Speciality Restaurants Limited vs Mani Square Limited

@JUDGMENT-JUDGMENT

The Court : The petitioner has a Fine Dining Restaurant in Mani Square Mall which is the respondent in the present case(Mani Square Limited). The case of the petitioner is that the restaurant has not enjoyed any footfall since April 2020 by reason of the pandemic.

Learned Counsel for the petitioner submits that the restaurant has been virtually closed and has generally been inaccessible since 22nd March, 2020 and has not had any customers or sales even after 8th June, 2020 when the lockdown was partially lifted. Counsel contends that the contract between the petitioner and the respondent stands frustrated by reason of impossibility to perform the terms of the contract due to the extraordinary state of affairs which have been prevailing since April of this year. Counsel relies on a letter of the petitioner dated 28th July, 2020 to the respondent stating that the petitioner intends to remove all the furniture, fixtures, fit-outs etc. from the Fine Dining Restaurant area which the petitioner had installed and hand over the set of keys of the restaurant to the respondent. The fixtures was due to be removed from 30th July, 2020 and the respondent was requested to refund the security deposit of Rs.46,84,678/- lying with the respondent.

The prayer in this application is for appointment of a Special Officer who will supervise the removal of the fixtures and furniture from the concerned area and that the petitioner should be permitted to take possession of the same.

Learned counsel appearing for the respondent, i.e. the company running the Mani Square Mall, submits that the contract of the petitioner which was to remain valid till 2022 has a lock-in period of three years from 2019 to 2022 and that the contract does not contemplate termination before 2022. It is also submitted that the respondent has filed an application under Section 9 of the Arbitration & Conciliation Act, 1996 for securing the respondent's monetary claims which are due from the petitioner which includes an amount of Rs.6 lakhs payable every month by the petitioner as the minimum guaranteed amount. Counsel submits that although he is not opposed to the idea of Special Officer being appointed in the matter, the furniture and fixtures belonging to the petitioner should be kept in a separate place so that the respondent can treat the same as security for its claims against the petitioner. The approximate amount of such claim is said to be Rs.25 crores as on date.

On hearing counsel for the parties, this Court is of the view that neither of the parties can be forced to suffer the consequences of the pandemic which has severely affected the hotel and hospitality industry. On the one hand, the petitioner is unable to run its Restaurant and has its furniture and fixtures locked in without being able to utilise the same; while on the other, the respondent is saddled with a contract without being able to realise its dues from the petitioner under the terms of the contract. The rival monetary claims can be gone into before an Arbitrator as and when such proceedings are commenced by the parties. However, before that stage arrives the petitioner must be given a measure of relief in the face of its restaurant becoming financially unviable. However, if the petitioner is permitted to take back all the furniture, the respondent may be deprived of treating the furniture as security. The depreciated value of the furniture and fittings is estimated in excess of Rs.2 crores.

In view of the above, Mr. Manish Ray of the Bar Library Club is appointed Special Officer to oversee the removal of the furniture, fittings and fixtures of the petitioner which are presently lying inside the precincts of the petitioner's Restaurant at Mani Square. The process of removing should start from 28th August, 2020 and be completed within a week thereafter.

In addition to the Special Officer, the process of removing the furniture and fixtures will be done in the presence of two representatives each of the petitioner and the respondent. After completing the process, the keys of the petitioner's Restaurant will be handed over to the respondent's representative in the presence of the Special Officer. The furniture and fittings removed will thereafter be kept at a place designated and arranged for by the respondent and at the respondent's expense till 14th September, 2020. This arrangement has been directed till 14th September, 2020 since the respondent has also filed an application under Section 9 of the 1996 Act which is expected to be listed in the coming week. The parties are at liberty to take appropriate steps for realising their claims against each other during the period in which protection has been given to the parties by this order.

The Special Officer will be paid Rs.70,000/- as remuneration in addition to incidental expenses for transportation etc. for the work as directed and is to be borne by the petitioner including all incidental charges.

This interim order is made without prejudice to the rights and contentions of the parties which may appear from the terms of the contract executed by them.

AP 225 of 2020 is disposed of accordingly.