Delhi High Court affirms Dart Properties Private Limited’s right to walk, take over and run cinema hall as Reliance Mediaworks subsidiary CVPL defaults Rs 50 Lakhs payment

Delhi High Court

Delhi High Court: In a contempt petition filed by Dart Properties Private Limited (petitioner) under Article 215 of the Constitution with Sections 11 and 12 of the Contempt of Courts Act, 1971 highlighting the wilful and deliberate non-compliance by the Director, Cinema Ventures Private Limited (respondent/contemnor) of the order dated 02-03-2023 passed by the Court whereby an undertaking was given stating that on payment of the outstanding amount, the keys of the premises will be handed over to the respondent and in case of non-compliance, the petitioner will attain full right to walk into the premises, take it over and operate the cinema hall. A Division Bench of Najmi Waziri and Sudhir Kumar Jain, JJ., held that the petitioner has the right to walk into the premises, take it over and start running the cinema hall, thus, the default by the respondent cannot undo the understanding nor resile from it.

The contempt petition arises from an appeal filed by the petitioner (appellants) under Section 37(1)(b) of the Arbitration and Conciliation Act, 1996. The Respondents were tenants in the property (cinema hall) of the appellant at Ansal Plaza, Palam Vihar, Gurugram. The Respondents failed to pay a single penny to the appellant herein until May 2022 and was directed to stop operations till payment of dues. Assailing the issue of non-payment of commercial charges/ rent, the appellant had initially filed petitions under Section 9 and Section 11(6) of the Arbitration Act which was disposed of in view of the conciliation award directing a 50% waiver for a period of 9 months of Covid-19 and the total amount payable as per the award was INR 1.64 crores.

On 02-03-2023 vide order passed by the Court, it was agreed upon by the parties that respondent, Mr. Prasanth Narayan, Director-CVPL is ready and willing to pay an amount of Rs. 50,00,000/- on or before 31-03-2023 to the appellant, whereupon, the keys of the property i.e., the cinema hall will be handed over to the respondent and it will have access to the licensed premises to carry out the renovation and repair work so that the cinema hall can be ready for the exhibition of the films within 30 days. The schedule of the payments was fixed vide the order and undertaking between the parties.

It was also agreed upon vide the undertaking that any default in compliance with the undertaking towards payments, either in terms of the quantum or the date fixed, would give the right to the appellant to walk into the premises, take over the premises, and run the cinema hall, without any delay or hindrance from the respondent.

The Court noted that the respondents neither filed the undertaking as assured to the court nor made any payment but rather continued to be in the possession of the property. Thus, the Court held that in terms of undertaking/agreement between the parties vide order dated 02-03-2023, the appellant has the right to walk into the premises, take it over and start running the cinema hall. The default by the respondent cannot undo the understanding nor resile from it.

The Court also directed the preparation of an inventory as regards the claims of the respondent’s assets etc. in the property so that the issue could well be pursued in the execution proceedings.

[Dart Properties Private Limited v Cinema Ventures Private Limited, 2023 SCC OnLine Del 2085, decided on 06-04-2023]

Judgment By: Justice Najmi Waziri

Advocates who appeared in this case :

Ms. Malvika Trivedi. Sr. Advocate with Mr. Swarnendu Chatterjee, Ms. Deepakshi Garg, Mr. Yashwardhan Singh, Ms. Megha Saha and Mr. Sujal Gupta, Advocates for the Appellants;

Mr. Chinmoy Pradip Sharma, Senior Advocate with Mr. Mohit Paul, Mr. Irfan Hasieb, Mr. Krishnajyoti Deka, Mr. Rishabh Munjal and Ms. Rangoli Seth, Advocates for respondents

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