Delhi High Court - Orders
Dost Hospitality Services Pvt. Ltd vs Oyo Hotels And Homes Pvt Ltd & Ors on 29 July, 2020
Author: Rekha Palli
Bench: Rekha Palli
Via video conferencing
$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ OMP(I)(COMM) 212/2020, I.A. 6283/2020 & I.A. 6286/2020
DOST HOSPITALITY SERVICES PVT. LTD. ....Petitioner
Through: Mr. Debesh Panda, Mrs. Amrita
Panda, Mr. V.D. Verma and Ms. Anandita
Sharma, Advs.
versus
OYO HOTELS AND HOMES PVT LTD & ORS ....Respondents.
Through: Mr. Jeevan Ballav Panda, Adv. with
Ms. Shalini Sati Prasad, Mr. Satish Padhi, Ms.
Meher Tandon and Mr. Gaurav Sharma, Advs.
Ms. Shreya Agrawal, AR
CORAM:
HON'BLE MS. JUSTICE REKHA PALLI
ORDER
% 29.07.2020 I.A. 6284/2020 (exemption)
1. Allowed, subject to all just exceptions.
I.A. 6285/2020 (exemption)
2. The applicant will file the requisite affidavits and court fees within two weeks of the normal functioning of the Court being restored.
3. The application is disposed of OMP(I)(COMM) 212/2020
4. This is a petition under Section 9 of the Arbitration and Conciliation Act, 1996 filed by Dost Hospitality Services Private Limited seeking the following reliefs:-
(a) Pass appropriate ex-parte ad-interim directions so that till the arbitral tribunal is fully constituted, has entered reference and is in a position to hear the parties and pass orders, the Respondents and their employees, agents, directors or any other related person or entity operating under their authority, are restrained from altering the status quo obtaining as on date with regard to the operations and management of the hotel property of the Petitioner in accordance with the contractual arrangement between the parties; and
(b) Pass appropriate directions for protection and preservation of full information and evidence in the possession of the Respondents herein immediately as to all revenues generated from and all expenditures incurred at the hotel property of the Petitioner located at C30/4, Sector 62, Noida, UP- 201 301 from June 28, 2017 till date, whether in hard copy, soft copy, or on remote server/cloud computing/SAP, inter alia; and
(c) To facilitate the above, appoint a pool of local commissioners duly empowering each one of them to:
(i) Visit any of the locations/premises where the Respondents or any of their agents/representatives/ employees are located (as identified by the Petitioner through its representatives), without prior notice to the Respondents, or any other locations/premises as revealed during the local commission proceedings where full information or evidence is available, or is believed/likely to be available; and
(ii) Serve a copy of this Hon'ble Court's order, if any, as passed on the person-in-charge of the establishment located at the premises identified above; and
(iii) Take inventory of all documents relating to any revenues and expenditures whatsoever, including without limitation, bill books, day books, ledgers of accounts, KOTs, invoices, files, returns, GST filings, Sales tax and Income tax files, delivery registers, files containing details of capital and operating expenditures at the hotel of the Petitioner, internal inward and outward gate pass registers, production charts, employee remuneration dockets, vouchers, labour contract files, suppliers contract files, bank files and bank pass books with transaction details, stocks of materials, raw materials, and all other relevant details communications and records of the business and make copies thereof, and further submit a report in respect thereof to this Hon'ble Court; and
(iv) Ascertain whether any documents are available in original hardcopy, and if so, take all such original documents into custody, and provide photostat copies thereof to the parties at the expense of the Petitioner, and if not, make efforts to ascertain where the original documents are kept/retained so that they may be seized and taken into custody forthwith; and
(v) In respect of any documents not available in original hardcopy, the print out or photostat copy thereof be collected with the signature of the person-in-charge of the establishment located at the premises identified above and copies thereof be provided to the parties on the spot, and if the documents are in softcopy or available on a remote server/cloud computing/SAP, get a copy thereof made on portable drives purchased at the expense of the Petitioner in the presence of the parties and hand over copies to the parties on the spot and obtain receipts from the person-in-charge of the establishment located at the premises identified above; and
(vi) To take photos and/or videograph the entire process, if so desired by the parties; and
(vii) To approach the local police station and/or if necessary senior police officers including Director General of Police, and /or Superintendent of Police of the district, if necessary, to render protection, ensure safety of the local commissioner concerned and provide all assistance required for execution of the commission in terms of the directions passed by this Hon'ble Court; and
(viii) To authorise the Police Officers to open the locks of any premises for the purposes of carrying out the directions passed by this Hon'ble Court;
(ix) Make appropriate arrangements for safekeeping of all such records and material, until the Arbitral Tribunal is constituted in accordance with law and 1s able to pass appropriate orders in respect thereof; and
(d) Pass appropriate directions so that till the arbitral tribunal has entered reference and is in a position to hear the parties and pass orders, the Respondents and their employees, agents, directors or any other related person or entity operating under their authority shall adequate security in terms of the amount to be disgorged from them pursuant to a rendition of accounts, which at present is tentatively valued at Rs. 7 crores but may be revised later, within such time as this Hon'ble Court deems fit, and further also issue similar ad interim directions of a similar nature as passed in O.M.P. (I.) (COMM.) 167/2020 where it directed the Respondent No. 1 to " ...
