Ascot Hotels and Resorts Pvt. Ltd & Anr v. Connaught Plaza Restaurants Pvt. Ltd

NAVIN CHAWLA, J. MARCH 20, 2018/Rekha/rv

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 13th February, 2018 Date of decision: 20th March, 2018 + ASCOT HOTELS AND RESORTS PVT. LTD & ANR. …. Appellants Through: Mr. Rajat Arora and Ms. Vishalakshi Singh, Advs. versus CONNAUGHT PLAZA RESTAURANTS PVT. LTD. ..... Respondent Through Mr.Sandeep Sethi, Sr. Adv. with Ms.Kanika Agnihotri, Mr.Preet Singh Oberoi, Advs. CORAM: HON'BLE MR. JUSTICE NAVIN CHAWLA 1. This appeal has been filed by the appellant under Section 37(2) of the Arbitration & Conciliation Act, 1996 challenging the order dated 12th April, 2017 passed by the Sole Arbitrator in arbitration proceedings No. DAC/1476/12-16, Connaught Plaza Restaurant vs. Ascot Hotels & Resorts Ltd. & Anr. The Arbitrator vide his impugned order has directed maintenance of status quo with respect to the 'license area' that is an area of approximately 2500 sq.ft, covered area along with terrace in the building constructed on Khasra No.656/1 and Khasra No.621 in Mauja Gahi, Tehsil Kasauli, District Solan, Himachal Pradesh along with storage area of 450 sq.ft in the basement of the said property. Page 2 2. The disputes between the parties arise out of the License Agreement dated 19th December, 2006 by which the license area along with the storage area in the basement was given on a license basis by the appellant to the respondent for running of a restaurant in the name of McDonald's Family Restaurants. The license was for a period of 20 years with an option to renew the same for a further term of 5 years. Some of the terms and conditions of the License Agreement that are relevant for the purposes of present appeal are reproduced herein under:- "2. GRANT OF LICENSE 2.1. In consideration of the license fees, covenants and agreements herein contained, AHRL agrees to give on license basis to CPRL and CPRL agrees to take on license from AHRL the Licensed Area along with storage of 450 sq ft built up covered area in the basement at a mutually agreed area, for a period of 20(Twenty years) with an option to renew the license for a period of one further term of 5 (Five) years upon serving a three months notice in advance prior to the expiry of the license and subject to the provisions of this agreement, with the right to use the common facilities in the Complex and for lawful purposes only including the right to ingress and egress into the Licensed Area. 4. TERM 4.1 PRIMARY TERM This agreement is for a term commencing from the date of restaurant being opened to the public (hereinafter referred to as the effective date) for business and ending 20 years from the effective date subject to the renewal of the agreement between AHRL and KK Ropeways Limited and renewal of the lease of the Licensed Area in favour of K.K. Ropeways. However, in the event the Lease in Page 3 respect of the Licensed Area is not renewed in favour of KK Ropeways, AHRL / K.K Ropeways shall provide a suitable alternative location in the said property. 4.2 OPTION TERM At the end of the Primary Term, the parties can renew for further period of 5 years on the same terms and conditions thereafter on the basis of mutually agreed terms. 6. LICENSE FEES 6.1 "CPRL" in consideration for using and operating the Licensed Area for the purpose of running the restaurant shall pay to AHRL subject to withholding of taxes, License fee at the rate of 8% (Eight Percentage) of the Gross Sales (as defined below), generated every month from "McDonald's Family Restaurant" operated by CPRL from the Licensed Area or a minimum guaranteed amount of Rs. 1.50,000/- whichever is higher. The ·Minimum Guaranteed amount shall be increased by 15% every 5 years from the effective date. 6.2 The gross sales for the purpose of determining the revenue share shall mean all receipts (cash, cash equivalent, credit or redeemed gift certificates) made exclusively from the Licensed area but shall not include any sales tax and/or Excise Duty or any Value Added Tax (VAT) imposed and collected or such taxes that