Delhi District Court
M/S Trinity Constultants vs M/S Redefine Online Express Opc Prv Ltd on 27 September, 2023
IN THE COURT OF
SH. PREM KUMAR BARTHWAL, DISTRICT JUDGE,
COMMERCIAL COURT-01, SOUTH DISTRICT,
SAKET COURTS, NEW DELHI
CS (COMM) NO.3/2022
CNR NO. DLST01-000003-2022
M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD.
REGD. OFFICE AT KHASRA NO. 640/1,
NEAR TELCO SERVICE STATION,
RANG PURI, NEW DELHI-110037
THROUGH ITS SOLE DIRECTOR
MR. RAKESH KUMAR ..... PLAINTIFF
Versus
M/S. TRINITY CONSULTANTS
THROUGH ITS PARTNER, MR. MANMEET S. JUNEJA
OFFICE AT : E 147, SAKET,
NEW DELHI-110017 ..... DEFENDANT
AND
COUNTER CLAIM : CS(COMM) 424/2022
CNR NO. DL-ST01-006151-2022
M/S TRINITY CONSULTANTS ..... COUNTER -
CLAIMANT
Versus
M/S. REDEFINE ONLINE EXPRESS
(OPC) PRIVATE LIMITED ..... RESPONDENT
Date of Institution : 03.01.2022 (Main Suit)
: 20.04.2022 (Counter Claim)
Reserved for judgment : 20.09.2023
Date of Judgment : 27.09.2023
CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS
CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36
JUDGMENT
1. The plaintiff, M/s. Redefine Online Express (OPC) Pvt. Ltd. has filed the suit bearing CS (Comm) 3/2022 against the defendant, M/s. Trinity Consultants for recovery of Rs.26,12,069/- (Rupees Twenty Six Lakh Twelve Thousand Sixty Nine Only) alongwith pendente lite and future interest.
2. Briefly stated, the case of the plaintiff is that the plaintiff company and defendant had entered into a Leave & License Agreement dated 16.12.2019 in respect of Hotel Anuthan, E-147, Saket New Delhi for a period of 3 years w.e.f. 01.12.2019 to 30.11.2022 with 18 months lock in period @ Rs.6,00,000/- p.m. and the said amount comprised of Rs.4,00,000/- (for Plant & Machinery) and Rs.2,00,000/- (for Hotel Equipment & Building). It is submitted that the plaintiff had cleared all its dues till March 2020 and due to lockdown from 25.03.2020 for period of about 6 months, the plaintiff had made the payment as per the revised terms of payment as agreed between the parties till January 2021 due to force majeure condition of lockdown due to COVID 19 as mentioned in Clause 13 of the said agreement. It is submitted that the plaintiff had suffered huge loss due to the lockdown and non running/use of the abovesaid premises in question for a period of six months and plaintiff had also not received any payment from Fab Hotels (M/s. Case2 Stays Pvt. Ltd.) since March 2020. It is submitted that the plaintiff was not in a position to continue suffering huge losses qua the abovesaid property as the same was not in use due to corona virus pandemic and lockdown and hence CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 the plaintiff was left with no option but to terminate the Lease & License Agreement dated 16.12.2019 w.e.f. 28.02.2021 and the plaintiff had also sent notice dated 06.02.2021 for the termination of abovesaid Agreement to the defendant. It is submitted that the defendant had given reply dated 10.02.2021 and the defendant had also sent an email demanding the balance dues of January 2021. It is submitted that the plaintiff requested the defendant to make the adjustment of the abovesaid amount in the plaintiff's security deposit of Rs.24,00,000/-. It is further submitted that on 28.02.2021, the plaintiff had vacated the premises in question and also handed over its physical possession to the defendant and the defendant had also issued an acknowledgement letter of handing over the suit property by the plaintiff. It is submitted that the defendant issued demand notice dated 15.03.2021 for Rs.34,51,482/- towards the termination of abovesaid Agreement. It is submitted that the plaintiff had cleared all the dues upto the month of December 2020 and also made a payment of Rs.3,58,000/- on 15.01.2021 against the demand of Rs.5,01,500/- for the month of January 2021 and February 2021, the defendant has raised a demand of Rs.5,90,000/- but the plaintiff had handed over the possession to the defendant on 28.02.2021 itself. It is further submitted that the electricity charges of Rs.97,482/- and water charges of Rs.22,500/- were additional dues whereas the plaintiff's office furniture, laptops, T.V. & other appliances worth about Rs.6,67,100/- were not returned to the plaintiff at the time of handover and the same are still lying within the suit property. It is further submitted that the plaintiff had spent an amount of Rs.10,00,000/- on Kitchenware and office renovation which are CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 permanent fixtures on the suit property. It is submitted that after going through all records and payment by the plaintiff, the plaintiff is liable to pay an amount of Rs.1,86,382/- (after deducting Rs.6,67,100/- from Rs.8,53,482/-) towards final outstanding dues and the plaintiff is not liable to pay illegal demand raised by the defendant. According to the plaintiff, after deducting the amount of Rs.1,86,382/- from the security deposit amount of Rs.24,00,000/-, the defendant is liable to refund an amount of Rs.22,13,618/- to the plaintiff. Hence the present suit for recovery of a sum of Rs.26,12,069/- (Principal outstanding sum of Rs.22,13,618/- and interest thereon @ 24% for a period of nine months till date of filing of the suit which comes to Rs.3,98,451/-) has been filed by the plaintiff alongwith interest @ 24% p.a. till realization of same.
3. Summons of the suit were issued to the defendant who contested the plaintiff's suit by filing written statement alongwith counter claim for recovery of Rs 10,51,482/- against the plaintiff. The said counter claim was registered as CS (Comm) 424/22 on 20.04.2022. According to the defendant/counter claimant, the plaintiff's suit is liable to be rejected as it is an attempt to wriggle out of a valid contract signed between the parties and that the plaintiff is guilty of concealing material facts. It is contended that on 16.12.2019, the defendant through its partner, Mr. Manmeet Singh Juneja signed a Leave & License Agreement with plaintiff and said agreement pertained to a completely constructed and fully furnished building situated at E-147, Saket, New Delhi owned by the defendant and the said building had amenities such as plant and machinery and was well suited for a hotel business. It is submitted that prior to entering into the Agreement the defendant was CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 operating a hotel business by the name of Trinity Art Hotel at the building. It is contended that the total license fee/compensation under the Agreement was of Rs.6,00,000/- (Rs.4,00,000/- for plant and machinery and Rs.2,00,000/- for hotel equipment and building). It is further contended that the license fee was exclusive of other charges or expenses which were directly related to running of the hotel business by the plaintiff such as electricity and water charges, house-keeping, in-house maintenance, security insurance, stocks and services and such other expenses were mutually agreed to be incidental to the business of the plaintiff which would solely be the liability of the plaintiff.
