FORTUNE PARK HOTELS LIMITED Vs. MARWAR HOTELS LIMITED

JUDGEMENT

(1.) THIS application/petition under Section 9 of the Arbitration and conciliation Act, 1996 has been made by the applicant seeking relief that the applicant should be allowed to run hotel known as 'fortune Ummed Hotel' situated at Banar Road, Jodhpur, Rajasthan till the end of 30th April, 2007 in terms of the agreement dated 3rd November, 2003. The other relief sought is that the respondent should be directed to furnish security, by way of a bank deposit, for a sum of Rs. 6 crore being the outstanding amount and compensation payable by the respondent to the applicant and direct the respondent and its successors to provide 50 room nights per year, at the above-mentioned hotel on complimentary basis till the disputes between the parties are resolved through arbitration.

(2.) BRIEF facts relevant for the purpose of deciding this application are that the applicant entered into a Technical, Pre-opening, operating and Marketing Services Agreement dated 3rd November, 2003 in respect of the above-said hotel with the respondent. The agreement was valid for a period of ten years commencing from operating date with liberty to the parties to extend the operating terms of the agreement for two successive period of 5 years each. Under this agreement, applicant was to render services in connection with marketing, advertising and publicity of the hotel. In consideration of the services to be rendered, a pre-opening fee of Rs. 2. 5 lac was to be paid to the applicant and during each fiscal year of the operating term of the agreement, services fee equivalent to 5% of the Gross Operating income of the hotel was to be paid to the applicant. The applicant was also entitled to a minimum of 50 room nights in each fiscal year on a complimentary basis for use in the hotel. However, during continuance of the agreement, the respondent sold the hotel to a third party and terminated agreement of the applicant. The applicant has moved this application under Section 9 of the arbitration and Conciliation Act since the agreement contained an arbitration clause 'article 15' wherein it was provided that all disputes and differences arising from the agreement or in any way connected thereto shall be settled by way of arbitration proceedings conducted at New Delhi by a sole Arbitrator appointed by ICA in accordance with the provisions of Arbitration and conciliation Act. It was also provided that this clause shall survive termination of the agreement.

(3.) DURING arguments it transpired that the applicant has already invoked the arbitration clause and made request for appointment of arbitrator. It is submitted by the Counsel for the applicant that the respondent has illegally terminated the agreement and sold the hotel. As per terms of the agreement, respondent was to maintain the ownership of the hotel and because of sale of the hotel by the respondent, there was breach of agreement and the applicant was entitled to claim damages as well as the dues. It is submitted that the dues to the tune of Rs. 36,33,666/- have been admitted and acknowledged by the respondent vide its letter dated 10th January, 2007. The applicant was entitled to get this much amount secured and this Court should ask the respondent to furnish a bank guarantee to the extent of this amount or to deposit this amount in the Court as security.