Full Text
ARB.P. 638/2025 and I.A. 9633/2025
Date of Decision: 05.08.2025 IN THE MATTER OF:
OYO HOTELS AND HOMES PVT LTD .....Petitioner
Through: Ms. Paromita Majumdar, Ms. Meenakshi Vimal and Mr. Nikhil Goel, Advs.
Through: None.
JUDGEMENT
PURUSHAINDRA KUMAR KAURAV, J. (ORAL)
The present petition has been filed under Section 11 of the Arbitration and Conciliation Act, 1996 (the 1996 Act), seeking appointment of an
Arbitrator, to adjudicate upon the disputes that have arisen between the parties under the Management Service Agreement (hereinafter referred to as
„MSA‟) dated 18.09.2024.
JUDGMENT
2. On 24.04.2025, the Court directed for issuance of notice to the respondents. In compliance thereto, the petitioner has filed the affidavit of service, and the same is extracted as under. “AFFIDAVIT OF SERVICE I, Meenakshi Vimal, D/o Sh. ShivaNath Kunwar, having chamber at 2/4 B, second floor, Jangpura-A, Delhi-110014, do hereby solemnly affirm and KUMAR KAURAV declare as under:-
1. That I am one of the counsels for the Petitioner in the abovementioned matter and hence competent to swear this affidavit of service.
2. I say that I have served the notice dated 14.05.2025 issued by this Hon'ble Court on behalf of the Petitioner along with a complete copy of the petition by all permissible modes i.e. through Courier, Registered Speed Post as well as through e-mail, as per the Order dated 24.04.2025 passed by this Hon'ble Court.
3. I say that I have set the notice issued by this Hon‟ble Court along with a complete copy of the petition with all the annexures to both the respondents on their addresses as mentioned in the Memo of Parties of this petition by Registered Courier i.e. Professional Courier Services on 14.07.2025 at 3:31 pm. The receipts of the same having Airway Bill No. DEL20368477 (issued to Ms. Munmun Ghosh i.e. Rl) and Airway Bill No. DEL203682476 (issued to Mr. Raju Ghosh i.e. R[2]), along with the tracking report are annexed as Annexure-I (colly). I further state that while the courier issued to Ms. Munmun Ghosh having Airway Bill No. DEL203682476 could not get delivered, the courier sent to Mr. Raju Ghosh bearing Airway Bill No. DEL203682476 stands delivered at the given address on 18th July 2025 at 11:07 am and has been acknowledged with signature.
4. Further, I also state that I have sent the notice issued by this Hon'ble Court along with a complete copy of the petition weighing about 220 gms and 219 gms respectively to both Rl and R[2] through Registered Speed post on 15th July 2025 at 2:12pm. The postal receipts along with the tracking report are annexed as Annexure-2 ( colly). I state that while the Speed post tracking report of R[1] shows the Current status as "Item Received at PO" as on 18th July 2025 at 9:40AM, the tracking report of R[2] shows the current status at "Item Delivered" on 18th July 2025 at 6:18 PM.
5. I have also served the notice along with a complete copy of the Arbitration petition to both R[1] and R[2] on their e-mail IDs i.e. munmung858(a)gmail.com and 66inguesthouse@gmail.com respectively from my official e-mail id i.e. docs.lopm@gmail.com on 15.07.2025 at 4:41 pm. I further say that the service stands complete as the e-mails sent to both the Respondent have not bounced back. The proof of Service done through mail is attached herewith and marked as Annexure-3.
6. Therefore, though the service of Notice through Courier and Registered Speed Post stands incomplete in case of Rl i.e. Munmun Ghosh, but the same stands complete through E-mail. Service of Notice to R[2] i.e. Raju Ghosh stands complete through all permissible modes and this affidavit of service is being filed in light of the same. Consequently, it is stated that since the Respondents are husband and wife, it is safe to presume that both of them are well aware of the proceedings and the Next date of hearing in this matter which is 05.08.2025. -sd- DEPONENT VERIFICATION Verified at New Delhi on this _ day of August 2025 that the contents of this affidavit are true and correct and nothing material has been concealed therefrom. -sd- DEPONENT”
3. In paragraph no.4 of the affidavit, it is stated that the respondent no. 1 and respondent no.2 were attempted to serve by registered speed post.
4. As per the affidavit, the respondent no.1 and respondent no.2 were served on 18.07.2025. Besides the registered post, it is stated that petitioner has served both the respondents through E-mail.
5. Since no one appears for the respondents, therefore, the Court is left with no other option except to decide the petition on the basis of the material available on record.
6. The facts of the case would indicate that on 18.09.2024, the petitioner executed the MSA with respondent no.1 as the patron and respondent no.2 as the confirming party. As per the MSA, respondent no.1 was obligated to handover the property to the petitioner after effectuating the modifications specified under Schedule B of the Agreement, and the petitioner was required to provide a Benchmark Revenue (BR) to respondent no.1 on a monthly basis as consideration.
7. The MSA was for five years from the effect date i.e. from 18.09.2024 with a mandatory lock-in period of 3 years, during which respondent no.1 did not have the right to terminate the agreement.
