Dharamvir Khosla and Others v. Asian Hotels (North) Ltd.

Judgment Name : Dharamvir Khosla and Others v. Asian Hotels (North) Ltd.

Citation : MANU/DE/1394/2020

Coram : Mukta Gupta

Date : 21st July 2020

Overview:

This judgment looked at the requirements for triggering an arbitration clause in an agreement and the nature of disputes that can be arbitrated upon.

Facts:

License that was provided to the Plaintiff with respect to spaces/shops/premises at the Hyatt regency were revoked by the Defendant. The Plaintiff, irked by this action of the Defendant filed a suit in the Delhi High Court contending that a license with respect to these properties as irrevocable and perpetual. The Defendant in turn questioned the maintainability of such suit citing an arbitration clause in the license agreement.

Issues:

  1. Whether an objection can be made under Section 8 of the Act without filing an application?
  2. Whether the Court can decide whether a matter under amended Section 8 is arbitrable once an objection is taken?
  3. Whether the Court can refer claims which relate to a special statute or are related to disputes in rem to arbitration?
  4. Whether seeking ownership rights in the shops/spaces is barred under Section 34 of the Specific Relief Act?

Analysis:

With respect to the first issue, the Court looked at Parasramka Holdings Pvt. Ltd. vs. Ambience Pvt. Ltd and another[i] where it was clearly held that there was no need for any filing of a formal application under Section 8. This was as long as there was an objection filed in the written statement challenging the maintainability of the suit in view of the arbitration clause in the agreement. The Court in Parasramka Holdings followed Booz Allen & Hamilton Inc. Vs. SBI Home Finance Limited & Ors.[ii] while coming to this reasoning. The Court in the current case noted that the defendant had brought up the question of maintainability even before filing the written statement under Section 8 and hence the objection was taken.

With respect to the second issue, the Court stated that Section 8 unlike Section 11 of the Act would require the Court to go into the issue of whether a dispute is arbitrable or not. The amended Section 8 limited the amount of judicial intervention that the Court had with respect to preventing the case from being arbitrated. However, the case of Emaar MGF Land Limited v. Aftab Singh[iii] was cited to state that Section 8 unlike Section 11 requires the Court to check if a case was arbitrable.

With respect to the third issue, cases such as Emaar MGF, Booz Allan, A. Ayyaswamy[iv] and Emaar MGF, were cited to state that there were certain categories of disputes that were non arbitrable. Decisions that made arbitrating decisions in rem or special legislation such as the Consumer Protection Act, 1986 illegal were discussed. However, barring these matters, it was stated that the rest could be sent to arbitration.

With respect to the fourth issue, it was found by the Court that the plaintiffs did indeed prima facie have a right or interest in the land which is at least of an irrevocable licensee. That being said, Booz Allen Hamilton was cited to state that an agreement to sell or mortgage created an obligation in personam. Vidya Drolia was also cited to state that there was nothing in the Transfer of Property Act or Specific Relief Act which forbade a dispute under the same from being decided through Arbitration. Finally, Olympic Structures was cited to state that specific performance of an agreement could be awarded by an arbitrator.

Conclusion:

The Court thus allowed the dispute to be referred to Arbitration under the amended Section 8 of the Act as there was nothing preventing the Court from doing the same.


[i] CS (SO) No. 125/2017

[ii] MANU/SC/0533/2011

[iii] (2019) 12 SCC 751

[iv] MANU/SC/1179/2016

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