In a sharp intervention touching the limits of interim protection under arbitration law, the Allahabad High Court stepped in to examine whether a Commercial Court can shield a private pharmacy from eviction inside a university hospital campus without first applying the settled tests of law, after Banaras Hindu University challenged an injunction that restrained it from taking any coercive action despite the expiry of a licence agreement.
The controversy began when BHU, which operates Sir Sunderlal Hospital, declined to further extend a licence granted to a private chemist to run a 24-hour pharmacy within hospital premises. Although the licence had expired in September 2021 and was only extended temporarily till March 2023, the chemist continued operating the shop while paying fees under the old rates.
When the University proposed a fresh licence with substantially higher fees and issued eviction notices upon non-acceptance, the chemist moved the Commercial Court under Section 9 of the Arbitration and Conciliation Act, securing an injunction against eviction and coercive measures. BHU challenged this order, arguing that no valid contract or arbitration clause survived and that the Commercial Court granted sweeping relief without analysing basic legal requirements.
The High Court rejected the argument that the arbitration clause had perished merely due to expiry of the licence, holding that conduct of parties, especially continued possession and acceptance of licence fees, could extend contractual terms sub silentio. However, the Court came down heavily on the manner in which interim relief was granted, noting that the Commercial Court failed to record even a single finding on prima facie case, balance of convenience, or irreparable injury.
Calling this lapse indefensible, the Court observed that granting a blanket protection against eviction “cannot be countenanced”, particularly when the respondent had itself offered to pay enhanced licence fees prospectively. Consequently, the High Court set aside the injunction order, remanded the matter to the Commercial Court for a fresh decision in accordance with law, and directed maintenance of status quo only till a reasoned order is passed.
Case Title: Banaras Hindu University, Varanasi through its Registrar Vs. M/s Umang Cure Pvt. Ltd. and others
Case No.: Appeal under Section 37 of Arbitration and Conciliation Act 1996 No. - 289 of 2025
Coram: Chief Justice Arun Bhansali, Justice Kshitij Shailendra
Advocate for Petitioner: Adv. Rahul Agarwal, Reema Pandey, Ishan Mehta
Advocate for Respondent: Adv. Manish Goyal (Sr. Advocate), Syed Fahim Ahmed
Read Judgment @Latestlaws.com
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