/2022 INSC 0289/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2783 OF 2022
Evergreen Land Mark Pvt. Ltd.            ..Appellant (S)
Versus
John Tinson & Company Pvt. Ltd. & Anr.            ..Respondent (S)
J U D G M E N T 
M. R. Shah, J.
1. Feeling aggrieved and dissatisfied with impugned judgment
and   order   dated   10.02.2022   passed   by   the   High   Court   of
Delhi   at   New   Delhi   in   ARB.A.   (Comm.)   No.9/2022   under
Section 37(2)(b) of the Arbitration & Conciliation Act, 1996
(hereinafter   referred   to   as   the   “Arbitration   Act”),   by   which
the High Court has dismissed the said appeal in which the
appellant   herein   challenged   order   dated   05.01.2022
passed by the Arbitral Tribunal in two applications filed by
respondent   No.   1   and   2   herein   under   Section   17   of   the
Arbitration   Act,   seeking   deposit   of   the   rental   amount   for
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the period between March, 2020 and December, 2021, the
appellant herein – lessee has preferred the present appeal. 
2. The   dispute   is   with   respect   to   two   separate   premises
owned by respondent No. 1 and 2 herein which were given
on lease to the appellant, who is running a Restaurant and
Bar in the premises in question. The lease agreement came
to   be   terminated   by   respondent   No.   1   and   2   –   original
owners.   The   dispute   with   respect   to   the   termination   of
lease   agreement   is   the   subject   matter   before   the   Arbitral
Tribunal.   Before   the   Arbitral   Tribunal,   respondent   No.   1
and   2   filed   two   separate   applications   under   Section   17   of
the   Arbitration   Act   seeking   deposit   of   the   rental   amount
due   and   payable   for   the   period   between   March,   2020   to
December,   2021.   By   way   of   an   interim   measure,   in
exercise   of   powers   under   Section   17   of   the   Act,   the
Arbitrator vide order/orders dated 05.01.2022 directed the
appellant   to   deposit   100%   of   rental   amount   due   and
payable   of   the   period   between   March,   2020   to   December,
2021.   At   this   stage,   it   is   required   to   be   noted   that   before
the   Arbitral   Tribunal,   it   was   the   case   on   behalf   of   the
appellant that due to the Covid­19 Pandemic, there was a
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lockdown declared by the Government and therefore, there
was   a   complete   closure/partial   closure   and   therefore,
invoking   clause   29   ( Force   Majeure )   of   the   lease   deed,   the
appellant   disputed   the   liability   to   pay   the   rental   amount
for   the   period   during   which   there   was   a
lockdown/complete   closure/partial   closure.   Despite   the
above   submissions,   the   Arbitral   Tribunal   directed   the
appellant   to   deposit   the   rental   amount   from   March,   2020
onwards and up to December, 2021. The Arbitral Tribunal
also   passed   an   order   that   amount   so   deposited   shall   be
kept in fixed deposit accounts. The operative portion of the
order contained in para 43 is as under: ­
“43.(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   respect   of   leased   premises   of
JTCPL and Rs. 2,39,390/­ per month (inclusive of GST) in
respect   of   leased   premises   of   BIET   ­   for   the   period   of
default   and   pendency   of   the   matter   thus   far,   i.e.   from
March   2020   onwards   for   and   up   to   December   2021,
adjusting   the   amounts   already   paid   (as   per   declarations
made before this tribunal), deducting the TDS as per law,
and   communicate   the   same   to   the   respective   Claimants
within a week of this order. 
(b)   The   amounts   of   money   equivalent   to   the   arrears
computed as above shall be deposited by the Respondent
in Fixed Deposit  (FD) accounts ­ separately  in relation to
the   respective   Claimants   ­   in   a   public   sector   Bank,
initially for a period of six months with provision of auto­
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credit   of  Interest   and   periodical  auto­renewal  within  four
weeks of this order.”
2.1 Feeling aggrieved and dissatisfied with the order passed by
the Arbitral Tribunal by way of an interim arrangement in
exercise of powers under Section 17 of the Arbitration Act,
the   appellant   preferred   an   appeal   before   the   High   Court
under   Section   37(2)(b)   of   the   Arbitration   Act.   By   the
impugned   judgment   and   order,   the   High   Court   has
dismissed   the   said   appeal   and   has   confirmed   the   interim
order passed by the Arbitral Tribunal passed in exercise of
powers under Section 17 of the Arbitration Act. Hence, the
present appeal. 
