In a significant interim relief decision, the Delhi High Court held that a prima facie case existed for granting protection under Section 9 of the Arbitration and Conciliation Act, 1996 where the respondent-lessee remained in possession of a sub-leased shop at Pitampura Metro Station without clearing outstanding dues. The Court restrained the respondent from dealing with the premises and directed initiation of arbitral proceedings within 45 days.
Background & Facts
The Dispute
The petitioner, Singla Gateway Private Limited, is the lessee of commercial space at Pitampura Metro Station, Delhi, under a registered Master Lease Agreement with Delhi Metro Rail Corporation Limited. The petitioner sub-leased Shop No. PTP G-1 (approximately 115 sq. metres) to the respondent, Rebel Mass Exports Private Limited, under a registered Sub-Lease Deed dated 25.09.2024 for a term of nine years commencing from 22.07.2024, with a three-year lock-in period. The agreed monthly sub-lease rent for the first year was ₹2,01,000/-, subject to an annual escalation of 5% plus applicable taxes, electricity and other charges.
Key Facts
- The Sub-Lease Deed was executed on 25.09.2024 and possession handed over to the respondent from 22.07.2024.
- The respondent commenced and continued operating a retail outlet from the premises but made only intermittent payments towards rent and other charges.
- As alleged by the petitioner, the outstanding dues amounted to ₹32,53,502/- as on 01.05.2026, apart from further accruing amounts.
- The petitioner further alleged that the respondent deducted TDS from certain payments without depositing the same with the concerned authorities.
- A legal notice terminating the sub-lease and invoking the arbitration clause was issued by the petitioner on 02.05.2026.
- Despite the notice, the respondent continued in possession and occupation of the premises.
Procedural History
- 23.07.2026: The Court recorded the petitioner’s counsel’s submission that the affidavit of service had been filed and service was sufficient; noted the respondent’s non-appearance and deferred adverse orders in the interest of justice; listed the matter for 07.08.2026.
- 07.08.2026: The Court directed the petitioner’s counsel to serve a copy of the order on the respondent via dasti, ordered reply to be filed within three weeks, rejoinder within two weeks thereafter, and fixed the next date of hearing as 29.09.2026. It also clarified that no further adjournment would be granted.
- 29.09.2026: The present judgment was pronounced, disposing of the petition with directions to initiate arbitral proceedings within 45 days and to maintain the interim arrangement until the Arbitral Tribunal considers the matter.
Relief Sought
The petition sought the following interim measures under Section 9 of the Arbitration and Conciliation Act, 1996: (a) Direction to deposit the admitted outstanding dues of ₹32,53,502/- as on 01.05.2026, together with further accruing dues, with interest @24% per annum from the respective due dates till actual payment/deposit. (b) Direction to pay the monthly sub-lease rent (₹2,01,000/- plus escalation, 18% GST, electricity and other charges) on or before the 10th day of each calendar month during the pendency of arbitration. (c) In the alternative to (b), direction to deliver peaceful vacant physical possession of the demised premises after discharging all outstanding dues, interest, damages and costs. (d) Restraint on the respondent and its associates from alienating, transferring, encumbering or dealing with movable and immovable assets up to ₹1,00,00,000/- pending constitution of the Arbitral Tribunal. (e) Direction to file a comprehensive affidavit disclosing all movable and immovable assets, bank accounts, investments, receivables, securities and encumbrances within a period of two weeks. (f) Direction to file TDS returns and deposit TDS in respect of sub-lease rent paid/payable, in compliance with Clause 8 of the Sub-Lease Deed and Section 194-I of the Income Tax Act, 1961, and to provide Form 16-A to the petitioner forthwith. (g) Restraint on the respondent from sub-letting, assigning, parting with possession, sub-licensing or creating any third-party rights in the demised premises in violation of Clause 21 of the Sub-Lease Deed. (h) Restraint on the respondent from altering, damaging, destroying, removing or impairing the demised premises, its fittings, fixtures and structural/civil/electrical/mechanical infrastructure. (i) Direction to appoint a Local Commissioner/Qualified Surveyor to inspect the demised premises and file an inspection report for preservation of the subject matter. (j) Direction to pass such ad-interim ex parte orders as the Court may deem fit and proper, and to confirm the same after notice to the respondent. (k) Direction to pass such other/further orders granting interim measures of protection in favour of the petitioner and against the respondent as the Court may deem fit and proper in the facts and circumstances of the case, in the interest of justice.
