Delhi District Court
M/S Lemon Tree Hotels Ltd vs M/S Span Motels Pvt. Ltd on 20 August, 2025
IN THE COURT OF DISTRICT JUDGE
(COMMERCIAL COURT)-02, NEW DELHI DISTRICT,
PATIALA HOUSE COURTS, NEW DELHI
OMP(I)(COMM.)/63/2025
CNR NO.: DLND01-002659-2025
IN THE MATTER OF: -
M/s SPAN Motels Private Ltd.
Having its registered office at:-
SPAN Resorts, Kullu-Manali Highway,
P.O. Katrain, Kullu, Himachal Pradesh-75129
&
Corporate Office at: -
Vijaya, 1st Floor, 17, Barakhamba Road,
New Delhi-110001.
. . . . . . Petitioner
VERSUS
M/s Lemon Tree Hotels Ltd.
Asset No. 6, Aero City Hospitality District
IGI Airport New Delhi, 110037, India.
. . . . . . Respondent
AND
OMP(I)(COMM.) 66/2025
CNR No. DLND01-003100-2025
IN THE MATTER OF: -
M/s Lemon Tree Hotels Ltd.
Asset No. 6. Aero City Hospitality District
IGI Airport New Delhi, 110037.
. . . . . . Petitioner
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 1 of 49
VERSUS
M/S SPAN MOTELS PVT LTD
Span Resorts, Kullu-Manali Highway,
P.O Katrain, Kullu, Himachal Pradesh-75129
And also at:
Vijaya, 1st Floor, 17,
Barakhambha Road, New Delhi-110001.
. . . . . . Respondent
Date of Institution : 17-04-2025
&
28-04-2025
Date of reserving judgment : 19-07-2025
Date of pronouncement of judgment : 20-08-2025
J U D G M E N T:
–
1. Vide this common judgment, I shall decide the
petitions under Section 9 of the Arbitration and
Conciliation Act, 1996 (hereinafter referred to as ‘Section
9‘) for interim measures/protection in the matter titled as
“M/s Span Motels Private Ltd. v M/s Lemon Tree Hotels
Ltd.” bearing Case No. OMP(I) COMM- 63/2025 and
“M/s Lemon Tree Hotels Ltd. v M/s Span Motels Private
Ltd.,” bearing Case No. OMP(I) COMM- 66/2025 as
common questions of facts and law are involved in both
the cases.
2. The facts of the case, in brief, for the disposal of the
present petitions, are as under: –
2.1 The M/s SPAN Motels Private Ltd (hereinafter
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 2 of 49
referred to as ‘SPAN Motels’) is a private limited
company and is stated to be a reputed hotelier, by
the name of Span Motels Private Limited in Manali.
2.2 M/s Lemon Tree Hotels Limited (hereinafter
referred to as ‘Lemon Tree’) is a public limited
company, engaged in the business of hospitality
industry. Lemon Tree is stated to have developed
and to be maintaining an interrelated plan and
system, in association with the Lemon Tree Marks
for providing to the public on an international basis,
inter alia lodging of a high standard of service.
2.3 Both the parties negotiated a franchise agreement
wherein SPAN Motels was to function as a
franchisee hotel of the Lemon Tree under its Brand
System and the Brand Marks. They both signed a
term sheet dated 03.02.2023 and consequently, a
franchisee agreement on 21.02.2023. Thereafter,
SPAN Motels was rebranded from “Span Inn &
Suites” i.e. “SIS” to “Lemon Tree Hotel, Manali”.
2.4 The whole objective of the arrangement was to have
wider economic exposure and incremental revenue
generation as indicated by the fact that the
fee/revenue payable to Lemon Tree was to be
utilised for economic exposure, reach and presence.
2.5 It is stated that Lemon Tree, during the tenure of the
Franchisee Agreement, committed various breachesOMP (I) COMM NO.: 63/2025 and 66/2025 Page 3 of 49
which directly & indirectly impacted performance of
the Hotel’s revenue. Hence, SPAN Motels
terminated the Franchisee Agreement with effect
from 31.03.2025 under Clause 14.3, vide
Termination Notice dated 24.02.2025.
2.6 It is further stated that there were multiple
communications on behalf of SPAN Motels made to
Lemon Tree calling upon Lemon Tree to send a
representative as per requirement of clause 15.1 and
regarding termination of marketing agreement and
arrangement with other companies. But, Lemon
Tree did not reply to any of such communications.
2.7 On 28.03.2025, Lemon Tree sent a reply to the
termination letter dated 24.02.2025, admitting that
the franchise agreement is terminable in nature but
claiming liquidated damages per the requirement of
clause 14.3.
2.8 On 01.04.2025, SPAN Motels published & posted
disclaimer on its website to make public at large
aware that its hotel is completely disassociated from
Lemon Tree. On 07.04.2025, SPAN Motels duly
informed Lemon Tree that SPAN Motels has
complied with Clause 15.1 of the Franchisee
agreement, and hence, with effect from 01.04.2025,
it has started operation of its hotel as SIS,
independently. In the said email, it was also pointed
out that the Lemon Tree`s website and its Online
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 4 of 49
Travel Aggregators (OTAs) are still presenting
SPAN Motels as franchisee of Lemon Tree and it is
taking reservation under the said representation,
despite the Franchisee Agreement being terminated.
2.9 The OTAs were requested to remove SPAN Motels
as franchisee of Lemon Tree from their websites
but, the OTAs denied the said request citing that
they need NOC from Lemon Tree to remove it.
2.10 It is submitted by SPAN Motels that the continued
representation by Lemon Tree, at a time when
tourist activity in Manali is considerably high,
tourist season starting from month of April onwards,
will cause irreparable harm to SPAN Motels.
2.11 Lemon Tree can always be compensated for the loss
under Franchisee Agreement by way of liquidated
damages but SPAN Motels shall suffer irreparable
loss and injury if the Lemon Tree is not restrained
and directed to immediately delist the Petitioner’s
hotel from its website and other OTA platforms as
monetary compensation alone would not suffice to
undo the reputational harm, customer confusion, and
interference with the SPAN Motels ongoing
operations under its own brand.
2.12 There are admittedly disputes between the parties
arising out of or in relation to or in connection with
Franchisee Agreement which is to be resolvedOMP (I) COMM NO.: 63/2025 and 66/2025 Page 5 of 49
through arbitration per Clause 19 of the Franchisee
Agreement. But, till the arbitration proceedings are
initiated by SPAN Motels, they are seeking this
Court`s intervention to prevent its loss and to
prevent the confusion amongst public at large about
the status of SPAN Motels.
3. On the other hand, Lemon Tree has also filed a
separate petition under Section 9 against SPAN Motels
seeking to enforce a negative covenant, contained in the
Franchise Agreement.
3.1 It is stated that under the Franchise Agreement,
Lemon Tree i.e. the Franchisor had permitted the
usage of the brand name, logo and all other
franchise benefits as stipulated therein in return of a
fixed and some variable recurring stipulated
franchise fee. SPAN Motels was solely responsible
to operate the hotel as per the brand standards and
system and that there was no commitment by Lemon
Tree of any specific economic exposure or
incremental revenue to SPAN Motels.
3.2 Lemon Tree had fulfilled all its obligations in line
with Clause 4 of the Franchise Agreement but
SPAN Motels, despite extensive payment
mechanism failed to make payments. It is also
submitted that Lemon Tree had divulged sensitive
confidential information, in furtherance of the
Franchise Agreement, for the expansion and
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 6 of 49
development of the business of SPAN Motels under
the brand name “Lemon Tree”.
3.3 On 24.02.2025, SPAN Motels terminated the
Franchisee Agreement citing reason that there was
no economic exposure and incremental revenue
increase and because of non-performance of
obligations by Lemon Tree. The stated obligations
were of SPAN Motels and not of Lemon Tree as per
Clause 4 of the Franchise Agreement. Also, as per
the Franchise Agreement, there was supposed to be
a cure notice of 30 days period given, for remedy of
any alleged breach, before the agreement is
terminated but no such cure notice was ever given
by SPAN Motels.
3.4 It is submitted that in view of clause 15.6, no rights
consequent to termination can be claimed since the
termination is subject to the payment of liquidated
damages as provided therein. It is alleged that SPAN
Motels is trying to circumvent the performance of
obligations under the agreement by disassociating
itself from the Lemon Tree Brand and using
confidential information disclosed by Lemon Tree,
to their gain. This is indicated by the fact that SPAN
Motels has changed the name of its hotel to Span
Resorts and Spa, Manali and listed the Hotel under
the said name with various Online Travel Agents
(“OTA”).
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 7 of 49
3.5 It is further submitted that irrespective of the issue
of termination, Clause 5.25, 5.27 and 5.28 along
with 16.3 specifically provide that the right of the
Lemon Tree for enforcing the negative covenant
under clause 5.25 survives and is specifically
enforceable and that irrespective of any claims of
SPAN Motels herein qua Lemon Tree, it shall not be
entitled to divert business from the Hotel to any
other place or franchise etc. or carry out action
against goodwill and brand image of Franchisor.
Clause 5.28 of the Franchise Agreement clearly
permit that in the event of violation under Clause
5.25 of the Franchise Agreement, the Lemon Tree
herein can seek injunctive relief as per Section 42 of
Specific Relief Act, 1963 (hereinafter referred to as
“SRA”) or other similar orders prohibiting any
conduct in contravention of Clause 5.25 by the
Respondent.
3.6 The Ld. Arbitral Tribunal has to adjudicate on the
validity of the termination and the entitlement of the
SPAN Motels to trigger the post termination
obligations, until then, the SPAN Motels is bound
by the embargo under Clause 5.25 of the Franchise
Agreement.
