Asian Hotels (North) Ltd. vs Sital Dass Sons

Headnote Court Copy Facts Arguments Court observation Judicial Analysis Case Map Category Hierarchy Table of Content

IN THE HIGH COURT OF DELHI
Mini Pushkarna, J.
Asian Hotels (North) Ltd. - Appellant
Versus
Sital Dass Sons - Respondent
Arb. A. (Comm.) 48 of 2022 & I.A. 12105 of 2022 with Arb. A. (Comm.) 49 of 2022 & I.A. 12107 of 2022 with Arb. A. (Comm.) 50 of 2022 & I.A. 12109 of 2022 and Arb. A. (Comm.) 51 of 2022 & I.A. 12111 of 2022
Decided On : 22-12-2022

Important Points

The court held that an appellate court can modify an arbitral tribunal's interim order if the appellant demonstrates a prima facie case, balance of convenience, and irreparable harm, while also clarifying the nature of license agreements as operating under permissive licenses.

Subject

Arbitration - Interim Relief

Headnote

(A) Arbitration and Conciliation Act, 1996 - Section 37(2)(b) and Section 17 - Appeals against an arbitral tribunal's order regarding interim measures - Appellant revoked the license agreements for various shops claiming urgent repairs needed, leading to applications for interim relief. Court reviews the tribunal's order for arbitrary discretion and rights of possession of licensed premises. (Paras 1-51)

(B) Judicial discretion in arbitration - An appellate court may interfere with an arbitral order where it establishes a prima facie case, balance of convenience, and irreparable harm if the order is improper. (Paras 42-44)

(C) Legal nature of license agreements - The agreements were deemed terminated by efflux of time; thus, the respondents held permissive licenses without ongoing rights of possession or operation. (Paras 40-41)

(D) Interim arrangement - Court noted the importance of preserving the property while the arbitral proceedings remain unresolved and directed that the appellant may carry out necessary repairs with certain conditions protecting the respondents' interests. (Paras 48-49)

Table of Content
1. formation and conditions of license agreements (Para 1 , 2 , 3 , 4 , 5)
2. revocation process and parties' initial actions (Para 6 , 7 , 8)
3. judicial outcomes and interim arrangements (Para 9 , 10 , 11 , 12)
4. roles of parties during arbitration (Para 14 , 15 , 16)
5. appellant's arguments for repair and restoration (Para 17 , 18 , 19 , 22 , 23 , 24)
6. respondents' response to appellant's actions (Para 26 , 34 , 35)
7. interim relief considerations (Para 39 , 42 , 43)
8. final order and directive outcomes (Para 50 , 51)

JUDGMENT

Mini Pushkarna, J.

1. The present appeals have been filed under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 (hereinafter called "the Act") against the common order dated 23.04.2022 passed by the Arbitral Tribunal disposing of the applications filed under Section 17 of the Act on behalf of appellant and respondents respectively, seeking interim measures.

2. The disputes between the parties relate to the revocation of the licence agreement of the respondents by the appellant. The present appeals deal with different shops situated in the premises of the appellant's hotel, details of which are given herein below:

(i) Arb. A (COMM) 48/2022- Shop No. L-79, Shopping arcade, Hotel Hyatt Regency, Bhikaji Cama Place, New Delhi

(ii) Arb. A (COMM) 49/2022- Shop No. L-78, Shopping arcade, Hotel Hyatt Regency, Bhikaji Cama Place, New Delhi

(iii) Arb. A (COMM) 50/2022- Shop No. L-73, Shopping arcade, Hotel Hyatt Regency, Bhikaji Cama Place, New Delhi

(iv) Arb. A (COMM) 51/2022- Shop No. L-81, Shopping arcade, Hotel Hyatt Regency, Bhikaji Cama Place, New Delhi

3. The appellant and respondents entered into unregistered licence agreements/Supplementary Agreements as follows:

(i) Arb. A (COMM) 48/2022- Unregistered Licence Agreement dated 01.09.1982 read with Supplementary Agreement dated 01.09.1982; Supplementary Agreement II dated 10.08.1984 and Amended Agreement dated 01.09.1983.

(ii) Arb. A (COMM) 49/2022- Unregistered Licence Agreement dated 18.02.1992 and Supplementary Agreement dated 18.02.1982.

(iii) Arb. A (COMM) 50/2022- Unregistered Licence Agreement dated 09.09.1992 and Supplementary Agreement dated 09.09.1992.

(iv) Arb. A (COMM) 51/2022- Unregistered Licence Agreement dated 01.09.1982 and Supplementary Agreements dated 01.09.1982 and 10.08.1984.

4. In terms of the aforesaid agreements, the use of the licensed premises were restricted only to the purposes authorised under the Licence Agreements i.e. for the purpose of carrying on the business of sale of jewellery, arts and handicrafts, in all the cases. Any change in the use of the licensed premises required the prior written permission of the appellant. Under the licence agreements, the respondents had no right to make any alterations or additions to the licensed premises. The respondents required the appellant's prior written permission and approval for the interior decoration of the licensed premises. The respondents further required prior approval of appellant for transfer of any interest or right under the licence agreement.

5. The respondents in all the cases were granted the right to use the licensed premises for a term of 5 years, subject to renewal for further 5 year terms. The appellant retained the right to terminate the licence agreements in terms of Clauses 3(t) and 9 of the respective licence agreements. In return for use of the licensed premises, respondents paid monthly licence fee. Respondents were further required to pay security deposit towards proper maintenance of the premises. Any disputes arising between the parties in relation to the agreement were to be referred to arbitration in terms of Clause 11 of the licence agreements.

6. In Arb. A. (COMM) 48/2022, the licence agreement was last renewed upto 31.08.2017. In Arb. A (COMM) 49/2022, the licence agreement was last renewed upto 28.02.2017. In Arb. A (COMM) 50/2022, the licence agreement was last renewed upto 31.08.2017. In Arb. A (COMM) 51