Authority: High Court of Jammu & Kashmir and Ladakh at Srinagar

Order Date: 08 September 2026

Case Overview

  • Petitions involved: Arb. P No.4/2025, CM(M) No.380/2025, and CM(M) No.485/2025.
  • Parties: Petitioners – Mohammad Rafeeq Karnai, Bashir Ahmad Karnai, Regenta Hotels Private Limited. Respondents – the remaining Karnai brothers (Nazir, Manzoor, Hilal), their mother Mst. Mehra, Royal Orchid Associated Hotels Private Limited, and others.
  • Background: A family suit filed on 10‑08‑2021 by Hilal Ahmad Karnai for declaration, partition, injunction and rendition of accounts led to a compromise deed dated 23‑Dec‑2021, which the Additional District Judge, Srinagar, incorporated into a consent decree on 20‑Apr‑2022. The decree covered multiple immovable assets (hotels, houseboats, office spaces, flat, shop, etc.).
  • Key terms of the Settlement Deed:

1. Life interest: Mother (Mst. Mehra) retains life interest in all listed immovable properties.

2. Hotel Grand Centre Point (2 Kanal, 6 Marlas, 86 sq ft): Owned equally (¼ each) by Bashir, Mohammad, Nazir, Manzoor; Hilal and the mother relinquish rights.

3. Hotel Centre Point (1 Kanal, 4 Marlas, 84 sq ft): Owned equally (¼ each) by Mohammad, Nazir, Manzoor, Hilal; Bashir and the mother relinquish rights.

4. Delhi & Srinagar properties: Bashir retains sole ownership of a Delhi office, a Delhi flat, and a shop in Srinagar; all other parties relinquish rights.

5. Houseboat ‘New Dilshad’: Mohammad retains exclusive ownership; other parties relinquish rights. Mohammad owes Rs 34 lakhs to Nazir, set‑off against a similar amount due from Nazir for an office share.

6. Houseboat ‘Peace of Mind’: Bashir retains exclusive ownership; other parties relinquish rights.

7. Donga boat ‘Young Dilshad’: Bashir and Mohammad share equally; license to be transferred to Manzoor; kitchen structure belongs to Mohammad.

8. Maintenance to mother: Parties 2‑5 must pay Rs 50,000 per month to mother for her expenses, payable from Hotel Grand Centre Point profits; Rs 2 crore cash share payable to mother on demand, chargeable on parties 3‑5.

9. Hotel Grand Centre Point operations: Bashir (2nd party) is sole operator for two years; daily cash book maintained by Mohammad (3rd party); marketing by Manzoor (5th party). Profit sharing: Bashir 33.5 %, Mohammad 25 %, Nazir 20 %, Manzoor 21.5 % (Bashir gets additional 8.5 % for operations). Post‑two‑year operation to be decided by vote. Joint signatory rights for Manzoor in bank accounts; fresh partnership deed to be executed.

10. Sale of Hotel Grand Centre Point: Minimum sale price Rs 55 crore; proceeds to be shared equally among parties 2‑5. If unsold after two years, minimum price may be revised with consent.

11. Hotel Centre Point (Bishember Nagar) operations: Manzoor (5th party) sole operator; daily cash handled by Riyaz Ahmad Karnai (son of Mohammad); marketing by Hilal (6th party). Profit sharing: Mohammad 25 %, Manzoor 25 %, Hilal 50 % (Nazir surrendered his share). Joint signatory rights for Hilal; fresh partnership deed required.

12. Tour & Travel licences: Manzoor to rename his licence from “Explore India Journeys” and surrender the domain www.exploreindiajourneys.com to Nazir within three months; Nazir to register the licence under his name.

13. Other licences: “Centre Tour and Travels” to belong to Bashir; “Discover Journey” and “Amarnath Tour and Travels” to belong to Mohammad; “Dilshad Guest House” licence to belong to Mohammad.

14. Office space in Competent House, Delhi: Nazir (4th party) to own exclusively; must pay Rs 31 lakhs to Mohammad and Rs 65 lakhs to Manzoor by 31 Dec 2021, net of a set‑off of Rs 34 lakhs payable by Mohammad to Nazir.

