contain
material particulars.
14. 3M also stated that initially a notice dated 13.07.2020 was
issued by KAR claiming an amount of `8,28,90,351/- which was
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COMAP No. 185 of 2025
subsequently reduced in the subsequent notice dated 21.12.2020
and restricted to `2,28,50,000/-.
15. Both parties also led evidence before the Arbitral Tribunal.
16. The Arbitral Tribunal found that KAR had taken inconsistent
positions and that there was no evidence to support its claims. In
view of the above, KAR’s claims were dismissed by the impugned
award.
17. KAR filed an application to set aside the impugned award
before the learned Commercial Court (Com. A.P. No. 136/2024).
The learned Commercial Court set aside the impugned award on
the ground that the Arbitral Tribunal had not answered all the
issues.
18. The only question that falls for consideration of this Court is
whether the impugned award is liable to be set aside on the ground
that it is unreasoned. At the outset, we may observe that the
statement of claims filed by KAR is sketchy, and the claims are not
clearly articulated. For instance, KAR claims it suffered losses and
3M is liable to reimburse them. However, the statement of claims
did not specify particulars of the losses suffered. Illustratively, the
Statement of Claims mentions capital expenditure of `45,00,000/-
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COMAP No. 185 of 2025
and products and other charges of `80,00,000/-, but it neither
specifies the nature of the said expenditure nor the manner in
which it is computed. The claim of `20,00,000/- towards running
expenditure is equally bereft of any particulars. It provides no clue
as to, on what items, the said expenditure was incurred.
19. As noted above, 3M had filed its statement of defence raising
several objections including as to the locus of KAR to make a
claim.
20. Based on the pleadings of the parties, the Arbitral Tribunal
had framed the following issues for consideration:
“1. Whether the claimant being an unregistered
Partnership Firm, can sue under Law?
2. Whether the Claimant has the locus-standi to
institute the present proceedings?
3. Whether the disputes between the parties are
arbitrable in nature?
4. Whether the Claimant has any cause of action to
file the present statement of claim?
5. Whether the Claimant is entitled to any amounts as
claimed?
6. Whether the Respondent is entitled to costs as
claimed?
7. What order or award?”
21. As rightly noted by the learned Commercial Court, the
Arbitral Tribunal did not proceed to answer each and every issue
as framed. However, we do not concur with the learned
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Commercial Court’s decision that the impugned award is liable to
be set aside on that ground alone. It is clear from the reasoning
that, after evaluating the evidence, the Arbitral Tribunal found that
there was no material to sustain the claims raised by KAR.
22. In view of the said finding, it was not necessary for the
Arbitral Tribunal to examine any further issues as the claim made
by KAR was liable to be rejected on this ground alone.
23. The learned counsel appearing for KAR contended that the
Arbitral Tribunal had grossly erred in the proceedings by raising an
oral plea of novation. He submitted that it was 3M’s contention that
if the FA 2018 was found to be invalid, the franchise agreement
dated 06.12.2018 would be operative. He submitted that the
contention was raised as 3M had contended that FA 2018 was
invalid. He stated that in the aforesaid context, KAR had taken a
stand that if FA 2018 is held to be invalid, the earlier franchise
agreement ought to be considered as binding between the parties.
He contended that KAR could not be faulted for not making any
averments to that effect in its pleadings, as the said contention was
raised to counter the submissions advanced on behalf of 3M.
24. In our view, it is not necessary to examine the aforesaid
contention as these controversies pale into insignificance once it is
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accepted that the impugned award, to the extent it holds that KAR
has been unable to establish its claims by any material, is not
required to be interfered with.
25. We find no material on record to establish that KAR suffered
the loss as claimed or that such loss arose from 3M’s failure to
perform its obligations under the agreements.
26. In view of the above, the present appeal is allowed, and the
impugned order is set aside.
Sd/-
(VIBHU BAKHRU)
CHIEF JUSTICE
Sd/-
(C.M. POONACHA)
JUDGE
KPS