3. Ms. Aastha Mehta, learned counsel appearing on behalf of
the   appellant   has   vehemently   contended   that   in   the
present   case,   both,   Arbitral   Tribunal   as   well   as   the   High
Court have not at all considered the submissions on behalf
of   the   appellant   on   clause   29   of   the   agreement   and   the
aspect   of   force   majeure   as   prayed   on   behalf   of   the
appellant.   It   is   submitted   by   Ms.   Mehta   that   even   the
Arbitral   Tribunal   has   specifically   observed   in   para   39   of
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the   order   that   at   this   stage,   the   Arbitral   Tribunal   is   not
deciding   anything   on   the   import   and   effect   of   the   force
majeure   clause   (No.   29)   contained   in   the   lease   deed.   It   is
contended   that   therefore   when   the   liability   to   pay   the
rentals   during   the   lockdown   period   while   applying   the
force majeure   clause is seriously disputed by the appellant
– lessee, such an order to deposit 100% rental amount by
way   of   an   interim   measure   under   Section   17   of   the
Arbitration   Act,   ought   not   to   have   been   passed   by   the
Arbitral Tribunal. 
3.1 It is further submitted by Ms. Mehta that even the learned
Arbitral   Tribunal   has   also   observed   that   there   is   no
evidence   showing   that   the   appellant   is   disposing   of   any
part of its property much less removing itself or its assets
out  of  India  so  as  to  create  a  possibility   of  frustrating  the
monetary   award   that   may   be   passed   in   favour   of   the
claimants   upon   conclusion   of   arbitration   proceedings
within  the  scope  of Order  XXXVIII  of  CPC.  It  is submitted
that   therefore,   in   absence   of   such   evidence   the   impugned
order which can be said to be akin to Order XXXVIII Rule 5
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could   not   have   been   passed   unless   the   conditions   while
invoking powers under Order XXXVIII Rule 5 are satisfied.
Reliance is placed on the decision of this Court in the case
of  Raman Tech. & Process Engg. Co. & Anr. Vs. Solanki
Traders;   (2008)   2   SCC   302 .   While   relying   upon   the
decision  of  this   Court  in   the  case of   Adhunik   Steels   Ltd.
Vs.   Orissa   Manganese   and   Minerals   (P)   Ltd.;   (2007)   7
SCC   125,   it   is   urged   by   Ms.   Mehta,   learned   counsel
appearing   on   behalf   of   the   appellant   that   as   held   by   this
Court, even while passing an order under Section 9 of the
Arbitration Act, the court has to bear in mind and consider
principles applicable for exercise of general power to grant
an interim injunction under Order XXXIX of CPC. 
3.2 It   is   contended   by   Ms.   Mehta,   learned   counsel   appearing
on   behalf   of   the   appellant   that   apart   from   the   fact   that
there was a complete closure due to complete lockdown for
the   period   between   22.03.2020   to   09.09.2020   and
thereafter   for   the   period   between   19.04.2021   to
28.06.2021   and   the   period   between   11.01.2022   to
27.01.2022 due to the pandemic, for the remaining period
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the appellant was allowed to run the Restro/Bar with only
50% capacity and that too, from 12:00 noon to 10:00 pm.
It   is   submitted   that   therefore,   clause   29   of   the   agreement
( force   majeure   clause )   shall   be   applicable.   It   is   submitted
that   the   appellant   could   not   use   the   rented   premises   for
the aforesaid period either fully and/or partially due to Act
of God and which was beyond the control of the appellant.
It   is   submitted   that   therefore,   the   force   majeure   clause
contained   in   clause   29   of   the   agreement   shall   be
applicable.   It   is   urged   that   whether   in   the   facts   and
circumstances   of   the   case,   the   principle   of   force   majeure
contained   in   clause   29   is   applicable   or   not   is   yet   to   be
considered by the Arbitral Tribunal at the time of the final
adjudication   and   therefore,   the   Arbitral   Tribunal   has
committed   an   error   in   directing   the   appellant   to   pay   the
full   rental   amount   for   the   aforesaid   period,   by   way   of
interim measure.  
