Arbitration clauses may survive contract expiration if parties show conduct indicative of ongoing agreement; proper prerequisites for injunction must be adhered to for issuing orders under the Arbitration and Conciliation Act.

JUDGMENT :

Arun Bhansali, CJ.

1. This appeal under Section 37 of the Arbitration and Conciliation Act, 1996 (‘the Act of 1996’) is directed against order dated 12.06.2025 passed by Commercial Court, Varanasi, whereby application filed by respondent under Section 9 of the Act of 1996 has been allowed and the appellants have been restrained not to evict the respondent from the property in dispute (indicated in the license deed) and not to take anycoercive measures.

2. The appellants-University manages and operates Sir Sunderlal Hospital within its campus. On 24.09.2013, the appellants entered into a license deed with the respondent for operating a 24-hour pharmacy within the hospital premises, the arrangement was subsequently renewed in the years 2014, 2015 and on 24.09.2016. By the last renewal, the respondent was granted a five year license to operate the chemist shop with certain conditions regarding continuation and termination. It is indicated that the Hospital Management Committee of the appellants in its meeting dated 09.02.2022 decided against granting any further extension to the respondent and resolved to initiate new tender process for 24-hour pharmacy. The resolution was approved by the Vice Chancellor of the University. Though the term of the license expired on 23.09.2021, the appellants allowed the respondent to continue for a further period of three months upto 23.12.2021. Further extensions were granted and by an order dated 20.01.2023, the period from 23.09.2021 to 03.01.2023 was treated as deemed to have been extended prior to which on 03.01.2023, an extension for a period of three months was granted.

3. Besides the 24-hours pharmacy within the hospital premises, additionally on 04.07.2022, a separate license deed with the respondent was executed for operating two new 24-hour pharmacies at the Trauma Centre Hospital and Hospital OT Complex under IMS system. The license was for a period of three years subject to periodic review.

4. The appellants after 31.03.2023 offered the respondent a fresh license deed for operating pharmacies at various locations within the hospital. The revised agreement containing terms and fees for license was forwarded on 11.10.2023 fixing license fee at Rs.1916.66 per sq. ft. It is claimed that the respondent did not execute the fresh license deed and persisted in paying the license fee as per expired license deed. The appellants issued an eviction notice dated 21.11.2023 to vacate the premises within 30 days and clear all the dues failing which legal steps were threatened. It is claimed that despite the legal notices were issued through counsel for the University dated 16.01.2025 and 17.02.2025, the respondent refused to vacate and continued to run the shop illegally.

5. Apparently, to enforce eviction/bring the respondent to terms, the appellants initiated steps for electricity disconnection and attempted to repossess the premises, which was objected by the respondent.

6. Aggrieved of the attempts made by the appellants, the respondent filed application under Section 9 of the Act of 1996 before the Commercial Court, Varanasi seeking interim protection in respect of the shop premises. An ex-parte injunction dated 20.02.2025 was passed restraining the appellants from taking any coercive action. Reply to the application under of the Act of 1996 was filed inter