Karnataka High Court
Royal Orchid Associated Hotels vs Rajendra Singh Rathore on 18 July, 2023
Author: R Devdas
Bench: R Devdas
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NC: 2023:KHC:25008
CMP No. 554 of 2021
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 18TH DAY OF JULY, 2023
BEFORE
THE HON'BLE MR JUSTICE R DEVDAS
CIVIL MISC. PETITION NO. 554 OF 2021
BETWEEN:
ROYAL ORCHID ASSOCIATED HOTELS
PRIVATE LIMITED
A COMPANY INCORPORATED UNDER
THE PROVISIONS OF THE
COMPANIES ACT, 1956,
HAVING ITS REGISTERED OFFICE
AT NO.1, GOLF AVENUE
BANGALORE - 560008
REPRESENTED HEREIN BY ITS
DIRECTOR AND AUTHORIZED SIGNATORY
MR AMLAN KUMAR DASGUPTA
Digitally signed ...PETITIONER
by JUANITA
THEJESWINI (BY SRI. SUNDARA RAMAN M V., ADVOCATE)
Location: HIGH
COURT OF
KARNATAKA AND:
RAJENDRA SINGH RATHORE
S/O RANVEER SINGH RATHORE
AGED ABOUT 45 YEARS
RESIDING AT DADA POULTRY FARM
LOHAGAL, AJMER,
RAJASTHAN - 305023
...RESPONDENT
(BY SRI. M RAJASHEKAR., ADVOCATE)
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NC: 2023:KHC:25008
CMP No. 554 of 2021
THIS CIVIL MISCELLANEOUS PETITION IS FILED UNDER
SEC.11(5) OF THE ARBITRATION AND CONCILIATION ACT,
1996, PRAYING THIS HONBLE COURT TO APPOINT A SOLE
ARBITRATOR AS THIS HON'BLE COURT MAY DEEM FIT AND
REFER THE DISPUTES BETWEEN THE PARTIES TO
ARBITRATION UNDER THE HOTEL OPERATION AGREEMENT
DATED 17/11/2017 AT ANNEXURE-B AND ETC.
THIS PETITION, COMING ON FOR ADMISSION, THIS DAY,
THE COURT MADE THE FOLLOWING:
ORDER
R.DEVDAS J., (ORAL):
The petitioner and the respondent entered into a Hotel Operation Agreement dated 17.11.2017, wherein the petitioner undertook to operate and run the hotel established by the respondent herein. It is the contention of the petitioner that there is a 'lock-in' period of 10 years and before the expiry of the 'lock-in' period, the respondent sought to terminate the contract by issuing a notice on 07.08.2019. Aggrieved, the petitioner herein filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the -3- NC: 2023:KHC:25008 CMP No. 554 of 2021 Act,1996', for short), before the Principal City Civil Judge, Bangalore in Arbitration Application No.187/2019. The Commercial Court considering the application filed under Section 9, and by order dated 13.12.2021, inter alia held that the petitioner herein made out a prima facie case and balance of convenience also lies in its favour and that irreparable injury will be caused to the petitioner herein if the interim relief is not granted in favour of the petitioner. Accordingly, temporary injunction was granted restraining the respondent herein from interfering with the right of the petitioner to manage and operate the hotel under the Hotel Operation Agreement dated 17.11.2017. The respondent herein challenged the judgment of the Commercial Court in COMAP No.47/2022. The Hon'ble Division Bench, by order dated 12.06.2023 held that there is an agreement to refer the existing dispute between the parties for arbitration. It was therefore held that the Commercial Court had rightly held that prima facie case was made out by the petitioner herein for issuance of a temporary injunction.-4-
NC: 2023:KHC:25008 CMP No. 554 of 2021
2. In that view of the matter, learned Counsel for the petitioner submits that after the notice was issued by the petitioner invoking the arbitration clause and calling upon the respondent to come forward for accepting the nomination and going further for arbitration, the respondent had not come forward for arbitration and therefore, the petitioner is before this Court.