4. On the facts and circumstances mentioned above,
the parties have filed petitions under Section 9. SPAN
Motels in case bearing no. OMP(I) COMM 63/2025 has
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 8 of 49
prayed for this Court’s intervention to pass an order,
granting reliefs, inter alia, restraining Lemon Tree, its
representative, etc from representing that hotel of SPAN
Motels i.e. “Span Inn and Suites” is its franchisee hotel; to
immediately take down and remove all listings of the
SPAN Motels hotel property from their website, including
the OTA`s; to restrain Lemon Tree from taking any
reservations/bookings for the Petitioner`s Hotel i.e. SPAN
Inn and Suites and to render the accounts for any bookings
done in respect of Petitioner`s Hotel i.e. SPAN Inn and
Suites w.e.f. 01.04.2025.
5. Lemon Tree, on the other hand, in its petition under
Section 9, in case bearing no. OMP(I) COMM 66/2025 has
prayed for this Court’s intervention to pass an order,
pending the arbitration process, granting reliefs, inter alia,
of temporary injunction enjoining SPAN Motels from
giving effect to purported termination of the
Franchise Agreement or holding out to the public that such
agreement has been terminated; to pass an order of
temporary injunction enjoining the SPAN Motels from
taking any action detrimental to the brand image and
goodwill of Lemon Tree; to pass an order enjoining SPAN
Motels from making any reservations or bookings of the
Franchised Hotel in the name of “SPAN Resorts and Spa”
or any name other than “Lemon Tree Hotel, Manali” and
to render accounts for booking/reservations in respect of
SPAN Inn and Suites.
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 9 of 49
ARGUMENTS ON BEHALF OF SPAN MOTELS
6. It is argued that under the agreement SPAN Motels
has the right to terminate the agreement without making
any penalty i.e. liquidated damages in case of breach of
obligations of the Lemon Tree. Whether the grounds on
which the agreement has been terminated were the
obligations of Lemon Tree or not will be a matter for
Arbitral Tribunal to decide. The interpretation given by the
Lemon Tree as to the payment of liquidated damages
would otherwise render the agreement a non-determinable
agreement for a fixed term which in any event is not the
case of the Lemon Tree. It is for Arbitral Tribunal
to decide who is liable to pay damages and how much.
7. It is submitted that reliance of Lemon Tree on clause
5.25, clause 5.27 and clause 5.28 is misconceived as these
obligations can be enforced only during the term of the
agreement and not post termination. It is submitted that by
virtue of Clause 15.1, which provides that “…termination
or expiration of this agreement, howsoever occasioned, all
of Franchisee’s rights and privileges hereunder shall cease
immediately;…”, while Lemon Tree is seeking to continue
to represent SPAN Motels` Hotel as the Franchisee of
Lemon Tree despite the agreement having been
terminated.
8. It is further argued that Clause 15 of the Agreement
stipulates what parties cannot do post termination and
hence the obligations laid down therein cannot be said to
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 10 of 49
amount to specific performance of any terms of the
agreement, rather SPAN Motels seeks to enforce the
negative covenant that is to take effect post termination as
given under Clause 15.1.
9. It is further argued that the stand of Lemon Tree that
SPAN Motels` Span Inn and Suits continues to be present
on the website of the respondent as well as website of the
OTA’s of respondent as “Lemon Tree Hotel, Manali” goes
to establish that it is bound to create confusion in the mind
of tourist as to the identity of the petitioner hotel.
10. It is further submitted that relief of specific
performance cannot be granted under the garb of
enforcement of misuse of alleged confidential information.
Clause 5.25 read with Clause 9 talks about ‘confidential
information’. In the whole petition, Lemon Tree has not
made even a single averment as to what information shared
by the Lemon Tree is being utilized by the SPAN Motels
to make a wrongful gain, which is the grievance of Lemon
Tree.
11. It has been held in plethora of cases that in a private
commercial transaction, even in the absence of a specific
clause authorizing and enabling either party to terminate
the agreement upon the happening of an event specified
therein, the agreement can be terminated without assigning
any reason by serving a notice. It has also been
consistently held in plethora of cases that in case of
termination of determinable contract at the most, if the
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 11 of 49
termination is found to be bad in law for any reason, the
remedy would be to seek compensation for wrongful
termination, but there cannot be a claim for specific
performance.
12. It is submitted that it is admitted case of Lemon Tree
that Franchise Agreement has been terminated w.e.f.
31.03.2025 vide letter dated 24.02.2025. Perusal of the
termination letter amply makes it clear that after defects
mentioned earlier by SPAN Motels were not cured and
consequently, the agreement was terminated. Thus, SPAN
Motels has duly fulfilled the requirement of Clause 14.3.
13. It is also submitted that Lemon Tree has admitted
and acknowledged that the agreement is determinable in
nature and that the claim of the Lemon Tree is restricted
only to liquidated damages.
14. It is submitted that power under Section 9 is meant
only for the sole purpose of preserving and maintaining the
property in dispute and cannot be used to enforce specific
performance of a contract as such. It is submitted that
prayer of the Lemon Tree, and the manner in which they
have been framed, if granted, would not only amount to
restoration of a terminated contract but would also amount
to grant of specific performance of a determinable contract
contrary to the principles underlying Section 14 (1) (d)
read with Section 41 (e) of Specific Relief Act.
15. It is submitted that damages in case of breach of
contract can be claimed within the contours of Section 74
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 12 of 49
of the Indian Contract Act as the object of damages is to
compensate for the loss and that Indian Contract Act does
not distinguish between liquidated damages and penalty.
16. It is further submitted that merely because in various
communications, word “30 days” has not been used, that in
itself will not render the said communication as improper
compliance of Clause 14.3. It is submitted that mere non
usage of word “30 days” in the communications does not
grant right in favor of the Lemon Tree to continue with
breach of its obligation and defects and its service. It is
submitted that perusal of email dated 15th December 2024
as well as email dated 21st December 2024 categorically
records that various issues and defects raised by SPAN
Motels have not been cured by the Lemon
Tree, hence SPAN Motels has rightly terminated the
franchise agreement.
17. The Ld. Counsel for SPAN Motels has cited
following judgments in support of his contentions: –
17.1 The National Highways Authority of India vs. HK
Toll Road Pvt. Ltd. MANU/DE/2640/2025 by
Hon`ble High Court of Delhi
17.2 Union Territory of Jammu & Kashmir Vs. IFFCO-
TOKIO, General Insurance Company Limited
MANU/JK/0033/2024 by Hon`ble Jammu and
Kashmir High Court
17.3 Ksheeraabd Construction Pvt. Ltd. Vs. National
Highways and Infrastructure Development
Corporation Ltd. and Ors. MANU/DE/3402/2023 by
Hon`ble High Court of Delhi
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 13 of 49
17.4 Chetan Iron LLP vs NRC Ltd.
MANU/MH/0207/2022 by Hon`ble High Court of
Bombay
17.5 Royal Orchids Vs. Kulbir Singh Kohli and Ors.
MANU/DE/3010/2022 by Hon`ble High Court of
Delhi
17.6 Rajasthan Breweries Ltd. vs. The Stroh Brewery
Company MANU/DE/0860/2000: 2000 (3) Arb.
L.R. 509 by Hon`ble High Court of Delhi
17.7 Royal Orchid Hotels Ltd. Vs. Ferdous Hotels Pvt.
Ltd. MANU/TN/0451/2013 by Hon`ble High Court
of Madras
17.8 Yassh Deep Builders LLP Vs. Sushil Kumar Singh
and Ors. MANU/DE/1604/2023 by Hon`ble High
Court of Delhi
17.9 Jindal Steel and Power Ltd. v. SAP India Pvt. Ltd.,
MANU/DE/1868/2015 by Hon`ble High Court of
Delhi
17.10 Inter Ads Exhibition Pvt. Ltd. Vs. Busworld
International Cooperative Vennootschap Met
Beperkte Anasprakelijkheid MANU/DE/0994/2020
by Hon`ble High Court of Delhi
17.11 Indian Railway Catering and Tourism Corporation
Ltd. (IRCTC) v. Cox and Kings India Ltd. and Arup
Sen, MANU/DE/0033/2012 by Hon`ble High Court
of Delhi
17.12 Glory Jeeva Rita vs. Executive Director, Bharat
Petroleum Corporation, Mumbai and others 252
(MANU/TN/0883/2008: 2008) 4 ML J 1236)
17.13 Roadway Solutions India Infra Limited Vs.
National Highway Authority of India,
[MANU/DE/3471/2023]
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 14 of 49
17.14 Sorrel Hospitality Pvt. Ltd. vs Nakodar Hotels
Pvt. Ltd. MANU/DE/1011/2018
17.15 Intercontinental Hotels Group-India Private
Limited and Ors. Vs. Shiva Satya Hotels Private
Limited MANU/GJ/0705/2013
17.16 Country Development and Management
Services Pvt. Ltd. Vs. Brookside Resorts Pvt. Ltd.
MANU/DE/4239/2006
17.17 Vidya Mandir Classes Ltd. vs Harsh Tiwary
MANU/DE/3357/2021
17.18 Essar House Pvt. Ltd. vs Arcellor Mittal Nippon
Steel India Ltd. MANU/SC/1165/2022
ARGUMENTS ON BEHALF OF LEMON TREE
18. The Ld. Counsel argued that the entire case of
SPAN Motels is that Lemon Tree can claim liquidated
damages before the Arbitral Tribunal, if the termination is
found to be illegal, but Lemon Tree, at that stage would
not be able to resist any relief sought by the SPAN Motels,
as the determinable contract, once terminated cannot be
sought to be specifically performed.
