Index Hospitality LLP vs. Contitel Hotels And Resorts PVT LTD

Held

The Court held that since there was no dispute regarding the existence of the Arbitration Agreement and the petitioner had invoked it, the petition under Section 11 of the Arbitration and Conciliation Act, 1996, was maintainable and ought to be allowed. The Court found it apposite to appoint a Sole Arbitrator to adjudicate the disputes between the parties. Accordingly, Justice (Retired) Pankaj Naqvi, a former Judge of the Allahabad High Court, was appointed as the Sole Arbitrator. This appointment was made subject to the arbitrator making the necessary disclosures under Section 12(1) of the A&C Act and not being ineligible under Section 12(5). The parties were granted liberty to approach the learned Arbitrator for further proceedings. The operative direction was the appointment of the arbitrator.

Facts

The petitioner, Index Hospitality LLP, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996, seeking the appointment of a Sole Arbitrator. The dispute arose from a Lease Deed dated June 1, 2018, concerning a property in Gurugram. The petitioner alleged that the respondent, Contitel Hotels and Resorts Pvt Ltd, defaulted in paying the entire lease rent. The lease period was from May 1, 2018, to May 31, 2021, with escalating monthly rents that included GST and other applicable taxes. The petitioner invoked the arbitration clause by issuing a notice on January 18, 2022. The respondent's counsel stated that lease rent was substantially reduced due to subsequent correspondence and that a director was held up in Moscow, expressing a desire to resolve disputes amicably.

Key Issues

1. Whether a Sole Arbitrator should be appointed to adjudicate the disputes between the parties under Section 11 of the Arbitration and Conciliation Act, 1996, given the existence of an arbitration agreement in the Lease Deed dated June 1, 2018? Petitioner's Arguments: The petitioner argued that a dispute had arisen concerning the Lease Deed and that they had validly invoked the arbitration clause by issuing a notice under Section 21 of the A&C Act. They sought the appointment of an arbitrator to resolve the alleged default in lease rent payments. Respondent's Arguments: The respondent's counsel indicated that there were subsequent communications leading to a substantial reduction in lease rent. They also mentioned external circumstances affecting a director and expressed a desire for an amicable resolution. However, the respondent did not dispute the existence of the arbitration agreement or the invocation thereof.