4. It is contended that the Agreement clearly provided that neither party, save as otherwise provided in the Agreement, would be entitled to terminate the Agreement for a total period of 18 months from the date of execution of the Agreement i.e. from 01.12.2019 to 01.06.2021 as the same was the lock in period. It is submitted that under Clause 4 of the said Agreement, the plaintiff was required to pay an amount of Rs.24,00,000/- in advance as an interest free security refundable subject to handing over of the building in original condition. It is contended that the Agreement under Clause 6.4 sets out the consequences of vacating the building and terminating the Agreement prior to the lock-in period. It is contended that on 06.02.2021, the plaintiff issued a Notice of termination of Lease & License Agreement and apart from terminating the Agreement on arbitrary grounds not covered by law or the terms of the Agreement, the plaintiff has also sought to recall the security deposit of Rs.24,00,000/-. It is contended that the plaintiff is not entitled to recover security deposit in law or as per CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 Agreement. According to the defendant, the real reason for not making timely payments was the plaintiff's dispute with M/s Case2 Stays Pvt. Ltd. (Fab Hotels) and that the commercial hardship arising from this relationship with Fab Hotels does not have any bearing with the present case. It is submitted that the defendant has an outstanding claim of Rs.34,51,482/- towards non-payment of the monthly licence fees, penalty for early exit within the lock-in period, repairs made within the building and other expenses/liabilities of the plaintiff as on 15.03.2021 and upon making the adjustment of the security deposit of Rs.24,00,000/-, a sum of Rs.10,51,482/- is still outstanding against the plaintiff for which the counter claim has been filed by the defendant alongwith pendente-lite and future interest @ 24% p.a. In para 17 of its counter claim, the defendant/counter claimant has contended that as a gesture of goodwill, it had provided the plaintiff with an extended and revised payment schedule starting from March 2020 to January 2021 and further contended that such revised terms would not count as any waiver of any express stipulations/obligations as provided under clause 14 of the Agreement. It has been contended that the plaintiff chose to illegally terminate the agreement under the guise of force majeure despite the defendant extending reasonable support. It has been contended that the plaintiff's commercial hardship cannot be treated as force majeure. The defendant prays for dismissal of the plaintiff's suit and a decree for a sum of Rs 10,51,482/- against the plaintiff.
5. Replication to the defendant's written statement and reply/WS to the counter claim has been filed on behalf of plaintiff reiterating the averments made in the plaint of suit bearing CS CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 (Comm) 03/22 and denying the averments of the defendant in written statement as well as counter claim.
6. Affidavits of admission/denial qua the documents filed on record was carried out vide proceedings dated 25.03.2023 and Mr. Manmeet Singh Juneja, Partner of the defendant/Counter claimant/AR has admitted following eight documents filed by the plaintiff which were marked as Ex.P-1 to P-8 namely:-
(i) Ex. P-1 : Leave and Licence Agreement dated 16.12.2019;
(ii) Ex. P-2 (colly) : Tax invoices;
(iii) Ex. P-3 : The reply dated 10.02.2021 to the termination notice dated 06.02.2021;
(iv) Ex. P-4 : Letter dated 28.02.2021 regarding handing over of the possession of the license property i.e. Hotel Anuthan, E-147, Saket, New Delhi;
(v) Ex.P-5 (colly) : Letter of acknowledgment of the termination of the Leave and Licence Agreement and demand of outstanding amount of Rs.10,51,482/- after adjusting the security deposit of Rs. 24 lacs;
(vi) Ex. P-6 : Non starter report dated 29.10.2021;
(vii) Ex. P-7 : Memorandum of Association of the plaintiff company;
(viii) Ex.P-8 : Certificate of incorporation of plaintiff company/M/s Redefine Online Express (OPC) Pvt. Ltd.
7. During the proceedings of 25.03.2023, the aforesaid two cases bearing CS (Comm) 03/22 and CS (Comm) 424/22 were directed to be tried and clubbed together as both were interrelated and the documents relied upon by the parties were also common and it was directed that common evidence would be led in the CS (Comm) 03/2022 which shall be treated as the lead case. From the CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 pleadings of parties and documents relied upon by the parties, following common issues were framed in the suits vide order dated 25.03.2023 :
1) Whether the plaintiff was entitled for premature termination of the Leave and Licence Agreement dated 16.12.2019? (OPP)
2) Whether the defendant is entitled to the complete payment of the licence fee as agreed between the parties for a lock-in period of Leave and Licence Agreement dated 16.12.2019? (OPD)
3) Whether the defendant is entitled for any damages on account of termination of the agreement by the plaintiff?
(OPD)
4) Whether the plaintiff is entitled for recovery of the suit amount of Rs.26,12,069/- from the defendant, as prayed for? (OPP)
5) Whether the parties are entitled for any interest? If so, at what rate and for which period? (OPP)
6) Relief.
8. On behalf of the plaintiff, Mr. Rakesh Kumar, AR of the plaintiff company has been examined as PW-1 and he tendered his evidence affidavit,Ex PW1/A and has relied upon the admitted documents Ex.P-1 to Ex.P-8 as well as reply dated 05.04.2021 to defendant's demand notice dated 15.03.2021 alongwith the postal receipt etc. Ex.PW1/A (colly.). On the other hand, Mr. Manmeet Singh Juneja, DW-1 has been examined on behalf of defendant/counter-claimant. The depositions and testimonies of the witnesses shall be considered during my findings on the issues.
9. I have heard the arguments of Ld. Counsels for the parties and have also considered the testimonies of witnesses and written CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 submissions filed by the Ld. Counsels. My issues-wise findings are as under:-
ISSUES NO. 1, 2 & 3 :
1) Whether the plaintiff was entitled for premature termination of the Leave and Licence Agreement dated 16.12.2019? (OPP)
2) Whether the defendant is entitled to the complete payment of the licence fee as agreed between the parties for a lock-in period of Leave and Licence Agreement dated 16.12.2019? (OPD)
3) Whether the defendant is entitled for any damages on account of termination of the agreement by the plaintiff? (OPD) All these issues are being taken up together as the same are interrelated and interconnected and common evidence has been led by the parties in both suits. Law of Evidence provides the legal framework for an orderly and reliable means of adjudicating a suit or proceeding between the parties. The Law of Evidence is designed to ensure that the court considers only that evidence which will enable it to reach a reliable conclusion. The Code of Civil Procedure, 1908, The Code of Criminal Procedure, 1973, and The Indian Evidence Act, 1872, constitute the trinity of the principal procedural codes that govern the law of procedure as applied in the courts of law. The Law of Evidence lays down the ground rules for determining on whom the burden of proof will lie for proving the case in a suit or proceeding which one has set in motion, what facts may be considered as relevant for treating them as evidence and what facts may be proved and in what manner so as to ensure high probative value, who may be considered as competent witnesses to prove the facts and the modes of examining those witnesses.
Evidence is the usual means of proving or disproving a fact or matter in issue. The law of evidence envisages the proof of facts by CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 the parties by means of: (i) oral evidence - which means and includes all statements which the court permits or requires to be made before it by witnesses in relation to the facts in issue (ii) documentary evidence-is all documents produced for the inspection of the court, and (iii) material objects - such as guns, knives, etc., to which the oral evidence relates.
10. The rules relating to burden of proof are based upon certain practical considerations of convenience and reasonableness and also of policy. The rules relating to burden of proof are as under :
(a) S 101: Whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts, must prove that those facts exist.
(b) S 102: The burden of proof in a suit or proceeding lies on that person who would fail if no evidence at all were given on either side.
