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Evergreen Land Mark Pvt. Ltd. vs John Tinson & Company Pvt. Ltd. & Anr.

Civil Appeal · 2022 INSC 445Decided 19 Apr 2022
Civil Appeal No. 2783 of 2022
M.R. Shah · B.V. Nagarathna

Background

The appellant ran a restaurant and bar on two leased premises. When the lease was terminated, a dispute went to arbitration, and the landlords sought an interim order under Section 17 directing the tenant to deposit unpaid rent for March 2020 to December 2021 (the Covid-19 period). The tenant argued that the pandemic lockdown triggered the "force majeure" clause (clause 29) in the lease, excusing it from paying rent for the closure periods, but the Arbitral Tribunal ordered 100% of the rent deposited without ruling on that defence, and the Delhi High Court upheld this.

Decision Breakdown

The Supreme Court held that since the Arbitral Tribunal itself had expressly declined to give even a prima facie view on whether the force majeure clause applied, it could not simultaneously order deposit of 100% of the rent covering the very periods where that clause was in dispute. The Court modified the order: the tenant must deposit the full rent for all periods except the specific spells of complete lockdown closure (22.03.2020-09.09.2020 and 19.04.2021-28.06.2021), leaving the force majeure question for those periods to be decided by the Tribunal on its own merits at final adjudication. The appeal was thus partly allowed, with the Tribunal directed to conclude arbitration within about nine months.

Lesson Learnt

An interim deposit order in arbitration should not effectively pre-decide a genuinely disputed contractual defence (like force majeure) that the tribunal has itself said it isn't yet ready to rule on: interim relief must leave the real dispute open for final decision.

Official source (sci.gov.in)View Judgment (PDF)

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