3.3 Ms.   Mehta,   learned   counsel   appearing   on   behalf   of   the
appellant   has   also   submitted   that   it   is   not   that   the
appellant  has  not  paid any   amount  at  all and/or  that  the
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intention of the appellant is to defraud the landlords. It is
contended   that   the   dispute   raised   by   the   appellant   is   a
bonafide   dispute.   It   is   pointed   out   that   undisputedly
during   the   pendency   of   the   arbitration   proceedings,   the
appellant   itself   had   paid   a   substantial   amount   towards
rentals of the two rented premises. That an amount of   Rs.
87,64,133.76/­   has   been   paid   towards   rentals   for   the
period from October, 2020 to March, 2021 and July, 2021
to December, 2021. The appellant had also incurred other
over   head   expenses,   TDS   dues,   electricity   and   water
charges.   That   even   during   the   lockdown   period,   the
appellant paid wages to its employees. Therefore, it will be
too harsh on the appellant to pay the entire rental amount
for the period between March, 2020 to December, 2021, as
per   the   order   passed   by   the   learned   Arbitral   Tribunal
confirmed   by   the   High   Court   is   the   submission   of   the
learned counsel for the appellant.         
4. The   present   appeal   is   opposed   by   Ms.   Shyel   Trehan,
learned counsel appearing on behalf of the respondents. It
is   contended   that   in   the   facts   and   circumstances   of   the
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case   no  error   has   been   committed   by   the   learned   Arbitral
Tribunal   in   directing   the   appellant   to   deposit   the   entire
amount   which   is   admittedly   due   and   payable   by   the
appellant. It is pointed out that on one hand, the appellant
has   continued   to   remain   in   possession   of   the   leased
properties   and   at   the   same   time,   he   is   not   paying   the
rental   amount.   It   is   submitted   that   therefore,   the   learned
Tribunal has rightly passed an order by way of an interim
measure   directing   the   appellant   to   deposit   the   rental
amount due and payable under the lease agreement.
4.1 According   to   learned   counsel   for   the   respondents   neither
the   principles   applicable   under   Order   XXXVIII   Rule   5   nor
Order   XXXIX   Rule   1   are   appliable   in   case   of   a   direction
issued   by   way   of   an   interim   measure,   as   in   the   instant
case, directing the lessee to deposit the rental amount due
and   payable   while   the   lessee   is   continued   to   be   in
possession.
4.2 It   is   further   submitted   that   in   the   present   case   the
principles   of   force   majeure   would   not   apply   as   the
appellant – lessee continued to remain in possession of the
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leased premises. It is submitted that none of the decisions
relied   upon   by   the   counsel   appearing   on   behalf   of   the
appellant, is applicable. 
4.3 It   is   pointed   out   that   as   rightly   observed   by   the   High
Court,   the   business   of   the   appellant   may   have   been
impacted   due   to   the   outbreak   of   Covid­19   pandemic   but
that   may   not   absolve   the   appellant   from   its   contractual
obligations   to   pay   the   lease   rent.   It   is   submitted   that   so
long   the   appellant   continues   to   occupy   the   premises,   the
liability   of   the   appellant   to   pay   the   rental   amount
continues. It is urged that no error has been committed by
the   Arbitral   Tribunal   by   directing   the   appellant   to   deposit
the rental amount for the period between March, 2020 and
December, 2021 and the same is rightly  confirmed by  the
High Court. 
5. We have heard learned counsel appearing on behalf of the
respective parties at length. 
6. At the outset, it is required to be noted that the dispute is
with   respect   to   the   rental   amount   for   the   period   between
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March,   2020   to   December,   2021,   for   which   the   Arbitral
Tribunal   has   directed   the   appellant   to   deposit   while
passing   the   order   by   way   of   an   interim   measure   on   the
applications   under   Section   17   of   the   Arbitration   Act.   The
liability   to   pay   the   lease   rental   for   the   period   between
March,   2020   to   December,   2021   is   seriously   disputed   by
the   appellant   by   invoking   the   force   majeure   principle
contained   in   clause   29   of   the   lease   agreement.   It   is   the
case   on   behalf   of   the   appellant   that   for   a   substantial
period   there   was   a   total   closure   due   to   lockdown   and   for
the   remaining   period   the   appellant   was   allowed   with   50%
capacity   and   therefore,   the   force   majeure   principle
contained in   clause 29 shall be applicable. When the same
was   submitted   before   the   Arbitral   Tribunal,   no   opinion,
even   a   prima   facie   opinion   on   the   aforesaid   aspect   was
given   by   the   Arbitral   Tribunal.   In   para   39,   it   is   observed
that  “it would  not  be fair  at  this  stage  of the  proceedings,
where   evidence   is   yet   to   be   adduced   by   the   parties   in
support their rival contentions on the issues that arise, to
record   any   definitive   opinion   on   the   import   and   effect   of
the   force   majeure   clause   (clause   no.   29)   contained   in   the
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lease   deed”.     Therefore,   applicability   of   the   force   majeure
principle contained in clause 29 is yet to be considered by
the   Arbitral   Tribunal   at   the   time   of   final   adjudication.
