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Judgment
,,
C. Hari Shankar, J",,
By this petition, preferred under Section 11 (6) of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “the 1996 Actâ€), the",,
petitioner prays for appointment of an arbitrator, to arbitrate on the dispute between the petitioner and the respondent.",,
The dispute arises out of a Management Service Agreement, dated 29th June, 2019 (hereinafter referred to as “the MSAâ€), executed between",,
the petitioner and the respondent.,,
The paragraphs in the petition which, as per the petitioner, set out the dispute between the parties, are haphazardly numbered but, for ready",,
reference, may be reproduced thus:",,
“9. In and around mid of 2019, the Respondent had expressed its interest in availing the services of Oravel Stays Private Limited (the ""Erstwhile",,
Company"") and in pursuance of the same, the Respondent had made several representations to the Erstwhile Company regarding the Property.",,
Subsequently, the Parties engaged in negotiations and entered into a Management Services Agreement dated 29 June 2020 (""MSA""). A copy of the",,
MSA is enclosed herewith.,,
It is most humbly submitted that based upon the representations of the Respondent, the Erstwhile Company (now the Petitioner) had paid an",,
Interest-Free Security Deposit (""IFSD"") of INR 17,50,000 to the Respondent.",,
Some relevant extracts of the MSA are provided herein below for ready reference:,,
Article 1 “/Approvals"" shall mean licenses, NOC, approvals required as per laws and regulations to construct the Venue and to run the",,
Venue for business purposes, i.e., banquet services, wedding services including but not limited to food and beverage services, catering,",,
serving liquor to guests, approved/ sanctioned venue plans, commencement certificate, occupancy certificate or equivalent, Venue usage as",,
per applicable law and regulation, NOC from fire authorities and electricity and water connections.""",,
Article 3: Term",,
3.1 This Agreement shall commence from Execution Date and shall be valid for a period of 5 years (five years) unless terminated earlier in,,
accordance with Article 9 of this Agreement. The Parties shall extend the Term of this Agreement on mutual consent basis, in writing, and to",,
be signed by the authorized representative of both Parties.""",,
4.2 The service provider shall on the commencement date deposit an interest free refundable security deposit (“IFRSD"") equivalent to",,
Rs. 17,50,000 (Indian Rupees Seventeen Lakh Fifty Thousand only) under this agreement on the Commencement Date. IFRSD in full, shall",,
be refunded to the owner by the service provider on expiry/termination of this Agreement. Failing which, the service provider shall have the",,
right to deduct equivalent amount from benchmark revenue payable by the Service Provider. The Service Provider shall have the right to,,
continue to set off the IFRSD amount from the benchmark revenue till the time the entire IFRSD is recovered by the Service Provider in case,,
the amount of the IFRSD to be recovered is more than the monthly benchmark revenue. It is clarified that the owner shall not be entitled to,,
terminate this Agreement irrespective of expiry of the Owners lock in, till full security amount is recovered by the Service Provider""",,
5.2 OWNER'S RIGHTS AND OBLIGATIONS",,
The Owner Shall:,,
5.2.5 Remain solely responsible and liable for all taxes, cess or duty, any ground rents, municipal taxes, real estate taxes, personal Venue",,
taxes and assessments and any other charges in respect of the Venue/Venue that are payable in relation to the title of or use of the Venue or,,
in relation to the business of providing banquet services on a commercial basis. In the event the Owner fails to pay such taxes or dues. due,,
to which the Service Provider is hindered in any manner and therefore unable to fulfill its obligations under this Agreement including but,,
not limited to not being able to provide Services in a smooth and efficient manner or the business at the Venue is getting disrupted or is,,
threatened to be disrupted by relevant government authority through its action or inaction, the Service Provider shall have a right to make",,
such payments due and have the right to recover such amounts from the Benchmark Revenue payable to the Owner under this Agreement.""",,
5.2.7 The Owner shall be solely responsible for obtaining Approvals, including but not limited to renewals of licenses, at its own cost, to",,
enable the Service Provider to perform its obligations under this Agreement.â€,,
ARTICLE 6: REPRESENTATIONS AND WARRANTIES",,
6.2 The Owner has all necessary statutory and/or regulatory permission(s), approval(s), licenses and permits required for running and",,
operating the Venue and conducting its business and for the providing of Services by the Service Provider.""",,
ARTICLE 9: TERMINATION AND CONSEQUENCES OF TERMINATION",,
9.1.2 Notwithstanding Article 9.1.1, Service Provider shall be entitled to terminate the Agreement anytime (including within the Service",,
Provider's Lock-In Period) in the event: (a) there is a material breach of the Agreement by Owner or there has been a misrepresentation by,,
Owner and Owner fails to rectify the said breach within a period of 30 (thirty) days from the date on which it is notified of the said breach;,,
or (b) Owner files for bankruptcy or becomes or is declared insolvent or has a receiver or manager appointed over all or substantially all,,
of its assets; (c) a proposal of land acquisition in respect of any material part of or all of the Venue being effected by any governmental,,
body; or (d) there being a dispute or threat of a dispute concerning title of the Venue; or (e) If the lease deed or any other agreement,,
vesting possession of the Venue on the Owner terminates; (f) If any act or omission of the Owner causes disruption in the business.""",,
ARTICLE 10: DISPUTE RESOLUTION AND GOVERNING LAWS",,
10.1 Arbitration: Any dispute arising out of this Agreement and the obligations thereunder (""Dispute"") shall be finally settled by arbitration",,
in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any statutory modification or re-enactment thereof for",,
the time being in force. The Parties agree that the Dispute shall be adjudicated by a mutually appointed single arbitrator. The arbitration,,
proceedings shall be conducted in English language and seat of arbitration shall be at New Delhi.""",,
Description,Amount (INR),
Amount Outstanding:,,
Benchmark Revenue for the month of
February, 2020",,"8,75,000
Benchmark Revenue for the month of
March, 2020",,"8,75,000
Total Rent,,"17,50,000
Less: Amount Recoverable,,
Security Deposit,"17,50,000",
2.Venue booking advance amount,"1,00,000",
3.Lock-in-pay-outs,"4,66,95,833","4,85,45,833
Net Actual Recoverable Amount,,"4,67,95,833