1. The greatest challenge before the judiciary today is the frivolous litigation. The judicial system in the country is choked with false claims and such litigants are consuming Courts’ time for a wrong cause. False claims are a huge strain on the judicial system. In Subrata Roy Sahara v. Union of India, (2014) 8 SCC 470, J.S. Khehar, J. observed that the Indian judicial system is grossly afflicted with frivolous litigation and ways and means need to be evolved to deter litigants from their compulsive obsession towards senseless and ill-considered claims. Relevant portion of the said judgment is as under:

“191. The Indian judicial system is grossly afflicted, with frivolous litigation. Ways and means need to be evolved, to deter litigants from their compulsive obsession, towards senseless and ill-considered claims. (Emphasis supplied)

2. In the present case, the respondent is a lessee in respect of 11,000 sq. mtrs. land near Mumbai International Airport for a period of 30 years from 1st April, 1994 to 30th March, 2024. On 13th August, 2008, i.e., after about 14 years of the commencement of the lease, the respondent invoked the arbitration and raised a claim to seek discharge from the liability to pay Royalty of Minimum Guaranteed Amount [hereinafter referred to as “Royalty (MGA)”] under the lease on the ground that it has become commercially unviable to construct the Hotel due to recession in the hotel industry and therefore, the clause with respect to payment of Royalty (MGA) has frustrated under Section 56 of the Contract Act.

3. The learned Arbitrator allowed the respondent’s claim and declared that the payment of Royalty (MGA) by the respondent has become impossible under Section 56 of the Contract Act w.e.f. 01st June, 2008 and, therefore, the parties may enter into a new contract. As a result, the respondent is continuing the possession but is discharged from the liability of paying Royalty (MGA). According to the petitioner, the respondent’s liability as on 31st May, 2016 along with interest thereon has crossed Rs.258 crores.

4. The petitioner has challenged the award dated 29th August, 2012 under Section 34 of the Arbitration and Conciliation Act on various grounds inter alia:

4.1. The award is against the well settled law that the lessee’s liability to pay the amounts under the lease to the lessor is absolute and unconditional; and the learned Arbitrator had no power of absolving the respondent from making the payment of the Royalty (MGA).

4.2. The impugned award is also against the well settled law that Section 56 of the Contract Act is not applicable to leases. If the payment of Royalty (MGA) had became unviable, the respondent had the option to surrender the lease but the respondent could not claim that the clause requiring the payment of Royalty (MGA) has frustrated.

4.3. The learned Arbitrator has re-written the contract which is not permissible in law. The learned Arbitrator was bound by the terms of the contract, but he has gone beyond the contract by discharging the respondent from the liability to pay the Royalty (MGA) and directing the parties to re-negotiate the contract.

4.4. The statement of claim instituted by respondent is gross abuse and misuse of process of law. The statement of claim was not even maintainable in law and the learned Arbitrator ought to have rejected the same at the outset.

5. Factual matrix

5.1. The petitioner licensed 11,000 sq. meters of land near Mumbai International Airport to the respondent in 1982. On respondent’s request, the license was converted into a lease and a lease deed dated 7th February, 1996 was executed by the parties for a period of 30 years w.e.f. 01st April, 1994 to 31st March, 2024. Under the lease deed, the respondent was required to pay the lease money as well as the Royalty (MGA). Relevant clauses of the lease deed are as under: -

“WHEREAS the land, admeasuring ap