M/S Mehra Jewel Palace PVT LTD vs. M/S Miniso Lifestyle PVT & Anr.

Held

The Court held that the force majeure clause in the Lease Deed provided for deferment of rent payment, not waiver. Consequently, the defendants were liable for rent for April and May 2020, albeit with a 50% concession offered by the plaintiff. The Court further held that the plaintiff was not entitled to claim double the monthly rent under Clause 7.2 or additional six months' rent under Clause 14.2, as they had not demonstrated any loss suffered due to the defendants' breach. Relying on precedents like Kailash Nath, the Court stated that such claims require proof of actual loss. The Court directed the defendants to pay the lease rentals as per the Lease Deed for the post-termination period until possession was handed over. The Court decreed the suit for arrears of rent, mesne profits/occupation charges, interest at 18% per annum, GST on rentals with interest and penalties, and unpaid electricity and water charges. The defendants were allowed to set off the security deposit, the amount already deposited with the court, and the partial payment made.

Facts

The plaintiff, Mehra Jewel Palace Pvt Ltd., is the owner of a commercial property leased to MINISO Life Style Pvt. Ltd. and another entity. A Lease Deed was executed on January 4, 2018, for nine years with a monthly rent of Rs. 27,00,000/-. The defendants also agreed to pay applicable Goods and Services Tax (GST) on the rent. Due to the COVID-19 pandemic, the defendants invoked the force majeure clause and sought waiver of rent for April and May 2020. The plaintiff offered a payment plan, but the defendants only paid a partial amount. The plaintiff subsequently issued a legal notice for outstanding rent and interest, and later terminated the lease. The suit was filed for recovery of possession, arrears of rent, mesne profits, and interest. The court had previously directed the defendants to deposit Rs. 90 lakhs provisionally.

Key Issues

1. Whether the defendants are entitled to the benefit of the force majeure clause for the period of April and May 2020, and if so, whether it leads to a waiver or deferment of rent (turning on Clause 14.1 of the Lease Deed)? 2. Whether the plaintiff is entitled to claim amounts over and above the lease rentals, specifically double the monthly rent under Clause 7.2 and additional six months' rent under Clause 14.2 of the Lease Deed, in case of breach of contract by the defendants? Petitioner/Plaintiff's Arguments: The plaintiff argued that the force majeure clause only provided for deferment of rent, not waiver. They contended that the defendants continued to occupy the premises and were liable for rent, interest, GST, and potential penalties. They sought summary judgment for the outstanding rent and other charges. Revenue/Defendant's Arguments: The defendants argued that the COVID-19 pandemic constituted a force majeure event, excusing them from paying rent for the period the premises were closed. They denied liability for rent beyond the force majeure period and contested claims for amounts beyond the stipulated lease rentals, citing legal precedents that require proof of loss for such claims.