M/S Pankaj Security Services vs. Postgraduate Institute Of Medical Education And Research (Pgimer) And Others

Facts

The petitioner, M/s Pankaj Security Services, was granted a license to run a cafeteria at PGIMER, Chandigarh, with a monthly license fee of ₹9,21,786/- plus GST. The license deed was dated 22.10.2021, with a duration of one year, extendable for six months, ending on 08.11.2022. The petitioner applied for an extension, which was denied on 31.10.2022. A writ petition filed by the petitioner challenging this denial was dismissed as withdrawn on 08.05.2023. The petitioner also approached the Supreme Court, whose dismissal of their SLP on 05.12.2022 led the petitioner to vacate the cafeteria on the same date, which was later than the stipulated expiry date. Consequently, PGIMER invoked Clause 32 of the License Deed and imposed a penalty of five times the monthly license fee. The petitioner's petition for dispute resolution under Clause 30 was rejected on 26.04.2023, prompting the present writ petition.

Held

The High Court did not decide the substantive issues of the dispute. Instead, during the course of arguments, both the petitioner and the respondents arrived at a consensus. They mutually agreed that for an effective resolution of the dispute, the matter should be referred to arbitration. Consequently, the parties proposed and the Court agreed to appoint a Single Member Arbitral Tribunal. The Court appointed Sh. B.S. Mehandiratta, District & Sessions Judge (Retired), as the Arbitrator. The parties were directed to appear before the Arbitrator on 11.06.2024 at 11:00 a.m. The writ petition was disposed of in terms of this mutual agreement for arbitration. No specific findings were made on the legality of the penalty or any other substantive legal question.

Key Issues

1. Whether the penalty imposed by the respondent-PGIMER under Clause 32 of the Licence Deed is legally sustainable, considering the petitioner vacated the premises later than the original expiry date but after the denial of extension and dismissal of their legal challenges. Petitioner's contention: The petitioner likely argued that the penalty was excessive or not warranted given the circumstances, possibly highlighting the denial of extension and the subsequent legal proceedings. They may have contended that the invocation of Clause 32 was arbitrary or disproportionate. Respondents' contention: The respondents, PGIMER, likely argued that the petitioner breached the terms of the Licence Deed by failing to vacate the premises by the stipulated date, thereby justifying the imposition of the penalty as per Clause 32 of the agreement. They would have emphasized the contractual obligation to vacate by 08.11.2022.