19. He further argued that Section 14 SRA is not a bar
to grant injunction to perform negative covenant and
injunction can be granted for illegal termination.
20. He further argued that the legislative intent behind
the Specific Relief Act is not to disregard the sanctity of
commercial arrangements between parties. On the
contrary, the amendments to the Act underscore the
importance of enforcing contractual obligations. If SPAN
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 15 of 49
Motel`s interpretation was to be accepted, that any contract
can be unilaterally terminated at any time, irrespective of
whether such termination conforms to the terms of the
contract, with the only recourse being a claim for damages
before an arbitral tribunal, then the fundamental principle
of commercial efficacy, as mutually agreed upon by the
parties, would be rendered meaningless.
21. It is submitted that Clause 14.3 of the Franchisee
Agreement clearly stipulates the procedure for termination
of the agreement by SPAN Motels. It provides that SPAN
Motels may terminate the Agreement only upon fulfillment
of three cumulative conditions: (i) the Respondent must be
in breach of Section 4 of the Agreement; (ii) the Petitioner
must issue a written notice granting 30 days` time to cure
the alleged breach; and (iii) the Respondent must fail to
cure the breach within the said 30-day period.
22. It is submitted that abovementioned conditions are
an essential precondition to invoke termination under
Clause 14.3. However, SPAN Motels has failed to place on
record any document evidencing the issuance of such a
mandatory Cure Notice or that the requirement of a 30-day
cure period to be given was fulfilled. It is further submitted
that any averment in the Termination Notice to any prior
opportunities to breach is completely misplaced.
23. He further argued that in addition to the absence of
any separate Cure Notice, even if SPAN Motels was to
contend that the notice dated 24.02.2025 serves the dual
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 16 of 49
purpose of a cure notice and a termination notice, the same
would still be legally untenable as no opportunity was
given to cure, rather a period of a month was given to
effectuate post termination obligations.
24. He further argued that the reliefs sought by the
SPAN Motels in their petition under Section 9, are in the
nature of a final relief and hence falls beyond the ambit of
Section 9 as it is established law that the object of granting
interim protection under Section 9 is to safeguard the
subject-matter of arbitration and to preserve the efficacy of
the arbitral proceedings. The interim relief must be of a
temporary nature, designed to operate only during the
pendency of arbitration, and must not pre-empt or overlap
with the final reliefs sought before the Arbitral Tribunal.
25. He further contended that the reliefs sought in the
petition of SPAN Motels are in the nature of Specific
Performance, which as per SPAN Motels` own case,
cannot be granted in a ‘determinable’ contract.
26. It is submitted that if it is assumed that the Franchise
Agreement stands terminated in accordance with the terms
of the said agreement, in that case, SPAN Motels also
cannot be allowed to seek specific performance of Clause
15 of the Franchise Agreement i.e. having accepted or
pleaded termination, SPAN Motels cannot be permitted to
selectively enforce post-termination obligations, that too
when SPAN Motels has acted in contravention of the terms
of the agreement as post termination obligations provided
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 17 of 49
under the Franchise Agreement shall only be triggered
once the payment envisaged under Clause 15.6 is satisfied
by SPAN Motels.
27. He further submitted that unless and until the
learned Arbitral Tribunal determines that the entitlement of
SPAN Motels to seek the post termination obligations,
(including the legality of the termination of Franchise
Agreement), all parties must continue to adhere to the
terms of the Agreement. This includes the obligations of
SPAN Motels to operate the hotel using Lemon Tree’s
brand name, accept bookings made under the Franchise
Agreement, or/and represent the hotel as a Lemon Tree
hotel. Any relief that would frustrate the contractual
arrangement between the parties, if granted would
essentially amount to specific performance of Clause 15.1
of the Franchise Agreement.
28. He further contended that moreover, SPAN Motels
has failed to establish that there is any urgency which
merits grant of interim relief in their favour. The only
urgency pleaded by the SPAN Motels is that they wish to
capitalize on the seasonal tourist time in Manali. However,
it is not the case of the SPAN Motels that Lemon Tree has
stopped taking reservation for the Hotel or is hampering
the business of the SPAN Motels. On the contrary, the
Lemon Tree is actively supporting the Petitioner’s business
by continuing to list the hotel on online travel aggregator
(OTA) platforms under its established brand name “Lemon
Tree,” thereby ensuring steady bookings and customer
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 18 of 49
engagement.
29. He further contended that if the relief of abandoning
all obligations of the Lemon Tree such as de-listing,
disassociating from the Franchise Agreement is granted, in
such a case, Lemon Tree would be compelled to incur
huge costs and would be put in a grave prejudicial
situation.
30. It is further argued that it was never the agreement
between the parties that Lemon Tree would increase
the revenue of the business, nor is this reflected in the
Lemon Tree’s obligation under Clause 4 of the Franchise
Agreement.
31. He further contended that Lemon Tree was not
under any legal obligation to send a representative to the
hotel site for severance formalities, as the Franchise
Agreement remains in force, and the termination notice
issued by the SPAN Motels is invalid.
32. He further submitted that Lemon Tree has disputed
the arbitrary nature and propriety of the SPAN Motel’s
public announcement of severance from the Lemon Tree
and reversion of the name to Span Inn and Suites (“SIS”).
Such an action is in direct violation of the terms and
conditions outlined in the Franchise Agreement and hence
is non-est.
33. He further argued that the mere act of seeking
amounts that are duly payable under the Franchise
Agreement does not, in any manner, amount to an
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 19 of 49
admission that the Franchise Agreement is determinable in
the sense that it can be arbitrarily and unilaterally
terminated without consequence. The demand for payment
is in accordance with the subsisting contractual
obligations.
34. Lemon Tree has cited the following judgments in
support of their arguments:-
34.1 The Global Music Junction Pvt. Ltd. Vs. Shatrughan
Kumar Aka Khesari Lal Yadav And Ors. 2023 SCC
ONLINE DEL 5479 by Hon`ble High Court of
Delhi
34.2 Nimisha Bansal Vs. Sorting Hat Technologies
Private Limited MANU/KA/1864/2024 by Hon`ble
Karnataka High Court of Karnataka
34.3 Egis India Consulting Engineers Private Limited v.
Pawan Hans Limited O.M.P.(I) (COMM.) 148/2021
by Hon`ble High Court of Delhi
34.4 Eptisa Servicios De Ingenierav National Highways
and Infrastructure Development 2018 SCC OnLine
Del 12053 by Hon`ble High Court of Delhi
34.5 Times Internet Limited v. Alt Digital Limited Media
Entertainment 2019 SCC OnLine Del 11948
34.6 Indian Charge Chrome Ltd. Vs. Tata Iron and Steel
Co. Ltd. MANU/WB/0229/1995
34.7 M/S Golden Tobacco Limited Vs. M/S Golden
Tobie Private Limited O.M.P.(I) (COMΜΜ.)
182/2021 by Hon`ble High Court of Delhi
34.8 Ascot Hotels and Resorts Pvt. Ltd. & Anr. V.
Connaught Plaza Restaurants Pvt. Ltd 2018 SCC
ONLINE DEL 7940 by Hon`ble High Court of
Delhi
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 20 of 49
34.9 GMR Pochanpalli Expressways Limited v. National
Highways Authority of India OMP (1) COMM
396/2020 by Hon`ble High Court of Delhi
34.10 Arcelor Mittal Nippon Steel (India) Ltd. v. Essar
Bulk Terminal Ltd., (2022) 1 SCC 712
34.11 Vijay Maheshwari v. Splendor Buildwell Private
Limited & Anr. OMP (I) (COMM) 42/2024
35. At this stage, it will be apposite to take note of
judicial pronouncements regarding scope of Section 9.
35.1 In Essar House (P) Ltd. v. Arcellor Mittal Nippon
Steel India Ltd., MANU/SC/1165/2022: 2022:INSC:
957, the Hon’ble Supreme Court observed as under:-
“39. In deciding a petition under Section 9 of the Arbitration
Act, the Court cannot ignore the basic principles of the CPC.
At the same time, the power of the Court to grant relief is not
curtailed by the rigours of every procedural provision in the
CPC. In exercise of its powers to grant interim relief under
Section 9 of the Arbitration Act, the Court is not strictly
bound by the provisions of the CPC.
40. While it is true that the power under Section 9 of the
Arbitration Act should not ordinarily be exercised ignoring
the basic principles of procedural law as laid down in the
CPC, the technicalities of CPC cannot prevent the Court
from securing the ends of justice. It is well settled that
procedural safeguards, meant to advance the cause of justice
cannot be interpreted in such manner, as would defeat justice.
41. Section 9 of the Arbitration Act provides that a party may
apply to a Court for an interim measure or protection inter
alia to (i) secure the amount in dispute in the arbitration; or
(ii) such other interim measure of protection as may appear
to the Court to be just and convenient, and the Court shall
have the same power for making orders as it has for the
purpose of, and in relation to, any proceedings before it.”
