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Date of Decision: 10th February, 2022
EVERGREEN LAND MARK PVT LTD. ..... Petitioner
Through Mr. Ashutosh Dubey with Mr. Rinku Kumar Garg, Mr. Abhishek Chauhan, Mr. Harsh Nadda, Mr. Bharat Sharma &
Mr. Jitendar Kumar, Advocates.
Through None.
[Hearing Held Through Videoconferencing]
VIBHU BAKHRU, J (ORAL)
IA No.2309/2022 (for exemption)
JUDGMENT
1. Exemption is allowed, subject to all just exceptions.
2. The application is disposed of. ARB. A. (COMM.) 9/2022
3. The appellant has filed the present appeal under Section 37(2)(b) of the Arbitration & Conciliation Act, 1996 (hereafter the ‘A&C Act’) impugning the order dated 05.01.2022 (hereafter ‘the impugned order’) passed by the Arbitral Tribunal in an application filed by the respondents under Section 17 of the A&C Act.
4. By the impugned order, the Arbitral Tribunal has directed the appellant to deposit the amount equivalent to the arrears of lease 2022:DHC:525 rentals in respect of the premises leased to the appellant.
5. The appellant had taken the premises (Rear First Floor, 54, Janpath, New Delhi) on lease from respondent no.2 in terms of Lease Deed dated 22.09.2010 which was subsequently amended by agreements dated 30.11.2013 and 20.05.2014. Thereafter, the appellant took another premises on lease (Rear Ground Floor, B.I. House, No.54, Janpath, New Delhi) from respondent no.1 and had executed a Lease Deed in respect of the same which was duly registered.
6. It is not in dispute that the appellant has not paid the lease rentals in respect of the aforesaid premises to respondents no.1 and 2 for a certain period. The respondents had issued a notice terminating the lease in respect of their respective premises and called upon the appellant to hand over vacant possession of the same. In addition, the respondents also claim arrears of the lease amount due from the appellant. The said disputes have been referred to arbitration.
7. The appellant states that it is running a restobar (restaurant and a bar) at the leased premises. Notwithstanding that the appellant is in possession of the leased premises and is using the same for its business, it claims that it is not required to pay the lease rentals on account of force majeure conditions that have resulted from the outbreak of Covid-19 and the directions issued under the Disaster Management Act, 2005 (Disaster Management Act).
8. Mr. Dubey, learned counsel appearing for the appellant earnestly contended that the business of the appellant was adversely affected due to the prevalent pandemic and the directions issued by the concerned Authorities under the Disaster Management Act in the wake of outbreak of the Covid-19 pandemic. Admittedly, the appellant had failed to pay the lease rentals in terms of the lease agreements entered into with the respondents.
9. The respondents had filed an application, inter alia, praying that the appellant be directed to deposit the arrears of lease rentals to secure their claims. The Arbitral Tribunal had considered the controversy and had also noted that the appellant was not inclined to surrender the leased premises but is continuing to occupy the same for the purpose of its business. The Arbitral Tribunal had returned a prima facie finding that the financial terms of the lease were not dependent on the revenue or profit sharing.
10. In view of the aforesaid, the Arbitral Tribunal had directed as under:
11. Mr. Dubey, learned counsel appearing for the appellant states that there is no finding that the appellant is attempting to alienate or dispose of its assets to frustrate the award that may be ultimately rendered against the appellant. He also submits that the appellant had deposited certain amounts as security deposits with the respondents and that may be adjusted from the amounts claimed by the respondents.
12. None of the aforesaid contentions are persuasive. The fact that it is not disputed that the appellant had taken on lease the premises from the respondents and is continuing to occupy the same is sufficient ground for the Arbitral Tribunal to have directed the respondents to deposit the arrears of rent payable in terms of the leases (which as stated earlier are not disputed). There is no denying the fact that the business of the appellant may have been adversely impacted due to the outbreak of Covid-19, however, that may not absolve the appellant from its contractual obligations to pay the lease rent. The respondents are not in the business of running a restaurant and therefore it is doubtful whether they can be mulcted with the risks attendant to running that business. This Court concurs with the prima facie finding returned by the Arbitral Tribunal that the financial commitments of appellant may not be dependent on the business operated by the appellant.
13. The security deposit furnished by the appellant to the respondents in terms of the lease agreements is required to be dealt with in terms of the agreements. Thus the contention that the same may be adjusted from the arrears of rent cannot be accepted.
14. In view of the above, the present appeal is unmerited and is accordingly dismissed.
15. All pending application/s are also dismissed.
VIBHU BAKHRU, J FEBRUARY 10, 2022 ‘gsr’/v