The Bombay High Court recently ruled that Kalaghoda’s Copper Chimney restaurant’s use of force majeure would not result in an extension of the time it was permitted to occupy its premises.
In the case of Deluxe Caterers Pvt. Ltd. v. M/s Narayani Associates (Appeal from Order No. 944 of 2022), the force majeure clause and the termination clause are separate provisions, according to Justice GS Kulkarni, and the application of force majeure would not alter the duration of the contract.
FACTS OF THE CASE :
The Copper Chimney restaurant in Kalaghoda is owned by the company Deluxe Caterers. The restaurant’s location is owned by the companies Trading Wings Ltd. and Narayani Hospitality and Academic Institute. They leased the property to Narayani Associates under a Leave and License Agreement, and that company gave the appellant permission to operate a restaurant there through a Conducting Agreement.
On March 23, 2020, the appellant sent a notification to Narayani Associates utilising the clause about force majeure, claiming that the agreement is in “suspended animation” as a result of COVID-19. It asked to be released from having to fulfill its financial responsibilities. Narayani Associates acknowledged receipt of the notification and noted that, should the appellant continue to default on its commitments beyond the 61st day, it will be free to end the contract.
Narayani Associates requested payment of outstanding debts through March 2020 on April 24, 2020, claiming that failure to do so will result in the Conducting Agreement being terminated as of May 23, 2020.
On May 10, 2021, the appellant again sought to be exempted from payments during the lockdown due to second wave of COVID. On May 31, 2022, Narayani Associates issued a notice asking the appellant to vacate the premises by September 30, 2022, as the Conducting Agreement would expire on that date.
The appellant challenged the notice before the Civil Court. It sought a permanent injunction against the respondents to restrain them from evicting it from the premises. It further sought extension of the term of the Conducting Agreement from September 30, 2022, to October 8, 2024. Appellant’s Notice of Motion for temporary relief was dismissed.
JUDGEMENT:
According to the force majeure provision in the contract, the parties agreed that the other party would be allowed to cancel the agreement if one of them was unable to fulfil its responsibilities under it for a period longer than 60 days due to circumstances beyond that party’s control.
The court observed that the appellant’s use of force majeure did not comply with the clause’s requirements, which provide for a 60-day period during which the contract’s obligations cannot be fulfilled. The appellant instead suggested an impending incapacity in its notice claiming force majeure, the court noted.
According to the court, the force majeure provision of the contract and the termination provision of the Conducting Agreement are separate provisions. The court ruled that just because the appellant sent a force majeure notice, it does not follow that Narayani Associates also agreed to extend the contract’s duration.
The court determined that the appellant’s application of the force majeure clause and Narayani Associates’ acceptance would not constitute any modification or adjustment of the contract’s termination clause.
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JUDGEMENT REVIEW BY SREYA MARY.
