The Delhi High Court has ruled that the dispute resolution provisions in the lease and licence deeds executed between Jhankar Banquets and the Delhi Development Authority (DDA) qualify as valid arbitration agreements, clearing the way for arbitration in a nearly three-decade-old commercial dispute. Justice Jyoti Singh allowed two petitions filed under Sections 11(5) and 11(6) of the Arbitration and Conciliation Act, 1996.
The case concerns the Tower Restaurant at Asiad Village, which Jhankar Banquets took on lease and licence from the DDA in 1997–98 after paying substantial upfront amounts. The petitioner alleged that DDA failed to disclose multiple structural, regulatory and ownership-related impediments, including pending litigation over title, non-compliance with fire safety norms, repeated sealing orders, and restrictions imposed by the National Green Tribunal on commercial operations in the area. The firm claimed that despite paying ground rent and licence fees, it suffered extensive losses for over 25 years, prompting it to invoke arbitration in December 2024.
DDA opposed the petitions, contending that Clause 21 of the Lease Deed and Clause 19 of the Licence Deed merely empowered the Vice-Chairman of DDA to take administrative decisions and did not reflect any intention to arbitrate. It further argued that many disputes relate to actions by third parties, making them non-arbitrable.
Rejecting these arguments, the Court held that the clauses fulfil the essential ingredients of an arbitration agreement, even though they do not expressly use the terms “arbitration” or “arbitrator.” The Court observed that what matters is the parties’ clear intention to refer disputes to a binding adjudicatory mechanism.
The Bench also reiterated that at the Section 11 stage, courts are required to adopt a prima facie approach, leaving complex questions of arbitrability to the arbitral tribunal unless the matter is manifestly non-arbitrable.
Accordingly, the Court appointed Dr. Amit George as the Sole Arbitrator to adjudicate the disputes arising out of the lease and licence agreements. The proceedings will be conducted under the Delhi International Arbitration Centre (DIAC) Rules, and the arbitrator will provide the statutory disclosure required under Section 12 of the Act.
The Court clarified that it has expressed no opinion on the merits of the parties’ claims.
Appearances:
For the Petitioner: Mr. Ravi Gupta and Mr. Ankit Jain, Senior Advocates with Mr. Aditya Chauhan and Ms. Muskaan Mehra, Advocates.
For the Respondent: Mr. Sanjay Vashishtha, Mr. Siddhartha Goswami, Ms. Geetanjali Reddy and Mr. Aditya Sachdeva, Advocates.
