This case is a part of our Annual Arbitration Review 2020.

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

Citation : MANU/DE/1394/2020

Court: Delhi High Court

Coram : Mukta Gupta, J.

Date : 21st July 2020

Keywords: Section 8, Non-Arbitrable Disputes.

Overview

This judgment looks at the conditions required to trigger an arbitration clause in an agreement and studies the nature of disputes that can be arbitrated upon.

Facts

A license that was provided to the Plaintiff with respect to spaces/shops/premises at the Hyatt regency was revoked by the Defendant.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

Issues

1. Whether an objection can be made under Section 8 of the Arbitration and Conciliation Act, 1996 (“Act”) without filing an application?
2. Whether the Court can decide whether a matter under the 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. v. Ambience Pvt. Ltd. and another where it was clearly held that there was no need for any filing of a formal application under Section 8. In this case the Court. followed the judgment given in Booz Allen & Hamilton Inc. v. SBI Home Finance Limited & Ors. and stated that this is applicable till an objection is filed in the written statement challenging the maintainability of the suit in view of the arbitration clause in the agreement. 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 undertaken.

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 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 Allen, and A. Ayyaswamy v. A. Paramvisam and Ors., 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 for arbitration.

With respect to the fourth issue, it was found that the Plaintiffs had a prima facie right or interest in the land which is of an irrevocable licensee. Further, Booz Allen Hamilton was cited to state that an agreement to sell or mortgage created an obligation is in personam. Vidya Drolia and Ors v. Durga Trading Corporation was also cited to state that there was nothing in the Transfer of Property Act,1882 or Specific Relief Act, 1963 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.