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1999 Supreme(Del) 745
High Court Of Delhi
MARRIOTT INTERNATIONAL INC. - Appellant
Versus
ANSAL HOTELS LIMITED - Respondent
ORIGINAL MISCELLANEOUS PETITION 91 of l999
Decided On : 09/13/1999
A.N.HAKSAR, Aditya Bandopadhyay, ANIL KHER, ASHOK DESAI, BINDU SAXENA, NIRAJ GUPTA, P.CHIDAMBARAM, SAURABH KIRPAL, SHAILENDER SVARUP, VIVEK TYAGI,
Headnote:
ARBITRATION - INTERIM MEASURE - JURISDICTION - SECTION 9 OF THE ARBITRATION AND CONCILIATION ACT, 1996 - INHERENT POWERS OF THE COURT - INJUNCTION - CONFIDENTIALITY CLAUSE - NEGATIVE COVENANTS - RESTRAINT OF TRADE.
Fact of the Case:
The petitioners, Marriott International, entered into several agreements with the respondents, Ansals, for the construction of a Five Star Hotel in Saket, New Delhi. The petitioners alleged that the respondents entered into an agreement with ITC, in total contravention of the agreements with the petitioners. The petitioners also alleged that the respondents had terminated the agreements with them without requisite notice and had entered into an agreement with ITC for the provision of technical services for the Hotel. The petitioners sought interim measures/relief under Section 9 of the Arbitration and Conciliation Act, 1996, including an injunction restraining the respondents from terminating the agreements, entering into any agreement with ITC, and disclosing confidential information.
Finding of the Court:
The Court held that it had jurisdiction to grant interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, even though the venue of arbitration was outside India. The Court also held that it had inherent powers to grant injunctions to protect the legal rights of the petitioners. The Court found that the respondents had failed to give requisite notice of termination of the agreements to the petitioners and that the petitioners had a strong case on the merits. The Court granted an injunction restraining the respondents from terminating the agreements, entering into any agreement with ITC, and disclosing confidential information.
Issues: 1. Whether the Court had jurisdiction to grant interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, even though the venue of arbitration was outside India? 2. Whether the Court had inherent powers to grant injunctions to protect the legal rights of the petitioners? 3. Whether the respondents had failed to give requisite notice of termination of the agreements to the petitioners? 4. Whether the petitioners had a strong case on the merits?
Ratio Decidendi: 1. The Court held that it had jurisdiction to grant interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, even though the venue of arbitration was outside India. The Court interpreted Section 2(5) of the Act to mean that the Act applies to all arbitrations and proceedings relating thereto, regardless of the venue of arbitration. The Court also noted that Section 11 of the Act empowers the Chief Justice of India and the Chief Justices of the High Courts to appoint arbitrators, even when the venue of arbitration is outside India. 2. The Court held that it had inherent powers to grant injunctions to protect the legal rights of the petitioners. The Court relied on Section 151 of the Code of Civil Procedure, 1908, which gives the Court the power to make orders necessary for the ends of justice. The Court also relied on the judgment of the Supreme Court in Munsi Ram v. Banwari Lal, in which the Court held that the Court has the power to record an agreement to refer a dispute to arbitration and to make it a part of the decree. 3. The Court found that the respondents had failed to give requisite notice of termination of the agreements to the petitioners. The Court noted that the Technical Services Agreement required a minimum of 30 days' written notice of termination for breach/default, and that the Hotel Operating Agreement required a minimum of 90 days' written notice of termination. The Court found that the respondents had terminated the agreements without providing the requisite notice. 4. The Court found that the petitioners had a strong case on the merits. The Court noted that the petitioners had performed their obligations under the agreements and that the respondents had failed to provide any evidence to support their allegations that the petitioners had breached the agreements.
Final Decision: The Court granted an injunction restraining the respondents from terminating the agreements, entering into any agreement with ITC, and disclosing confidential information.
( 1 ) THE petitioners have entered into a number of agreementswith the respondents, for the construction of a Five Star Hotel at Saket, New Delhi. Itis alleged by the petitioners that during the pendency of the agreement, the respondentshave entered into an agreement with ITC, in total contravention of the agreements withthe petitioners. It is further alleged that the petitioners agreements with the respondents are subsisting and without requisite notice of termination, the respondents haveentered into an agreement with ITC, which is in contravention with the respondentsagreement with the petitioners. Consequently, respondent No. 1 be restrained fromterminating the Technical Services Agreement, Hotel Operating Agreement, Advisoryservices Agreement, License and Royalty Agreement, Pre-Opening Technical Assistance Agreement and International Sales and Marketing Agreement dated 8/03/1997.
( 2 ) IT is also prayed that the respondents be restrained from entering into anyagreement for provision of technical services for the Hotel with any third party, otherthan petitioner No. 2 or its affiliates.
( 3 ) IT is further prayed in the petition that the respondents be restrained fromdisclosing or parting with the confidential information in violation of confidentialityclause contained in the agreement. It is also prayed that the respondents be directed torestore immediately the "marriott" banner and sign-board at the construction site ofthe Hotel and direct the respondents to effect payments to petitioner No. 2 as requiredunder the terms of TSA dated 8. 3. 1997.
( 4 ) THE petitioners have moved this Court under Section 9 of the Arbitration andconciliation Act, 1996 for interim measure/relief. The main submission of the petitioners is that there is no valid termination of the petitioners agreement with therespondents. For the sake of convenience, the petitioners hereinafter shall be referredas marriott and the respondents as ansals .
( 5 ) ACCORDING to Article 8. 02 (C), Technical Services Agreement hereinafterreferred TO as (TSA) required minimum 30 days written notice of termination forbreach/default. It is also mentioned that if breach/default is rectified or cured within30 days then the notice at termination shall be of no force and effect. The respondentshave terminated the agreement vide letter dated 13. 1. 1999 and purport to terminatemarriott TSA with immediate effect with no cure period. According to the petitioners,the termination is illegal. The petitioners replied to the termination letter dated 2. 2. 1999and 26. 2. 1999 but received no response from the respondents.
( 6 ) ARTICLE 16. 02 of Marriott Operating Agreement provides for termination byminimum 90 days notice and if breach/default is rectified or cured within the noticeperiod, then the notice would be of no force and effect. Other Marriott Agreements alsocontain similar notice provisions. Termination by letter dated 4. 3. 1999 with immediateeffect with no notice period is illegal. Other Marriott Agreements were terminated byletter dated 5. 3. 1999 with immediate effect with no notice period.
( 7 ) IT is alleged by the petitioners that the respondents have entered into anagreement with ITC Hotels Limited on 16. 1. 1999 in utter violation with the petitioners agreement. It is also alleged that ITCHL Hotel Operating Agreement was entered intoon 16. 1. 1999 even before the issue of purported termination letter dated 5. 3. 1999 formarriott Operating Agreement and other Marriott Agreements.
( 8 ) THE ITCHL entered into shareholders agreement on 16. 1. 1999, during theperiod when Marriott Hotel Operating Agreement was subsisting, consequently theagreement is clearly in violation of the provisions of hotel Sale with Marriott Hoteloperating Agreement.
( 9 ) IT may be pertinent to mention that the petitioners have alleged that on 13. 1. 1999the respondents terminated Technical Services Agreement dated 8. 3. 1997 by allegingthat petitioner No. 2 Marriott I