35.2 The Hon’ble Supreme Court in the landmark
judgment of Adhunik Steels Ltd. v. Orissa
Manganese and Minerals (P) Ltd.,
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 21 of 49
MANU/SC/2936/2007: 2007:INSC:742: (2007) 7
SCC 125 has, with respect to Section 9, held as
under:-
“8. There was considerable debate before us on the scope of
Section 9 of the Act. According to learned counsel for
Adhunik Steels, Section 9 of the Act stood independent of
Section 94 and Order 39 of the Code of Civil Procedure and
the exercise of power there under was also not trammelled by
anything contained in the Specific Relief Act. Learned
counsel contended that by way of an interim measure, the
court could pass an order for the preservation or custody of
the subject-matter of the arbitration agreement irrespective of
whether the order that may be passed was in a mandatory
form or was in a prohibitory form. The subject-matter of
arbitration in the present case was the continued right of
Adhunik Steels to mine and lift the ore to the surface on
behalf of OMM Private Limited and until the Arbitral
Tribunal decided on whether OMM Private Limited was
entitled to breach the agreement or terminate the agreement
and what would be its consequences, the court had not only
the power but the duty to protect the right of Adhunik Steels
conferred by the contract when approached under Section 9
of the Act. Learned counsel emphasised that what was liable
to be protected in an appropriate case was the subject-matter
of the arbitration agreement. Learned counsel referred to The
Law and Practice of Commercial Arbitration in England by
Mustill and Boyd and relied on the following passage
therefrom:
“(b) Safeguarding the subject-matter of the dispute.
The existence of a dispute may put at risk the property which
forms the subject of the reference, or the rights of a party in
respect of that property. Thus, the dispute may prevent
perishable goods from being put to their intended use, or may
impede the proper exploitation of a profit-earning article,
such as a ship. If the disposition of the property has to wait
until after the award has resolved the dispute, unnecessary
hardship may be caused to the parties. Again, there may be a
risk that if the property is left in the custody or control of one
of the parties, pending the hearing, he may abuse his position
in such a way that even if the other party ultimately succeeds
in the arbitration, he will not obtain the full benefit of the
award. In cases such as this, the Court (and in some instances
the Arbitral Tribunal) has power to intervene, for the purpose
of maintaining the status quo until the award is made. The
remedies available under the Act are as follows:-
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 22 of 49
(i) The grant of an interlocutory injunction.
(ii) The appointment of a receiver.
(iii) The making of an order for the preservation, custody or
sale of the property.
(iv) The securing of the amount in dispute.”
11. It is true that Section 9 of the Act speaks of the court by
way of an interim measure passing an order for protection,
for the preservation, interim custody or sale of any goods,
which are the subject matter of the arbitration agreement and
such interim measure of protection as may appear to the
court to be just and convenient. The grant of an interim
prohibitory injunction or an interim mandatory injunction are
governed by well known rules and it is difficult to imagine
that the legislature while enacting Section 9 of the Act
intended to make a provision which was de hors the accepted
principles that governed the grant of an interim injunction.
Same is the position regarding the appointment of a receiver
since the Section itself brings in, the concept of ‘just and
convenient’ while speaking of passing any interim measure of
protection. The concluding words of the Section, “and the
court shall have the same power for making orders as it has
for the purpose and in relation to any proceedings before it”
also suggest that the normal rules that govern the court in the
grant of interim orders is not sought to be jettisoned by the
provision. Moreover, when a party is given a right to
approach an ordinary court of the country without providing
a special procedure or a special set of rules in that behalf, the
ordinary rules followed by that court would govern the
exercise of power conferred by the Act. On that basis also, it
is not possible to keep out the concept of balance of
convenience, prima facie case, irreparable injury and the
concept of just and convenient while passing interim
measures under Section 9 of the Act.
16. Injunction is a form of specific relief. It is an order of a
court requiring a party either to do a specific act or acts or to
refrain from doing a specific act or acts either for a limited
period or without limit of time. In relation to a breach of
contract, the proper remedy against a defendant who acts in
breach of his obligations under a contract, is either damages
or specific relief. The two principal varieties of specific relief
are, decree of specific performance and the injunction (See
David Bean on Injunctions). The Specific Relief Act,
1963 was intended to be “An Act to define and amend the
law relating to certain kinds of specific reliefs.” Specific
Relief is relief in specie. It is a remedy which aims at the
exact fulfilment of an obligation. According to Dr. BanerjeeOMP (I) COMM NO.: 63/2025 and 66/2025 Page 23 of 49
in his Tagor Law Lectures on Specific Relief, the remedy for
the non performance of a duty are (1) compensatory, (2)
specific. In the former, the court awards damages for breach
of the obligation. In the latter, it directs the party in default to
do or forbear from doing the very thing, which he is bound to
do or forbear from doing. The law of specific relief is said to
be, in its essence, a part of the law of procedure, for, specific
relief is a form of judicial redress. Thus, the Specific Relief
Act, 1963 purports to define and amend the law relating to
certain kinds of specific reliefs obtainable in civil courts. It
does not deal with the remedies connected with
compensatory reliefs except as incidental and to a limited
extent. The right to relief of injunctions is contained in part-
III of the Specific Relief Act. Section 36 provides that
preventive relief may be granted at the discretion of the court
by injunction temporary or perpetual. Section 38 indicates
when perpetual injunctions are granted and Section
39 indicates when mandatory injunctions are granted. Section
40 provides that damages may be awarded either in lieu of or
in addition to injunctions. Section 41 provides for
contingencies when an injunction cannot be granted. Section
42 enables, notwithstanding anything contained in Section
41, particularly clause (e) providing that no injunction can be
granted to prevent the breach of a contract the performance
of which would not be specifically enforced, the granting of
an injunction to perform a negative covenant. Thus, the
power to grant injunctions by way of specific relief is
covered by the Specific Relief Act, 1963.
36. From the pleadings and arguments advanced by both
the sides, the following questions emerge for
consideration:-
36.1 Whether the SPAN Motels cannot terminate the
contract without payment of Liquidated Damages as
stipulated in clause 15.3 of the Franchisee
Agreement?
36.2 Whether Lemon Tree is seeking enforcement of
negative covenant as per clause 5.25 of franchisee
agreement and is it permissible?
36.3 Whether Lemon Tree is seeking the enforcement of
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 24 of 49
specific performance of a determinable contract and
is it allowed?
36.4 Whether the claim of SPAN Motels is barred by
provision of Section 14(d) of SRA as it amounts to
specific performance of determinable contract?
37. At this stage, it will be appropriate to reproduce the
relevant clauses of the franchise agreement:-
Clause 3. TERM:
Except as otherwise provided herein, this Agreement shall
commence on the Effective Date and shall remain valid for a
period of Ten (10) years from the Operating Date (the “Initial
Term”). Upon conclusion of the Initial Term, this Agreement
shall renew with and extend for another period of 10 (Ten)
years from the date of the expiration of the Initial Term, upon
the terms and conditions mentioned herein, unless either
party hereto shall give the other party hereto prior written
notice of such party’s intention to terminate this Agreement at
the conclusion of the Initial Term, which written notice must
be provided to the other party no more than twelve (12)
months, and no less than six (6) months, before the scheduled
termination of the Initial Term.
Clause 4. FRANCHISOR’S OBLIGATIONS
4.1 To educate Franchisee regarding the Brand Standards,
Franchisor may loan or otherwise make available to
Franchisee one set of the Franchised Operations Manual and
the Rules and Regulations in English for operation of the
Franchised Hotel. This is returnable by the Franchisee at the
end of the contract period. No copies of this shall be made
without written consent of the Franchisor.
4.2 The Franchisor shall review and analyze preliminary and
final plans and specifications pertaining to the construction
of the Hotel and perform periodic/monthly inspections of the
Hotels in order for the Hotel to comply with the Brand
Standards during the period of construction at the sole
expense of the Franchisee (i.e., travel, boarding, lodging
equivalent to 5 star hotel and miscellaneous expense);
however, Franchisor shall not be liable to Franchisee, any
subsequent owner of the Hotel nor to any third party as a
result of Franchisor’s review or approval of the plans and
specifications for the Hotel.
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 25 of 49
4.3 Franchisor or its designee shall provide initial training
and on-going training to Franchisee’s principals, general
manager and key employees all related costs would be borne
by Franchisee.
4.4 Franchisor or Lemon Tree shall provide the Reservations
System for the Franchised Hotel and, if available, Franchisor
may provide a license to Franchisee to use Reservations
Systems Software for the Franchised Hotel to receive
Reservation Transactions in the manner and on the terms
contemplated in Section 5.9 hereof.
4.5 Franchisor shall use the monies collected pursuant to
Section 6.3 hereof for the purpose of providing and
supporting efforts to advertise and promote the System
through the marketing Fee described in Section 12 hereof in
such manner as Franchisor may from time to time determine
to be necessary and appropriate.
4.6 Franchisor shall use the reservations fees collected
pursuant to Section 6 hereof to support, as part of the System,
the Reservation System, as Franchisor its designee may from
time to time determine to be necessary and appropriate.
4.7 Franchisor shall list the Franchised Hotel in such
appropriate directories of hotels as may be published by the
Franchisor or its designee from time to time.
4.8 Franchisor carries out group sales and marketing services
for all Affiliated Hotels and shall extend the benefit of such
group sales and marketing services to the Franchisee for the
Hotel through the Systems. Group sales and marketing
services for the Affiliated Hotels, shall comprise cluster
advertising carried out on corporate basis in the local,
national and international markets for the benefit of the
Affiliated Hotels comprised as Affiliated Hotels enjoying the
benefits of Franchisor Trademarks. Franchisor shall in its
sole discretion determine the group advertising program
having regard to the objective of providing wider economic
exposure for all Affiliated Hotels covered under the group
sales and marketing services program.
4.9 Franchisor operates a guest feedback system that enables
Affiliated Hotels to provide timely feedback for the benefit
of Affiliated Hotels. While Franchisor encourages every
Affiliated Hotel using the Brand Marks to adopt the Guest
feedback System, Franchisee will have the option to
participate or not participate in this program. The cost for
such subscribing to such system shall be borne
by the Franchisee.