(c) S 103: The burden of proof as to any particular fact lies on that person who wishes the court to believe in its existence, unless it is provided by any law that the proof of that fact shall lie on any particular person.
11. Thus, the Evidence Act has clearly laid down that the burden of proving a fact always lies upon the person who asserts it. Until such burden is discharged, the other party is not required to be called upon to prove his case. The dictum in law is as old as the hills i.e. one who avers must prove. The court has to examine as to whether the person whom the burden lies has been able to discharge its burden. In order to discharge their respective burdens, Mr. Rakesh Kumar, PW-1 has been examined on behalf of the plaintiff. On the other hand, Mr. Manmeet Singh Juneja, DW-1 has been examined on behalf of defendant/counter-claimant. PW-1, Mr. Rakesh Kumar has deposed that he is the Director of the plaintiff CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 company M/s Redefine Online Express (OPC) Pvt. Ltd. and the plaintiff had entered into Leave and Licence Agreement dated 16.12.2019 in respect of Hotel Anuthan, E-147, Saket, New Delhi for a period of 3 years w.e.f. 01.12.2019 to 30.11.2022 with lock-in period of 18 months. The said witness,PW 1 has also relied upon the documents Ex. P-1 to Ex. P-8 which were admitted on the defendant on 25.03.2023 during the proceedings of admission and denial. According to the plaintiff, all the dues in respect of the premises in question were cleared till March 2020 and due to lockdown from 25.03.2020 for a period of about 6 months, the plaintiff had made that payments as per their revised terms as agreed between the parties till January 2021 due to force majeure/lockdown. The plaintiff's witness/PW-1 has categorically deposed that the plaintiff had suffered huge loss due to lockdown and that plaintiff had not received any payment from Fab Hotels (M/s. Case2 Stays Pvt. Ltd.) since March 2020 and plaintiff's agreement with the said Hotel was also terminated from 31.08.2020. According to the plaintiff, they could not continue to suffer huge loss as the premises was not be put to any commercial use due to Corona Epidemic and the lockdown due to which the plaintiff was left with no option but to terminate the Lease and Licence Agreement dated 16.12.2019 w.e.f. 28.02.2021 and the plaintiff had issued the termination notice 06.02.2021 which was replied by the defendant vide his reply dated 10.02.2021. Admittedly, the premises has been handed over by the plaintiff to the defendant on 28.02.2021. The Ld. Counsel for the plaintiff has argued that in circumstances such as the outbreak of a pandemic, like the current Covid-19 outbreak, the grounds on which the CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 tenants/lessees or other similarly situated parties could seek waiver or non-payment of the monthly amounts, under contracts which have a force majeure clause would be governed by Section 32 of the Indian Contract Act, 1872. Hon'ble Supreme Court in Halliburton Offshore Service Inc. Vs. Vedanta Limited, 2020 SCC OnLine Del 2068 has summarized the law laid down by the Supreme Court in Energy Watchdog (Supra) stating that Force Majeure operates within the ambit of Section 32 of the Contract Act if contained in a contract as contingency and would operate independently if not contained in the contract. Impossibility of the performance of contract takes place if the untoward event totally disrupts the foundation upon which the agreement was entered into. The Ld. Counsel for plaintiff has argued that the hotel premises had been taken on licence w.e.f 01.12.2019 but due to Covid 19 pandemic and the lockdown/restrictions imposed by the government since March 2020, the plaintiff suffered huge losses due to non-running/ use of the premises in question. It is submitted that the parties tried to even mitigate the losses and the plaintiff had cleared all dues as per the agreement till March 2020 and thereafter revised payment terms were agreed upon until January 2021 due to the Force Majeure condition of the pandemic and the incidental lockdown as mentioned in Clause 13 of Ex.P-1. It has been argued that since the plaintiff was unable to continue suffering losses, hence there was no option but to terminate the agreement vide notice dated 06.02.2021. It has been further argued that the plaintiff is liable to pay only a sum of Rs.1,86,382/- only and after deducting the same from the Security Deposit of Rs.24,00,000/-, the defendant was liable to refund amount of Rs.22,13,618/- to the plaintiff. It has been argued CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 that the defendant's witness, DW-1 Mr. Manmeet Singh Juneja has admitted in his cross-examination that the defenfant is an unregistered partnership and thus the defendant does not have any legal right to file the counter-claim. It has been further argued that DW-1 has also admitted that the defendant is not the owner of the suit property as no document regarding ownership or a valid lease between the actual owner and the defendant have been produced on record. It has further been argued that DW-1 has admitted that there is no calculation of the amount being claimed by the defendant in the written statement/counter claim. Per Contra, Ld counsel for defendant has argued that the defendant/counter claimant is a partnership firm registered with the Registrar of firms since 01.10.2002 and a licence fee of Rs.6,00,000/- per month was to be given by the plaintiff as per the agreement Ex. P-1 and there was a lock-in period of 18 months. It has been argued that the plaintif's commercial hardship cannot be used as a plea of Force Majeure event and that the plaintiff is not permitted to wriggle out of the leave and licence agreement Ex.P-1. It is argued that the performance under a contract cannot be discharged merely because of the commercial hardship and the plaintiff cannot be permitted to blow hot & cold by seeking refund of the security deposit but repudiating the indemnity granted to the defendant in the same agreement, Ex P-1 for the lock-in period. It has been submitted that the defendant had incurred expenses on the repairs/service charges of the generator, passenger lifts, repairs in the rooms, at reception and steps to the tune of Rs.3,66,700/- and the plaintiff also had not paid the part payment of the licence fee for January 2021 besides electricity and water bills to the tune of Rs.9,60,782/- and thus the CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 defendant/counter claimant is entitled to receive Rs.10,51,482/- from the plaintiff as claimed in the counter claim and the plaintiff is not entitled to any relief. Perusal of the record reveals that following documents were admitted by Mr. Manmeet Singh Juneja, Partner/AR of the defendant during the proceedings of admission and denial on 25.03.2023 :-
(i) Ex. P-1 : Leave and Licence Agreement dated 16.12.2019;
(ii) Ex. P-2 (colly) : Tax invoices;
(iii) Ex. P-3 : The reply dated 10.02.2021 to the termination notice dated 06.02.2021;
(iv) Ex. P-4 : Letter dated 28.02.2021 regarding handing over of the possession of the license property i.e. Hotel Anuthan, E-147, Saket, New Delhi;
(v) Ex.P-5 (colly) : Letter of acknowledgment of the termination of the Leave and Licence Agreement and demand of outstanding amount of Rs.10,51,482/- after adjusting the security deposit of Rs. 24 lacs;
(vi) Ex. P-6 : Non starter report dated 29.10.2021;
(vii) Ex. P-7 : Memorandum of Association of the plaintiff company;
(viii) Ex.P-8 : Certificate of incorporation of plaintiff company/M/s Redefine Online Express (OPC) Pvt Ltd.
