Disputed rent arrears must be deposited in court pending final arbitral adjudication.

The petitioner was a lessee of the subject property under a registered lease and subsequent agreements.

After the lease was terminated, the respondent initiated arbitration proceedings. During those proceedings, the arbitrator directed the petitioner to deposit ₹40,15,213 towards rent arrears within one month, failing which the petitioner’s defence would be struck off.

The petitioner’s appeal under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996 was dismissed by the Commercial Court. The petitioner then challenged both orders in this writ petition.

Separately, a suit concerning the deceased lessor’s legal heirs was pending, with the petitioner and the respondent among the parties.

The petitioner said that ₹18 lakh had been deposited before the Commercial Court and disputed the calculation of arrears.

Whether the orders requiring the petitioner to deposit the claimed rent arrears, with the stated consequence for non-payment, warranted interference in the writ petition.

Whether the disputed amount should be secured pending determination of the parties’ rights in the suit and the arbitration proceedings.

The petition invoked Articles 226 and 227 of the Constitution and challenged an order made in an arbitration proceeding, following an appeal under Section 37(2)(b) of the Arbitration and Conciliation Act, 1996.

The Court did not set out or apply a separate statutory test for deciding the merits of the rent-arrears dispute.

Instead, it directed that the disputed sum be deposited in the pending suit, where the lessee and the persons claiming to be the deceased lessor’s legal representatives were parties, and held that the arbitrator’s assessment of arrears remained subject to final determination in the arbitration.

The Court noted that the petitioner’s challenge concerned an interim order made while the arbitration remained pending, and that the competing claims regarding the deceased lessor’s legal representatives were also before the civil court.

In light of those parallel proceedings and the respondent’s stated lack of objection to removing the consequence of striking off the petitioner’s defence, the Court directed the disputed amount to be secured in the suit by a fixed deposit with automatic renewal.

It clarified that the arbitrator’s calculation was not a final determination and left the parties’ substantive rights open.

The fixed deposit is subject to further orders in the suit.

The arbitrator’s assessment of arrears remains subject to final adjudication, and the parties’ rights and contentions on the merits were left open.