Allowed

Oyo Hotels and Homes Private Limited v. M/S Jagadish

Karnataka HC1 Oct 2024CMP/725/2022

Case brief

AI extract

What is this about?

Section 11(6) petition for appointment of a sole arbitrator under clause 10 of a Management Service Agreement after disputes over a fire at the managed property and termination of the agreement. Respondent raised no objection. Petition allowed and a retired High Court judge appointed as arbitrator.

What did the court decide?

Petition allowed; retired Karnataka High Court judge Ashok B Hinchigeri appointed as sole arbitrator.

Oyo Hotels and Homes Private Limited Vs M/S Jagadish — Arbitration | Karnataka HC (2024)

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1 - NC: 2024:KHC:41102 CMP No. 725 of 2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 1^ST DAY OF OCTOBER, 2024

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BEFORE

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THE HON'BLE MR JUSTICE ASHOK S.KINAGI CIVIL MISC. PETITION NO. 725 OF 2022

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BETWEEN:

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OYO HOTELS AND HOMES PRIVATE LIMITED., A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 2013, REGISTERED OFFICE AT:GROUND FLOOR 001 MAURANSH ELANZA, SHYAMAL CROSS ROAD, NEAR PAREKH HOSPITAL, SATELITE AHMEDABAD, GUJARAT - 380 015, EMAIL ADDRESS [email protected], REPRESENTED BY SHIVARAJU K, AUTHORIZED REPRESENTATIVE.

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…PETITIONER

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Digitally signed by R DEEPA Location: HIGH COURT OF KARNATAKA

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(BY SMT. PRIYANKA M. P.,ADVOCATE)

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AND:

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M/S JAGADISH, PARTNERSHIP FIRM, HAVING ITS REGISTERED OFFICE: - NO. 51, OLD NO. 664. 11^TH MAIN ROAD, 4^TH BLOCK, JAYANAGAR, BANGALORE, KARNATAKA - 560 011, REPRESENTED BY ITS PARTNER.

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…RESPONDENT

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NC: 2024:KHC:41102 CMP No. 725 of 2022

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(BY SRI. SURESH T.S., ADVOCATE)

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THIS CIVIL MISC. PETITION FILED UNDER SEC.11(6) OF THE ARBITRATION AND CONCILIATION ACT 1996, PRAYING TO ALLOW THE PETITION AND APPOINT A SOLE ARBITRATOR FOR ADJUDICATION OF DISPUTES THAT HAVE ARISEN BETWEEN THE PETITIONER AND THE RESPONDENT IN TERMS OF CLAUSE 10 OF THE MANAGEMENT SERVICE AGREEMENT DATED 12/07/2017 (ANNEXURE 'A') IN THE INTEREST OF JUSTICE AND EQUITY AND ETC.

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THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

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CORAM: HON'BLE MR JUSTICE ASHOK S.KINAGI

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ORAL ORDER

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The petitioner has filed this civil miscellaneous petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, for appointment of an Arbitrator to resolve the dispute arisen between the petitioner and respondent in terms of clause 10 of the management service agreement dated 12.07.2017, vide annexure-A as per the provisions of Arbitration and Conciliation Act, 1996.

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NC: 2024:KHC:41102 CMP No. 725 of 2022

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Brief facts leading rise to the filing of this petition are as follows:

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The petitioner (erstwhile known as Alcott Town Planners Private Limited) and the respondent entered into a Management Service Agreement with respect to property bearing No.124, situated at Brigade road, opposite Brigade Towers, near Shoolay Circle, Bangalore -560025. As per the agreement, petitioner had the right to operate and manage the lodging, accommodation and certain others services in a portion of the property, except the basement area which was retained by the respondent. Clause 10 of the agreement provides that in the event of a dispute arising out of the agreement, the parties shall refer the disputes for arbitration with the seat of arbitration being Bangalore.

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It is contended that, on 23.12.2018, around 2.43 p.m. a fire broke out at the property. Upon an inspection and an independent inspection, the root cause of the fire was identified to be the short circuit at the electrical

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4 - NC: 2024:KHC:41102 CMP No. 725 of 2022

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system located in the basement room, which was under the exclusive control and possession of the respondent. Dispute arose between the parties after the fire incident at the property.

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Meeting was held between the representatives of both the petitioner and respondent to ascertain the damage and the responsibility and cost of the repair and restoration that was required. The petitioner sent a communication to the respondent on 28.01.2019, inter alia stating that, all the repairs were to be undertaken by the respondent and requested the compliance of all mandatory fire regulations. The petitioner stated that until the property was restored, operations would remain suspended, and the petitioner would not be liable for the payment of benchmark revenue to the respondent. The petitioner urged for an amicable resolution of the issues. The respondent, in response of the email of petitioner dated 28.01.2019 disputed its liability towards the outbreak of fire and demanded that the petitioner pay the

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5 - NC: 2024:KHC:41102 CMP No. 725 of 2022

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benchmark revenue. The petitioner invoked arbitration as provided in Clause 10 of the Agreement for resolution of the dispute. The respondent wrote letter to the petitioner informing that the property had allegedly been restored, but insisted that the same had been done at the cost of the petitioner. The petitioner responded to the email of the respondent dated 15.02.2019 and 28.02.2019, disputing the contents thereof, including assertions of the costs towards restoration being contrary to the terms of the agreement. The petitioner requested a joint meeting on 05.03.2019 the issues amicably. The respondent refused to attend the joint proposed meeting, and insisted on the alleged liabilities of the petitioner. The petitioner wrote a letter on 11.03.2019 to the respondent stating that the property was to be restored as per applicable Government/ regulatory permits the before operations could be resumed and no money is payable until the conditions were met by the respondent. The petitioner proposed a joint inspection of the property from a fire safety perspective and for a meeting to discuss the issues