The Legal Issue
The central question was whether the petitioner had made out a prima facie case for the grant of interim measures under Section 9 of the Arbitration and Conciliation Act, 1996, namely, whether the respondent’s continued possession without payment of dues and alleged TDS defaults justified ex parte restraints and a direction to initiate arbitration, and whether the balance of convenience favoured such relief.
Arguments Presented
For the Petitioner
The petitioner relied on the terms of the registered Sub-Lease Deed, the legal notice dated 02.05.2026, and the alleged non-payment of rent and TDS defaults to assert that a prima facie case existed. It argued that the respondent’s continued occupation without clearing dues caused irreparable injury, that the balance of convenience lay in preserving the subject matter, and that ex parte interim measures were necessary to prevent alienation of assets or deterioration of the premises. The petitioner cited the settled principle that where a party is in possession and refuses to pay dues, the court may grant protection under Section 9 to maintain the status quo pending arbitration.
For the Respondent
No appearance was made by the respondent despite sufficient opportunity to contest the petition; consequently, no counter-arguments were advanced on record.
The Court's Analysis
The Court first noted that service was complete and the respondent had chosen not to appear or place any material disputing the invoices or alleged defaults. It observed that the registered Sub-Lease Deed established, prima facie, the relationship of lessor and lessee, the agreed consideration and the arbitration agreement. The Court further found that possession had been handed over to the respondent, invoices were periodically raised and certain payments had been made, demonstrating implementation of the sub-lease arrangement. Despite repeated demands, the respondent’s dues remained unpaid and it continued to occupy and commercially exploit the premises.
The Court held:
"Accordingly, a prima facie case is made out in favour of the Petitioner as Respondent is in continuous possession of the subject premises without clearing the outstanding dues."
It concluded that the balance of convenience and the likelihood of irreparable injury justified interim restraints. The Court therefore restrained the respondent, till the next date of hearing, from sub-letting, assigning, parting with possession, sub-licensing or otherwise creating any third-party rights in the subject premises. It directed the petitioner’s counsel to serve a copy of the order via dasti, ordered reply within three weeks, rejoinder within two weeks thereafter, and listed the matter for 29.09.2026.
The Verdict
The petition was disposed of with the direction that appropriate arbitral proceedings may be initiated within 45 days from 29 September 2026. Upon constitution of the Arbitral Tribunal, the present petition shall be treated as an application under Section 17 of the Arbitration and Conciliation Act, 1996 and placed before the learned Arbitral Tribunal for consideration in accordance with law. The Arbitral Tribunal is free to continue, vacate or modify the interim arrangement granted by this Court. All rights and contentions of the parties are left open, and no order passed herein shall be construed as an expression of opinion on the merits of the dispute. No monetary compensation, interest or costs were awarded.
What This Means For Similar Cases
Interim Relief Under Section 9 Requires a Prima Facie Showing
Practitioners must establish a prima facie case - such as clear contractual non-payment coupled with continued possession - to secure interim measures under Section 9. The judgment reinforces that mere allegations are insufficient; documentary proof of dues and possession is essential.
Ex Parte Orders Are Viable When Respondent Avoids Appearance
Where a respondent, despite proper service, elects not to appear, the Court may proceed ex parte and grant interim protection to prevent dissipation of the subject matter. The decision clarifies that non-appearance does not defeat the petitioner’s right to interim relief.
Parties Must Adhere to Court-Set Arbitration Timelines
The Court’s directive to initiate arbitration within 45 days underscores the importance of timely commencement of arbitral proceedings. Failure to do so will result in the automatic vacation of the interim arrangement, prompting parties to act swiftly to preserve the status quo.
- Ensure that notices invoking arbitration clauses are issued and preserved.
- Maintain rigorous records of payments, dues and TDS compliance to substantiate claims.
- Prepare for ex parte hearings by drafting affidavits that demonstrate prima facie case and balance of convenience.
- Monitor compliance with court-ordered timelines for initiating arbitration to avoid loss of interim protection.
