M/S Golden Plates Banquet PVT. LTD. vs. Shubham Resorts PVT. LTD.

The appellant has preferred this appeal aggrieved by order dated 02.09.2024 passed by the Commercial Court No.1, Jaipur

It is contended by learned counsel for the appellant that an agreement that took place between the appellant and the respondents, whereby, the property belonging to the respondents was handed over to the appellant on 25.01.2023. It was agreed between the parties that till 31.08.2023, it will be fee free fit out period and that from 01.09.2023, the appellant would be responsible to pay license fee of Rs.21,00,000/- per month. It is also contended that an interest free security deposit of Rs.1,89,00,000/- was given by the appellant to the respondent to safeguards the interest of the respondents. It is also contended that in the agreement, there was a lock-in-period of three years to protect the interest of the appellant. It is also argued that the appellant had invested crores of rupees for the upkeep of the resort and suddenly on 22.05.2024, the respondents put lock on the premises.

It is also contended that the learned Commercial Court has erred in coming to the conclusion that the appellant was dispossessed on 22.05.2024, whereas, actually the appellant conducted three wedding in the month of July, 2024. It is only after the order was passed by the Commercial Court that the appellant was forcefully dispossessed by police force on 05.09.2024. 4. It is also contended that there was an arbitration clause in the agreement and under Section 9 of the Arbitration and Conciliation Act, 1996, the Court was required to pass an interim

It is also contended that the agreement which was entered into between the parties, there was an additional clause that if license fee of Rs.21,00,000/- per month is not paid, the respondents would be entitled to interest at the rate of 18% per annum. It is also contended that after the issuance of notice, a sum of Rs.26,31,000/- was paid by the appellant to the respondents.

Learned counsel for the respondents has vehemently opposed the appeal. It is contended that the appellant has not approached the Commercial Court with clean hands. The appellant had admitted that locks were put on 22.05.2024, but the appellant did not disclosed that they were not paying the license fees and a notice for termination was issued on 17.04.2024 by the respondents to the appellant. It is also contended that since the appellant has not approached the Court with clean hands, he is not entitled to any relief from the Court.

It is also contended by counsel for the respondent that since the appellant had taken bookings for wedding for the month of July, 2024 and the parents of the bride and groom approached the respondents, they permitted the appellant to conduct three wedding in July on humanitarian grounds. It is also contended that the appellant had paid only Rs.15,00,000/- to the respondent and that was also towards the outstanding electricity dues. The amount of Rs.15,00,000/- paid was immediately deposited by the respondents with the Electricity Department. It is also contended

Learned counsel for the respondents contends that before the Commercial Court, the application was filed by the appellant through the Director, Rajneesh Gupta, who was also director in Roshni Hotels. A similar matter pertaining to Roshni Hotels had come up before the Delhi High Court, wherein, also license fee is not paid in due time and the Delhi High Court vide its decision dated 12.12.2023 granted a decree of possession in favour of the owner. It is also contended that as per Section 64 of the Indian Easements Act, the appellant is only entitled to recovery of compensation.

Learned counsel for the respondents have also placed reliance upon the judgment of M/s Gesture Hotels and Food 2051, and other judgments, the Hon’ble Supreme Court held that under Section 64 of the Indian Easements Act 1882, even if a licensee is evicted, though grounds for revocation of license do not

It is also contended by counsel for the respondent that even prior to the notice dated 17.04.2024, notices were issued to the appellant, asking them to pay the license fee. It is also contended that during time of execution of the agreement itself, it was specifically made clear to the appellant that payment was Rs.21,00,000/- per month is the sole condition on which license is being granted.

We have considered the contentions and have perused the relevant documents.

The main contention of counsel for the appellant is that they have deposited a sum of Rs.1,89,00,000/- as interest free security deposit that they have invested huge amount in making the resort operative and that there was a lock-in-period of three years before which the agreement could not have been terminated.

Clause-5.1 of the agreement reads as under:- “The period of first 03 years i.e. from 25th January 2023 to 31st January 2026 shall be the lock in period for the First Party/Owner and the agreement cannot be terminated prior to 03 years at the behest of the First Party/Owner. Except in the condition that if, it is found that the Second Party/Operator has failed to pay the full monthly license fees (along with applicable GST) for a period of any Two months in a year (12 MONTHS). In such eventuality, the First Party/Owner shall give a written notice for paying the same within a period of ONE MONTH, and thereafter, if entire due licenses fee amount together, applicable GST amount is not paid by the Second Party/Operator then the First Party/Owner shall be free to terminate this agreement forthwith on completion of ONE MONTH time stipulated in written termination

The lock-in-period of three years was subjected to exception and the said exception was that if the appellant fails to pay the full month license fee along with the applicable GST for a period of any two months in a year, the owner i.e. respondents shall give a written notice for paying the same within a period of one month and thereafter, if the due license fee is not paid, the owner shall be free to terminate his agreement forthwith, on completion of one month time stipulated in the written notice. It was also specifically noted in Clause-5.1 that on completion of notice period, if license fee is not paid, the agreement shall ipso facto stand terminated and the operator, his employees or any other person claiming under them shall have no right to enter into the property except to make due payment and then removing all their movable belongings, if any, inside the premises. The Clause further entitled the owner to put their locks on the property and if necessary, forcefully stop the entry of the appellant. Similar

As per the condition of the agreement, the license fee was to be paid on 07th day of each month and in the case of delay in payment of the same, the respondents were entitled to 18% per annum interest from 8th of such month till actual date of payment. In Clause-9 also, it is clearly mentioned that the Clause wherein the payment of interest is provided will not relieve the appellant from facing the consequences of default in payment of two months in a year mentioned above. Thus, the contention of learned counsel for the appellant that in the agreement it was provided that when there is a delay in payment of license fee, then 18% interest would be payable, thus the respondents has no right to terminate the agreement, has no basis. The contention of counsel for the appellant that they have raised Civil Construction to the tune of Rs.20 to 25 crores also cannot be accepted for the very reason that under Clause-13.7 of the agreement, it was specifically provided that Second party/operator will have to take written permission from First Party/Owner for making any Civil Construction in the said premises.

We agree with the contention of the counsel for the appellant that all such dispute have to be decided by the Arbitrator. However, as far as the dismissal of the application under Section 9 of the Arbitration and Conciliation Act, 1996, is concerned, we are of the considered view that the appellant has not come with clean hands and they have concealed the fact that there was a

As far as question of possession is concerned, the appellant had pleaded in the application under Section 9 of the Arbitration and Conciliation Act, 1996, that the respondents have put their locks on 22.05.2024. It is an admitted fact that the Electricity Connection was also disconnected due to non-payment of the electric dues. The appellant never remain in possession after 22.05.2024 as held by the Commercial Court. However, they were permitted to manage the marriages scheduled in July, 2024 on humanitarian grounds.

We do not find any error and the order impugned so as to entertained the present appeal and the same is accordingly, dismissed.

Any observation made in this order shall not affect the proceedings before the Arbitral Tribunal. (PRAVEER BHATNAGAR),J (PANKAJ BHANDARI),J Ashwani Kr Srivastava /-3