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6 - NC: 2024:KHC:41102 CMP No. 725 of 2022

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amicably. The respondent proposed to meet the petitioner on 14.03.2019 at 4 p.m. The petitioner requested for

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another date with at least 48 hours notice. The representative of the petitioner met the respondent on 18.03.2019. To the shock of the petitioner, the respondent insisted on refund of costs of any alleged structural repairs and that it would not furnish the requisite licenses required under law. The petitioner issued a breach and cure notice to the respondent on 02.04.2019 but the respondent failed to cure the defects and breaches as highlighted in the breach and cure notice, the agreement terminated on 09.04.2019. The respondent sent a demand notice to the petitioner under the provisions of the Insolvency and Bankruptcy Code, 2016, before the Learned National Company Law Tribunal, Ahmedabad Bench, for initiating proceedings under the act against the petitioner. It is stated that there are disputes between the petitioner and respondent in terms of the agreement. Hence, the said dispute has to be resolved by the Arbitrator in terms of

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NC: 2024:KHC:41102 CMP No. 725 of 2022

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clause 10 of the Management Service Agreement, dated

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12.07.2017. Hence, prayed to allow the petition.

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The respondent appeared through their counsel

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but did not filed the statement of objections.

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Heard the learned counsel for the petitioner and also learned counsel for the respondent.

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Learned counsel for the petitioner submits that, there is an agreement between the petitioner and respondent. She submits that the dispute has arisen between the petitioner and respondents and the said dispute has to be resolved by appointing an arbitrator. She submits that the petitioner got issued arbitration notice invoking clause 10 of the agreement proposing the name of the arbitrator. The respondent has replied but disagreed with the name proposed by the petitioner. Hence, she prays to allow the petition.

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On the other hand learned counsel for the respondents submits no objection to allow the petition and

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8 - NC: 2024:KHC:41102 CMP No. 725 of 2022

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appoint an arbitrator to resolve the dispute arisen between the petitioner and respondent.

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Perused the records and considered the

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submissions of learned counsel for the parties. The point that arise for consideration is;

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Whether the petitioner made out the ground to refer the matter to the arbitrator to resolve the dispute arisen between the petitioner and respondent in terms of clause 10 of the Management Service Agreement, dated 12.07.2017?

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It is not in dispute that, the petitioner and respondent have executed Management Service Agreement dated 12.07.2017. The dispute has arisen between the petitioner and respondent in regard to the conditions mentioned in the Management Service Agreement. The petitioner and respondent have exchanged the communications, in spite of it they resolve the disputes arisen between the petitioner and respondent. The clause 10 of the Management Service

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NC: 2024:KHC:41102 CMP No. 725 of 2022

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Agreement provides the dispute resolution which reads as under;

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"10. Dispute Resolution

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10.1 In the event of a dispute arising out of this agreement, the party shall confer and make a good faith effort to settle the dispute. If the dispute cannot be settled in three (3) days following the date of such conference, then the parties shall refer the dispute to a single arbitrator who shall be mutually appointed. The arbitrator proceedings shall be governed by the provisions of the Arbitration and Conciliation Act, 1996. The arbitration shall be held in English language only under seat of arbitration shall be in Bangalore."

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On careful perusal of clause 10 of the

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Management Service Agreement which provides that, in the event of a dispute arising out of this agreement, the party shall confer and make good faith efforts to settle the dispute. If the dispute cannot be settled in 3 days following the date of such conference, then parties shall

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10 -

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NC: 2024:KHC:41102 CMP No. 725 of 2022

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refer the dispute to the single arbitrator who shall be mutually appointed.

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Admittedly, the petitioner and respondent tried to settle the dispute amicably but they could not settle the dispute amicably. Hence, if the dispute cannot be settle within 3 days party shall refer the dispute to single arbitrator.

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As observed above, parties did not settled their dispute within 3 days from the date of conference. Thus, petitioner has made out the ground to refer the matter to the arbitrator. Further, learned counsel for the respondent submitted no objection to appoint any retired High Court Judge as an arbitrator. In view of the above discussion the petitioner has made out the ground to refer the matter to the arbitrator.

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Accordingly, I proceed to pass the following:

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11 -

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NC: 2024:KHC:41102 CMP No. 725 of 2022

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ORDER

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i) The Civil Miscellaneous Petition is allowed ;

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ii) Hon’ble Justice Sri. Ashok B Hinchigeri, former judge, High Court of Karnataka, is appointed as an arbitrator to resolve the dispute arisen between the petitioner and respondent.

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iii) Office is directed to forward the copy of this order to the Hon’ble Justice Sri. Ashok B Hinchigeri, former Judge of Karnataka High Court and to the Arbitration and conciliation center, Bengaluru.

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Sd/(ASHOK S.KINAGI) JUDGE

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SRK List No.: 1 Sl No.: 31

Oyo Hotels and Homes Private Limited v. M/S Jagadish

Case brief

What is this about?

What did the court decide?

Oyo Hotels and Homes Private Limited v. M/S Jagadish

Case brief

What is this about?

What did the court decide?

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