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2023 DIGILAW 1085 (DEL)

Sona Hotel v. Oyo Hotels And Homes Pvt. Ltd.

2023-02-21

CHANDRA DHARI SINGH

body2023
ORDER Chandra Dhari Singh, J. (Oral) 1. The present petition has been filed on behalf the petitioner under section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of Sole Arbitrator for redressal of disputes and disagreements qua the Management Service Agreement (MSA) dated 28th August, 2018 followed by First Addendum to Management Service Agreement dated 16th November, 2018 and Addendum Agreement to Management Service Agreement dated 12th March, 2020 alongwith various other oral as well as written agreements. 2. Learned counsel for the petitioner submits that the petitioner, Sona Hotels is a registered partnership firm having its registered at G.F. Hotel Sona Building, Panjim, Goa-403001. 3. It is submitted on behalf of the petitioner that the respondent No. 1, M/s Oyo Hotels & Homes Pvt. Ltd. (previously Alcott Town Planners Private Limited), is a business that was formed in accordance with the Companies Act, 1956. It is further submitted that respondent No. 2, M/s Mypreferred Transformation and Hospitality Private Limited, is a company incorporated under the provisions of the Companies Act, 1956. 4. It has been submitted on behalf of the petitioner that the petitioner was informed by respondent No. 1 that it had been employed by the hospitality industry for a number of years and had both operational experience and the necessary business, technical, and industrial know- how for managing hotels and putting in place various systems and procedures to maximise profitability. It is further submitted that on account of such assurances, the parties executed an MSA dated 28th August, 2018 with respect to boarding and lodging services at Hotel Sona, Rua De Ourem, Panjim, Goa. 5. It has been submitted on behalf of the petitioner that in pursuance to the said agreement the petitioner handed over the property to the respondent No. 1 on 1st September, 2018. It is further submitted that initially, the respondents performed their obligations under the MSA and duly submitted the payments to the petitioner. However, beginning in July 2019 and continuing through May 2020, the respondents failed to make timely and complete payments of the agreed-upon benchmark revenue. 6. It has been submitted on behalf of the petitioner that while continuing to have custody and exclusive control of the property between June 2020 and August 2020, the respondents entirely ignored their payment commitments. 7. However, beginning in July 2019 and continuing through May 2020, the respondents failed to make timely and complete payments of the agreed-upon benchmark revenue. 6. It has been submitted on behalf of the petitioner that while continuing to have custody and exclusive control of the property between June 2020 and August 2020, the respondents entirely ignored their payment commitments. 7. It has been submitted on behalf of the petitioner that the petitioner consented to enter into an Amendment dated 12th March, 2020 with respondent No. 2, due to the respondents' continuous defaults, to keep the business partnership intact. The amendment, among other things, recorded the understanding that respondent No. 1 and respondent No. 2, who were sister companies, would be jointly and severally liable for any and all payment obligations arising under the MSA. The petitioner was further instructed that payments would be made through accounts of respondent No. 2 for accounting purposes. The said amendment also decreased the agreed-upon benchmark revenue from Rs. 7,00,000/- to Rs. 6,00,000/- in order to lower the respondents' payment obligations. On the respondents' repeated promises that they would settle all outstanding debts and make payments on schedule going forward, all of these adjustments were accepted in good faith. 8. It has been submitted on behalf of the petitioner that the petitioner received an email dated 28th March, 2020, where respondent No.1 attempted to abuse its dominant market position by going outside the bounds of the MSA by providing a notice of the occurrence of a "Force Majeure" event effective from 12th March, 2020 via email dated 28th March, 2020, despite the petitioner accepting the reduced benchmark revenue. The same was done under the guise of the COVID-19 pandemic. This was accomplished despite the MSA's lack of a "Force Majeure" provision. As a result, respondent No. 1 made an illegal claim of "Force Majeure" in order to escape its legal responsibilities and liabilities under the stated agreement, even though the agreement itself included no mention of such a claim. 9. It has been submitted on behalf of the petitioner that due to the impact of COVID-19, the petitioner, despite not being required to do so by the agreement, agreed to waive the respondents' payment obligations from 28th March, 2020 to 14th April, 2020 in order to maintain good business relations and as a gesture of good will. 10. 9. It has been submitted on behalf of the petitioner that due to the impact of COVID-19, the petitioner, despite not being required to do so by the agreement, agreed to waive the respondents' payment obligations from 28th March, 2020 to 14th April, 2020 in order to maintain good business relations and as a gesture of good will. 10. It has been submitted on behalf of the petitioner that notwithstanding the petitioner's expression of goodwill, the respondents not only failed to settle their past-due balances but also refused to make any further contributions in accordance with the Agreements. 