12. Hon'ble Delhi High Court in case titled Sarawjeet Singh & Anr. Vs. Asian Hotels North Ltd. bearing CS(COMM) 346/2023 decided on 19 July, 2023 involving question of payment of rent for the lock-in period during Covid 19 Pandemic and the question of Covid 19 being considered Force Majeure even has observed as under:-
CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 "39. It is important for this Court to peruse the govern-
ment regulations imposing lockdown which prevented de- fendant‟s access to the hotel premises from 25th March 2020 until 21st August 2020. Notification No. 40-3/2020- DM-I(A) passed by the Ministry of Home Affairs dated 24th March 2020 imposing a nation-wide lockdown owing to the COVID-19 specifically directing that the hospitality services would also remain suspended. The relevant por- tion of the Notification reads as under:
―Whereas in exercise of the powers under section 6(2)(i) of the Disaster Management Act. 2005, the National Disaster Management Authority (NOMA), has Issued an Order no. 1- 29/2020-PP (Pt.II) dated 24.03.2020 {Copy enclosed) directing the Ministries/ Departments of Government of India, State/Union Territory Governments and State/ Union Territory Authorities to take effective measures so as to prevent the spread of COVID-19 in the country; Whereas under directions of the aforesaid Order of NOMA, and in exercise of the powers, conferred under Section 10(2)(1) of the Disaster Management Act. The undersigned, in his capacity as Chairperson, National Executive Committee, hereby issues guidelines, as per the Annexure, to Ministries/ Departments of Government of India, State/Union Territory Governments and State/ Union Territory Authorities with the directions for their strict implementation.
This Order shall remain in force, in all parts of the country for a period of 21 days with effect from 25.03.2020.
xxx xxx xxx
7. Hospitality Services to remain suspended Exceptions:
a. Hotels, homestays, lodges and motels, which are accommodating tourists and persons stranded due to lockdown, medical and emergency staff, air and sea crew.
b. Establishments used/ earmarked for quarantine facilities.
CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36
40. This lockdown was again extended till 14th April, 2020 to curb COVID-19. Relevant extracts are as follows:
―And whereas Delhi Disaster Management Authority (DDMA) has notified lockdown in Territory of NCT of Delhi w.e.f. 25th March, 2020 till midnight of 14th April, 2020 to curb the menace of COVID-19 vide order dated 25.03.2020 along with the guidelines, And whereas, Delhi Disaster Management Authority (DDMA) has issued various subsequent orders/Instructions to authorities concerned of NCT of Delhi to take all required measures to appropriately deal with the situation; And whereas, Govt. of India has extended the lockdown period all over India, Including the territory of NCT of Delhi, further w.e.f. dated 15.04.2020 to 3 rd May, 2020 to curb the menace of COVID-19.‖
41. The lockdown was finally relaxed and vide Notification No. F. DDMA/COVID-19/2020/1/292 dated 21st August 2020, the Ministry allowed the opening of the hotels. The relevant extracts are reproduced herein:
―And whereas, in pursuance of Ministry of Home Affairs, Govt. of India Order as well as DO letter dated 29.07.2020, DDMA has issued Order No. 275 dated 31.07.2020 with regard to extension of lockdown in the containment zones and to maintain status quo (except removal of night curfew) in the territory of NCT of Delhi till the mid night of 31.08.2020;
And whereas, Ministry of Home Affairs, Govt. of India, vide Order No. 40-3/2020-DM-l(A) dated 30.05.2020 annexed with guidelines for Phased Re-opening (Unlock
1) has already permitted to open Hotels & other hospitality services in the area outside the Containment Zones with the observation & compliance of Standard Operating Procedure (SOP) to be prescribed by the Ministry of Health & Family Welfare, Govt. of India. Ministry of Health & Family Welfare, Govt. of India vide CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 OM dated 04.06.2020 has also issued SOP for Hotels & other hospitality services, which is enclosed herewith;
And whereas, the current situation of ongoing pandemic of COVID-19 in Delhi has been reviewed during the meeting of Delhi Disaster Management Authority held, through video conferencing, on August 19, 2020 under the Chairmanship of Hon'ble Lt. Governor, Delhi and it has been decided that the Hotels will be allowed to open in NCT of Delhi in all the areas outside the Containment Zones:
Now, therefore, in exercise of powers conferred under section 22 of the Disaster Management Act, 2005, the undersigned, In his capacity as Chairperson, State Executive Committee, DDMA, Govt. of NCT of Delhi, hereby, In partial modification of DDMA order dated 31.07.2020, directs all authorities concerned that Hotels shall be permitted to operate throughout the NCT of Delhi in all areas, except in containment zones, subject to the strict compliance of Standard Operating Procedure (SOP) issued in this regard by Ministry of Health & Family Welfare, Govt. of India dated 04.06.2020, annexed with this order as well as other directions / instructions / guidelines issued by the Government of India and Government of NCT of Delhi from time to time.
42. From the above circulars, it is clear that the defendant was prevented from accessing the hotel and the premises for a period of 6 months w.e.f. 25th March 2020 until 21st August 2020."
13. The Hon'ble High Court in aforementioned case has also further discussed the applicable Law in present situation as under:-
CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 "43. It is also important to peruse Clause 15.2 of the Sub-Lease or Second Lease Deed which entitles the defendant to terminate the Lease Deed if prohibited from performing its obligations under the lease for a period of 90 days on account of any restrictive governmental laws or regulations. The Clause states that:
―15.2 Force Majeure - the Said Property or any part thereof is destroyed or damaged due to a Force Majeure event, not caused by wilful act or negligence of the Lessee thereby rendering it impossible/ unsafe/ unfit/ non-feasible to operate out of the Said Property the Lessee may, temporarily vacate the Said Property, as may be required, to enable the Lessor to carry out repairs to restore the Said Property to as good condition as it was· in on the Lease Commencement Date. In such an event, all payments specified under this Deed for the Said Property or portion thereof shall abate till the time they Said Property is repaired and restored to as good condition as it was in at the time of handover of the Said Property for interior/fit-outs.
The Lessee shall not be held responsible for any consequences or liabilities under this Deed if it's prevented in performing its obligations under the terms of this Deed by reason of any restrictive governmental laws or regulations, riots, insurrection, war, terrorist action, strike, public demonstrations, rallies, acts of God, etc. Furthermore, if the above situation continues for a period of more than 90 (ninety) calendar days, the Lessee may terminate this Deed by giving a prior written notice of 30 (thirty) days.
44. Since, the primary ground taken by the respondent is of the frustration by Contract due to Force Majeure, this Court shall delve into the doctrine and principles CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 surrounding the same. Force Majeure and doctrine of frustration are embodied in the Indian Contract Act, 1872 (hereinafter referred to as "Contract Act") under Sections 32 and 56. Section 32 of the Contract Act states that:
―32. Enforcement of contracts contingent on an event happening.--Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. --
Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened." If the event becomes impossible, such contracts become void.
45. Section 56 of the Contract Act reads as under:
―56. Agreement to do impossible act.-
An agreement to do an act impossible in itself is void. Contract to do an act afterwards becoming impossible or unlawful.--A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Compensation for loss through non- performance of act known to be impossible or unlawful.-- Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non- performance of the promise.