Clause 5:- Franchisee`s Obligations
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 26 of 49
5.25 Franchisee specifically acknowledges that, pursuant to
this Agreement, Franchisee will receive valuable information
including, without limitation, information regarding the
operational sales, promotional and marketing methods and
techniques of Lemon Tree and the Brand System, Franchisee
covenants that during the term of this Agreement, and except
as otherwise approved in writing by Franchisor, Franchisee
shall not, either directly or indirectly, for itself, or through,
on behalf of, or in conjunction with any person, partnership,
association or corporation, divert or attempt to divert any
information provided by Lemon Tree to Franchisee or its
Affiliates nor divert or attempt to divert any business or
customer of the Franchised Hotel to any competitor, by direct
or indirect inducement or otherwise, to do or perform directly
or indirectly, any other act injurious or prejudicial to the
goodwill associated with the Lemon Tree Marks and the
Brand System.
5.26 Franchisee understands and acknowledges that
Franchisor shall have the right, in its sole discretion, to
reduce the scope of any covenant set forth in Section 5.25
without Franchisee’s consent, effective immediately upon
receipt by Franchisee of written notice thereof, and
Franchisee agrees that it shall comply forthwith with any
covenant so modified, which shall be fully enforceable
notwithstanding the provisions of Section 19.1 hereof.
5.27 Franchisee expressly agrees that the existence of any
claims it may have against Franchisor, whether or not arising
from this Agreement, shall not constitute a defense to the
enforcement by Franchisor of the covenants in Section 5.25.
Franchisee agrees to pay all costs and expenses (including
reasonable attorneys’ fees and expenses) incurred by
Franchisor in connection with the enforcement of Section
5.25
Clause 14: TERMINATION
14.1 Immediate Termination Without Opportunity to Cure
Franchisor may, at its sole discretion, terminate this
Agreement and all rights granted herein without prior notice
to Franchisee on occurrence of any of the following events:
14.1.1 If Franchisee shall become insolvent or make a
general assignment for the benefit of creditors; or if a petition
in bankruptcy (insolvency) is filed by Franchisee or such a
petition is filed against Franchisee and not opposed by
Franchisee; or if a receiver or other custodian (permanent or
temporary) of Franchisee’s assets or property, or any part
thereof, is appointed by any court of competent jurisdiction,
or if any suit to foreclose any lien or mortgage against theOMP (I) COMM NO.: 63/2025 and 66/2025 Page 27 of 49
Franchisee’s property is instituted, and not dismissed or
contested by litigation within thirty (30) days; or if
Franchisee is dissolved; or if execution is levied against all or
substantially all of Franchisee’s business or property; or if the
real or personal property of Franchisee shall be sold after
levy thereupon by any officer acting on behalf of any court;
14.1.2 If for any reason whatsoever the Franchised Hotel
ceases to exist or is sold/transferred by the Franchisee to a
third party or the lease/license Agreement of the Owner is
determined then this Agreement shall stand terminated
forthwith;
14.1.3 If, contrary to the terms of Section 13 hereof,
Franchisee or any shareholder in Franchisee purports to make
any transfer to any third party without Franchisor’s prior
written consent;
14.1.4 If contrary to the terms of Section 9 hereof, Franchisee
discloses or divulges any confidential information provided
to franchisee by franchisor;
14.1.5 If franchisee misuses or makes any unauthorized use
of the the Lemon Tree Marks or otherwise materially impairs
the goodwill associated therewith or Lemon Tree’s rights
therein;
14.1.6 If Franchisee submits false or misleading information
required under this Agreement;
14.1.7 If Franchisee fails to comply with the insurance
requirements set forth in Section 11 hereof,
14.1.8 If any other agreement between Franchises and
Franchisor. Lemon Tree, or an Affiliate thereof is terminated
for breach by Franchisor or Lemon Tree;
14.1.9 If a threat or danger to public health or safety results
from the construction, renovation, maintenance, or operation
of the Franchised Hotel;
14.1.10 If Franchisee violates the covenants contained in
Section 5.22 hereof;
14.1.11 If the beneficial ownership of any interest (Which for
purposes debentures, partnership interest, or the like) in
Franchisee hereof shall include, but not be limited to, stock,
bonds, becomes, directly or indirectly, owned by a company
other than Lemon Tree or Franchisor without Franchisor’s
prior written consent; or
14.1.12 If any representation or warranty given by the
Franchisee under present agreement to the Franchisor is
found to be untrue or misleading.
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 28 of 49
14.2 Termination by Franchisor After Opportunity to Cure
Franchisee shall be deemed to be in default and Franchisor
may, at its option, terminate this Agreement and all rights
granted hereunder, without further notice to Franchisee,
effective immediately upon receipt of notice chisee’s
obligations by Franchisee, upon any breach of any of
Franchisee’s hereunder, including, but not limited to, any of
the following eventsat
14.2.1 If, within thirty (30) days after notice is given to it by
Franchisor requiring remedy, Franchisee fails to pay when
due payments requirement under this Agreement Franchisee
shall not have remedied or cause to be remedied such breach;
14.2.2 If within thirty (30) days after notice is given to it by
Franchisor requiring remedy, Franchisee fails to maintain or
observe any of the standards or procedures required for
operation of the Franchised Hotel by Franchisor in this
Agreement, in the Franchise Operations Manual, the Rules
and Regulations, or otherwise in writing, and Franchisee
shall not have remedied or cause to be remedied such breach.
14.2.3 If, within thirty (30) days after notice is given to it by
Franchisor requiring remedy, Franchisee fails to timely
submit any information required under this Agreement,
Franchisee shall not have remedied or cause to be remedied
such breach,
14.2.4 If, within thirty (30) days after notice is given to it by
Franchisor requiring remedy, Franchisee breaches any other
covenant promise, obligation, or undertaking herein
contained, if such breach shall be of a remediable nature, and
Franchisee shall not have remedied or cause to be
remedied such breach.
14.3 Termination After Notice to Franchisor – Franchisor
shall be deemed to be in default and Franchisee may at its
option terminate this Agreement and all rights granted
hereunder upon breach of any of Franchisor’s material
obligations as per Section 4 of this Agreement and
Franchisor shall not have remedied or cause to be remedied
such breach within 30 days after notice is given to it by
Franchisee requiring remedy.
Clause 15: RIGHTS AND OBLIGATIONS UPON
TERMINATION OR EXPIRATION
15.1 Upon the termination or expiration of this Agreement
howsoever occasioned, all of Franchisee’s rights and
privileges hereunder shall cease immediately and Franchisee
shall immediately:
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 29 of 49
15.1.1 Cease to operate the Franchised Hotel under the Brand
System and the Brand Marks;
15.1.2 Cease to use any of the Lemon Tree Marks or any
aspect of the Brand System and cease to use in any manner
whatsoever any forms, manuals, slogan signs, marks or
symbols containing the Lemon Tree Marks and anything
similar thereto or suggestive thereof used in connection with
the Franchised Hotel;
15.1.3 Cease to claim or represent orally or in writing that it
is or that the Franchised Hotel is a Franchisee or a franchised
hotel of Franchisor;
15.1.4 Remove or alter all relevant signs used in connection
with the Franchised Hotel so as to distinguish it from the
Franchisor and Lemon Tree,
15.1.5 Pay without offset all sums owing to Franchisor and
Lemon Tree and their Affiliates;
15.1.6 Not allow any third party to use or apply the Brand
System;
15.1.7 Deliver up to Franchisor all manuals (including,
without limitation, the Franchise Operations Manual), the
Rules and Regulations, the reservation system software, and
all programs and confidential information in its possession or
control and not keep any copies thereof; and
15.1.8 Take such action as may be necessary to cancel any
assumed name or equivalent registration which contains any
Franchised Mark. Franchisee shall furnish Franchisor with
evidence satisfactory to Franchisor of compliance with this
obligation within seven (7) days after termination or
expiration of this Agreement.
15.2 In the event Franchisee continues to operate or
subsequently begins to operate any other business following
termination or expiration of this Agreement, Franchisee shall
not use any reproduction, counterfeit, copy, or colorable
imitation of the Brand Marks or any of the Lemon Tree
Marks, either in connection with such other business or the
promotion thereof, which is likely to cause confusion,
mistake or deception, or which is likely to dilute Lemon
Tree’s rights in and to such marks, and shall not utilize any
designation of origin or description or representation which
falsely suggests or represents an association or connection
with Lemon Tree or Franchisor constituting unfair
competition.
15.3 In the event of termination of this Agreement pursuant
to Sections 14.1 or 14.2 herefor by the Franchisee, then in
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 30 of 49
addition to any other remedies available under this
Agreement, Franchisee shall pay to Franchisor within thirty
(30) days from the date of such termination, as liquidated
damages and not as a penalty, an amount, which both parties
admit and acknowledge to be a genuine pre-estimate of the
loss/damages which would be suffered by the Franchisor,
determined in accordance with the following:
A) If the applicable termination occurs anytime on or before
the 7th anniversary of the Operating Date, Franchisee will
pay Franchisor, within 30 days after the termination, as
liquidated damages and not as a penalty for the premature
termination of this Agreement, an amount equal to the
product of (i) average monthly amount of fees due and/or
receivedby the Master Franchise under Sections 6.2, 6.3 and
6.4 in the most recent 12 months prior to the year of
termination for shorter number of months until the date on
which Franchisce could terminate this Agreement without
penalty. Date), multiplied by the
B) If the applicable termination occurs anytime after the 7th
anniversary of the Operating Date, Franchisee will pay
Franchisor, within 30 days after the termination, as liquidated
damages and not as a penalty for the premature termination
of this Agreement, an amount equal to the product of (i)
average monthly amount of fees due and/or received by the
Master Franchise under Sections 6.2. 6.3 and 6.4 in the most
recent 12 months prior to the year of termination for shorter
number months since the Effective Date), multiplied by (li)
12 months until the date on which Franchisee could terminate
this Agreement without penalty.
