AJA Clothings LLP Regd. Partnership Firm vs Ms. Saroj Malik & Anr.

DINESH MEHTA, J.(ORAL)

The appeal in hands is directed against the judgment and order dated 17.07.2026 passed by learned District Judge (Commercial Courts)-01, South-East, Saket Courts, New Delhi (hereinafter referred to as ‘the Commercial Court’) whereby the application under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act of 1996’) filed by the appellant was rejected.

The facts narrated in a nut-shell are that the appellant and the respondents entered into a registered lease deed dated 10.06.2019 in relation to a commercial property owned by the respondents. The said lease deed contained an arbitration clause for resolution of the dispute and in terms of the said clause, the respondents lodged a claim in relation to arrears of two months’ rent for January-February, 2021 for which a legal notice dated 05.03.2021 had been issued and the lease deed had been later terminated.

During the course of arbitral proceedings, the appellant took a plea that on account of spread of Covid-19 pandemic, the premises remained unused and could not be vacated and thus the lessor was not justified in demanding rent for such period.

The sole Arbitrator, who was appointed by the Delhi High Court vide its order dated 28.09.2021 in terms of Section 11 of the Act of 1996 passed an award dated 01.06.2023. It has been observed in the award, inter alia, that admittedly the cheques issued towards arrears of rent for the months of January, 2021 to March, 2021 were paid by the appellant to respondent no.1 and were subsequently dishonoured. Thus, the sole Arbitrator held the respondent entitled for a sum of Rs.10,40,587/- along with the interest of 10% p.a. as calculated: -

Feeling aggrieved with the aforesaid award, the appellant preferred an application under Section 34 of the Act of 1996 and sought setting aside of the award on various grounds.

The Commercial Court vide its judgment dated 17.07.2026 considered the contentions and arguments of the parties and found that no case for setting aside the award within the scope of Section 34 of the Act of 1996 has been made out.

Learned counsel argued that the appellant is a Limited Liability Partnership and a plea was taken that one of the partners being partner with only 5% share in the partnership cannot be held jointly liable for the liabilities of the firm, but such plea was not properly considered by the Commercial Court.

He further argued that during the period of lockdown, the respondent-lessor could not have claimed/demanded the lease money or the rent.

Having heard learned counsel for the appellant, we are of the view that the argument that one of the partner with 5% share in the partnership cannot be held jointly and severally liable, has no substance in the eye of law.

In a Limited Liability Partnership, the liability of a partner is governed by the partnership deed. That apart, if the award of the Arbitrator is taken into account, no separate liability of individual partner(s) has been fixed; the award has been passed against all the respondents (firm as well as other co-respondents). And therefore, it is only at the time of execution of the award, that the Executing Court would consider as to what amount is to be recovered and in what manner, having due regard to the law in this regard. But for this reason, the award passed by the Arbitrator cannot be said to be in any manner, illegal.

Learned counsel for the appellant has not been able to show any law which postulates that during the period of Covid-19/pandemic, rent or lease money was not payable.

Learned Commercial Court has taken into consideration, the law dealing with the scope of the Court’s interference under Section 34 of the Act of 1996 and has rightly reached a conclusion that it is not a fit case, warranting interference.

We do not find any error or infirmity in the order. The appeal is, therefore, rejected.

Pending applications also stand disposed of.