46. Explaining the Force Majeure Clause and the application of the same on contracts, the Ministry of Finance, on 19th February, 2020, issued an Office Memorandum (O.M.) with respect to invocation of the CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 Force Majeure Clause provided in paragraph 9.7.7 of the Manual for Procurement of Goods, 2017. The same is set out below:
―A Force Majeure (FM) means extraordinary events or circumstance beyond human control such as an event described as an act of God (like a natural calamity) or events such as a war, strike, riots, crimes (but not including negligence or wrong-doing, predictable/seasonal rain and any other events specifically excluded in the clause). An FM clause in the contract frees both parties from contractual liability or obligation when prevented by such events from fulfilling their obligations under the contract. An FM clause does not excuse a party's non-performance entirely, but only suspends it for the duration of the FM. The firm has to give notice of FM as soon as it occurs and it cannot be claimed ex-post facto. There may be a FM situation affecting the purchase organisation only. In such a situation, the purchase organisation is to communicate with the supplier along similar lines as above for further necessary action. If the performance in whole or in part or any obligation under this contract is prevented or delayed by any reason of FM for a period exceeding 90 (Ninety) days, either party may at its option terminate the contract without any financial repercussion on either side.
A doubt has arisen if the disruption of the supply chains due to spread of corona virus in China or any other country will be covered in the Force Majeure Clause (FMC). In this regard it is clarified that it should be considered as a case of natural calamity and FMC may be invoked, wherever considered appropriate, following the due procedure as above.
47. The Hon‟ble Supreme Court in Energy Watchdog v.
CERC, (2017) 14 SCC 80 has explained that if a contract contains the Force Majeure Clause itself then it shall be CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 governed by Section 32 of the Contract Act but if the terms are not expressly mentioned in the contract, then Section 56 of the Contract Act shall govern the contract and the course of impossible events. The Court observed as under:
"34. ―Force majeure is governed by the Contract Act, 1872. Insofar as it is relatable to an express or implied clause in a contract, such as the PPAs before us, it is governed by Chapter III dealing with the contingent contracts, and more particularly, Section 32 thereof. Insofar as a force majeure event occurs dehors the contract, it is dealt with by a rule of positive law under Section 56 of the Contract Act. Sections 32 and 56 are set out herein:
―32. Enforcement of contracts contingent on an event happening. -- Contingent contracts to do or not to do anything if an uncertain future event happens, cannot be enforced by law unless and until that event has happened. If the event becomes impossible, such contracts become void.
56. Agreement to do impossible act.-- An agreement to do an act impossible in itself is void.
Contract to do act afterwards becoming impossible or unlawful.-- A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. Compensation for loss through non- performance of act known to be impossible or unlawful.-- Where one person has promised to do something which he knew, or, with reasonable diligence, might have known, and which the promisee did not know, to be CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non- performance of the promise.
35. Prior to the decision in Taylor v. Caldwell [Taylor v. Caldwell, (1863) 3 B&S 826 : 122 ER 309 : (1861-73) All ER Rep 24] , the law in England was extremely rigid. A contract had to be performed, notwithstanding the fact that it had become impossible of performance, owing to some unforeseen event, after it was made, which was not the fault of either of the parties to the contract. This rigidity of the Common law in which the absolute sanctity of contract was upheld was loosened somewhat by the decision in Taylor v. Caldwell [Taylor v. Caldwell, (1863) 3 B&S 826 : 122 ER 309 : (1861-73) All ER Rep 24] in which it was held that if some unforeseen event occurs during the performance of a contract which makes it impossible of performance, in the sense that the fundamental basis of the contract goes, it need not be further performed, as insisting upon such performance would be unjust.
36. The law in India has been laid down in the seminal decision of Satyabrata Ghose v. Mugneeram Bangur & Co. [Satyabrata Ghose v. Mugneeram Bangur & Co., 1954 SCR 310 : AIR 1954 SC 44] The second paragraph of Section 56 has been adverted to, and it was stated that this is exhaustive of the law as it stands in India. What was held was that the word ―impossible‖ has not been used in the section in the sense of physical or literal impossibility. The performance of an act may not be literally impossible but it may be impracticable and useless from the point of view of the object and purpose of the parties. If an untoward event or change of circumstance totally upsets the very foundation upon which the parties entered their agreement, it can be said that the promisor finds it impossible to do the act which he had promised to do. It was further held that where the Court finds that the contract itself either impliedly or expressly contains a term, according to which CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 performance would stand discharged under certain circumstances, the dissolution of the contract would take place under the terms of the contract itself and such cases would be dealt with under Section 32 of the Act. If, however, frustration is to take place dehors the contract, it will be governed by Section 56.
37. In Alopi Parshad & Sons Ltd. v. Union of India [Alopi Parshad & Sons Ltd. v. Union of India, (1960) 2 SCR 793 : AIR 1960 SC 588] , this Court, after setting out Section 56 of the Contract Act, held that the Act does not enable a party to a contract to ignore the express covenants thereof and to claim payment of consideration, for performance of the contract at rates different from the stipulated rates, on a vague plea of equity. Parties to an executable contract are often faced, in the course of carrying it out, with a turn of events which they did not at all anticipate, for example, a wholly abnormal rise or fall in prices which is an unexpected obstacle to execution. This does not in itself get rid of the bargain they have made. It is only when a consideration of the terms of the contract, in the light of the circumstances existing when it was made, showed that they never agreed to be bound in a fundamentally different situation which had unexpectedly emerged, that the contract ceases to bind. It was further held that the performance of a contract is never discharged merely because it may become onerous to one of the parties.
38. Similarly, in Naihati Jute Mills Ltd. v. Khyaliram Jagannath [Naihati Jute Mills Ltd. v. Khyaliram Jagannath, (1968) 1 SCR 821 : AIR 1968 SC 522] , this Court went into the English law on frustration in some detail, and then cited the celebrated judgment of Satyabrata Ghose v. Mugneeram Bangur & Co.
[Satyabrata Ghose v. Mugneeram Bangur & Co., 1954 SCR 310 : AIR 1954 SC 44] Ultimately, this Court concluded that a contract is not frustrated merely because the circumstances in which it was made are altered. The courts have no general power to absolve a party from the performance of its part of the contract CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 merely because its performance has become onerous on account of an unforeseen turn of events.‖
48. Supreme Court in Halliburton Offshore Service Inc. v. Vedanta Limited, 2020 SCC OnLine Del 2068 has summarized the law laid down by the Supreme Court in Energy Watchdog (Supra) stating that Force Majeure operates within the ambit of Section 32 of the Contract Act if contained in a contract as contingency and would operate independently if not contained in the contract. Impossibility of the performance of contract takes place if the untoward event totally disrupts the foundation upon which the agreement was entered into. The Court held as follows:
―64. The law relating to Force Majeure has been recently settled by the Supreme Court in the case of Energy Watchdog v. Central Electricity Regulatory Commission, (2017) 14 SCC 80. The principles laid down by the Supreme Court in paragraphs 34-42 are as under:
a) Force Majeure would operate as part of a contract as a contingency under section 32 of the Indian Contract Act 1872 (‗ICA').
b) Independent of the contract sometimes, the doctrine of frustration could be invoked by a party as per Section 56, ICA.
c) The impossibility of performance under Section 56, ICA would include impracticability or uselessness keeping in mind the object of the contract.
d) If an untoward event or change of circumstance totally upsets the very foundation upon which the parties entered their agreement it can be said that the promisor finds it impossible to do the act which he had promised to do.
CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36
e) Express terms of a contract cannot be ignored on a vague plea of equity.
f) Risks associated with a contract would have to be borne by the parties.
g) Performance is not discharged simply if it becomes onerous between the parties.
h) Alteration of circumstances does not lead to frustration of a contract.
i) Courts cannot generally absolve performance of a contract either because it has become onerous or due to an unforeseen turn of events. Doctrine of frustration has to be applied narrowly.
j) A mere rise in cost or expense does not lead to frustration.
k) If there is an alternative mode of performance, the Force Majeure clause will not apply.
l) The terms of the contract, its matrix or context, the knowledge, expectation, assumptions and the nature of the supervening events have to be considered.
m) If the Contract inherently has risk associated with it, the doctrine of frustration is not to be likely invoked.
n) Unless there was a break in identity between the contract as envisioned originally and its performance in the altered circumstances, doctrine of frustration would not apply.‖ CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36
49. The Coordinate Bench of this Court in Ramanand and Ors. v. Dr. Girish Soni and Anr., 2020 SCC OnLine Del 635 has elaborated upon the application of Force Majeure and the applicability of Section 32 of Contract Act in case the stipulations are provided in the contract itself. The Court stated that:
―12. Contracts of tenancy and leases could be of different kinds including--
(i) Oral tenancies with a month-to-month payment of rent;
(ii) Short term tenancy agreements with a monthly rent payable;
(iii) Long term leases with force majeure clauses;
(iv) Lease agreements which are structured as revenue sharing agreements and;
(v) Lease agreements which are in the nature of monthly payments as a percentage of the sales turnover.
13. The above list is however not exhaustive. The question of waiver, suspension or any remission in the rental payments would operate differently for each category of agreements. Where there is a contract, whether there is a force majeure clause or any other condition that could permit waiver or suspension of the agreed monthly payment, would be governed by the contractual terms. If, however, there is no contract at all or if there is no specific force majeure clause, then the issues would have to be determined on the basis of the applicable law.
14. In circumstances such as the outbreak of a pandemic, like the current COVID 19 outbreak, the grounds on which the tenants/lessees or other similarly situated parties could seek waiver or non-payment of the monthly amounts, under contracts which have a force majeure clause would be governed by Section 32 of the Indian Contract Act, 1872 (hereinafter, ―ICA). This section reads as under:
―32. Enforcement of contracts contingent on an event happening. Contingent contracts to do or CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 not to do anything if an uncertain future event happens cannot be enforced by law unless and until that event has happened.
If the event becomes impossible, such contracts become void.
15. Force Majeure' is defined by Black's Law Dictionary as ―an event or effect that can be neither anticipated nor controlled. As per the dictionary, ―The term includes both acts of nature (e.g. floods and hurricanes) and acts of people (e.g. riots, strikes and wars).
16. The Supreme Court in Energy Watchdog v.
CERC, (2017) 14 SCC 80 has clearly held that in case the contract itself contains an express or implied term relating to a force majeure condition, the same shall be governed by Section 32 of the ICA. Section 56 of the ICA, which deals with impossibility of performance, would apply in cases where a force majeure event occurs outside the contract. The Supreme Court observed:
―34. ―Force majeure is governed by the Contract Act, 1872. Insofar as it is relatable to an express or implied clause in a contract, such as the PPAs before us, it is governed by Chapter III dealing with the contingent contracts, and more particularly Section 32 thereof. Insofar as a force majeure event occurs dehors the contract, it is dealt with by a rule of positive law under Section 56 of the Contact Act.
17. Thus, in agreements providing for a force majeure clause, the Court would examine the same in the light of Section 32. The said clause could be differently worded in different contracts, as there is no standard draft, application or interpretation. The fundamental principle would be that if the contract contains a clause providing for some sort of waiver or suspension of rent, only then the tenant could claim the same. The force majeure clause in the contract could also be a contingency under Section 32 which may allow the tenant to claim that the contract has become void and surrender the premises. However, if the CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 tenant wishes to retain the premises and there is no clause giving any respite to the tenant, the rent or the monthly charges would be payable.
50. It has been clearly stipulated by the Hon‟ble Supreme Court in the case of NTPC Limited v. Voith Hydro Joint Venture, 2020 SCC OnLine SC 1071 that the express provision of the contract stating the Force Majeure Clause would prevail over the plain language of Section 56 of the Contract Act. The Court stated that:
―54. The Contract, essentially, has two facets. The first relates to the performance of reciprocal promises that parties are obliged to perform but for any supervening event. These obligations would obviously be curtailed if their performances are rendered impossible. To that extent, the Contract would stand frustrated as being incapable of performance. However, to the extent that the parties have already contemplated the consequences of such supervening event, the same would remain binding and parties would not be absolved to act in accordance with the commitment made in contemplation of such eventuality. It is open for the parties to agree that if on account of any force majeure condition it is impossible to perform a contract, a party would compensate the other for the efforts made notwithstanding that it is impossible to fully perform the same. It would be erroneous to contend that in such cases, the party who has so agreed to compensate the other contracting party for the efforts undertaken would be absolved of its obligation to do so merely because of a supervening event, the possibility of which was contemplated, had occurred. In this view, this Court is unable to find any fault with the decision of the Arbitral Tribunal that in such cases, the contractual provisions would prevail over the plain language of Section 56 of the Contract Act.‖
51. Applying the principles enunciated above, it is clear that Section 32 would apply in the present scenario as CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 there is a clear stipulation in the Contract regarding the Force Majeure Clause contained in Clause 15.2 of the Sub Lease Deed. Clause 15.2 states that the Force Majeure Clause would apply if there are ‗restrictive governmental laws or regulations, riots, insurrection, war, terrorist action, strike, public demonstrations, rallies, acts of God, etc' and the stipulation continues for a period more than 90 days."
14. Applying the law laid by the Superior courts and principles enunciated above, it is clear that Section 32 would apply in the present matter as there is a clear stipulation of Force Majeure/Act of God clause in the admitted terms and conditions of the Leave and Licence Agreement, Ex. P-1. The clause 13 of the said agreement, Ex. P-1 postulated as under:-
" 13. FORCE MAJEURE/ACT OF GOD 13.1 "Force Majeure' shall mean any such event beyond the control of the affected party, which could not be anticipated upon formation of the contract, and the effects of which are compelling and unforeseeable. A Force Majeure event may make it temporarily or permanently impossible to perform all or any part of a party's obligations.
13.2 If at any time during the term of the Leave and License agreement, the scheduled property is damaged or destroyed on account of war, riots, fire, earthquake or any other eventuality/act of god or for any reason whatsoever, so as to render the scheduled property (or part thereof) unfit for the use of the licensee then, and in such event, the Licensors shall not be responsible for any Force Majeure or the situation beyond the control of Licensor and in such case this agreement shall be deemed to have come to an end. The parties shall not be held liable for any breach of the terms and conditions of this agreement when such breach results from a Force Majeure event.
13.3 The party affected by a Force Majeure event shall inform the other party as soon as it has become aware of CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 such event. The party shall describe such event in detail and inform the other party of any relevant element capable of allowing its precise identification, and to determine its effects as to performance of its contractual obligations. The party invoking a Force Majeure event shall then inform the other party in writing of its delayed performance/inability to honour the terms of this agreement due to the occurrence of the Force Majeure within a reasonable period.
