Back
2023 Supreme(Online)(Bom) 14056
HIGH COURT OF BOMBAY
G. S. Kulkarni, J
Deluxe Caterers Pvt. Ltd. – Appellant
Versus
M/s. Narayani Associates – Respondent
CIVIL APPELLATE JURISDICTION APPEAL FROM ORDER NO. 944 OF 2022 | NOTICE OF MOTION NO.2577 OF 2022 | SUIT NO. 1644 OF 2022
For the Appellants/Petitioners: Mr. Ravi Kadam, Mr. Prateek Sakseria, Mr. Soham Khinkhabwala, Mr. Priyam Amin, Mr. Kaushal Parsekar
For the Respondents: Mr. S. U. Kamdar, Ajay Panicker, Mr. Aseem Naphade, Mr. Arvind Tiwari, Mr. Atal Dubey
The force majeure clause allows for termination of contract obligations due to external factors but does not automatically extend the contract term without mutual written agreement.
Headnote:(A) Contract Law - Force Majeure - The appeal challenged the City Civil Court order which dismissed the motion, stating that the conducting agreement did not extend due to force majeure invoked by the appellant during the Covid-19 pandemic. The main clauses discussed include Article 19 (Force Majeure) and Article 16 (Term and Termination). The court reiterated that the force majeure clause allows termination, not extension, unless mutually agreed in writing. (Paras 30 to 34)
(B) Modification of Contract - The court emphasized that any modification requires mutual consent as per Article 32, which was not evidenced in this case. (Paras 29 and 31)
(C) Legal Presumptions - Inability to perform obligations due to external factors does not intrinsically extend contract terms unless explicitly stated. (Para 28)
Facts of the case:
The appellant contended the conducting agreement was extended due to the invocation of the force majeure clause against the responses from the respondents seeking adherence to the original agreement terms.
Findings of Court:
The court upheld the trial court's dismissal of the motion, clarifying that invocation of force majeure did not allow for automatic contract extension, but rather stipulated conditions for termination.
Issues: Whether the conduct agreement was automatically extended due to force majeure invoked by the appellant and the validity of claiming a right based on this invocation.
Ratio Decidendi: The court concluded that force majeure does not inherently provide for an extension of contractual obligations; the contract's express terms govern modifications.
Result: Appeal dismissed.
1. This Appeal from Order assails an order dated 27 September, 2022 passed by the City Civil Court at Mumbai whereby Notice of Motion No. 2577 of 2022 filed by the appellant(original plaintiff) in Suit No. 1644 of 2022 has been dismissed.
2. A short issue which arises for consideration in this appeal is as to whether the term of the Conducting Agreement (for short “the Agreement”) dated 20 November, 2017 entered, between respondent no. 1 and the appellant would stand extended by virtue of the appellant invoking the force majeure clause.
3. The facts relevant for adjudication of this appeal are: Respondent nos. 2 and 3 (original defendant nos. 2 and 3) are owners of two units, bearing Unit Nos. 4129 and 4130 situated on the ground floor (part) of the building known as “Kalaghoda Buildings Bhadekaru Cooperative Premises Society Ltd.” situated at 30, K. Dubash Marg, Kalaghoda, Fort, Mumbai – 400 001(for short “suit premises”). Respondent nos. 2 and 3 have let out the suit premises on leave and licence to respondent no. 1 (original defendant no. 1) under a registered Leave and Licence Agreement dated 18 October, 2017. In turn, respondent no. 1 with the consent, permission and authorization of respondent P a g e o f F e b r u a r y , nos. 2 and 3 has entered into the suit agreement dated 20 November, 2017 with the appellant whereunder respondent no. 1 has permitted and authorized the appellant to use and occupy the suit premises for the purpose of running and operating its restaurant known as “Copper Chimney”, on terms and conditions as agreed between the parties and as contained in the Agreement. The agreement describes the appellant as “Conductor” and respondent no. 1 as “Narayani”. Under Article 6 of the agreement, the parties have agreed that the appellant shall inter alia pay respondent no. 1 a fixed fee of Rs.6,00,000/- per month and in addition to the Fixed Conducting Fee, the appellant was to pay an additional fee equivalent to 18% of Net Annual Turnover above Rs.200 lakhs for the financial year 2017-2018 and with agreed increases as set out in Article 6.2 thereof; under Article 7, it was agreed between the parties that under the Leave and Licence Agreement entered between respondent nos. 2 and 3 and respondent no. 1, respondent no. 1 was entitled to use and occupy the suit premises for a period of five years, effective from 1 October, 2017 and expiring on 30 September, 2022, being the licencee of the suit premises. The period of the Conducting Agreement as agreed between respondent no. 1 and appellant as recorded in “Clause 16” was from 1 October, 2017 till 30 September, 2022. Article 19 of the Agreement is the “ Force Majeure” Clause. Article 32 of the agreement is a Clause in regard to “No Oral Change”. These being the relevant clauses and subject matter of discussion at the bar, the same are required to be noted hereunder:
“ Article 19. FORCE MAJEURE
In the event either Party is unable to perform its obligations under this Agreement for a period greater than 60 (sixty) days as a result of any failure or delay where such failure or delay is due to any cause or causes beyond its control, including but not limited to flood, damage by the elements, act of God, strike, lock out or other labour disorders, act of foreign or domestic de jure or de facto Government, whether by law, order, legislation, decree, rule, regulation or otherwise revolution, civil distrubance, breach of the peace, declared or undeclared war, act of interference or action by civil or military authorities, terrorist acts, or due to any other cause beyond the Party’s control notwithstanding what is stated hereinabove, the other Party shall be entitled to fortwith terminate this Agreement.
Article 32 NO ORAL CHANGE
This Agreement cannot be changed, modified or supplemented in any manner except by an instrument in writing duly executed by the Parties. Any amendment, addition or variation to this Agreement shall be valid and binding only if the same are
