Bombay High Court Stays Malad Gymkhana's Restaurant Termination Notice, Bars Third-Party Rights

On Monday, 26 October, the Bombay High Court partly allowed Achieve Hospitality's petition against Malad Gymkhana Limited, staying the termination notice concerning its existing restaurant and restraining the Gymkhana from creating third-party rights in a proposed new restaurant and two banquet halls pending arbitration.

A Bench of Justice Amit Borkar held that a party cannot bypass a contractually agreed cure period when terminating an agreement and must preserve the existing business arrangement pending arbitration where the validity of the termination is seriously disputed. He held:

“I am of the view that the Petition deserves to be allowed in part. At this stage, it would not be proper to decide whether every term of Clause 17 is enforceable or to direct immediate handover of the new restaurant and the two banquet halls. These issues will have to be decided in arbitration. Equally, it would not be proper to permit the Respondent to obstruct the Petitioner's existing business or create third-party rights in the disputed premises while the contractual issues remain unresolved and the validity of the termination notice is open to serious doubt.”

The dispute arose from a lease deed dated 24 October 2024 under which Achieve Hospitality was permitted to operate a restaurant and bar named “SOME PLACE NICE” across approximately 2,500 square feet at Malad Gymkhana House for nine years, until 21 October 2033. Clause 56 of the agreement provided the company 60 days to rectify alleged breaches.

In its reply dated 14 February 2026, the Gymkhana directed Achieve Hospitality to rectify the alleged breaches within seven days. It subsequently issued a termination notice on 13 June 2026, declaring the agreement terminated and requiring the company to vacate within 30 days. Achieve Hospitality disputed the allegations and challenged the termination.

The Court observed that the Gymkhana could not unilaterally reduce the contractually agreed 60-day rectification period to seven days. It also noted that the termination notice did not grant the company a further 60-day opportunity to cure the alleged breaches.

It further held that the passage of time between the notices did not, by itself, resolve the issue of compliance with Clause 56.

Regarding the proposed new restaurant and two banquet halls, the Bench found that Clause 17 raised serious questions about whether the Gymkhana could offer the premises to third parties while the contractual dispute remained unresolved. It restrained the Gymkhana from creating third-party rights or entering into fresh commercial arrangements concerning those premises, but declined to direct their immediate handover to Achieve Hospitality.

However, it directed the Gymkhana to ensure a safe and lawful emergency exit for the existing restaurant, leaving the remaining contractual disputes for determination by the arbitral tribunal.

Accordingly, the High Court partly allowed the petition and granted interim protection to Achieve Hospitality pending arbitration.

For the Petitioner: Advocates Ambrin Khan with Aditya Chopta, Amay Jain, Isiri Rajaneesh, VG Sreeram and Dhruvit Shah i/by Mohammad Abdi

For the Respondent: Advocates Piyush Shah with Dishang Shah, Deep Madnani and Kinjal