Payment of such liquidated damages is in addition to all
other rights of Franchisor hereunder, including, without
limitation, the right to obtain equitable and/or in junctive
relief and to collect amounts owed which accrued prior to
termination of this Agreement. The parties acknowledge that
the injury caused to Franchisor by Franchisee’s breach is
difficult or impossible accurately to estimate that they intend
to provide for compensation for damages which are not
specifically ascertainable and not as a penalty,. The parties
agree that the stipulated method of computation constitutes a
reasonable estimate of Franchisor’s probable loss resulting
from such breach by Franchisee.
15.4 In the event of termination or expiration of this
Agreement for any reason whatsoever, the Franchisee shall
immediately cease and refrain Hotel or former Franchised
Hotel. from holding the Franchised Hotel to the general
public as a Franchised Hotel or former Franchised Hotel
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 31 of 49
15.5 In the event that, Franchisee fails to discontinue use of
the Brand the Proprietary immediately, Franchisee agrees
and understands that Franchisor or Lemon Tree shall also be
entitled to injunctive or other equitable relief for any
violation of the foregoing, without prejudice to other rights
as available under the present agreement or law to the
Franchisor.
15.6 The termination of this Agreement howsoever
occasioned:
15.6.1 Shall be without prejudice to any rights which shall
have accrued to either party hereunder prior to or as a result
of such termination; and
15.6.2 Shall not release Franchisee from its obligations to
pay the fees or other sums accrued and due (but not paid) up
to the date of such termination, nor entitle Franchisee to
repayment of any monies already paid by it under and
pursuant to this.
Clause 16. RELATIONSHIP OF PARTIES;
INDEMNIFICATION; THIRD PARTY RIGHTS
16.3. Notwithstanding anything contained herein Franchisee
hereby and all losses, liabilities, punitive measures, penalties,
damages, unequivocally undertakes to indemnify, the
Franchisor against each claims, actions, proceedings, cost
and expenses, including reasonable connection therewith,
suffered or incurred by Franchisor which may arise out of or
result from or payable on account of breach of terms and
conditions of the present agreement.
19. DISPUTE RESOLUTION
19.1 Any and all disputes or differences arising out of or in
relation to or in performance or non-performance of the
rights and obligations set forth connection with this
Agreement between the Parties or relating to the thereof shall
be referred for arbitration to sole Arbitral Tribunal in
accordance herein or relating to the breach, termination,
invalidity or interpretation with the terms of Arbitration and
Conciliation Act, 1996 or any amendments thereof.
19.2 The place of arbitration shall be New Delhi.
19.3 The language used in the arbitral proceedings shall be
English.
19.4 Arbitration shall be conducted by a sole Arbitral
Tribunal.
19.5 The sole Arbitral Tribunal shall be appointed with
matual consent. The arbitral award shall be in writing and
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 32 of 49
shall be final and binding on each party and shall be
enforceable in any court of competent jurisdiction.
19.6 Noting contained in this Section 19 shall be construed to
limit or preclude a party from bringing any action in any
court of competent jurisdiction for injunctive or similar court
order providing for other provisional relief to compel another
party to comply with its obligations hereunder at any time.
The costs of any such action, including, without limitations,
attorneys’ fees, shall be borne by the losing party. For all
such proceedings, Courts at Delhi shall have the jurisdiction.
38. I have already heard the Ld. counsels for both the sides
and perused the records carefully. I have also gone through
the written arguments filed by both the parties.
Analysis & Findings
39. The first point for consideration is “Whether the
SPAN Motels cannot terminate the contract, without
payment of Liquidated Damages as stipulated in clause
15.3 of the Franchise Agreement”?
40. The argument of Lemon Tree is that till liquidated
damages are paid in terms of clause 15.3 of the Franchise
Agreement, the agreement cannot be terminated by SPAN
Motels. It is also the argument of Lemon Tree that as per
Clause 15.6, termination is not allowed without payment
of liquidated damages. It is also argued that SPAN Motels
has acted in contravention of the terms of the agreement
and hence the termination is invalid and SPAN Motels
cannot seek enforcement of Clause 15 and it is only after
compliance of Clause 15.6, that Clause 15 can be enforced.
Another argument by Lemon Tree is that the mere fact that
liquidated damages have been claimed, does not make the
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 33 of 49
agreement determinable.
41. At first, it is to be noted that Lemon Tree itself has
admitted in its pleadings and submissions that in view of
Clause 14 of the agreement, the agreement is determinable
and therefore the Franchise Agreement being a
determinable contract, cannot be specifically enforced by
SPAN Motels. Hence, it is admitted position of the parties
that Franchise Agreement is a determinable contract, as
under Clause 14 of the Franchise Agreement both the
parties have been given the right to terminate the contract.
In various judgments, it has been observed that a
determinable contract is one where the contract can be
terminated by either of the parties.
42. In National Highways Authority of India (Supra), it
was observed that: –
88. On perusing the above judgments, it is discernible that if a
contract can be terminated by either of the parties whether for a
specific breach or even without any cause and this right is
based on an allegation of breach or happening of an event
which is clearly stated in the contract, then the contract is
determinable in nature and hence, cannot be enforced.
90. On perusal, clause 37.1 grants the right to NHAI to
terminate the Agreement if the concessionaire (respondent
herein) commits any default whereas clause 37.2 grants the
right to respondent to terminate the Agreement if NHAI
commits any default. The above clauses make amply clear that
both the parties herein have been given a right to terminate the
Agreement, making the Agreement in question i.e. Concession
Agreement 02.07.2010 a determinable contract. Hence, by
virtue of section 14(d) of SRA, the Agreement is incapable of
specific performance and by virtue of section 41(e), an
injunction cannot be granted.
43. In Global Music (Supra), relied upon by Ld.
Counsel for Lemon Tree, the agreement was held not to be
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 34 of 49
determinable as there was a negative covenant and
Respondent No.1/Defendant No.6 had no right to terminate
the agreements. Relevant observations made therein are
reproduced here as under: –
43. The agreements in question are not determinable, as
there is a negative covenant and the Respondent No.1/
Defendant No.6 has no right to terminate them. Schedule
A Clause 2 of the original agreement stipulates that “the
artist (Respondent No.1/ Defendant No.6) shall not
terminate this agreement for any reason whatsoever for the
term.”
44. In Golden Tobacco (Supra), relied upon by
Ld.Counsel Lemon Tree, it was observed that:-
35. The question whether an agreement is in its nature
determinable, is required to be understood in the context
of the nature of that agreement. There are certain
agreements that can be terminated by either party.
Partnership agreements in cases of partnerships at will and
agreements, which expressly provide that either party has
the right to terminate the same, without any cause, are,
clearly agreements that by their nature are determinable.
There may be certain other contracts such as those of
service of a personal nature, which require a voluntary
commitment by any individual, the performance of which
by its very nature cannot be compelled. Clearly, such
contracts would also be determinable by their nature.
There may be agreements where the right to terminate the
contract is reserved for a specified party or parties.
Plainly, in such cases, the contracts are determinable but
only at the instance of the said party and that party cannot
be compelled to specifically perform the contract.
However, an agreement, which pertains to transfer of
rights in property, can certainly not be considered as a
determinable contract if the same does not provide for
termination by a party without cause. The aforesaid
illustrations are by no means, exhaustive; the question
whether a contract is determinable in its nature is required
to be examined in the facts of each case.
45. In Ascot Hotels (Supra), relied upon by Ld.Counsel
for Lemon Tree, there were specific situations in which the
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 35 of 49
agreement could have been terminated and except under
those situations, there was no right to terminate the
agreement. It was observed that:-
23. In the present case, the respondent has clearly
made out a case which falls in the exception to the
rule as provided in Section 14(1)(a) of the Specific
Relief Act, 1963.
24. Similarly, reliance of the appellant on Section
14(1)(c) of the Specific Relief Act, 1963 is also ill-
founded. In the License Agreement, there is a
specific prohibition on the appellant from
terminating the agreement “except” in the case of
three consecutive defaults in the payment of the
license fee by the respondent. In view of the
prohibition, it cannot be said that the agreement is
determinable by its very nature….
46. Secondly, under clause 15.1, it is stipulated that:-
“Upon the termination or expiration of this Agreement howsoever
occasioned, all of Franchisee’s rights and privileges hereunder shall
cease immediately and Franchisee shall immediately …….”.
47. As such, in view of the above stipulation,
irrespective of the fact that how the termination has
occasioned, once the contract is terminated, Clause 15.1
comes into effect.
48. Clause 15.3 talks about the obligation to pay
liquidated damages in the event of termination. So, claim
for liquidated damages, under the Franchise Agreement is
a post-termination obligation. Since the amount to be paid
under Clause 15 is not in the form of penalty, the quantum
of liquidated damages is a matter that would require
adjudication, which would be done by the Arbitral
Tribunal.
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 36 of 49
49. So far as the contention of Ld. Counsel for Lemon
Tree that the termination of Franchise Agreement by
SPAN Motels is invalid is concerned, the validity of
termination is a matter to be decided by the Ld. Arbitral
Tribunal when the Arbitral Tribunal is constituted. This
Court, under the limited scope of Section 9 cannot go into
the merits of termination.
