LexEVERGREEN LAND MARK PVT. LTD versus JOHN TINSON & COMPANY PVT. LTD. & ANR
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[2022] 4 S.C.R. 879 879 EVERGREEN LAND MARK PVT. LTD. v. JOHN TINSON & COMPANY PVT. LTD. & ANR. (Civil Appeal No. 2783 of 2022) APRIL 19, 2022. [M. R. SHAH AND B. V. NAGARATHNA, JJ.] Arbitration and Conciliation Act, 1996: ss.17, 37(2)(b) – Appellant was lessee in the premises of respondent no.1 and 2 and was running a Restaurant and Bar in the said premises – Lease agreement terminated by the owners, as a consequence of which, dispute arose and the same referred for arbitration – During pendency of dispute, owners made applications seeking deposit of rental amount – Lessee sought to invoke the force majeure clause in light of outbreak of Covid-19 pandemic – Arbitral Tribunal allowed the application of the owners in exercise of the power u/ s.17 of the Act – High Court upheld the same – On appeal, held: Applicability of the force majeure principle contained in clause 29 is yet to be considered by the Arbitral Tribunal – Therefore, no order could have been passed by the Tribunal by way of interim measure on the applications filed u/s.17 of the Arbitration Act since there was serious dispute with respect to the liability of the rental amounts to be paid – 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 lessee to deposit the rental amount for the said period of complete closure by way of an interim measure, pending final adjudication – Contract, principle of – Force majeure principle. Partly allowing the appeal, the Court HELD: 1. 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. A B C D E F G H 880 SUPREME COURT REPORTS [2022] 4 S.C.R. 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, not even a prima facie opinion on the aforesaid aspect was given by the Arbitral Tribunal. Therefore, applicability of the force majeure principle contained in clause 29 is yet to be considered by the Arbitral 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. [Para 6][885-F-H; 886-A-F] Raman Tech. Process Engg. Co. & Anr. v. Solanki Traders (2008) 2 SCC 302: [2007] 12 SCR 409; Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd. (2007) 7 SCC 125 : [2007] 8 SCR 213 – referred to. A B C D E F G H 881 Case Law Reference [2007] 12 SCR 409 referred to Para 3.1 [2007] 8 SCR 213 referred to Para 3.1 CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2783 of 2022. From the Jud
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