TaxTMI 
TaxTMI 
2022 (4) TMI 927
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....greement 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 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 T....
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.... 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 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....
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....n 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 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 directi....
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....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 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 s....