50. In Inter Ads (Supra), it was observed that: –
13. Whether the termination notice dated 15.03.2019, met
the requirements of Article 12.4 or not and thus, whether the
termination was a valid termination or not, would be
questions that have to be examined and adjudicated upon by
the learned Arbitral Tribunal, to be appointed by the parties
to resolve their disputes. It would also be for the learned
Arbitral Tribunal to reconcile Article 7.1 with the recitals in
the JVA-II dated 25.10.2011, as reproduced hereinabove,
limiting the agreement to four editions. Under Article 7,
termination can be either mutually agreed to under Article
7.2 or at the option of either party, on the occurrence of
certain events, as listed under Article 7.3, which
contemplates a termination with penalty. Again, the
question whether the respondent had given 30 days’ time to
the appellant to make good the default, duly specified in
reasonable detail in the communications exchanged between
the parties, is not for this court to inquire into. Suffice it is to
state that in either event, the agreement was terminable and
therefore, the conclusion arrived at by the learned Single
Judge that specific performance of the contract could not be
granted and nor could any injunction be issued restraining
the respondent from giving effect to the notice dated
15.03.2019, as that would in effect amount to enforcement
of the contract beyond the said date i.e. 15.03.2019, cannot
be faulted.
15. Since the contract in the present case was terminable and
as the issue of the legality of the action of termination has yet
to be determined and further, since wrongful termination can
be restituted by awarding of damages, in the event the
appellant is able to establish that the said termination was
illegal and invalid, the learned Single Judge has rightly
declined the reliefs prayed for by the appellant in the Section
9 petition. We do not find any reason to interfere with theOMP (I) COMM NO.: 63/2025 and 66/2025 Page 37 of 49
view taken in the impugned judgment.
51. In the case of Egis India (Supra), cited by Ld.
Counsel for Lemon Tree, the question of law to be decided
was whether in view of the clause 2.9.6 of the GCC, the ad
interim relief could be granted or not. This case is not
relevant as there was specifically a clause in the said case
which laid down that if the matter is referred for
arbitration, after notice of termination, such contract would
not stand terminated and it will be subject to the outcome
of the arbitral award. It was observed:-
13. While, therefore, I am not entirely in agreement with Mr.
Dewan’s argument that the decision in Eptisa Servicios1
covers the present case, there is substance in Mr. Dewan’s
contention that even after a notice of termination has been
issued by the respondent, the contract would not stand
terminated, if the petitioner seeks resolution of the disputes
by arbitration. In this case, the notice of termination was
issued on 13th April, 2021. The petitioner, on 27th April,
2021, disputed the validity of the letter of the termination
order of the decisions to terminate the contract and also
sought reference of the disputes to arbitration. Prima facie,
therefore, it would appear that, in such circumstances, Clause
2.9.6 of the GCC, would apply and, pending resolution of the
dispute in arbitration and subject to the result of the arbitral
award, the contract would continue to subsist.
52. However, no such clause exists in the contract
between the parties in the present case and hence the same
is distinguishable and not applicable.
53. In Eptisia Servicios (Supra), cited by Ld.Counsel for
Lemon Tree, again there was a specific clause which
contained a negative covenant that termination notice
would not take effect during the pendency of arbitration
proceedings and hence, not applicable.
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 38 of 49
54. In GMR Pochanpalli (Supra), judgment cited by
Ld.Counsel for Lemon Tree, it was observed that:-
31. Therefore, the primary consideration while passing the
order is to see whether irreparable harm is likely to be caused
to the party seeking the relief, while bearing in mind that
granting such relief shall not render the final relief or the
entire proceedings infructuous. A relief beyond the final
relief as an interim measure, at the preliminary stage, shall
not be granted and even if granted has to be with utmost
caution and vigilance. By way of exercising powers under
Section 9(1) of the Arbitration Act, the Courts cannot enforce
the Award in the garb of granting a relief beyond the scope
of the powers but can only grant relief which is deemed
necessary to ensure that the rights of either party are not
being prejudiced to the extent that the resolution being
sought becomes futile.
34. It is, hence, evident that the relief which may be granted
under Section 9 of the Act can be only to provide relief to the
party claiming so to ensure that the subject matter of the
arbitration is protected during and till the conclusion of
proceedings and after the Award is made but is not enforced.
Such a measure can certainly not be granted beyond the
scope and mandate of Section 9 and in the nature of a final
order/relief.
36. This Court, in light of the limitations delineated under
Section 9 of the Arbitration Act, cannot grant a permanent
relief to the petitioner, especially when an Award has already
been made highlighting the extent of claims and reliefs that
the parties are legally entitled for. The mandate of the
provision does not permit passing of an order in the nature of
a permanent measure in favour of either party under the
Arbitration Act.
55. There is no dispute to the proposition of law laid
down in the aforesaid judgment, but the prayers made in
the petition of SPAN Motels cannot be said to be granting
of final relief but are consequential to the Clause 15.1 of
the agreement.
56. Another argument by Lemon Tree is that SPAN
Motels has misused confidential information supplied by
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 39 of 49
Lemon Tree to SPAN Motels. Under Clause 5.25 read with
Clause 9, the terms regarding confidential information
have been provided. It is to be noted that in the entire
pleadings and submissions by Lemon Tree, there is no
mention that what confidential information has been
misused by SPAN Motels.
57. So far as the requirement of notice with cure period
of 30 days before termination in terms of Clause 14.3 is
concerned, in the email dated 24.02.2025, sent by SPAN
Motels to Lemon Tree, the termination was to take effect
from 31.03.2025. The termination was stated to be on
account of non-compliance with earlier emails dated
21.08.2024, 09.10.2024 and the follow up emails dated
15.12.2024 and 21.12.2024 to cure the lapses and breaches
notified by SPAN Motels to Lemon Tree. This prima facie
shows that more than 30 days` time to cure the lapses and
defects was given before the termination was to take effect
and the mere fact that term “30 days cure period” has not
been mentioned specifically in the said communications
cannot be said to be a breach of Clause 14.3.
58. In Nimisha (Supra), cited by Ld.Counsel for Lemon
Tree the termination was with immediate effect and the
specific clause to give 60 days` notice demanding arrears
of salary was not followed. The relevant paras are
reproduced as under: –
35. There is no denial that the agreement was entered into
between the Educator and the Unacademy on 03.05.2023. In
the said agreement, the Educator has agreed to provide theOMP (I) COMM NO.: 63/2025 and 66/2025 Page 40 of 49
Contents defined as “Educator Content” in clause No.1.1.9
to the Unacademy. The Unacademy is entitled to use the
“Educator Content” exclusively during the lock-in period
which is two years from 01.04.2023. The two years’ tenure
under the agreement has not come to an end as no 60 days
notice issued demanding arrears of salary. Admittedly the
Educator has received base salary for two years. This being
the prima facie position, Educator could not have terminated
the agreement in the way alleged to have been done in terms
of email dated 18.09.2023 wherein the Educator states that
she is resigning with immediate effect.
53. As already noticed, the covenant mandating the
Educator to provide service exclusively to the Unacademy is
not enforceable by way of specific performance as it
involves the personal service of the Educator. The action for
its breach is only to seek damages. However, the agreement
confers the right to exclusive use of the “Educator Content”
by Unacademy. This right in appropriate circumstances can
be protected by restraining the other party in the exercise of
power under Section 42 of the Specific Relief Act.
59. In the present case, the requirement of 30 days cure
period notice is prima facie appearing to have been
followed by SPAN Motels. The merits or validity of such a
notice will be a matter for consideration before the Arbitral
Tribunal.
60. In Golden Tobacco (Supra), relied upon by
Ld.Counsel for Lemon Tree, even though the termination
of the agreement was stated in the notice to be with
immediate effect, the party terminating it had refrained
from taking any action for the requirement period of three
months. This was considered to be sufficient compliance.
It was observed that:-
58. The termination notice dated 13.02.2021 is also, ex-
facie, illegal as it is not in conformity with the terms of the
Trademark License Agreement, as amended by the
Amendment Agreement. In terms of Clause 5 of the
Amendment Agreement, GTL was entitled to terminate
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 41 of 49
the Agreement in the event GTPL did not comply with
any of the conditions as set out in the Trademark License
Agreement “after a notice period of 3 (three) months by
issuance of a termination notice”. However, paragraph 14
of the termination notice dated 13.02.2021 expressly states
that GTL had terminated the Trademark License
Agreement and the Amendment Agreement “with
immediately effect”.
59. Mr. Verma, has contended that the said notice was in
conformity with the Amendment Agreement as GTL had
refrained from taking any action for a period of three
months after 13.02.2021 and the same was sufficient
compliance of Clause 4 of the Amendment Agreement. He
submitted that GTPL had not contested the notice at the
material time on the aforesaid ground, but had merely
insisted that the same be withdrawn.
61. In view of above discussion, the first question is
answered in the negative.
62. The second point for consideration is “Whether
Lemon Tree is seeking enforcement of negative covenant
as per clause 5.25 of franchisee agreement and is it
permissible”?
63. A bare reading of Clause 5.25 reveals that the
obligations laid down under Clause 5.25 are pre-
termination obligations which means that the obligations
under Clause 5.25 are to be performed during the
continuation/subsistence of the Franchise agreement. The
status of the Franchise agreement, as it exists right now is
that, it has been terminated by SPAN Motels. The validity
of termination and other nuances related thereto shall be
the subject matter of the Ld. Arbitral Tribunal, as and
when constituted. However, at this stage, given the limited
scope of Section 9 and as it appears prima facie that the
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 42 of 49
agreement has been terminated, Clause 5.25 cannot be
enforced, as sought by Lemon Tree.
64. In Union Territory of Jammu and Kashmir(Supra) ,it
was observed that:-
25. Further, in Pink City Expressway Private Limited vs. NHAI
&Anr, reported as 2022 SCC Online Del 1816 decided on 15th
June 2022, the aforesaid preposition was also considered by a
Division Bench of Delhi High Court and the following was
observed:
“19. Law on the scope of interference in a Section 9 petition
is no longer res integra. The learned Single Judge has held
that the prayer made by the Appellant in the Section 9
petition cannot be granted as that would amount to extending
the contract contrary to the decision dated 29.04.2022. It is
well-settled that powers under Section 9 can only be
exercised for preservation of the subject matter of the dispute
till the decision of the Arbitral Tribunal and cannot be
extended to directing specific performance of the contract
itself.
