Lease Cancellation Set Aside: JK High Court Upholds Arbitrator’s Award in Gulmarg Hotel Dispute

SRINAGAR: The High Court of Jammu and Kashmir and Ladakh has dismissed a government petition challenging an arbitral award in a decades-old property dispute involving a hotel lease at Gulmarg. The judgment upholds the rights of a Kashmiri Pandit woman, Rajinder Oberoi, whose lease was unilaterally cancelled during the 1990s insurgency while she had to migrate from Kashmir.

Justice Sanjay Dhar ruled that there were no legal grounds to interfere with the arbitral award dated February 28, 2024, which had granted partial relief to the claimant, including either restoration of the property or compensation amounting to Rs 1.37 crore with interest, along with litigation costs of Rs 20 lakh.

“The power of the court to interfere with an award of the Arbitrator is extremely limited,” the bench noted, adding that “none of the grounds enumerated in Section 34 of the [Arbitration and Conciliation] Act are made out” by the petitioners the Union Territory of J&K and the Gulmarg Municipal Committee.

The origins of the dispute date back to 1989, when the J&K Tourism Department leased a building at Site No. 221-A, Gulmarg to Rajinder Oberoi for operating a hotel and restaurant. The lease, valid for 15 years and renewable for another 15, allowed the lessee to mortgage the lease rights for funding construction. Oberoi took a Rs 40 lakh loan from the State Financial Corporation but had to abandon the project due to the eruption of militancy in 1990 and threats to her family stemming from her husband’s political affiliation.

When she returned and attempted to complete construction, she alleged state interference. In 2002, the lease was unilaterally cancelled and subsequently re-allotted to another individual, Ghulam Qadir Palla. Oberoi challenged the action through a writ petition, which was later referred to arbitration.

The arbitral tribunal, led by retired Justice M.K. Hanjura, ruled in her favour, terming the cancellation arbitrary and unlawful. However, the tribunal denied her larger compensation claims for over Rs 55 crore due to lack of sufficient evidence, instead awarding Rs 1.37 crore, the amount she owed to the State Financial Corporation, along with interest.

In court, government counsel argued that the award granted reliefs not specifically claimed, was contrary to public policy, and ignored third-party rights. They also said Oberoi’s status as a registered migrant limited her remedies under the J&K Migrant Immovable Property Act.

Justice Dhar rejected these arguments. “The respondent has never sought protection of her household rights under the Migrant Property Act. She merely explained that her migration prevented project completion,” the judgment noted.

Regarding the lease cancellation, the court found no evidence that notice was duly served. “Publishing notices in local dailies with little circulation outside the Valley does not satisfy the legal requirement, especially when the lessee had migrated,” the judge stated.

The court also observed that the subsequent re-allotment to Ghulam Qadir Palla was done without auction or public notice, calling the action “arbitrary and mala fide.”

“The petitioners cannot now turn around and submit that the disputes raised by the respondent in arbitration were beyond scope, when it was they who originally invoked the arbitration clause,” Justice Dhar said, calling their position “contradictory and self-defeating.”

The verdict reinforces the legal sanctity of lease agreements and underscores the responsibility of state authorities to uphold contractual terms even amid conflict-related disruptions. It also sets a precedent for safeguarding the rights of migrants whose properties were impacted during Kashmir’s troubled years.