Delhi District Court
Good Times Restaurant Pvt Ltd vs Indian Tourism Development ... on 3 October, 2013
IN THE COURT OF MS. VINEETA GOYAL, ADJ01, PATIALA HOUSE COURTS,
NEW DELHI DISTRICT, NEW DELHI
Arbitration No. 97/2013
Good Times Restaurant Pvt Ltd.
(Through its CEO Sameer Madan)
Having its Registered Office at :
29, Shivaji Marg, New Delhi - 110 015.
.......... Petitioner
Versus
Indian Tourism Development Corporation Ltd.
Having its Registered Office at :
CORE8, 6th floor, Scope Complex,
Lodhi Road, New Delhi - 110 003.
...... Respondent
Arbitration petition present On : 10.07.2013
Arguments Heard On : 26.09.2013
Order On : 03.10.2013
Appearance :
Sh. Rajesh Tikku, Senior Counsel with Sh. Mukesh Vats
and Sh. Vivek Ojha, Ld counsels for petitioner.
Sh. Sushant Kumar, Ld counsel for respondent.
ORDER:
This order shall dispose off an application filed by the petitioner under section 9(ii) of the Arbitration and Conciliation Act 1996 inter alia seeking ex Arbitration no. 97/2013 Page no. 1 of 13 parte injunction staying operation and effect of letter/ notice dated 04.07.2013 issued by the respondent.
2. Brief facts of the case relevant for disposal of the application are that the on 21.06.2010, the defendant entered into a license deed contracting approximately 4309.26 Sq. Ft. Of area at R6 side of Hotel Samrat, Chankyapuri, New Delhi herein called (the demised premises) to the petitioner for running 24 hours F&B (international Cuisine) for a period of five year. The deed clearly mentioned that the demised premise is a 'Public Premises' as defined under the Public Premises (Eviction of Unauthorised occupants) Act 1971. The petitioner alleged that after taking over the possession of the demised premises there were number of problems/ issues arose which forbid the petitioner from enjoying of premises. Further, the demised premise could not be commercially exploited during Commonwealth Games as was envisaged due to the fault attributed to the defendants. The petitioner contends that the demised premise could only be put to use during the period July 2011 till June 2012, when again due to leakage, the premise required extensive repairs. It is part of petition that despite rent was paid Arbitration no. 97/2013 Page no. 2 of 13 regularly the defendant initiated proceedings of eviction under section 7 of PP Act, which are still pending. After the above mentioned repairs in the month of November 2012, the premise was reopened. The demised premise was being enjoyed by the guests for dancing but the police authorities once issued challan for not possessing necessary permission to maintain sound system. It is further contended that since the petitioner was maintaining a number of statutory licenses like L16F, excise, NDMC etc., therefore the necessary license for running a Discotheque from the demised premises was obtained from police authorities in April 2013 for the purpose of maintaining high standards of lighting, ambience and sound system.
3. Repelling the above, the defendants denied all the allegations levelled in the petition. It was stated in the reply by the respondent that the petitioner was under an obligation to pay license fee as agreed but despite the fact that an international restaurant in the name MOBIUS was started by the petitioner in July/ August 2011, the petitioner defaulted in making payments of license fee as agreed. The closing down of the premise in July 2012 was due to extensive renovation carried by the petitioner for making the place suitable Arbitration no. 97/2013 Page no. 3 of 13 for the use as a DISCOTHEQUE against the purpose and objective of the license deed. The respondent took the demised premises on lease on "as is where is" basis and the seepage of the premises is attributed to the negligence of petitioner which is the effect of extensive renovation. The petitioner has started operating a discotheque/ night club in the premise under name and style SKOOTER in contravention to the agreed terms of license deed and thus a notice dated 04.07.2013 was issued.
4. My Ld. Predecessor vide her order dated 11.07.2013 stayed the operation of the aforesaid notice dated 04.07.2013 till further orders. The interim order of injunction continued till date.
