Facts of the Case

  • The litigation involved two cross-proceedings before the High Court of Delhi: an execution petition filed by the Decree Holder, AVG Logistics Limited [OMP (ENF.) (COMM.) 17/2026], and a commercial arbitration appeal filed by the Judgment Debtor/Petitioner, M/S Shree Shyam Palace [ARB. A. (COMM.) 15/2026] along with multiple connected interim applications.
  • The conflict emerged from contractual issues relating to a commercial tenanted premises, encompassing unresolved liabilities concerning property tax, outstanding arrears of rent, electricity charges, and accrued interest up to the initial months of 2026.
  • During the pendency of the enforcement and appeal proceedings, both corporate entities entered into discussions to amicably resolve their commercial real estate disputes without further escalating litigation costs or risking adverse judicial decrees.
  • Consequently, both entities jointly moved an application designated as I.A. 15785/2026 under Section 30(2) of the Arbitration and Conciliation Act, 1996, asking the Court to legally record and dispose of the entire dispute based on their mutually executed settlement terms.

Issues Involved

  • Whether the commercial appeal [ARB. A. (COMM.) 15/2026] and the corresponding enforcement petition [OMP (ENF.) (COMM.) 17/2026] could be completely disposed of by the High Court based on a private, bilateral settlement recorded under Section 30(2) of the Act.
  • Whether the terms set forth by the parties regarding the structured clearance of outstanding rental arrears, property tax obligations, and electricity restoration were legally sound and binding under the supervisory jurisdiction of the High Court.

Petitioner’s Arguments (M/S Shree Shyam Palace)

  • The Petitioner submitted that they had already complied with the critical initial component of the settlement by transferring a lump sum amount of ₹60,00,000 (Rupees Sixty Lakhs Only) to the Respondent.
  • They argued that this significant payment was directed specifically toward resolving the accumulated property tax liabilities tied to the commercial subject property covering the timeline from September 15, 2018, up to March 31, 2026.
  • They contended that upon executing this transaction, they were entitled to the swift and immediate restoration of the electrical connections at the tenanted premises to resume unhindered business operations.
  • Furthermore, they expressed their readiness to honor the subsequent payments toward rental arrears in structured, monthly instalments and to duly pay the revised monthly lease amounts as agreed upon in the settlement deed.

Respondent’s Arguments (AVG Logistics Limited)

  • The Respondent, through their learned counsel, confirmed the receipt of the ₹60,00,000 payment from the Petitioner aimed at clearing the property tax liabilities.
  • They formally gave an undertaking to the High Court that they would take all necessary administrative and technical steps to ensure the electricity connection at the tenanted premises was completely restored by May 30, 2026.
  • The Respondent asserted that the remaining total financial liability of ₹1,25,00,000 (Rupees One Crore Twenty-Five Lakhs Only) due from the Petitioner for rental defaults, electricity bills, and interest up to January 31, 2026, must be paid strictly according to the agreed 6-month schedule without any defaults.
  • They argued that the new revised monthly rent structure of ₹10,00,000 (inclusive of GST) must be strictly adhered to moving forward, running parallel to the liquidation of the past arrears.

Court Order / Findings

  • The Single-Judge Bench of Hon’ble Mr. Justice Harish Vaidyanathan Shankar observed that the learned counsels for both the Petitioner and the Respondent were ad idem (in complete agreement) regarding the terms of settlement enumerated in paragraph 5 of the joint application.
  • The Court legally recorded the key financial and operational terms, which dictated:
    1. The Petitioner’s payment of ₹60 Lakhs for property tax and the corresponding undertaking by the Respondent to restore power by May 30, 2026.
    2. The payment of ₹1.25 Crores in 6 distinct instalments starting July 15, 2026 (the first 5 instalments being ₹20 Lakhs each, followed by a final instalment of ₹25 Lakhs on December 15, 2026) to settle arrears of rent, electricity, and accrued interest.
    3. A revised ongoing monthly rent of ₹10 Lakhs (inclusive of GST), which must be paid by the Petitioner alongside the timely clearance of the arrear instalments.
  • The High Court concluded that in view of the robust settlement explicitly laid out by the parties, no further judicial intervention or adjudication was required in either the commercial appeal or the enforcement petition.
  • Accordingly, the Court formally disposed of ARB. A. (COMM.) 15/2026 and OMP (ENF.) (COMM.) 17/2026, along with all associated pending applications, holding both parties strictly bound to their mutual compromise terms.

Important Clarification

  • Enforceability of Section 30 Settlement Terms: This order clarifies that when parties reach a settlement during the pendency of appellate or enforcement litigation, the Court can dispose of the petitions by absorbing the settlement terms into its final order. Failure by either party to adhere to the payment schedules (such as the 6 instalments spanning from July to December 2026) or the operational undertakings (such as the restoration of electricity) will amount to a direct violation of a court-recorded undertaking, opening avenues for contempt proceedings or immediate execution.

Section Involved

  • Section 30(2) of the Arbitration and Conciliation Act, 1996: This provision pertains to the settlement of disputes during arbitral proceedings or during the pendency of subsequent challenges/appeals, enabling the recording and disposal of matters based on mutually agreed terms between the parties.

Link to download the order - https://mytaxexpert.co.in/uploads/1783068990_463compressed.pdf

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