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Rajasthan HC refuses IHCL plea on land use dues to Jai Mahal Palace Hotel

The Rajasthan High Court has refused to stay a commercial court decision that had ordered IHCL, the hospitality company that operates Taj Hotels, to pay ₹1.52 crore to Jai Mahal Palace Hotel for excess land usage since 1984 and ₹84 lakh annually going forward. The June 6 order was made available on Thursday. Earlier, a commercial court in Jaipur had stayed the eviction of The Indian Hotels Company Limited (IHCL) from the Jai Mahal Palace Hotel till the matter was decided by arbitration. The court had also ordered an annual increase in the amount to be paid to Jai Mahal Palace Hotel if arbitration is delayed beyond May 2029. The High Court said that if any party is reaping benefits under the garb of a protection order obtained from any court, then it is also duty-bound to pay the price to the opposite party against whom the injunction order has been procured. It noted that 14.44 acres of land along with a constructed area of 3,353 square yards was given on licence to IHCL on August 28, 1985, but a dispute has arisen about illegal encroachment of 2.74 acres by the licensee (IHCL). 'A simple option before the licensee is either to vacate the premises in excess of what is mentioned in the agreement or pay interim compensation as directed by the Commercial Court till consideration of the matter by the Arbitral Tribunal,' the court noted. It said that the dispute between the parties is required to be adjudicated by the Arbitral Tribunal. Therefore, the court was "not expressing any opinion over the dispute but looking to the nature of the dispute." 'We are of the considered view that stay on certain terms of the order will cause prejudice to the opposite party. Therefore, by paying a sum of money, the appellant-petitioner (IHCL) is enjoying excess property of 2.74 acres, allegedly not part of the agreement between the parties,' the order noted. The case arises from an interim order of March 28, 2025, passed by the Commercial Court under Section 9 of the Arbitration Act, granting conditional protection to IHCL. The section empowers a court to grant interim measures of protection in cases of arbitration. The property in question was licensed in 1985 to IHCL, covering 14.44 acres. The respondent, Jai Mahal Hotels, alleged that IHCL had encroached upon an additional 2.74 acres of land. The Commercial Court allowed IHCL to retain possession of the full property on an interim basis, but imposed conditions requiring IHCL to pay substantial licence fees for the excess land. IHCL sought a stay on the enforcement of certain paragraphs which required it to pay ₹1.52 crore as arrears for excess land from 1984 to 2024, and ₹84 lakh annually for 2.74 acres from 2024 onwards. It also sought an interim stay on payments pending arbitral proceedings and a stay on automatic vacation of interim protection if payments are not made within 90 days. The High Court has now given IHCL the liberty to withdraw its application under Section 9 of the Arbitration Act if it does not desire to seek a stay.