Achieve Hospitality vs Malad Gymkhana Limited

CNR No : HCBM020335882026

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AGK
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMM ARBITRATION PETITION (L) NO.33587 OF 2026
Achieve Hospitality
… Petitioner
Vs.
Malad Gymkhana Limited
… Respondent
ATUL
GANESH
KULKARNI
Digitally signed
by ATUL GANESH
KULKARNI
Date: 2026.10.26
13:00:36 +0530
Ms. Ambrin Khan with Mr. Aditya Chopta, Mr. Amay
Jain, Mr. Isiri Rajaneesh, VG Sreeram and Mr. Dhruvit
Shah i/by Mohammad Abdi for the Petitioner.
Mr. Piyush Shah with Mr. Dishang Shah, Mr. Deep
Madnani and Ms. Kinjal for the Respondent.
CORAM : AMIT BORKAR, J.
RESERVED ON : OCTOBER 23, 2026
PRONOUNCED ON : OCTOBER 26, 2026
JUDGMENT:
1. I have heard the arguments made by the learned Advocates
appearing for both parties. The main question at this stage is
whether the Respondent was entitled to terminate the Lease Deed
in the manner in which it has done, when both parties had agreed
upon the procedure to be followed for such termination. The other
question is whether the Petitioner has shown sufficient grounds for
temporary protection of its existing restaurant and bar business
and the three additional premises referred to in Clause 17 of the
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Lease Deed.
2. At the beginning, it is necessary to understand the nature of
the agreement entered into between the parties. Under the Lease
Deed dated 24 October 2024, the Petitioner is permitted to run a
restaurant and bar in the name and style of “SOME PLACE NICE”
in premises admeasuring about 2,500 square feet on the first floor
of Malad Gymkhana House. Clause 2 provides that the agreement
shall continue for nine years, from 22 October 2024 until 21
October 2033. The agreement provides for payment of monthly
rent or royalty, security deposit and other obligations which both
parties are required to perform.
3. The Respondent has argued that, in its real nature, the
agreement is a business conducting agreement and not a lease
which gives independent possession rights to the Petitioner. For
this purpose, the Respondent has relied upon Clauses 27(c) and
54. These clauses state that the premises shall remain under the
control and juridical possession of the Owners and that the
Petitioner is allowed to use the premises for conducting its
business. This argument cannot be ignored. Only because the
document is called a Lease Deed, the Court cannot ignore what is
written in it. At the same time, the Respondent cannot avoid the
obligations accepted by it under the written document merely by
describing the arrangement as a business conducting agreement.
Whatever may be the exact nature of the rights created in respect
of the existing premises, the Respondent is required to follow the
conditions agreed between the parties for terminating the
agreement.
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4. The learned Advocate for the Petitioner has placed
considerable reliance upon Clause 56 of the Lease Deed, which
appears at page 88 of the Petition. The important part of this
clause states that “cause” shall mean any continuing or repeated
failure by the Lessee to perform its duties and responsibilities
under the agreement. The clause states:
“However, the Lessee shall be allowed a period of 60 days to
rectify the issues as are pointed out by the Lessor in his
notice.”
5. Thus, the agreement provides the circumstances in which the
Lessor may seek termination. It provides a period during which the
Lessee must be allowed to correct the stated problems. This is an
important condition agreed between the parties. They have agreed
that the Lessee shall get sixty days to correct the breaches before
termination is resorted to. The Court cannot reduce this period
merely because the Lessor considers the alleged breach to be
serious. At the same time, giving sixty days to correct a breach
does not mean that the Lessee is free to violate the agreement. The
purpose of this clause is that the alleged defaults must be pointed
out to the Lessee and an opportunity must be given to correct them
in the manner agreed between the parties.
6. It is necessary to see whether the Respondent pointed out
the alleged breaches and whether the Petitioner was given the
opportunity provided under Clause 56. The detailed reply dated 14
February 2026 refers to several alleged breaches. Paragraph 20
states that the delay in obtaining the Occupancy Certificate was
caused because the Petitioner had asked for changes and
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modifications in the approved plan. It refers to force majeure
circumstances arising from rules, norms and procedures which
were beyond the control of the Respondent. In paragraph 21, the
Respondent has given a list of alleged breaches. These include
alleged demolition of the existing store room and toilet blocks and
construction of new ones without its consent, removal of internal
walls, non-payment of non-member entry fees, failure to provide
certain records, changes in the approved design, purchase of liquor
allegedly beyond the permitted limit, putting up signage without
necessary approval, failure to obtain approval for menu prices,
holding functions similar to banquet functions, staff allegedly
staying overnight and parking of more than two vehicles. The
Respondent relies upon these allegations to say that the Petitioner
has repeatedly committed serious breaches of the existing
agreement.