Hence, the liability to pay the rentals for the period during
lockdown is yet to be adjudicated upon and considered by
the   Tribunal.   Therefore,   no   order   could   have   been   passed
by   the   Tribunal   by   way   of   interim   measure   on   the
applications filed under Section 17 of the Arbitration Act in
a case where there is a serious dispute with respect to the
liability of the rental amounts to be paid, which is yet to be
adjudicated   upon   and/or   considered   by   the   Arbitral
Tribunal.   Thus,   no   such   order   for   deposit   by   way   of   an
interim   measure   on   applications   under   Section   17   of   the
Arbitration   Act   could   have   been   passed   by   the   Tribunal.
However,   at   the   same   time,   the   aforesaid   can   be
considered   only   for   the   period   of   complete   closure   due   to
lockdown. As per the available record, there was complete
closure   for   the   period   between   22.03.2020   to   09.09.2020;
for   the   period   between   19.04.2021   to   28.06.2021   and   for
the   period   between   11.01.2022   to   27.01.2022   and   for   the
remaining   period   the   appellant   was   allowed   to   run   the
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Restro/Bar with 50% capacity. The appellant will therefore
have to deposit the entire rental amount except the period
for which there was complete closure due to lockdown. As
the applicability of  force majeure  principle (clause 29) is yet
to   be   considered   at   least,   for   the   period   during   the
complete   closure,   it   would   not   be   justified   to   direct   the
appellant  to deposit  the rental amount  for  the  said period
of complete closure by way of an interim measure, pending
final adjudication.        
7. In view of the above and for the reasons stated above, the
present   appeal   succeeds   in  part.   The   order   passed   by   the
Arbitral   Tribunal  passed   in   applications  under   Section   17
of the Arbitration Act, directing the appellant to deposit the
entire   rental   amount   for   the   period   between   March,   2020
to   December,   2021,   confirmed   by   the   High   Court   by   the
impugned   judgment   and   order,   is   modified   and   it   is
directed   that   the   appellant   to   deposit   the   entire   rental
amount for the period other than the period during which
there   was   complete   lockdown   i.e.,   22.03.2020   to
09.09.2020   and   for   the   period   between   19.04.2021   to
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28.06.2021. However, non­deposit of the rental amount for
the   aforesaid   period   during   which   there   was   a   complete
closure/lockdown shall be subject to the ultimate outcome
of   the   Arbitration   Proceedings   and   the   Arbitral   Tribunal
shall have to adjudicate and consider the principle of  force
majeure   contained in  clause 29 as contended on  behalf  of
the   appellant   in   accordance   with   law   and   on   its   own
merits.   All   contentions   which   may   be   available   to   either
party   are   kept   open   to   be   considered   by   the   learned
Arbitral   Tribunal.   The   learned   Tribunal   to   adjudicate   and
consider the aforesaid issue in accordance with law and on
its   own   merits   uninfluenced   by   the   present   order   and
observations   by   this   Court   in   the   present   order   shall   be
treated   to   be   confined   to   while   deciding   the   applications
under   Section   17   of   the   Arbitration   Act   and   the   interim
measure   order   in   exercise   of   powers   under   Section   17   of
the Arbitration Act only, and the same shall not have any
bearing on the final adjudication on the liability to pay the
rentals even for the aforesaid period. The balance amount
as   per   the   present   order   shall   be   deposited   by   the
appellant   as   observed   by   the   learned   Arbitral   Tribunal   in
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para   43(b)   of   interim   order.   The   learned   Tribunal   to
conclude   the   arbitration   proceedings   at   the   earliest
preferably   within   a   period   of   nine   months,   subject   to   the
co­operation   of   both   the   parties.   With   this   the   present
appeal is partly allowed to the aforesaid extent. There shall
be no order as to costs.   
…………………………………J.
                  (M. R. SHAH)
…………………………………J.
 (B.V. NAGARATHNA)
New Delhi, 
April 19, 2022.
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