The Madhya Pradesh High Court, Indore, has appointed Justice A.M. Naik (Retd.) as a sole arbitrator to adjudicate disputes arising out of a 20-year commercial lease between a property owner and Sapphire Foods India Pvt. Ltd., which operates a KFC outlet in Indore.
The case arose from a lease agreement dated February 6, 2020, under which the shop premises at “The One” building, RNT Marg, Indore, were leased on a 20-year term, with a minimum monthly guarantee of ₹2 lakh or revenue sharing, whichever was higher. Later, after alleging rent default, the lessor terminated the lease in July 2024 and invoked arbitration when the tenant refused to vacate.
Sapphire Foods opposed the Section 11 plea, arguing that the tenancy was governed by the Madhya Pradesh Accommodation Control Act, 1963, and therefore not arbitrable. It contended that eviction matters under rent control legislation fall outside the scope of arbitration.
Rejecting this preliminary objection, the High Court observed that the agreement was not a “plain and simple” landlord-tenant arrangement but a commercial lease incorporating revenue-sharing elements with “a tinge of profit sharing.” The Court held that whether the dispute was governed by the Transfer of Property Act or the Accommodation Control Act required detailed examination and could not be conclusively determined at the Section 11 stage.
Referring to VGP Marine Kingdom (P) Ltd. v. Kay Ellen Arnold, (2023) 1 SCC 597, and Lombardi Engg. Ltd. v. Uttarakhand Jal Vidyut Nigam Ltd., (2024) 4 SCC 341 on the scope of judicial scrutiny at the pre-referral stage, the Court ruled that the issue of arbitrability should be left to the arbitral tribunal.
It also noted the existence of a contractual clause barring recourse under rent laws and emphasising arbitration as the agreed dispute resolution mechanism.
Accordingly, the Court proposed the appointment of Justice A.M. Naik (Retd.), former Judge of the Madhya Pradesh High Court, as the sole arbitrator, subject to statutory disclosures. The matter has been listed for March 9, 2026, for further proceedings
Appearances
Shri Siddharth Singh, learned counsel for the applicant. Shri Murtuza Bohra, learned counsel for respondent No.1.