3. Objection is sought to be raised at the hands of the respondent that under Article XXVIII contained in the Hotel Operation Agreement dated 17.11.2017, more particularly, clause (1) provides that if the parties do not reach such solution through negotiation, then upon notice being issued by either of the party, all disputes, claims, questions or differences shall be referred to exclusive jurisdiction of court of Bangalore or parties may opt to settle the dispute by arbitration in accordance with the provisions of the Act, 1996. Therefore, it is submitted that the arbitration is only an option and it is not a binding covenant on either of the parties. Attention of this Court -5- NC: 2023:KHC:25008 CMP No. 554 of 2021 is drawn to a judgment of the Hon'ble Apex Court in the case of Wellington Associates Ltd., Vs. Kirit Mehta, (2000) 4 SCC 272, wherein it was held that if words "may be referred" is used in the clause, then it is not a firm or mandatory arbitration clause and therefore, it postulates a fresh agreement between the parties that they will go for arbitration. In that view of the matter, it is contended that the parties are required to once again agree upon reference of the dispute for arbitration.
4. However, learned Counsel for the petitioner submits that this very issue was raised before the Hon'ble Division Bench in the Commercial Appeal filed at the hands of the respondent herein. The very same judgment which was cited by the learned Counsel for the respondent was also cited before the Hon'ble Division Bench. However, the Hon'ble Division Bench, took note of another decision of the Hon'ble Supreme Court in the case of S.N.Prasad Vs. Monnet Finance Ltd., and Ors., (2011) 1 SCC 320, wherein it was held that if there is no denial on the part of -6- NC: 2023:KHC:25008 CMP No. 554 of 2021 the party in a counter statement about the arbitration clause, it follows that the court can proceed on the basis that there is an arbitration agreement in writing between the parties. The Hon'ble Division Bench considered the submissions of the learned Counsel appearing for the respondent that in the statement of objections, filed before the Commercial Court, a stand was taken by the respondent herein that there is no arbitration clause binding on the parties. On perusal of the statement of objections filed by the respondent herein before the Commercial Court, the Hon'ble Division Bench concluded that there was no specific denial on the part of the respondent herein before the Commercial Court. In that view of the matter, the Hon'ble Division Bench has already held that there is an agreement to refer the existing dispute between the parties to arbitration.
5. At this juncture, learned Counsel for the respondent submits that the decision of the Hon'ble Division Bench was rendered on 12.06.2023 and there is -7- NC: 2023:KHC:25008 CMP No. 554 of 2021 still time for the respondent to question the said decision of the Hon'ble Division Bench.
6. Having heard the learned Counsels and on perusing the petition papers, this Court is of the considered opinion the objections sought to be raised by the respondent regarding the non-existence of arbitration clause and the first option would be to approach a civil court and unless there is a consensus between the parties once again to refer the matter for arbitration, an arbitrator cannot be appointed, is a question already decided by the Hon'ble Division Bench and it has clearly been held that there is an agreement to refer the existing dispute between the parties to arbitration. Therefore, in the light of the above, this Court is required to refer the matter for arbitration.
7. Consequently, this Court proceeds to pass the following:
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NC: 2023:KHC:25008 CMP No. 554 of 2021 ORDER
(a) The petition is allowed appointing Shri. C. Chandramalle Gowda, Retired District Judge, as the sole arbitrator to enter reference of the disputes between the petitioner and the respondent and conduct proceedings at the Arbitration and Conciliation Centre (Domestic and International), Bengaluru according to the Rules governing the said Arbitration Centre.
(b) All contentions inter se parties are left open for adjudication in the arbitration proceedings.
(c) The office is directed to communicate this order to the Arbitration and Conciliation Centre and to Shri. C. Chandramalle Gowda, Retired District Judge, as -9- NC: 2023:KHC:25008 CMP No. 554 of 2021 required under the Arbitration and Conciliation Centre Rules, 2012.
8. Pending I.As., if any, stand disposed of.
Sd/-
JUDGE DL