28. In view of the law discussed herein above, coming to the
facts of the present case, this court is of the opinion that on the
plain reading of Clause 9.1 of Insurance Contract, the contract
agreement is prima facie determinable, as such the contract is not
specifically enforceable under Section 14 of the Specific Relief
Act. Further, injunction under Section 41 (e) of the Act cannot be
granted in favour of petitioner since the contract is not
specifically enforceable. Even if the petitioner would have
passed the litmus test of Section 14 and Section 41 (e) of
Specific Relief Act, as per the law laid down by the Hon’ble
Supreme Court mentioned Supra, the interim relief in the form of
directing the respondents to continue with the insurance contract
could not have been granted as it will amount to granting of
relief of specific performance of contract, which is beyond the
scope of Section 9 of the Arbitration and Conciliation Act.
65. In Vidya Mandir (Supra), it was observed that:-
19. The issue of whether the respondent had, or had not,
defaulted in complying with the covenants of the Franchise
Agreement with the petitioner, is an aspect which cannot
engage the attention of the Court in proceedings under
Section 9 of the 1996 Act.
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 43 of 49
20. A Division Bench of this Court has, recently, in DLF Ltd.
v. Leighton India Contractors Pvt. Ltd., clearly held that,
while exercising its jurisdiction under Section 9, the Court
should forbear from entering into the merits of the disputes
between the parties or interpreting the covenants of the
contracts between them….
66. It is vehemently contended by Ld. Counsel for
Lemon Tree that Section 14 of SRA is not a bar to
enforcement of a negative covenant. The argument that
negative covenant can still be enforced even if the
affirmative obligations cannot be enforced, holds no water
as it has already been observed in the preceding paragraph
that the obligations under Clause 5.25 are essentially pre-
termination obligations and if the same is allowed to be
enforced now, it would effectively amount to enforcing a
clause in an agreement which is no longer existing. By
way of enforcement of negative covenant, Lemon Tree
cannot be granted specific performance of an already
terminated contract.
67. In Indian Charge Chrome Ltd. (Supra) case, cited by
Ld. Counsel for Lemon Tree, interim order already in force
was sought to be continued since the dispute between the
parties was subject matter of the arbitration. This case was
mainly on the point that if the court cannot compel specific
performance, it can nevertheless grant injunction to
perform a negative covenant. It is also to be noted that in
the said case, there was no right vested with either party to
terminate the agreement which was for a fixed period of 5
years and the agreement showed that there was strong
presumption that the agreement would not be terminated
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 44 of 49
by either of the parties for the defined period of 5 years.
68. However, in the present case though, term of
contract is 10 years under Clause 3, but there is nothing
that the parties could not have terminated the agreement
before the expiry of 10 years.
69. On a conjoint reading of Clause 5.25, 5.27 and 5.28
with Clause 15.3, the contention of Lemon Tree cannot be
accepted that irrespective of claims of SPAN Motels,
SPAN Motels cannot be allowed to divert its business
without payment of liquidated damages. Under Clause
16.3 though, there is an obligation on the franchisee to
indemnify on account of breach of terms and conditions of
the franchise agreement. However, again same is a matter
which would fall under the Arbitral Tribunal`s jurisdiction
and this Court cannot go into deciding whether there has
been a breach or not.
70. Accordingly, it is decided that Lemon Tree is
seeking enforcement of negative covenant under Clause
5.25 but the same is not permissible.
71. The third question is “Whether Lemon Tree is
seeking the enforcement of specific performance of a
determinable contract and is it allowed”?
72. Clause 14 of the Franchise Agreement clearly
indicates that both the franchisor and the franchisee had a
right to terminate the agreement. As per the settled
position of law, if the contract or agreement is terminable
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 45 of 49
by the parties, it is a determinable contract. Section 14(d)
of SRA prohibits specific enforcement of a determinable
contract. Lemon Tree by seeking to enforce the obligations
under clause 5.25 is in effect trying to enforce a pre-
termination obligation which cannot be allowed once the
agreement has been terminated. Also, in cases where the
contract/agreement is determinable, by virtue of Section
14(d) read with 41(e) of SRA, the specific performance
cannot be granted. If allowed, it would lead to restoration
of a terminated contract which cannot be done under
Section 9 as it only deals with maintaining the status quo.
73. In Chetan Iron (Supra), it was observed that: –
21. In my view, the injunction sought by the Appellant under
section 17 of the Arbitration Act, 1996 for the contract which
is determinable or is terminated even according to the
appellant, such injunction is statutorily prohibited. In my
view, at the interim stage, the arbitral tribunal while deciding
petition under section 17 and the court deciding petition
under section 9 of the Arbitration Act, 1996 cannot continue
operation of such determinable contract or the same having
been terminated otherwise it would amount to re-writing the
contract. In my view the arbitral tribunal was thus right in
refusing to grant injunction under section 17 of the
Arbitration Act, 1996. Even otherwise, the arbitral tribunal
has given a finding of fact after considering the facts,
provisions of the agreement and the provisions of Specific
Relief Act and thus no interference is warranted by this court
with such finding of fact recorded by the arbitral tribunal at
this stage.”
74. In Yash Deep Builders(Supra), it was observed
that:-
65. If the petitioner is aggrieved by the letter of termination
of the contract and is advised to challenge the validity
thereof the petitioner can always invoke the arbitration
clause to claim damages, if any, suffered by the petitioner. It
is not open to this Court to restore the contract under
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 46 of 49
Section 9 which is meant only for the sole purpose of
preserving and maintaining the property in dispute and
cannot be used to enforce the specific performance of a
contract.
75. In National Highways Authority of India (Supra), it was
observed that:-
96. In view of the settled law and for the reasons recorded
above, I have no hesitation to hold that the Agreement in
question is a determinable contract and thus, the specific
performance of the Agreement cannot be enforced and by virtue
of bar created by section 41(e) of SRA, no injunction can be
granted by staying the termination notice as the same amounts
to enforcement of the Agreement which already stood
terminated. Even if the termination of the Agreement is found to
be illegal, the only remedy available to the respondent is to seek
compensation and damages and not specific performance of the
Agreement.
76. Hence, the third question is answered in the
affirmative that Lemon Tree is seeking enforcement of a
determinable/terminated contract and that such an
enforcement is not permissible.
77. The fourth question is “Whether the claim of SPAN
Motels is barred by provision of Section 14(d) of SRA as it
amounts to specific performance of determinable
contract”?
78. Lemon Tree has claimed that if SPAN Motels is
allowed to disassociate from the Lemon Tree mark, then it
would amount to specific performance of the post-
termination obligations, as provided under Clause 15.1. As
has already been observed, Lemon Tree has itself in its
pleadings and submissions accepted that the agreement is
determinable. SPAN Motels has effectively terminated the
agreement and now, seeks to disassociate from Lemon
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 47 of 49
Tree as per clause 15.1. SPAN Motels while seeking to
enforce Clause 15.1 is seeking to enforce the post-
termination obligations. The argument that the relief
claimed by SPAN Motels is in the nature of final relief
holds no ground as Clause 15.1 also clearly lays down that,
the obligations therein are to be acted upon, irrespective of
how the termination might have occasioned.
79. Accordingly, the fourth question is decided in the
negative.
CONCLUSION
80. In the totality of the facts and circumstances of the
case and in view of the foregoing discussions, the petition
filed by Lemon Tree bearing OMP(I)COMM. 66/2025 is
hereby dismissed and the petition filed by SPAN Motels
under Section 9 OMP(I)COMM. 63/2025 is hereby
allowed in the following terms: –
80.1 Lemon Tree, its representative, affiliates, authorised
agents, servants, employees are hereby restrained
from representing that hotel of the Petitioner/SPAN
Motels i.e. “Span Inn and Suites” is franchisee hotel
of the Respondent/Lemon Tree and are directed to
immediately take down and remove all listings of
the Petitioner/SPAN Motel’s hotel property from
their website and including authorised OTA
platforms of Respondent/Lemon Tree, MakeMy
Trip i.e. MMT, cleartrip.com, easemytrip.com,OMP (I) COMM NO.: 63/2025 and 66/2025 Page 48 of 49
goibibo and others.
80.2 Lemon Tree its representative, affiliates, authorised
agents, servants, employees are further restrained
from taking any reservations/bookings for the
Petitioner’s Hotel i.e. “Span Inn and Suites”
representing the same as franchisee hotel of the
Respondent/Lemon Tree.
81. However, the prayer regarding direction to render
the details and accounts of all bookings/reservations done
by Lemon Tree/its representatives etc. in respect of SPAN
Motels with effect from 01.04.2025 is declined as the same
shall be subject matter of the arbitration proceedings.
82. Nothing stated herein shall tantamount to my
expression on merits of the case to be adjudicated upon in
the arbitration proceedings.
83. Accordingly, both the petitions are disposed of in
these terms. No order as to costs.
84. File be consigned to record room, after due
Digitally signed
compliance.
BALWANT by BALWANT
RAI BANSAL
Announced in the open court RAI Date:
On 20th Day of August, 2025 BANSAL 2025.08.20
16:44:26 +0530
(Balwant Rai Bansal)
District Judge (Commercial Court)-02
Patiala House Courts, New Delhi
OMP (I) COMM NO.: 63/2025 and 66/2025 Page 49 of 49