8. Learned counsel for the petitioner submits that as per clause 4 of the MSA, it deposited an interest free security deposit of Rs. 4,40,000/- with the respondent no.1 and the same was to be refunded in full to the petitioner as per the terms of the MSA.
9. According to learned counsel for the petitioner, the petitioner appears to have remitted a certain amount as a transformation advance. As per the learned counsel, despite all steps being undertaken by the petitioner, the respondents did not make the repayment. It is stated that the petitioner sent a representation, which was not replied to by the respondents, and the petitioner, thereafter, invoked the arbitration Clause 21 of the MSA on 07.01.2025. According to the petitioner, vide the said notice, the petitioner claimed Rs. 80,79,227/- dues as on the date. Despite the steps being taken by the petitioner, the respondent did not come forward to amicably resolve the dispute and to appoint the Arbitrator.
10. Clause 21 of the agreement is extracted as under:
11. The law with respect to the scope and standard of judicial scrutiny under Section 11(6) of the 1996 Act has been fairly well settled. This Court as well in the order dated 24.04.2025 in case of ARB.P. 145/2025 titled as Pradhaan Air Express Pvt Ltd v. Air Works India Engineering Pvt Ltd has extensively dealt with the scope of interference at the stage of Section 11. The Court held as under:-
held to be within the scope of the Arbitral Tribunal which is equally capable of deciding upon the appreciation of evidence adduced by the parties. While considering the aforesaid pronouncements of the Supreme Court, the Supreme Court in the case of Goqii Technologies (P) Ltd. v. Sokrati Technologies (P) Ltd.5, however, has held that the referral Courts under Section 11 must not be misused by one party in order to force other parties to the arbitration agreement to participate in a timeconsuming and costly arbitration process. Few instances have been delineated such as, the adjudication of a non-existent and malafide claim through arbitration. The Court, however, in order to balance the limited scope of judicial interference of the referral Court with the interest of the parties who might be constrained to participate in the arbitration proceedings, has held that the Arbitral Tribunal eventually may direct that the costs of the arbitration shall be borne by the party which the Arbitral Tribunal finds to have abused the process of law and caused unnecessary harassment to the other parties to the arbitration.
12. It is thus seen that the Supreme Court has deferred the adjudication of aspects relating to frivolous, non-existent and malafide claims from the referral stage till the arbitration proceedings eventually come to an end. The relevant extracts of Goqii Technologies (P) Ltd. reads as under:-
the Tribunal ultimately finds to have abused the process of law and caused unnecessary harassment to the other party to the arbitration. Having said that, it is clarified that the aforesaid is not to be construed as a determination of the merits of the matter before us, which the Arbitral Tribunal will rightfully be equipped to determine.”
13. In view of the aforesaid, the scope at the stage of Section 11 proceedings is akin to the eye of the needle test and is limited to the extent of finding a prima facie existence of the arbitration agreement and nothing beyond it. The jurisdictional contours of the referral Court, as meticulously delineated under the 1996 Act and further crystallised through a consistent line of authoritative pronouncements by the Supreme Court, are unequivocally confined to a prima facie examination of the existence of an arbitration agreement. These boundaries are not merely procedural safeguards but fundamental to upholding the autonomy of the arbitral process. Any transgression beyond this limited judicial threshold would not only contravene the legislative intent enshrined in Section 8 and Section 11 of the 1996 Act but also risk undermining the sanctity and efficiency of arbitration as a preferred mode of dispute resolution. The referral Court must, therefore, exercise restraint and refrain from venturing into the merits of the dispute or adjudicating issues that fall squarely within the jurisdictional domain of the arbitral tribunal. It is thus seen that the scope of enquiry at the referral stage is conservative in nature. A similar view has also been expressed by the Supreme Court in the case of Ajay Madhusudan Patel v. Jyotrindra S. Patel”6.
12. Having considered the aforesaid legal position, the Court deems it appropriate to appoint Mr. Aviral Mishra, Advocate (Mobile No.+91 7985026059, e-mail id: adv.aviralmishra03@gmail.com ) as the sole Arbitrator.
13. The arbitration would take place under the aegis of the Delhi International Arbitration Centre (DIAC) and would abide by its rules and regulations. The learned Arbitrator shall be entitled to fees as per the Schedule of Fees maintained by the DIAC.
14. The learned arbitrator is also requested to file the requisite disclosure under Section 12 (2) of the 1996 Act within a week of entering on reference.
15. The registry is directed to send a receipt of this order to the learned arbitrator through all permissible modes, including through e-mail.
16. All rights and contentions of the parties in relation to the claims/counter-claims are kept open, to be decided by the learned Arbitrator on their merits, in accordance with law.
17. Needless to say, nothing in this order shall be construed as an expression of opinion of this Court on the merits of the controversy between the parties. Let a copy of the said order be sent to the Arbitrator through the electronic mode as well.
18. Accordingly, the instant petition, along with the pending application, stands disposed of PURUSHAINDRA KUMAR KAURAV, J AUGUST 5, 2025 aks/mj