7. It cannot be said that the Respondent made no attempt to
point out the alleged defaults. Paragraph 21 contains specific
allegations which the Petitioner could understand and answer. To
this extent, the Respondent's argument has some substance.
However, whether each alleged breach took place, whether it was
against the Lease Deed and whether it was serious enough to
justify termination are separate matters. These questions cannot be
decided merely by reading the allegations made in an Advocate's
notice as if they have been proved.
8. The Petitioner, by its reply dated 17 April 2026, denied the
allegations made in paragraph 21 of the Respondent's reply. The
Petitioner stated that the changes and construction work were
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carried out with the knowledge or approval of the Respondent's
representatives. It denied any deliberate failure to pay entry fees or
any unauthorised use of the premises. The Petitioner disputed the
allegations regarding liquor, signage, menu approvals, banquet
functions and parking. In substance, the Petitioner stated that
these allegations were not supported by proper material and had
been made as a counterblast to its own complaints regarding non-
performance of Clause 17. At this stage, the Court cannot treat the
version of either party regarding these disputed events as proved.
The allegations made by the Respondent cannot be ignored, but
the answers given by the Petitioner will have to be considered by
looking at the relevant documents and evidence. Merely because
the Petitioner denies a breach, it cannot be said that no breach
took place. In the same way, merely because the Respondent has
listed certain allegations in its reply notice, it cannot be said that
those allegations are true. The proper course is to examine
whether the Respondent followed the agreed procedure for
termination, without deciding the disputed facts which are to be
considered in arbitration.
9. The more important difficulty for the Respondent arises from
the last part of its reply dated 14 February 2026. Paragraph 59 of
that reply calls upon the Petitioner to “cease and desist from
committing breaches” and to correct the breaches mentioned in
paragraph 21 within seven days from receipt of the notice. It states
that if the Petitioner fails to comply, the Respondent would be
required to terminate the existing agreement. Paragraph 60 again
states that the Respondent would proceed to terminate the
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agreement if the Petitioner failed to correct the stated breaches.
The words in paragraph 59 are clear. The Petitioner was asked to
correct the alleged breaches within seven days, whereas the
agreement provides sixty days for this purpose. The two periods
are different. The Respondent was required to follow the
procedure which both parties had accepted. It could not reduce the
agreed period on its own by mentioning a different period in its
Advocate's reply. Therefore, the question is not only whether the
Respondent pointed out the alleged breaches, but whether the
Petitioner was given the opportunity to correct them in the manner
required under the Lease Deed.
10. The learned Advocate for the Respondent submitted that the
termination was not made immediately after seven days had
expired. He pointed out that the termination notice was issued on
13 June 2026, which was more than sixty days after the reply
dated 14 February 2026. According to him, the Petitioner had, in
fact, received more than sixty days to correct the breaches and
cannot now complain about the seven-day period mentioned in
paragraph 59. This argument requires consideration. The fact that
the Respondent did not issue the termination notice within seven
days is relevant. The time which passed between the two notices is
a circumstance which the Court must consider. However, the
question is not only whether sixty days had passed according to
the calendar. The Court must see what the Respondent told the
Petitioner and whether its later action followed the protection
given under Clause 56. The reply dated 14 February 2026 asked
the Petitioner to correct the breaches within seven days and
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threatened termination if the Petitioner failed to do so. It did not
state that the Petitioner would be given sixty days to correct the
issues.
11. The notice dated 13 June 2026 did not give the Petitioner
another sixty-day opportunity to correct the alleged breaches.
Instead, it claimed that the agreement stood terminated and
required the Petitioner to remove within thirty days. Therefore, at
this interim stage, merely because more than sixty days had passed
after the earlier reply, the difficulty arising from the seven-day
period mentioned in that reply and the termination claimed in the
later notice does not disappear. The agreed procedure for
correcting breaches has to be considered as a whole. The
Respondent cannot rely upon the seven-day demand to say that
the Petitioner failed to comply and, at the same time, treat the
later termination as valid without showing that the protection
provided under Clause 56 was followed.
