Godolphine INDIA Private Limited vs. Um Projects LLP

Facts

This appeal concerns an order passed by the Commercial Court in Bengaluru. The respondent (UM Projects LLP) and the appellant (Godolphine India Private Limited) entered into a lease deed on June 10, 2020. The appellant had previously filed an application under Section 9 of the Arbitration and Conciliation Act, 1996, seeking an interim order to prevent the respondent from interfering with its possession of the leased premises pending arbitration. In that application, the appellant offered to deposit 40% of the agreed rent monthly. The respondent, in turn, filed a separate application under Section 9 seeking directions for the appellant to deposit outstanding rent and maintenance charges, including applicable GST. The Commercial Court partly allowed the respondent's application and dismissed the appellant's application, leading to the present appeal.

Held

The Court held that the interim order dated December 22, 2021, in A.A.No.127/2021, permitting the appellant to deposit only 40% of the monthly sums, did not absolve the appellant of its liability to pay the full admitted rent and maintenance charges as per the lease deed dated June 10, 2020. The Court reasoned that this permission was granted at the appellant's instance without any adjudication on the appellant's actual liability, and since A.A.No.127/2021 was pending, the permission could not be construed as a determination restricting the liability. The Court found considerable force in the respondent's submission that the liability to pay admitted rent had no nexus with the permission to deposit a reduced amount. Furthermore, the Court held that the dismissal of the appellant's I.A.No.III was justified in view of the undisputed fact that arbitration proceedings had commenced, and the respondent had sought eviction. The Court found no infirmity or illegality in the impugned order and dismissed the appeal, confirming the trial court's order. Liberty was reserved for the appellant to file appropriate applications before the Arbitral Tribunal.

Key Issues

1. Whether the interim order dated December 22, 2021, passed in A.A.No.127/2021, permitting the appellant to deposit only 40% of the monthly sums, restricts the appellant's liability to pay the full admitted rent and maintenance charges as per the lease deed dated June 10, 2020, pending arbitration? Appellant's contention: The appellant argued that the permission granted to deposit 40% of the monthly sums was not time-bound and continued to be in force, benefiting the appellant. They relied on the order in A.A.No.127/2021. Respondent's contention: The respondent argued that the order dated December 22, 2021, was time-bound and only related to restraining interference with possession. They contended that the permission to deposit 40% did not absolve the appellant of its liability to pay the full admitted rent and maintenance charges as per the lease deed, especially since A.A.No.127/2021 was still pending adjudication. They emphasized that the liability to pay rent had no nexus with the permission to deposit a reduced amount. 2. Whether the dismissal of the appellant's interlocutory application (I.A.No.III) to restrain the respondent from interfering with the appellant's possession was justified, given that arbitration proceedings had commenced and the respondent sought eviction?