13.4 A party falling to fulfill its obligation to inform in compliance with the procedure described in the above paragraph may not invoke a force majeure exemption. 13.5 The obligations of the party invoking "Force Majeure" shall be suspended as long as they cannot be performed due to a 'force Majeure" event. Nevertheless, such party shall, as far as it is possible, remedy the situation with due diligence. A "Force Majeure" event shall not give rise to any legal right or claim for damages by the affected party."
15. Thus, Ex. P-1 signed by the parties clearly postulated about circumstances of any subsequent event rendering the premises in question unfit for use and in such eventuality the said agreement was mutually agreed to be deemed to have come to an end. The parties were not liable for any such breach of the terms and conditions where the said breach had resulted from the Force Majeure event or any situation beyond the control by the parties.
The occurrence of Covid-19 has given the entire jurisprudence of force majeure a fresh relevance. The initial days of the virus spreading from China to different parts of the world, Covid-19 and the consequent lockdowns were truly unprecedented and unforeseeable. Further, these events resulted in a complete shutdown in businesses all across the world. In India, the one of the earliest instances of Covid-19 getting recognised in the realm of CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 contractual law was by the Government of India, Ministry of Finance through its Office Memorandum dated 19.02.2020. This office memorandum was path-breaking where it interpreted para 9.7.7 of the Manual for Procurement of Goods, 2017 (which did not contain "epidemics" or "pandemics" as a force majeure event), and specifically added Covid-19 under the bracket of force majeure, terming it as a "natural calamity". Regulators such as the Reserve Bank of India and Securities Exchange Board of India had also introduced several relief measures such as imposing a moratorium/deferment of 3 months on payment of loan instalments and interest on working capital facilities and exemptions from several compliance and disclosure requirements. Further, considering the severity of the situation, the moratorium was further extended. Thus judicial notice could be taken of the lockdown/ restrictions imposed by the Government of India due to Covid-19 pandemic leading to the closure of non essential activities such as hospitality sector during the Covid-19/Corona Pandemic in the year 2020. In view of the foregoing discussion, it is clear that the doctrine of frustration and impossibility would apply if a party is prevented from performing the terms of the contract which are essential and strike at the root of the contract. In other words, the government regulations/lockdown due to Covid-19 pandemic in the present matter pertaining to Hotel/hospitality sector constituted Force Majeure' referred to in clause 13 of Ex.P1 as such occurrence/event was beyond the control of the plaintiff and same could not have been anticipated upon formation of the contract and the effects of which are also compelling and unforeseeable. The Government regulations prevented the plaintiff from running the CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 hotel from the leased premises for about 6 months which constitutes a 'real justification' as per the Hallibuton judgment (Supra) and brings an exception as to excuse the non-performance of the contractual obligations in the present case. It is the settled position in law that a Force Majeure clause is to be interpreted narrowly and not broadly. Parties ought to be compelled to adhere to contractual terms and conditions and excusing non-performance would be only in exceptional situations. Admittedly the charges for the plant and machinery as well as for the building premises were reduced by the parties during the Covid period as per the tax invoices for the period 01.04.2020 to 30.04.2020 and 01.07.2020 to 31.07.2020 etc. as detailed in Ex.P-2 (colly.). The defendant has also claimed in para 17 of its counter claim that,as a gesture of goodwill, it had provided the plaintiff revised payment schedule starting from March 2020 to January 2021. The formal termination/handing over of the premises done on 28.02.2021 vide Ex P-4. The receipt of the plaintiff's termination notice dated 06.02.2021 and reply on behalf of the defendant, Ex. P-3 is also not in dispute. As per clause 13.2 of the agreement, Ex P-1, the parties shall not be held liable for any breach of the terms and conditions of this agreement when such breach results from a Force Majeure event. Thus the plaintiff is held to be entitled for premature termination of the Agreement, Ex P-1 in the present facts and circumstances of restrictions imposed by the Government authorities due to Covid-19 Pandemic after March 2020. Accordingly the issue no 1 is decided in favour of the plaintiff and against the defendant. As regards the issue no 2 and 3, the defendant is claiming penalty of Rs.21,24,000/- for early exit during lock in period and licence charges for the Month of March to CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 May 2021. However, the position with respect to rent of lock-in period is akin to that of earnest money/security and qua which the Hon'ble Supreme Court in Kailash Nath Associates Vs. Delhi Development Authority, (2015) 4 SCC 136 followed by Hob'ble Delhi High Court in Speed Track Cargo Vs. State Bank of Patiala, 2016 SCC OnLine Del 919, Palm Art Apparels Pvt. Ltd. Vs. Enkay Builders Pvt. Ltd., 2017 SCC OnLine Del 12776, Mera Baba Pvt. Ltd. Vs. Ram Lubhaya Puri, 2018 SCC OnLine Del 9502, Klintoz Pharmaceuticals Pvt. Ltd. Vs. Ravinder Shankar Mathur, 2018 SCC OnLine Del 11954, Satish Verma Vs. Garment Craft (India) Pvt. Ltd., 2018 SCC OnLine Del 6829 and Mahendera Verma Vs. Suresh T. Kilachand, 2019 SCC OnLine Del 9333 have consistently held that mere entitlement in the agreement to forfeit is not enough and loss/damages from breach of contract has to be proved. In fact, the matter is no longer res integra. The Hon'ble Division Bench of Delhi High Court in Tower Vision India Pvt. Ltd. Vs. Procall Pvt. Ltd., 2012 SCC OnLine Del 4396 (DB) has held that rent of the lock-in period in a Lease Deed cannot be claimed without pleading loss from vacation by the tenant of the property prior to expiry of the term of lease. Mr. Manmeet Singh Juneja, DW-1 has averred in para no. 1 of his evidence Ex. DW-1/1 that he is the partner and authorized signatory/representative of the defendant/counter claimant, M/s Trinity Consultants and that there was lock-in period of 18 months and plaintiff had issued a notice for termination dated 06.02.2021 and that the agreement had been terminated by the plaintiff 108 days prior to last day of lock-in period.DW1 has averred that there was an outstanding claim of Rs.34,51,482/- as on 15.03.2021 against the plaintiff due to penalty of early exist within CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 the lock-in period, non payment of monthly licence fees, repairs made within the building and other expenses. The defendant has claimed that after adjustment upon the plaintiff's security deposit of Rs.24,00,000/-, the plaintiff was liable to pay a sum of Rs.10,51,482/-. During his cross examination on 24.07.2023, DW- 1 Mr. Manmeet Singh Juneja deposed that M/s. Trinity Consultant is a partnership firm which has taken hotel in question on lease and further given the same on leave and licence to others. He also answered that M/s. Trinity Consultants has two partners and the other partner is Mrs. Sheetal Juneja. He expressed his unawareness as to how the defendant/Trinity Consultants was referred to be a Company incorporated under the provisions of the Companies Act in the agreement Ex.P-1. He also stated during his cross- examination on 24.07.2023 that M/s. Trinity consultants is an unregistered partnership firm. He was unable to give details of the previous lessee of the said premises add admitted that no documents regarding lease agreement of the partnership firm with