15. Hotel Centre Point accounts: Effective 10‑Dec‑2021, parties 3‑5 to reconcile accounts from 1‑Jan‑2019; profits to be credited to Nazir’s account; Hilal not liable for pre‑10‑Dec‑2021 liabilities.

16. Succession: In case of death, legal heirs step into the shoes of the deceased and are bound by the settlement terms.

17. Court presentation: Settlement deed (or concise form) to be filed before the Additional District & Sessions Judge, Srinagar; prior deeds superseded.

18. Arbitration clause: Any dispute regarding interpretation, operation or enforcement of the settlement deed shall be referred to an arbitrator mutually appointed; arbitration seat Srinagar; jurisdiction of Srinagar courts only.

  • Subsequent litigation:
  • Execution petition filed on 28‑Mar‑2024 seeking compliance with the settlement deed and accounts of Hotel Grand Centre Point.
  • Receiver appointed on 26‑Aug‑2024 (Mr. Ajaz Ahmad Hakak) to manage Hotel Grand Centre Point; duties included reviewing financials, preventing diversion of funds, and ensuring payments per the deed.
  • Separate arbitration petition (Section 9) filed on 01‑Apr‑2024 by Mohammad and Manzoor, restraining respondents from interfering with hotel operations; interim status‑quo order issued.
  • Suit for rendition of accounts filed by Manzoor and Mohammad against Bashir, a J&K Bank branch manager, and others.
  • Application by Hilal under Order XXIII Rule 3 CPC to set aside the compromise decree, pending before the Additional District Judge.
  • Regenta Hotels Private Limited filed a Section 9 arbitration petition in Bengaluru; an ex‑parte interim order restraining Bashir was initially granted (17‑Feb‑2024), later dismissed by Karnataka High Court (14‑Nov‑2024), restored by Supreme Court (7‑Jan‑2026).
  • Regenta also filed a Section 11(6) petition in Karnataka High Court seeking appointment of a sole arbitrator; the court appointed Shri S. Siddhalingesh as sole arbitrator on 12‑Mar‑2026.
  • The arbitration before Shri Siddhalingesh concerns the validity of a notice dated 17‑Feb‑2024 and alleged interference by the franchisor.
  • Core contention: After the two‑year operator period, Bashir has not vacated the sole operator role for Hotel Grand Centre Point, allegedly failing to render accounts and diverting funds, which the other brothers dispute.

Final Outcome

  • Sole Arbitrator appointed: Justice Rashid Ali Dar (former Judge of this Court) is appointed as the sole arbitrator to adjudicate all disputes arising from the settlement deed, including Hilal’s recall application.
  • Directions to Arbitrator:

1. Registry to forward a copy of this order to the arbitrator within ten days.

2. Arbitrator to furnish statutory disclosure statements (Sec 11(8) & Sec 12(1) of the Arbitration Act) to parties within two weeks.

3. Parties to appear before the arbitrator on a date/place fixed by him.

4. Arbitrator to bear his costs equally among parties; final award to determine cost allocation.

5. Arbitrator may grant interim measures under Sec 17 of the Arbitration Act, after notifying Regenta Hotels to protect its franchise rights.

6. Arbitrator shall not entertain matters already before the Karnataka arbitration tribunal.

  • Receiver appointment set aside: The order dated 26‑Aug‑2024 appointing a receiver is hereby set aside.
  • Section 9 petition dismissed: The petition filed by Mohammad Rafeeq Karnai and others before the Principal District Judge, Srinagar, is dismissed.
  • Stays: Execution petition, application under Order XXIII Rule 3 CPC (Hilal’s recall), and the suit titled “Manzoor Ahmad Karnai & another v. Bashir Ahmad Karnai & others” are stayed until the arbitration concludes or further order.
  • All disputes: The parties’ disputes concerning joint properties, the settlement deed, and Hilal’s recall claim are referred to arbitration.

Topics: Arbitration, Family Property Dispute, Hospitality