11. It has been submitted on behalf of the petitioner that the petitioner was compelled to submit a Breach and Cure Notice to the respondents through email on 18th August, 2020, requesting that the respondents clear the petitioner's dues of Rs. 34,16,580/- for the Benchmark Revenue deficit, TDS amount, CCP costs, energy expenses, etc. 12. Learned counsel for the petitioner submitted that as the respondent failed to remedy the violations pointed out by the petitioner, the petitioner was compelled to issue a notice on 28thAugust, 2020 pursuant to Article 10.2 of the MSA, requesting an amicable resolution of the dues/disputes within thirty days. It is further submitted that in lieu of settling the disagreement in accordance with the peaceful resolution provision, the respondents exacerbated the difficulties by leaving the property unilaterally on 9th September, 2020, contrary to the terms of the Agreements. 13. It has been submitted on behalf of the petitioner that in light of failure to resolve the disputes amicably, the petitioner nominated its arbitrator to resolve the dispute between the parties vide notice dated 29th September, 2020. It is further submitted that respondent vide its response dated 12th November, 2020 proposed to approach the Goa Centre of International Arbitration for appointment of a sole arbitrator to resolve the disputes. 14. It has been submitted on behalf of the petitioner that since the respondents failed to respond to the said notice, the petitioner approached the Bombay High Court, at Goa for appointment of Sole Arbitrator. 15. 14. It has been submitted on behalf of the petitioner that since the respondents failed to respond to the said notice, the petitioner approached the Bombay High Court, at Goa for appointment of Sole Arbitrator. 15. It has been submitted on behalf of petitioner the Bombay High Court vide order dated 22nd November, 2022 while reiterating the principle laid down by the Hon'ble Supreme Court in its judgment titled as BGS SGS SOMA JV vs. NHPC Limited reported as (2020) 4 SCC 234 , dismissed the petition filed by the petitioner herein. The following are the observations which are reproduced hereunder: "1. After this application was heard on the earlier occasion and also today, it is quite clear that a settlement could not be brought about between the parties. 2. Having due regard to the arbitration agreement and the seat of the arbitration as agreed between the parties, which is at New Delhi, this Court would not have jurisdiction to entertain this application considering the settled principles of law as laid down by the Supreme Court in BGS SGS SOMA JV vs. NHPC Limited (2020) 4 SCC 234 . 3. Accordingly, the application is allowed to be withdrawn with liberty to file appropriate proceedings before the appropriate Court. 4. All contentions of the parties are expressly kept open." 16. Learned counsel appearing on behalf of the respondent vehemently opposed the averments made in the instant petition. However, it has been fairly conceded that the dispute between the parties is arbitral in nature and has no objection if the instant dispute is referred to a Sole Arbitrator by this Court. 17. Heard the learned counsel for the parties and perused the record. 18. As agreed on behalf of the parties, it is evident that the parties intend this Court to refer the disputes to arbitration, by appointing a Sole Arbitrator. In view of the request made by the parties, to resolve the dispute arising under the Tender Agreement, the said disputes and differences arising between the parties are referred to arbitration. Hence, the following Order: ORDER (i) Ms. In view of the request made by the parties, to resolve the dispute arising under the Tender Agreement, the said disputes and differences arising between the parties are referred to arbitration. Hence, the following Order: ORDER (i) Ms. Radhika Bishwajit Dubey, Advocate is appointed as a sole arbitrator to adjudicate the disputes between the parties which have arisen under the Management Service Agreement dated 28th August, 2018; (ii) The learned sole arbitrator, before entering the arbitration reference, shall ensure the compliance of Section 12(1) of the Arbitration and Conciliation Act, 1996; (iii) The fee of the appointed sole arbitrator shall be in accordance with the schedule of fees prescribed under the Delhi International Arbitration Centre (Internal Management) Rules, 2012 and Delhi International Arbitration Centre (Administrative Cost and Arbitrators' Fees) Rules, 2012 as amended vide notification dated 15th November, 2022; (iv) At the first instance, the parties shall appear before the learned sole arbitrator within 10 days from today on a date which may be mutually fixed by the learned sole arbitrator; (v) All contentions of the parties are expressly kept open; (vi) A copy of the order be forwarded to the learned sole arbitrator on the following address: Radhika Bishwajit Dubey F-18, 3rd floor, Geetanjali Enclave, New Delhi 110017 Ph. No.+91 98280-31813/63910-06169 E-mail ID - radhika.arora21@gmail.com 19. The petition is disposed of in the aforesaid terms along with pending applications, if any. 20. The order be uploaded on the website forthwith.