The court upheld an arbitrator's discretion under Section 17 for interim security but clarified the need to reconsider the amount based on specific claims presented.

JUDGMENT (Oral)

1. M/s Faridabad Implements Pvt. Ltd. (FIPL), MyPreferred Transformation And Hospitality Pvt. Ltd (MPTHPL) and OYO Hotels and Homes Pvt. Ltd. (OHHPL) were the claimant, Respondent 1 and Respondent 2 respectively, before the learned arbitrator in the proceedings from which the present appeals emanate.

2. The dispute emanated out of two lease deeds. The first lease deed dated 11th December, 2018 was executed between FIPL and OHHPL. Under the said lease deed, OHHPL leased out, to FIPL, the premises at C-18, Friends Colony East, New Delhi for a period of nine years, of which five years were to be treated as a lock in period, within which the contract could not be terminated and, if terminated, would entail penal consequences. The monthly rent of the premises was fixed at Rs.17,75,000/- for the first year, to be increased by 4% every succeeding year.

3. A second lease deed, dated 1st October, 2019, was executed between FIPL and MPTHPL. MPTHPL, the petition asserts, is a group company of OHHPL, and OHHPL had expressed its intent to transfer the lease in favour of MPTHPL, resulting in the execution of the second lease deed on 1st October, 2019. The terms of the second lease deed were the same as those of the first, except that the period of lease was five years, with the entire period being treated as a lock in period.

4. From February, 2020, MPTHPL stopped paying rent. On 24th March, 2020, the lease deed was terminated by MPTHPL.

5. The disputes which thus arose between the parties were referred, by this Court, vide order dated 5th August, 2020, to arbitration by the learned arbitrator, who happens to be a retired Judge of the Supreme Court of India. Before the arbitrator, as already noted hereinabove, FIPL was the claimant, MPTHPL was Respondent 1 and OHHPL was Respondent 2.

6. In its statement of claim before the learned arbitrator, FIPL claimed Rs.15,09,80,086/- as the principal amount due from MPTHPL and OHHPL.

7. OHHPL preferred an application, before the learned arbitrator, under Section 16 of the 1996 Act, seeking to be deleted from the proceedings, on the ground that it was not a party to the second lease deed. This application was, however, rejected by the learned arbitrator by order dated 27th January, 2021, which is not subject matter of challenge.

8. FIPL moved an application, before the learned arbitrator, under Section 17 of the 1996 Act, for securing its claim.

9. By the impugned order dated 20th September, 2021, the learned arbitrator directed furnishing, by Respondents 1 and 2, of security of Rs.10 crores by way of bank guarantee. The reasoning preceding this direction, as contained in paras 20 to 22, 24, 26, 27, 30 to 32, 34 and 36 to 42 may be reproduced thus:

"20. The contentions urged by the learned Counsel for the parties inter-alia give rise to the points: (i) Whether the Claimant has failed to produce the documents as alleged by the Respondents and whether the Claimant has committed default in performing its obligations under the lessee deeds as contended by the Respondents; (ii) Whether the `breach and cure' notice issued by Respondent No. 1 was justified and in terms of the lease agreement; (iii) Whether the Claimant has furnished the documents as contended by the Claimant; (iv) Whether or not the Claimant furnished the documents to the Respondent thereby complying with the terms of its obligations; and (v) How the Respondents have been running the hotel from 11.10.2018 till the Respondents vacated/allegedly abandoned the premises. The above points/questions could be determined only at the time of final hearing of the matter when the parties adduce oral and further documentary evidence and adv