12. I am unable to accept the Respondent's argument that, at this
stage, the termination notice can be treated as having been issued
in full compliance with Clause 56. The issue is not that the
Respondent had no right to complain about the alleged breaches.
The issue is that both parties had agreed upon the manner in
which termination could take place. A contractual right to
terminate must be exercised in the manner agreed between the
parties. One party cannot rely upon the alleged breach of the other
party while ignoring the procedure which governs its own right to
terminate.
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13. This is only a prima facie finding for deciding the present
Petition. It does not mean that the allegations made in paragraph
21 of the reply dated 14 February 2026 are false. It does not mean
that the Respondent has lost its rights in respect of any breach
which may be proved. It only means that, on the material
available, the termination notice dated 13 June 2026 cannot be
treated as free from difficulty merely because the Respondent has
made several allegations against the Petitioner.
14. The other important issue concerns Clause 17 of the Lease
Deed. The Petitioner contends that the registered document
creates a binding obligation upon the Respondent to construct a
new restaurant and two banquet halls and to make these premises
available exclusively to the Petitioner. For this purpose, the
Petitioner relies upon the following words in Clause 17:
“It is and irrevocably agreed between the First and Second
party that the said New Restaurant and 2 Banquet Hall
premises shall be offered solely to the Second Party and that
the same cannot be offered to any third party for any reasons
and on any terms whatsoever.”
15. The clause records the broad commercial terms for the
proposed premises. Clause 17(e) connects the future agreements
with the existing agreement and provides nine months, with a one-
month grace period, for making the premises available. It states
that if the premises are not made available within that period, it
shall be at the sole discretion of the Second Party to cancel or
terminate the existing agreement as well as the arrangement for
the future agreements. The clause provides for refund of security
deposits and agreed liquidated damages of Rs.30,00,000 in the
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circumstances mentioned therein. These terms are important.
Clause 17 does not merely state that the parties may possibly do
business together in future. It mentions the number and general
nature of the proposed premises, their approximate area, the
arrangement for giving them exclusively to the Petitioner, the time
period and certain consequences if the premises are not made
available. Therefore, Clause 17 will have to be considered by
looking at all its terms and not only by referring to the fact that
separate agreements were contemplated for the future.
16. The Respondent has disputed whether Clause 17 can be
enforced. In paragraphs 8 to 19 of its reply dated 14 February
2026, the Respondent says that Clause 17 is separate from the
agreement governing the existing restaurant and only records an
intention to enter into future agreements. It points out that several
matters, including menu, prices, licence fees, access, parking,
amenities, working arrangements and other matters relating to
running the business, were still required to be discussed and
agreed. It contends that the proposed business was not fully
established and that the necessary permissions and approvals for
the new premises had not been obtained. On this basis, the
Respondent argues that there was no complete agreement
regarding the three additional premises and that the Petitioner did
not acquire any enforceable right to demand their allotment. There
is substance in the argument that the separate agreements
mentioned in Clause 17 would be required to regulate the detailed
working of the new restaurant and banquet halls. The document
refers to those future agreements. Therefore, at this stage, it would
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not be proper to hold that every detail of the future business
arrangement had been settled. Nor would it be proper to hold that
the Petitioner can immediately demand possession of all three
premises without execution of the contemplated documents and
compliance with the applicable requirements. However, that is not
the end of the matter. The Respondent's argument does not deal
with the clear words that the proposed premises “shall be offered
solely to the Second Party” and “cannot be offered to any third
party”. Clause 17(h) records that the terms were “agreed in
principle between the Parties and being binding upon the parties”,
while stating that they were to be included in individual
agreements for the respective premises. These words have to be
read together. The fact that detailed agreements were to be
executed later does not make every obligation recorded in Clause
17 meaningless. The question whether the clause can be enforced
will have to be decided after considering the agreement as a whole
and the material placed before the Arbitral Tribunal.
