Delhi High Court on Maintainability of Section 9 Petition in Licensing Disputes: QC One Solutions v. Delhi Metro Rail Corporation
In QC One Solutions v. Delhi Metro Rail Corporation (DMRC), the Delhi High Court examined the scope of interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 in the context of termination of a commercial license agreement.
The petitioner, along with a consortium, had submitted a proposal for leasing commercial bare spaces at selected metro stations under DMRC’s policy. Upon acceptance of the proposal, a License Agreement was executed between the parties. Under the agreement, the petitioner was required to develop the allotted spaces, make them commercially viable, and thereafter operate and maintain them. The petitioner further sub-licensed portions of the spaces to third parties. The agreement was for a term of nine years, containing a lock-in period of two years. The petitioner was also obligated to pay quarterly license fees and furnish an interest-free security deposit.
Subsequently, DMRC issued a termination notice seeking to terminate the License Agreement over unpaid dues. The petitioner challenged the termination before the Delhi High Court under Section 9 of the Arbitration and Conciliation Act, contending that DMRC had failed to follow the contractual procedure requiring issuance of a Cure Notice prior to the Termination Notice and that dues could have adjusted against the security deposit.
A principal issue before the Court was maintainability of the section 9 petition wherein the petitioner was seeking an interim injunction to stay the termination notice and whether such relief sought amounted to specific performance of a determinable contract and was therefore barred under Section 14(d) of the Specific Relief Act, 1963. DMRC argued that the petition effectively sought continuation of the contract by staying the termination notice.
The Court rejected this contention. Relying on the Supreme Court judgment in K.S. Manjunath and Others v. Moorasavirappa alias Muttanna Chennappa Batil (2025 SCC OnLine SC 2378), the Court observed that contracts could be classified into different categories based on the ease of their determinability for the purpose of Section 14(d). The License Agreement in the present case was held not to be inherently determinable in nature. Consequently, the Section 9 petition was maintainable.
The Court further reiterated that relief under Section 9 is equitable and requires satisfaction of the established tests of prima facie case, balance of convenience, and irreparable injury.
However, on the issue of arbitrariness, the Court held that DMRC’s actions were not violative of Article 14 of the Constitution, as the authority had consistently acted in accordance with the License Agreement. Moreover, since the petitioner was already aware of the reasons for termination, the Court found no arbitrariness in the impugned action of termination.
Conclusion
The judgment clarifies that not every contractual termination dispute is barred by Section 14(d) of the Specific Relief Act. Where a contract is not inherently determinable, interim protection under Section 9 may still be granted. The decision also highlights the importance of adherence to contractual termination procedures while balancing the equitable nature of interim relief in arbitration matters.
The judgment copy is available here.
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