The court held that financial hardship cannot prevent arbitration based on a valid arbitration agreement if an arbitrable dispute is present.

JUDGMENT (Oral)

ARB.P. 512/2021

1. This is a petition under Section 11 (6) of the Arbitration & Conciliation Act, 1996 ("the 1996 Act"), seeking reference of the disputes between the parties to arbitration.

2. The dispute arises out of a lease agreement dated 15th May, 2019, between the petitioner and the respondent. The petitioner alleges that there has been continuous default in payment of rent by the respondent, after March, 2020.

3. Ultimately, on 20th February, 2021, the petitioner issued a notice to the respondent, directing the respondent to vacate the premises. The respondent, in its reply dated 4th March, 2021, claimed waiver of rent on the ground of force majeure, owing to the intervention of the COVID-2019 pandemic.

4. The petitioner disputes the applicability of force majeure in the present circumstances.

5. Mr. Abhimanyu, learned counsel for the petitioner, submits that, as on date, the respondent owes to the petitioner, an amount of Rs.60 lakhs.

6. The lease deed contains the following dispute resolution clause:

"28. Dispute Resolution-Every dispute, difference, or question which may at any time arise between the parties hereto or any person claiming under them, touching or arising out of or in respect of this agreement or the subject matter thereof shall be referred to the sole arbitrator to be appointed mutually by LESSOR and LESSEE for arbitration in the territory as may be decided by the sole arbitrator as per the provisions of the Arbitration and Conciliation Act, 1996 with such modification and amendments as may be time being in force and the decision of the arbitrator shall be final and binding on the parties. It is also agreed between the parties that arbitration proceeding would be conducted in English only and in no other language. The Courts at Delhi shall have exclusive jurisdiction over any or all disputes arising out of this agreement."

7. Prima facie, an arbitrable dispute exists between the parties.

8. The only submission of Mr. Chaudhary, learned counsel for the respondent, is that the respondent is in pecuniary circumstances and would not be able to bear the expenses of arbitration. This is not an aspect which can inhibit the court from referring a dispute to arbitration, if an arbitrable dispute exists and the contract between the parties contains an arbitration clause.

9. In view thereof, the dispute between the parties is referred to arbitration by the Delhi International Arbitration Centre (DIAC). The arbitration would proceed under the aegis of the DIAC and the arbitrator would be entitled to charge fees in accordance of the schedule of fees maintained by the DIAC.

10. This petition stands disposed of in the aforesaid terms.