17. At least for the purpose of temporary protection, Clause 17
raises a serious question as to whether the Respondent can use the
premises reserved for the Petitioner for another commercial
arrangement or give them to a third party while the contractual
disputes remain unresolved. The Petitioner has shown a prima
facie basis for claiming an exclusive arrangement. The
Respondent's argument that some terms remained to be settled is a
matter which the Arbitral Tribunal will have to consider. On the
material available, this argument does not justify rejecting the
Petitioner's request to preserve the disputed premises. The Court
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must keep in mind the difference between protecting a contractual
claim and directing specific performance of the agreement. The
Petitioner has, among other things, asked that the Respondent
should be prevented from creating third-party rights in the new
restaurant and the two banquet halls. A temporary order
preventing the creation of such rights would preserve the subject
matter of the dispute. Such an order would not direct the
Respondent to hand over the premises to the Petitioner. It would
not decide whether every term of Clause 17 can be enforced. This
limited protection would leave the main claims open for decision
in arbitration.
18. The Respondent has stated, in paragraph 20 of its reply
dated 14 February 2026, that the delay in obtaining the Occupancy
Certificate occurred because the Petitioner had asked for changes
and modifications in the approved plan and those changes were
not approved. The Respondent has referred to force majeure
circumstances arising from rules, norms and procedures which
were beyond its control. The Petitioner denies that these
allegations justify the Respondent's failure to perform its
obligations. It has asked the Respondent to give details of the
changes, the applications made to the authorities, the alleged
rejection of the changes and the connection between those events
and the delay in obtaining the Occupancy Certificate. At this stage,
there is not enough material to hold that the entire delay was
caused only by the Respondent. There is not enough material to
hold that the Petitioner caused the delay by asking for changes in
the plan. Both sides have made statements which are disputed by
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the other side. The Respondent's explanation cannot be treated as
proved only because it appears in the reply notice. Equally, the
Petitioner's denial does not settle the issue in its favour. The
relevant applications, approvals, communications with the
authorities and other evidence will have to be examined during
arbitration.
19. What is clear from the Lease Deed is that the parties had
fixed a period for obtaining the Occupancy Certificate and making
the three premises available. The Petitioner relies upon the expiry
of that period to support its complaint. The Respondent relies upon
the Petitioner's alleged conduct and circumstances beyond its
control to explain the delay. Until these matters are examined,
neither party should be allowed to take steps which may defeat the
contractual rights claimed by the other party.
20. The termination notice dated 13 June 2026 requires
consideration. In paragraph 2, the Respondent states that it has
instructed its Advocates “to revoke, cancel and terminate” the
Lease Deed because of the alleged breaches. Paragraph 6 again
states that the Respondent is not willing to continue the agreement
and that it “stands revoked, cancelled and terminated”. Paragraph
8 states that the Respondent would have the right to prevent and
obstruct the Petitioner's restaurant and bar activities. Paragraph 9
reserves the Respondent's right to claim damages and seek
forfeiture of the security deposit. Paragraph 10 calls upon the
Petitioner to comply within thirty days, failing which the
Respondent threatens to initiate appropriate civil or criminal
proceedings. These statements show that the termination notice is
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intended to have immediate effects upon the Petitioner's existing
business. If the Respondent is allowed to act upon the notice and
prevent the business from continuing, the Petitioner's operations
may be interrupted before the contractual disputes are decided.
The Petitioner states that it paid security deposits totalling
Rs.30,00,000 and spent substantial amounts on renovation,
interiors, equipment and setting up the restaurant. The
Respondent disputes the amount and the legal basis of the
Petitioner's claims for expenditure. However, its own reply states
that it is willing to refund amounts received towards the proposed
premises. The payment of these amounts and the nature of the
Petitioner's entitlement will have to be decided on the evidence.
For the present purpose, the material placed before the Court
shows that there is a arrangement between the parties and that the
Petitioner is running a restaurant business.
21. The Petitioner has asked for a direction to renovate or
construct the rear fire exit and make it accessible. The papers refer
to an email dated 28 January 2026 concerning construction of an
underground water tank and breaking of the staircase. The
Petitioner has relied upon photographs of the staircase and has
stated that the present condition creates a risk to its staff,
customers and other persons using the restaurant. This issue
cannot be treated as an ordinary dispute about commercial terms.
The safety of the persons using the premises is important. At the
same time, the actual condition of the staircase, the construction
work required and the proper manner of making the premises safe
will have to be considered in accordance with the applicable
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building and fire safety requirements.