5. The petitioner has approached this court for injunction against operation of notice dated 04.07.2013 issued by the defendant and the text of the notice is reproduced here under:
Our hotel had entered into a License Agreement with you for licensing 292672 sqft (centralized air condition area) and 521.74 sq.ft R 6 lounge alongwith non air conditioned space measuring 860.80 sq.ft kitchen area (total admeasuring 4309.26 sq.ft ) for the Arbitration no. 97/2013 Page no. 4 of 13 purpose of operating of 24 Hours F&B (International Culsine) outlet alongwith Tea Lounge Service at R 6 side.
In view of the terms of the License Agreement it was clear that the area Licensed to you was proposed to be used for the purpose of operating 24 Hours F &B (International Culsine) outset alongwith Tea Lounge Service at R 6 side. Even Clause 11 (1) & VII (11) clearly provides that the space was being Licensed for the purpose of running the business of Restaurent and Bar alone.
It has now come to our notice that in the garb of running 24 Hours F & B (International Culsine) outlet / Tea Lounge Service. You are operating a discotheque from the License Premises and for the purpose of the same. You have obtained other permission from statutory autorities. This clearly construes a misuse of the License Premises and violation of the terms and conditions of the License Agreement executed between the parties.
We hereby call upon you to strictly adhre to the terms and conditions of the License Agreement and stop the business of operating discotheque from the Licensed Premises with immediate effect.
In the even you fail to comply with the direction, we shall be constrained to initiate appropriate action including termination of the License Agreement and initiation of eviction proceedings.
Arbitration no. 97/2013 Page no. 5 of 13
6. The petitioner has alleged that the above mentioned notice dated 04.07.2013 is misconceived and the appropriate course of action was to refer the matter to arbitration as envisaged under clause V(1) of the license deed dated 21.06.2010. It is important to analyse the termination clause of the Lease deed which is reproduced hereunder:
If the Licensee commits a breach of any of the terms and conditions berein contained of the License Deed, the Licensor shall be at liberty to revoke the Licensee forthwith as detailed in Clause 2 below, and, without prejudice to any other right of the Licensor in that behalf, to forfeit the security deposit either in whole or in part as they may deem fit. Except as stated in the preceding sentence, the security deposit will be refunded without any interest and after deducting any dues from the License within three months of the date of determination of the licensing arrangements. Further the Licensor shall have right to deduct and adjust any amount towards any damage caused by the License to the property of the Licensor or otherwise.
6.1 The above mentioned clause has two limbs providing that the provisions of Public Premises (Eviction of Unauthorised occupants) Act 1971 (PP Act) would apply to all the issues over which the provisions of that Act Arbitration no. 97/2013 Page no. 6 of 13 applies where as for any other issue which is not covered under PP Act, the dispute would be referred to arbitration in accordance with the Arbitration and conciliation Act 1996.
6.2 As per the rival contentions of the parties, the dispute under consideration is is whether any Discotheque is running from the demised premises and if so whether the same is in contravention to the agreed terms and conditions as per the license deed dated 21.06.2010 . Now the question arises, if there is any contravention regarding the nature of use of the demised property whether such dispute shall be resolved under Public Premises (Eviction of Unauthorised occupants) Act 1971 or by an Arbitrator appointed under the above clause. At this stage of the proceedings, it is not relevant to adjudicate as to how the present dispute can be resolved even if it is assumed that the aforesaid dispute is to be resolved through Arbitration proceedings as claimed by the petitioner, whether the protection of section 9(ii) of the Arbitration and conciliation Act 1996 can be extended to the petitioner as prayed.
Arbitration no. 97/2013 Page no. 7 of 13 6.3 The respondent has alleged that the petitioner has violated terms of
the agreement by opening a discotheque from the demised premises and thus liable for eviction. Admittedly, there is an arbitration clause in the aforesaid license deed but the petitioner has failed to substantiate that the present dispute can be lawfully referred to the arbitration and not under PP Act when the termination clause provides for proceedings under PP Act as well as Arbitration. Hon'ble Supreme Court in SBP & Co. v. Patel Engg.
