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2012 DIGILAW 129 (GAU)

National Airport Authority v. N. L. Bhalotia

2012-01-31

AMITAVA ROY, P.K.MUSAHARY

body2012
Amitava Roy J The instant application carries a prayer of the applicant, Airports Authority of India (‘AAF) for twofold reliefs-firstly, to restrain the opposite party from operating the Snacks Bar at the LGBI Airport, Guwahati and, secondly, to allow it to float a Notice Inviting Tender for grant of fresh licence for the said Snacks Bar. We have heard Mr. K.N. Choudhury, senior advocate assisted by Mr. R. Dubey, Advocate for the applicant and Mr. M. Kotoki, Advocate for the opposite party. The facts in brief as can be gathered from the pleadings bearing on the issue under consideration need be recorded at the threshold. The opposite party was granted a licence for operating the Snacks Bar referred to hereinabove by the applicant at the LGBI Airport and the work order therefor was issued in its favour on 30.9.1988. An agreement to that effect was entered into between the parties on 10.6.1989 wherein the term of the licence was fixed at three years and the licence fee was determined to be Rs. 26,060 per month Pursuant to the said agreement, the possession of the Snacks Bar in question was handed over to the opposite party who, however, asserts that he also had to make necessary constructions at his own cost. Differences between the parties started surfacing thereafter and on 14/15.11.1990 the licence was cancelled. This decision was challenged by the opposite party in T.S. (Arb.) 58/90 and 193/90 in the learned Court below. Initially the learned Lower Court directed maintenance of status quo, where-after, on 17.2.1992 a compromise decree was passed inter alia on the condition that the opposite party would pay 40% of the licence fee till the dispute was resolved by arbitration. The records reveal that thereafter Sri K. Theckchandani was appointed as the sole Arbitrator in terms of section 34 of the agreement which embodied the arbitration clause. He was replaced by Sri R.J. Treasurywalla who pronounced the award on 3.1.1997 on the rival claims of the parties pertaining to the dispute. The opposite party, thereafter, filed an application under section 30 of the Arbitration Act, 1940 (for short, hereinafter referred to as ‘the 1940 Act’) for setting aside the said award and the learned trial court by the judgment and order dated 9.7.1999 rendered in T.S. (Arb) 124/97 interfered therewith further issuing a direction to the applicant to hold arbitration by appointing a new Arbitrator. Being aggrieved, the applicant approached this court with FAO 72/99 which was dismissed on 15.11.1999. The concluding paragraph of the said judgment reads: “Before parting with the judgment it is necessary to observe that the concerned authority would appoint the Arbitrator within a period of one month and the new Arbitrator would give the award within a period of four months and even he is to conduct the proceeding on day-to-day basis.”. The text of the judgment and order dated 15.11.1999 reveals that this operative direction was issued by the Division Bench of this court in the aforementioned appeal being of the view that non-interference with the judgment and order dated 9.7.1999 notwithstanding, a de novo arbitration proceeding would be expedient for an early resolution of the lingering dispute. The applicant unsuccessfully challenged this judgment and order before the hon’ble Apex Court which was dismissed on 17.11.2000, where-after, Sri P. Kalita, retired District Judge was appointed by it as the sole Arbitrator on 25.1.2001. As the sequence of events that followed would reveal, this Arbitrator was replaced successively by Sri D.P. Chakraborty and Justice S.P. Rajkhowa (Retired) who eventually withdrew himself from the arbitration proceeding on 5.8.2007. Noticeably, on 4.5.2005 a Division Bench of this court in an interim application registered as M.C. 617/2005 in connection with FAO 727 1999 (since dismissed as on that date) had appointed Justice S.P. Rajkhowa (Retired) as the sole Arbitrator to arbitrate the dispute between the parties. The opposite party in his bid to get the order-dated 4.5.2005 reviewed filed an application to that effect which was registered as R.P. 87/2005. This petition was rejected on 11.4.2006 by this court. As referred to hereinabove, with the withdrawal of Justice S.P. Rajkhowa (Retired) from the arbitral proceeding, the process in connection therewith came to a halt. Situated, thus and confronted with the consequential impasse, the applicant approached this court with another interim application registered as M.C. 3379/2009 seeking an order making appointment of a fresh Arbitrator to enter into the reference for settlement of the protracted dispute between the parties. An affidavit-in-opposition was filed on behalf of the opposite party mainly refuting the allegation of delay that had been attributed to him by the applicant resulting in the stalemate. An affidavit-in-opposition was filed on behalf of the opposite party mainly refuting the allegation of delay that had been attributed to him by the applicant resulting in the stalemate. This court after hearing the parties, by order dated 20.12.2011, having regard to the attendant facts and circumstances issued the following directions: (i) The existing disputes and differences between the parties as contemplated in the agreement and within the purview of Clause 34 would be referred to arbitration in accordance therewith within a period often days herefrom. (ii) Meanwhile, the Chairman, Airport Authority of India, New Delhi would appoint the sole Arbitrator as per clause 34 of the contract agreement and notify the opposite party thereof forthwith. (iii) The appointed Arbitrator would complete the arbitration proceedings de novo in accordance with law within a period of four months from the date of his entering the reference. It is submitted at the Bar that in compliance of the said order, the Chairman, AAI, New Delhi by his letter dated 28.12.2011 did appoint Sri S.K. Gupta as the sole Arbitrator to enter upon the reference and conduct the arbitration proceeding. Thereby, the arbitrator was required to adjudicate the claims/counter-claims of the parties as referred to the sole arbitrator