also file affidavit of assets, which are unencumbered as of today, along with the reply. .. " and to further direct them not to encumber any assets which are unencumbered as of date without further leave of this Hon'ble Court and pass any other orders that would secure and safeguard the monies and ensure that the arbitration proceedings do not culminate in a paper award; and
(e) Grant such other interim measure of protection as may appear to the court to be just and convenient, in the circumstances presented through the instant petition;
(f) Pending the hearing and final disposal of the present Petition, grant interim and ad-interim ex parte reliefs in terms of prayer clauses (a), (b), (c), (d) and (e) above;
(g) Grant costs of the instant petition;
5. Learned counsel for the petitioner submits that the petitioner is the owner of the premises situated at C-30, Sector 62, Noida (U.P.) where he had been running and operating a hotel since October, 2011. In the year 2017, the petitioner was approached by the respondents- group of companies with an offer to collaborate whereunder the respondents would upgrade his hotel and its facilities and subsequently operate and manage this hotel, in exchange for remitting a monthly sum to the petitioner out of its earnings. He submits that consequently, the parties entered into a Management Services Agreement dated 28.06.2017 according to which the petitioner was entitled to receive a certain percentage of the revenue generated by the hotel. He submits that over time, the petitioner learnt that the respondents have not been maintaining fiscal discipline in that they have failed to maintain proper accounts and have, in fact, tried to raise duplicate bills on bookings; therefore, the petitioner is aggrieved and intends to invoke arbitration in terms of Clause 9.1 of the Management Services Agreement dated 28.06.2017. He prays that since the respondents continue to run the hotel, this Court restrain them and their employees from altering status quo with respect to the hotel and be further directed to protect all records pertaining to the generation of the revenue and expenditure of the hotel w.e.f. 26.06.2017.
6. Issue notice. Learned counsel for the petitioner submits that a complete set of the paperbook will be forwarded to the learned counsel for the respondents within the next two hours. Mr. Jeevan, Advocate accepts notice on behalf of the respondents and submits that, without admitting the contents of the petition, the respondents have no objection to maintaining status quo with respect to the hotel. He further submits that the respondents undertake to preserve the complete financial records regarding the revenue and expenditure of the aforesaid Hotels, as may be available, and assures that these records will be shared with the petitioner, through its counsel, within a period of five days from today.
7. At this stage, learned counsel for the petitioner submits that since the petitioner intends to invoke arbitration, this Court may appoint a sole arbitrator in order to expedite the dispute resolution. Learned counsel for the respondents has no objection to this request.
8. Accordingly, with the consent of the parties, the petition is disposed of by appointing Hon'ble Mr. Justice Arjit Pasayat (Mob:-
99710-90200), former judge of the Hon'ble Supreme Court of India, as the sole Arbitrator for adjudication of the disputes and differences which have arisen between the parties in relation to the agreement dated 28.06.2017. Before commencing arbitration proceedings, the learned Arbitrator will ensure compliance of Section 12 of the Arbitration and Conciliation Act, 1996. It is clarified that even though all the respondents are agreeable for being referred to arbitration, the question as to whether all of them are liable for the claims raised by the petitioner in relation to the aforesaid agreement will be determined by the learned Arbitrator itself.
9. In the meantime, the respondents shall remain bound by their undertaking recorded in paragraph 3 hereinabove, till the learned Arbitrator takes up interim application proposed to be moved by the petitioner under Section 17 of the Act, whereafter it will be subject to the orders of the learned Arbitrator. It is clarified that in case the petitioner fails to move its Section 17 application within six weeks from today, the respondents' undertaking will expire and this interim protection shall stand vacated.
10. It is further made clear that this Court has not considered the rival claims of the parties on merits and it will be open for them to raise all pleas permissible in law before the learned Arbitrator. It will, therefore, be open for them to file their claims/counter claims before the learned Arbitrator, which will be considered as per law.
11. A copy of this order be sent to the learned Arbitrator through electronic means.
12. The petition along with pending applications is disposed of in the aforesaid terms.
REKHA PALLI, J.
JULY 29, 2020 'sdp'