22. In these circumstances, it would not be proper at this stage
to hold that the Respondent deliberately created a dangerous
condition. It would not be proper to insist upon a particular
method of construction without considering the requirements of
the competent authorities. However, the Respondent must ensure
that construction work does not leave the restaurant and bar
without a safe and lawful emergency exit. Necessary steps must be
taken to make the rear fire exit accessible or to provide a safe and
lawful alternative as required by the competent authority. This
direction is necessary for protecting the persons using the premises
and does not depend upon the final decision of the contractual
dispute.
23. The next question is whether the Petitioner has fulfilled the
requirements for temporary relief under Section 9 of the
Arbitration and Conciliation Act, 1996. The Petitioner has shown a
prima facie case regarding the procedure followed for termination
under Clause 56 and the exclusive arrangement recorded in Clause
17. The balance of convenience supports maintaining the existing
position for the time being. If the Respondent is allowed to
obstruct the existing restaurant and bar business on the basis of a
termination which is open to serious doubt, the Petitioner may
suffer interruption of business, loss of customers and other
commercial consequences before its claims are decided. If third-
party rights are created in the new restaurant and the two banquet
halls, the dispute concerning Clause 17 may become more difficult
to resolve effectively. On the other hand, granting temporary
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protection does not prevent the Respondent from defending in
arbitration or placing its allegations of breach before the Tribunal.
The Respondent's allegations regarding unauthorised alterations,
non-payment of entry fees, signage, business practices and other
matters remain open for consideration. The protection granted by
this Court does not mean that the Petitioner is permitted to violate
the Lease Deed or statutory requirements. The Petitioner must
continue to perform its undisputed obligations, including payment
of amounts which are due, and comply with the applicable safety
and licensing requirements. The Respondent will remain free to
seek appropriate relief from the Arbitral Tribunal in accordance
with law.
24. I am of the view that the Petition deserves to be allowed in
part. At this stage, it would not be proper to decide whether every
term of Clause 17 is enforceable or to direct immediate handover
of the new restaurant and the two banquet halls. These issues will
have to be decided in arbitration. Equally, it would not be proper
to permit the Respondent to obstruct the Petitioner's existing
business or create third-party rights in the disputed premises while
the contractual issues remain unresolved and the validity of the
termination notice is open to serious doubt. The proper course is to
preserve the existing business arrangement and the three
additional premises until the Arbitral Tribunal considers the
dispute, subject to the terms of the following order.
(a) Pending constitution of the Arbitral Tribunal and until
the Tribunal considers and passes an appropriate order on
interim protection, the Respondent shall not obstruct or
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interfere with the Petitioner's existing restaurant and bar
business under the name and style of “SOME PLACE NICE”,
save in accordance with law and the terms of the Lease
Deed;
(b) The operation and implementation of the termination
notice dated 13 June 2026 shall remain stayed until the
Arbitral Tribunal considers the question of interim
protection, subject to orders passed by the Tribunal;
(c) Until the Arbitral Tribunal considers the dispute, the
Respondent shall not create any third-party rights, lease,
licence, allot, part with possession of, or enter into any fresh
commercial arrangement concerning the new restaurant and
the two banquet halls referred to in Clause 17 of the Lease
Deed. This direction shall not be construed as a direction to
hand over possession of those premises to the Petitioner or as
a final finding that every term of the proposed future
agreements is enforceable;
(d) The Respondent shall ensure that construction or other
activities at the premises do not create an unsafe condition
for persons using the existing restaurant and bar. The
Respondent shall take necessary steps to ensure that the rear
fire exit is accessible or that a safe and lawful alternative
emergency exit is provided in accordance with the
requirements of the competent authority;
(e) The Petitioner shall continue to comply with its
undisputed payment obligations under the existing
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agreement and shall comply with applicable statutory,
licensing and fire safety requirements. All disputes regarding
the alleged breaches set out in paragraph 21 of the
Respondent's reply dated 14 February 2026, the delay in
obtaining the Occupancy Certificate, the enforceability of
Clause 17 and the parties' respective monetary claims are left
open for determination in arbitration;
(f) The parties are at liberty to place their respective
claims and applications for interim protection before the
Arbitral Tribunal. The Tribunal shall consider those claims
independently and in accordance with law;
25. The Petition is allowed in part in the above terms. No order
as to costs at this stage.
(AMIT BORKAR, J.)
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