Court holds that termination notice issued by Malad Gymkhana was prima facie not in accordance with agreed contractual cure period; restrains respondent from obstructing petitioner's restaurant business and creating third-party rights in reserved premises pending arbitration.
In a significant interim relief order dated October 26, 2026, the Bombay High Court, presided over by Mr. Amit Borkar, J., has restrained Malad Gymkhana Limited from terminating the lease deed with Achieve Hospitality and from interfering with its existing restaurant business. The order came on a Commercial Arbitration Petition filed by Achieve Hospitality challenging the termination notice served by Malad Gymkhana Limited, the lessor, alleging breach of agreed contractual procedures.
The dispute arose under a Lease Deed dated October 24, 2024, granting Achieve Hospitality the right to run a restaurant and bar named "SOME PLACE NICE" at Malad Gymkhana House for a term of nine years. The lease deed also contemplated future agreements for additional premises-a new restaurant and two banquet halls-exclusively reserved for the petitioner under Clause 17.
Malad Gymkhana contended that the agreement was essentially a business conducting arrangement without independent possession rights and alleged multiple breaches by Achieve Hospitality, including unauthorized structural changes, failure to pay certain fees, and non-compliance with licensing conditions. It issued a notice demanding rectification of breaches within seven days and later served a termination notice on June 13, 2026.
However, the Court found that Clause 56 of the lease deed clearly provided a 60-day cure period for rectifying breaches before termination could be effected. The unilateral reduction of this period to seven days by the respondent was held to be contrary to the agreed contract terms. The Court emphasized that a contractual right to terminate must be exercised strictly in accordance with the procedure agreed between the parties.
Further, the Court observed that while the future agreements relating to the additional premises under Clause 17 were yet to be finalized in detail, the clause unequivocally provided for exclusive rights to the petitioner. Accordingly, the Court restrained Malad Gymkhana from creating any third-party rights or entering into fresh commercial arrangements for these premises pending arbitration.
The Court also directed the respondent to ensure that construction activities at the premises do not compromise safety, particularly by maintaining a lawful emergency exit for the existing restaurant, in view of alleged unsafe conditions due to ongoing works.
Granting interim protection under Section 9 of the Arbitration and Conciliation Act, 1996, the Court stayed the operation of the termination notice and prohibited obstruction of the petitioner's ongoing business. It clarified that this interim order does not decide the merits of alleged breaches or the enforceability of Clause 17, leaving all disputes open for resolution by the Arbitral Tribunal.
The petitioner was directed to continue fulfilling undisputed payment and statutory obligations, while both parties were given liberty to seek further interim relief before the Arbitral Tribunal.
This order underscores the judiciary's approach to uphold contractual procedures in lease and business agreements and to protect commercial interests pending arbitration, while ensuring safety and lawful use of premises.
Bottom Line:
Arbitration and Conciliation Act, 1996, Section 9 - Interim protection - Where lease deed/ business conducting arrangement provided 60 days' cure period before termination, lessor could not unilaterally reduce it to 7 days and terminate agreement - Prima facie termination held doubtful - Pending arbitration, respondent restrained from obstructing existing restaurant business and from creating third-party rights in proposed new restaurant and banquet halls reserved exclusively for petitioner under Clause 17 - Court also directed maintenance of safe and lawful emergency exit.
Statutory provision(s): Arbitration and Conciliation Act, 1996, Section 9
Achieve Hospitality v. Malad Gymkhana Limited, (Bombay) : Law Finder Doc Id # 3002726
