A party cannot be absolved of contractual obligations to pay lease rent due to claimed force majeure conditions, reaffirming the binding nature of lease agreements.

JUDGMENT

[Hearing Held Through Videoconferencing]

Vibhu Bakhru, J. (Oral)

IA No.2309/2022 (for exemption)

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 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:

"43. It is deemed proper to invoke the provisions of the above-quoted Order XV-A of CPC to put in position the requisite measures under Section 17 of the A&C Act in each of these cases, by directing as under:

(a) The Respondent shall compute the arrears towards rent separately in respect of each premises under lease at the agreed rate - Rs.10,35,000/- per month (subject to applicable taxes) for the period from 01.05.2018 to 30.04.2021 and Rs.11,90,250/- from 01.05.2021 onwards in resp