Case: Evergreen Land Mark Pvt. Ltd Vs. John Tinson &amp; Company Pvt. Ltd. &amp; Anr

that undisputedly during the pendency of the arbitration proceedings, the appellant itself had paid a substantial amount towards rentals of the two rented premises. That an amount of Rs. 87,64,133.76/- has been paid towards rentals for the period from October, 2020 to March, 2021 and July, 2021 to December, 2021. The appellant had also incurred other over head expenses, TDS dues, electricity and water charges. That even during the lockdown period, the appellant paid wages to its employees. Therefore, it will be too harsh on the appellant to pay the entire rental amount for the period between March, 2020 to December, 2021, as per the order passed by the learned Arbitral Tribunal confirmed by the High Court is the submission of the learned counsel for the appellant. 4. The present appeal is opposed by Ms. Shyel Trehan, learned counsel appearing on behalf of the respondents. It is contended that in the facts and circumstances of the case no error has been committed by the learned Arbitral Tribunal in directing the appellant to deposit the entire amount which is admittedly due and payable by the appellant. It is pointed out that on one hand, the appellant has continued to remain in possession of the leased properties and at the same time, he is not paying the rental amount. It is submitted that therefore, the learned Tribunal has rightly passed an order by way of an interim measure directing the appellant to deposit the rental amount due and payable under the lease agreement. 4.1 According to learned counsel for the respondents neither the principles applicable under Order XXXVIII Rule 5 nor Order XXXIX Rule 1 are appliable in case of a direction issued by way of an interim measure, as in the instant case, directing the lessee to deposit the rental amount due and payable while the lessee is continued to be in possession. 4.2 It is further submitted that in the present case the principles of force majeure would not apply as the appellant – lessee continued to remain in possession of the leased premises. It is submitted that none of the decisions relied upon by the counsel appearing on behalf of the appellant, is applicable. 4.3 It is pointed out that as rightly observed by the High Court, the business of the appellant may have been impacted due to the outbreak of Covid--19 pandemic but that may not absolve the appellant from its contractual obligations to pay the lease rent. It is submitted that so long the appellant continues to occupy the premises, the liability of the appellant to pay the rental amount continues. It is urged that no error has been committed by the Arbitral Tribunal by directing the appellant to deposit the rental amount for the period between March, 2020 and December, 2021 and the same is rightly confirmed by the High Court. 5. We have heard learned counsel appearing on behalf of the respective parties at length. 6. At the outset, it is required to be noted that the dispute is with respect to the rental amount for the period between March, 2020 to December, 2021, for which the Arbitral Tribunal has directed the appellant to deposit while passing the order by way of an interim measure on the applications under Section 17 of the Arbitration Act. The liability to pay the lease rental for the period between March, 2020 to December, 2021 is seriously disputed by the appellant by invoking the force majeure principle contained in clause 29 of the lease agreement. It is the case on behalf of the appellant that for a substantial period there was a total closure due to lockdown and for the remaining period the appellant was allowed with 50% capacity and therefore, the force majeure principle contained in clause 29 shall be applicable. When the same was submitted before the Arbitral Tribunal, no opinion, even a prima facie opinion on the aforesaid aspect was given by the Arbitral Tribunal. In para 39, it is observed that it would not be fair at this stage of the proceedings, where evidence is yet to be adduced by the parties in support their rival contentions on the issues that arise, to record any definitive opinion on the import and effect of the force majeure clause (clause no. 29) contained in the lease deed. Therefore, applicability of the force majeure principle contained in clause 29 is yet to be considered by the Arbitral Tribunal at the time of final adjudication. Hence, the liability to pay the rentals for the period during lockdown is yet to be adjudicated upon and considered by the Tribunal. Therefore, no order could have been passed by the Tribunal by way of interim measure on the applications filed under Section 17 of the Arbitration Act in a case where there is a serious dispute with respect to the liability of the rental amounts to be paid, which is yet to be adjudicated upon and/or considered by the Arbitral Tribunal. Thus, no such order for deposit by way of an interim measure on applications under Section 17 of the Arbitration Act could have been passed by the Tribunal. However, at the same time, the aforesaid can be considered only for the period of complete closure due to lockdown. As per the available record, there was complete closure for the period between 22.03.2020 to 09.09.2020; for the period between 19.04.2021 to 28.06.2021 and for the period between 11.01.2022 to 27.01.2022 and for the remaining period the appellant was allowed to run the Restro/Bar with 50% capacity. The appellant will therefore have to deposit the entire rental amount except the period for which there was complete closure due to lockdown. As the applicability of force majeure principle (clause 29) is yet to be considered at least, for the period during the complete closure, it would not be justified to direct the appellant to deposit the rental amount for the said period of complete closure by way of an interim measure, pending final adjudication.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]6. At the outset, it is required to be noted that the dispute is with respect to the rental amount for the period between March, 2020 to December, 2021, for which the Arbitral Tribunal has directed the appellant to deposit while passing the order by way of an interim measure on the applications under Section 17 of the Arbitration Act. The liability to pay the lease rental for the period between March, 2020 to December, 2021 is seriously disputed by the appellant by invoking the force majeure principle contained in clause 29 of the lease agreement. It is the case on behalf of the appellant that for a substantial period there was a total closure due to lockdown and for the remaining period the appellant was allowed with 50% capacity and therefore, the force majeure principle contained in clause 29 shall be applicable. When the same was submitted before the Arbitral Tribunal, no opinion, even a prima facie opinion on the aforesaid aspect was given by the Arbitral Tribunal. In para 39, it is observed that it would not be fair at this stage of the proceedings, where evidence is yet to be adduced by the parties in support their rival contentions on the issues that arise, to record any definitive opinion on the import and effect of the force majeure clause (clause no. 29) contained in the lease deed. Therefore, applicability of the force majeure principle contained in clause 29 is yet to be considered by the Arbitral Tribunal at the time of final adjudication. Hence, the liability to pay the rentals for the period during lockdown is yet to be adjudicated upon and considered by the Tribunal. Therefore, no order could have been passed by the Tribunal by way of interim measure on the applications filed under Section 17 of the Arbitration Act in a case where there is a serious dispute with respect to the liability of the rental amounts to be paid, which is yet to be adjudicated upon and/or considered by the Arbitral Tribunal. Thus, no such order for deposit by way of an interim measure on applications under Section 17 of the Arbitration Act could have been passed by the Tribunal. However, at the same time, the aforesaid can be considered only for the period of complete closure due to lockdown. As per the available record, there was complete closure for the period between 22.03.2020 to 09.09.2020; for the period between 19.04.2021 to 28.06.2021 and for the period between 11.01.2022 to 27.01.2022 and for the remaining period the appellant was allowed to run the Restro/Bar with 50% capacity. The appellant will therefore have to deposit the entire rental amount except the period for which there was complete closure due to lockdown. As the applicability of force majeure principle (clause 29) is yet to be considered at least, for the period during the complete closure, it would not be justified to direct the appellant to deposit the rental amount for the said period of complete closure by way of an interim measure, pending final adjudication.