the owner of the suit property have been filed. DW-1 admitted that the rent was reduced up to 50% by an oral agreement due to the pandemic and that he has not mentioned the said fact in his evidence affidavit. He also deposed that he has not filed any calculation of the amount due upon the plaintiff in the written statement/counter claim. He also stated that the premises was leased out to ASKJ Hospitality from 01.04.2022. No authorization of Mr. Manmeet Singh Juneja, DW-1 by the partnership firm M/s Trinity Consultants has been filed/proved on record. In the entire written statement dated 18.04.2021, there is no detail of partners and no documents filed alongwith the written statement regarding authorization by the CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 partnership firm in favour of DW-1, Mr. Manmeet Singh Juneja. Strangely in the agreement Ex. P-1 M/s. Trinity Consultants had claimed to be a company duly incorporated under the provision of the Companies Act having its corporate office at E-147, Saket, New Delhi and acting through partner Mr. Manmeet Singh Juneja who is duly authorized act on behalf of the firm. The registration of the partnership firm/defendant has not been proved on record as per law. The testimony of the defendant's witness, DW-1 is contradictory to the submissions of the defendant's counsel that the defendant/counter claimant is a registered partnership firm. No documents regarding the expenses incurred by the defendant/counter-claimant on the alleged repairs or any proof of having made the payments of the electricity bills etc. have been filed or proved on record. The defendant could have easily examined the contractor/labourers who had carried out the said repairs. The same could have also been proved by producing the defendant's books of accounts/receipts if such payments were really made/incurred by the defendant. The plaintiff's witness PW-1, Mr. Rakesh Kumar on 03.05.2023 has categorically averred that the business could not be carried due to lockdown and that the agreement was terminated on account of force majeure. PW-1 also denied the suggestion made by the counsel for defendant that the said premises were given out to healthcare workers of nearby hospitals during lockdown. The defendant could have summoned the witnesses from the said hospitals to prove its claim of suit premises being used even during the lockdown. However, no such witness was produced or got summoned by the defendant. The testimony of the defendant's witness/DW-1 is found to be CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 inconsistent and lacks credibility. Accordingly, the defendant has failed to discharge the onus cast on it qua the issue no.3 regarding its entitlement of any damages on the scales of preponderance of probabilities. The issues no. 2 and 3 are hereby decided against the defendant and in favour of the plaintiff in view of the foregoing discussions.
ISSUES NO. 4 :
4) Whether the plaintiff is entitled for recovery of the suit amount of Rs.26,12,069/- from the defendant, as prayed for? (OPP)
16. The onus to prove issue no.4 was upon the plaintiff and PW-
1, Mr. Rakesh Kumar appearing on behalf of the plaintiff has categorically averred in paras 12 & 13 of his evidence affidavit Ex.PW1/1 that the plaintiff is liable to pay an amount of Rs.1,86,382/- towards the outstanding dues and after deducting the said amount from the Security Deposit of Rs.24,00,000/- the defendant is liable to return an amount of Rs.22,13,618/-. However, during his cross-examination on 03.05.2023, PW-1 admitted that he has not deposited the TDS of the amount paid by him to the defendant with the government after March 2020 and that had paid utility bills up to January 2021. No cross examination qua the averments of PW-1 in para 11 to para 13 of his evidence affidavit has been done by the defendant's counsel. Admittedly the suit premises had been vacated/handed over on 28.02.2021 vide Ex.P-4. In view of the testimony of PW-1 and the documents proved on record by the plaintiff and in view of the findings of this Court on the issues no. 1 to 3, this Court is of considered opinion that the plaintiff's claim in respect of the refund of the security deposit i.e. Rs.22,13,618/- (Rupees Twenty two Lakh Thirteen thousand Six CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 hundred and Eighteen Only) stands proved on the scales of preponderance of probabilities and the plaintiff is entitled for recovery of the same from the defendant. Accordingly, the plaintiff is held to be entitled for the recovery of Rs.22,13,618/- (Rupees Twenty two Lakh Thirteen thousand Six hundred and Eighteen Only) from the defendant and the defendant is at liberty to deduct the TDS amount, if any, deposited by it qua the payments received after March 2020 from the plaintiff. Issue No.4 is decided accordingly in favour of the plaintiff and against the defendant.
ISSUE NO. 5 :
5) Whether the parties are entitled for any interest? If so, at what rate and for which period? (OPP)
17. The plaintiff has claimed interest @ 24% p.a.on the outstanding amount as well as towards pendente lite and future interest. Proviso 2 Section 34 of the Code of Civil Procedure, as applicable to the commercial transactions, postulates that rate of interest in excess of 6% per annum on the principal amount can be awarded but the same shall not exceed the rate of interest at which money is lent or advanced by the nationalized bank in relation to the commercial transaction if no contractual rate is agreed between the parties. In view of the nature of the commercial transaction involved in the matter and the prevailing banking rates of interest, in the considered opinion of this Court, a pendente lite and future interest @ 12% p.a. on the suit amount would meet the ends of justice. Accordingly, the interest @ 12% per annum on the outstanding amount i.e Rs.22,13,618/- (Rupees Twenty two Lakh Thirteen thousand Six hundred and Eighteen Only) is hereby CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 awarded in favour of the plaintiff from the date of vacation of the suit property i.e. 28.02.2021 till its realization. Accordingly, the issues no.5 is decided in favour of the plaintiff and against the defendant.
ISSUE NO. 6 : (RELIEF)
18. In view of the findings on the aforesaid issues, this Court holds that in CS (Comm) 3/2022 filed by M/s. Redefine Online Express OPC PRV Ltd., the plaintiff is entitled to a decree in the sum of Rs.22,13,618/- (Rupees Twenty two Lakh Thirteen thousand Six hundred and Eighteen Only) in favour of the plaintiff and against the defendant alongwith interest @ 12% p.a. w.e.f. 28.02.2021 till its realization. The Counter Claim bearing CS (Comm) 424/2022 filed by M/s. Trinity Consultants is disallowed and defendant's suit/counter claim is hereby dismissed. The plaintiff has also claimed the costs of the suit. Keeping in view Section 35 and 35A of CPC and particularly when the defendant itself is responsible for the litigation, it is held to be liable to bear the costs to the extent of court fees etc. The plaintiff is directed to file certificate regarding charges/fee paid by it to the Ld. Local Commissioner appointed for recording evidence and the said amount shall also be recovered from the defendant as part of the costs allowed in favour of plaintiff. Accordingly, the plaintiff is entitled for the costs of litigation. The advocate fee is assessed to be Rs.50,000/- only and same is hereby awarded in favour of the plaintiff. Decree sheet be prepared accordingly.
19. File be consigned to record room after necessary compliance.
Digitally signed PREM by PREM
KUMAR
KUMAR
Announced in the open Court BARTHWAL BARTHWAL th Date: 2023.09.27 Dated : 27 September, 2023 17:02:01 +0530 (Prem Kumar Barthwal) CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36 District Judge (Commercial Court)-01, South District, Saket Courts, New Delhi.
CS (COMM) 03/2022 M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Vs. M/S TRINITY CONSULTANTS CS (COMM) 424/2022 M/S TRINITY CONSULTANTS Vs. M/S. REDEFINE ONLINE EXPRESS (OPC) PVT. LTD. Page No.: 36 of 36