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2017 Supreme(Del) 3560
IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
MAYAR HEALTH RESORTS LIMITED – PETITIONER
VERSUS
INDIAN TOURISM DEVELOPMENT CORPORATION – RESPONDENT
W.P.(C) 6277 OF 2016 & CM NOS.25652, 31138 OF 2016 & 11475 OF 2017
DECIDED ON : 26-10-2017
For the Petitioner:Mr Anil Sapra, Senior Advocate with Ms Manjula Gandhi, Mr Aditya Kapoor, Mr Sarthak, Ms Piyusha Singh, Mr Shivanshu Kumar, Mr Jaideep Singh and Mr Kartik Bhardwaj
For the Respondent:Mr Ravi Sikri, Sr. Advocate with Ms Shweta Bharti, Mr Neelesh Sinha, Ms Anamika Dubey and Mr Ravi Thakur
A licensee does not acquire any vested right for renewal of a license, and the decision to renew a license is a commercial one that falls within the discretion of the licensor. Courts will not interfere with policy matters unless they violate constitutional guarantees or statutes.
Headnote:
License Renewal - Dispute over License Renewal - Arbitration and Conciliation Act, 1996 - Licensing Policy, 2009 - Licensing Policy, 2013 - [Arbitration and Conciliation Act, 1996, Section 8, Section 34] - The court discussed the dispute over the renewal of a license granted by ITDC to Mayar for running a health club at the Ashok Hotel, Chanakyapuri, New Delhi. The court analyzed the relevant provisions of the Licensing Policy, 2009 and Licensing Policy, 2013, and their applicability to the case. The court also considered the implications of the Arbitration and Conciliation Act, 1996, particularly Section 8 and Section 34, in the context of the dispute over the license renewal.
Fact of the Case:
Mayar Health Resorts Limited filed a petition seeking the renewal of a license granted by ITDC for running a health club at the Ashok Hotel, Chanakyapuri, New Delhi. The dispute arose when ITDC refused to renew the license, citing non-compliance with the Licensing Policy, 2013, and violations of the original Agreement. Mayar contended that ITDC had renewed licenses of other similarly placed licensees and that the Licensing Policy, 2013 could not be applied retrospectively.
Finding of the Court:
The court found that Mayar had no vested right for renewal of the Agreement and that a licensee does not acquire any interest in the property by virtue of a license. The court also held that Mayar could not retain possession of the premises after the license termination. Additionally, the court concluded that ITDC's decision not to renew the license was not discriminatory or arbitrary and was in line with the Licensing Policy, 2013. The court dismissed the petition with costs.
Issues: The main issues revolved around the renewal of the license, the applicability of the Licensing Policy, 2009 and Licensing Policy, 2013, and the alleged discriminatory treatment by ITDC in renewing licenses of other entities.
Ratio Decidendi: The court's decision was based on the lack of a vested right for renewal, the nature of a licensee's interest in the property, and the commercial discretion of ITDC in deciding license renewals. The court also emphasized that the policy decisions of ITDC should not be interfered with unless they offend constitutional guarantees or statutes.
Final Decision: The petition was dismissed, and Mayar was ordered to pay costs of Rs.25,000 within four weeks from the date of the judgment.
VIBHU BAKHRU, J.
1. Mayar Health Resorts Limited (hereafter ‘Mayar’) has filed the present petition, inter alia, praying that the Indian Tourism Development Corporation (hereafter ‘ITDC’) be directed to renew the license granted to Mayar for running a health club at the Ashok Hotel, Chanakyapuri, New Delhi.
2. This petition is, in effect, the fourth round of litigation concerning the license granted by ITDC to Mayar.
3. The relevant facts necessary to address the controversy in the present petition are briefly stated hereafter.
4. ITDC and Mayar entered into a license agreement dated 01.09.2003 (hereafter ‘the Agreement’), whereby Mayar was granted a license with respect to a space admeasuring 20,000 sq. ft. in the building premises of Ashok Hotel, Chanakyapuri, New Delhi, to set up an “International Standard SPA and Health Club in Technical Assistance with M/s Serena Spa Pvt. Limited”. The said license was granted for a period of 10 years commencing from 01.03.2004. Clause I(2) of the Agreement provided that the license may be renewed at the option of the licensor [ITDC] on the expiry of the license period on such terms and conditions as the licensor may impose in this regard. Mayar states that in terms of the Agreement, it made investments to the tune of Rs.26 crores in constructing a gym, renovation of swimming pool and juice bar, etc. and established a spa under the name of 'Amatrra'.
5. Certain disputes arose between the parties regarding the area occupied by Mayar under the Agreement and Mayar filed a suit (CS (OS) 1038/2007), inter alia, praying that ITDC be restrained from disturbing Mayar’s peaceful use, occupation and enjoyment of the licensed premises. By an ex parte order dated 31.05.2007, an ad interim injunction was granted restraining ITDC from disturbing the occupation and enjoyment or causing any interference in the business run by Mayar in the licensed premises. The Court also appointed a Local Commissioner (LC) to identify the area in use and occupation by Mayar.
6. In its report, the LC stated that the area in exclusive use and occupation of Mayar was 19,569 sq ft as contemplated in the Agreement. In the said suit – CS (OS) 1038/2007 - ITDC filed an application under Section 8 of the Arbitration and Conciliation Act, 1996, praying that the parties be referred to arbitration. The said application was allowed and this Court passed an order dated 24.03.2008 dismissing the suit and relegating the parties to avail the alternative remedy available to them.
7. Before the arbitrator, ITDC raised claims against Mayar for various charges in respect of the area allegedly encroached by Mayar. The claims made by ITDC were rejected and the arbitrator made an award dated 06.04.2009 in favour of Mayar, holding therein that the report of the LC had attained finality as it was not assailed in any proceedings. ITDC challenged the said award by filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 (being OMP 389/2009). The said application was dismissed for non prosecution by an order dated 16.12.2016. This court is informed that an application has been filed by ITDC for restoration of the said petition, which is pending.
8. In the meanwhile, ITDC formulated a new policy – ‘Procedure for Licensing of Restaurants/Business Premises in ITDC Hotels/Units’ on 04.03.2009 (hereafter ‘the Licensing Policy, 2009’) - which provided for a fixed duration of the first license agreement on the basis of various levels of investment made by the licensee and the duration of the first renewal. It was also stated that the licensor will initiate a fresh process of tendering at least six months in advance after the expiry of the original period or the first renewal, as the case may be. Paragraph 2 of the draft license deed annexed to the Licensing Policy, 2009 expressly stated that „the Licensee shall be enti
