Court stays eviction of company running health club at Hotel Mountview in Chandigarh

A local court has restrained CITCO from evicting a company running a health club at Hotel Mountview, Sector 10, till the dispute between the parties is referred to arbitration and the application for interim measures is considered by the arbitrator.

The court has also stayed the operation of the new tender notice dated July 5 for the allotment of health club.

The court passed the order on a case filed by United House, Sector 8, under Section 9 of the Arbitration and Conciliation Act, 1996, for grant of interim injunction and suitable measures to restrain CITCO or its agents from dispossessing the company from the health club.

The licensee has also prayed to stay the operation of the new e-auction notice dated July 5 for the allotment of health club.

In the petition, the company said the Chandigarh Industrial and Tourism Development Corporation (CITCO) allotted the work of running the club to it in 2018 for seven years, which was extendable up to three years. The firm is running the club, including a gym, swimming pool and beauty parlour, etc, for many years and has spent huge amount on infrastructure. The company added that the licence of the petitioner for allotment of entire premises of the club has not been extended beyond the period of seven years.

On account of the arbitrary action, it is seeking interim relief under Section 9 of the Arbitration and Conciliation Act, 1996, for staying the dispossession of the petitioner as well as the e-auction notice for the allotment of the club.

The company said as per clause 3 of the allotment letter, the contract has to commence from January 13, 2019, and even if the contract is treated to be valid for seven years, the same expires on January 13, 2026. As per file noting dated February 1, 2021, an extension of one year has been proposed to the petitioner up to January 13, 2029. Therefore, the respondent has admitted that the validity of the licence is for a period of 10 years i.e. up to January 13, 2028.

Further, the issue with regard to granting extension to the petitioner for a period of four years (Covid period ) is pending and the same is evident from the file noting. The company said an order dated July 2, 2025, for rejecting its extension had been passed without issuing show-cause notice and granting an opportunity of hearing. Therefore, the same is violative of principles of natural justice.