Ltd., (2005) 8 SCC 618, held that in a situation when a party to arbitration agreement opposes the grant of interim measures, thereby challenging the validity of arbitration agreement or contending that the impugned dispute is covered under the agreement, the court has to necessarily determine the existence of the arbitration agreement. The case of the petitioner fails on this account too because if the present dispute is covered under PP Act, then no protection of section 9 of Arbitration and conciliation Act is possible. 6.4 Even on merits, assuming that the dispute is of the nature which is referable to arbitration it is trite law that the court has to apply the principles of injunctions before any relief is granted. In Arvind Constructions Co. (P) Arbitration no. 97/2013 Page no. 8 of 13 Ltd. v. Kalinga Mining Corpn.,(2007) 6 SCC 798, it was held by the court that exercise of power under Section 9 of the Act must be based on well recognised principles governing the grant of interim injunctions and other orders of interim protection or the appointment of a Receiver. The power under Section 9 of the Act is not independent of the wellknown principles of interim injunctions and in Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd., (2007) 7 SCC 125, the Supreme held that:
"When the grant of relief by way of injunction is, in general, governed by the Specific Relief Act, and Section 9 of the Act provides for an approach to the court for an interim injunction, we wonder how the relevant provisions of the Specific Relief Act can be kept out of consideration."
6.5 The main considerations before the court would be (i) whether a person seeking temporary injunction has made out a prima facie case;
(ii) whether balance of convenience is in his favour; (iii) whether a person seeking temporary injunction would suffer irreparable injury.
Arbitration no. 97/2013 Page no. 9 of 13 The power to grant interim injunction under Section 9 of Arbitration and Conciliation Act is given to the Court only as a measure of protection. 7.0 In the present case, the defendant has leased out demised premises to the defendants for running a Food and Beverages (International Cuisine) but the allegation is that the petitioners has started a Discotheque on the demised premises. It is commonly understood that a Discotheque is a different kind of entertainment joint as compared to F&B joint. In a Discotheque normally a continuous loud music is played under flashy lights to entertain the guests and the main thrust of the joint is to provide loud dancing atmosphere whereas the service of foods and beverages is secondary. Whereas in a Food and Beverages (International Cuisine) joint the emphasis on providing food services with beverages which may or may not be coupled with light to normal music. In view of the nature of business of a Discotheque being loud, the police authorities insist upon for obtaining of a special permission before any joint is used as DISC. The discotheque cannot be taken to be usual and automatic part of running of a Food and Beverages (International Cuisine). At this stage of proceedings when the defendants Arbitration no. 97/2013 Page no. 10 of 13 have no objection to the business of Food and Beverages (International Cuisine) it would not be appropriate to extend the arm of protection around the discotheque activities of the petitioner by invoking injunction clause of section of 9 Arbitration and conciliation Act 1996. Under a circumstance when the main activity of Food and Beverage is not disturbed, no irreparable loss to the petitioner is foreseeable. On the other hand, if the activities of discotheque are allowed to be carried out from the leased premises, the defendant can suffer irreparable loss in the form of legal action of permitting unauthorised use of the demised premises. I find the balance of convenience in favour of the defendant and hence the following is ordered:
(a) The respondents are restrained from evicting the petitioner from the demised premises without following the due process as agreed in the termination clause of License Deed dated 21.06.2012 executed between the parties;
(b) The petitioners are restrained from using the demised premise as Discotheque till the time the dispute; whether or not as per terms and conditions of the license deed the demised premises can be used as Arbitration no. 97/2013 Page no. 11 of 13 Discotheque too in addition to Food and Beverages (International Cuisine) by the appropriate procedure laid down in the license deed.
In view of aforesaid observations, application moved by the applicant / petitioner is disposed off.
Announced in the open Court (VINEETA GOYAL)
on 03 day of October, 2013 Additional District Judge1
rd
New Delhi District : PHC
New Delhi : 03.10.2013
Arbitration no. 97/2013 Page no. 12 of 13
Arbitration no. 97/2013
Good Times Restaurant Pvt Ltd.
Vs.
Indian Tourism Development Corporation Ltd.
03.10.2013.
Present : Sh. Rajesh Tikku, Senior Counsel with Sh. Mukesh Vats
and Sh. Vivek Ojha, Ld counsels for petitioner.
Sh. Sushant Kumar, Ld counsel for respondent.
Vide separate order of even date, the Arbitration petition stands disposed off. Accordingly file be consigned to record room.
(Vineeta Goyal)
Additional District Judge1
NDD/PHC New Delhi/03.10.2013
Arbitration no. 97/2013 Page no. 13 of 13