appointed earlier subject to the admissibility in terms of clause 34 of the agreement executed by and between the parties on 10.6.1989. Significantly, the rival claims as recited in the two annexures to the letter, namely, Annexures I and II clearly demonstrate that those are monetary in nature. The sole arbitrator, as the records laid before us reveal,, thereafter on 3.1.2012 issued notice to the parties inter .alia requiring them to submit their statement of claims and facts supporting the same within a period of 15 days of the receipt thereof: The notice also indicated that after submission pf the documents referred to therein the parties would be intimated of the venue, and the date of hearing. Indication was also made with regard to the expenses to be borne by them as costs of the arbitration proceeding. In response to the notice however the opposite party through letter dated 16.1.2012 of his learned counsel conveyed his refusal to participate in the arbitral proceedings. It is in this background that the reliefs mentioned hereinabove insisted upon by this application are being pressed for by the applicant. In response to the notice however the opposite party through letter dated 16.1.2012 of his learned counsel conveyed his refusal to participate in the arbitral proceedings. It is in this background that the reliefs mentioned hereinabove insisted upon by this application are being pressed for by the applicant. As the averments made in the application would demonstrate, the principle emphasis of the applicant by way of justification of the reliefs sought for is the persistent non-cooperation of the opposite party with the arbitration proceeding(s) resulting in undue delay and his wrongful gain by operating the Snacks Bar the licence whereof, according to it, had expired on 9.6.1992. . The opposite party in his counter has in details narrated the facts bearing on the progression of the events from the date of issuance of the licence to him and has underlined that at all relevant points of time he had extended unstinted co-operation in the arbitration proceeding. Denying the accusation of deliberate delay to his advantage, the opposite party has maintained that in terms of the compromise decree dated 17.2.1992 he is entitled to possess the licensed premises till the dispute between the parties are finally resolved by arbitration. Mr. Choudhury has argued that the recorded facts are telltale testimony of the conscious initiatives of the opposite party to intentionally delay the determination of the disputes by arbitration as ordered from time-to-time and that in the exceptional fact situation, in the interest of public revenue, leave may be granted to the applicant to initiate a fresh process for settlement of the Snacks Bar involved in a open participatory process. While pointing out that in terms of the agreement between the parties, the contracted term of the licence had expired long back on 9.6.1992 and that the opposite party is enjoying undue benefit of the possession thereof without any subsisting legal right under the cover of the compromise decree dated 17.2.1992, the learned senior counsel has argued that leave prayed for is extremely warranted in view of the stand taken by the opposite party to abstain from the arbitration proceeding as conveyed by the letter dated 16.1,2012 of his learned counsel. According to Mr. According to Mr. Choudhury, the compromise decree dated 17.2.1992 by no means vests the opposite party with a right to legitimately continue in possession of the licensed premises beyond 9.6.1992 as the same clearly was not the comprehension of the learned trial court in passing the said decree. Without prejudice to this, the learned senior counsel has urged that in any view of the matter, the opposite party is not entitled in law even under the compromise decree dated 17.2.1992 to remain in occupation of the licensed premises beyond 3.1.1997, the date on which the arbitrator Sri R.J. Treasurywalla had pronounced his award in terms of the same (compromise decree). Referring in particular to section 85(2)(a) of the Arbitration and Conciliation Act, 1996 (‘the 1996 Act’), Mr. Choudhury has argued that having regard to the date on which the first arbitration proceeding had been initiated, the provisions of the 1940 Act were still applicable in absence of any agreement between the parties to the contrary. Relying on section 31 of the 1940 Act, the learned senior counsel has, therefore, insisted that this court is possessed of the jurisdiction to-pass appropriate orders in the instant interim application. Referring to the definition of ‘court’ under section 2(c) of the 1940 Act as well as section 2(e) of the 1996 Act, Mr. Choudhury has argued as well in support of this plea. The dismissal of the Special Leave Petition filed by the opposite party against the order dated 4.5.2005 and the order dated 11.4.2006 of this court dismissing the review petition referred to hereinabove have also been pressed into service to bring home this point. As according to him this court had been entertaining applications for appointment of Arbitrators even after the dismissal of FAO 72/99 signifying continuance of the original proceeding in which the award dated 3.1.1997 had been passed, Mr. Chdudhury has maintained that any plea questioning the jurisdiction of this court is misconceived and, if raised, ought to be rejected in limine. In support of his contentions, Mr. Choudhury has placed reliance on the decisions of the Apex Court in State of Madhya Pradesh v. M/s. Saith and Skelton (P.) Ltd., (1972) 1 SCC 702 ; Damodar Valley Corporation: v. K.K. Kar, (1974) 1 SCC 111, Milkfood Ltd. v. GMC Ice Cream CR) Ltd., (2004) 7 SCC 288 and in McDermott International Inc. v. Burn Standard Co. Choudhury has placed reliance on the decisions of the Apex Court in State of Madhya Pradesh v. M/s. Saith and Skelton (P.) Ltd., (1972) 1 SCC 702 ; Damodar Valley Corporation: v. K.K. Kar, (1974) 1 SCC 111, Milkfood Ltd. v. GMC Ice Cream CR) Ltd., (2004) 7 SCC 288 and in McDermott International Inc. v. Burn Standard Co. Ltd. and Ors., (2005) 10 SCC 353 . ‘ Per contra, Mr. Kotoky has argued that the instant application in its factual background is not maintainable in the face of the definition of “court” contained in section 2(e) of the 1996 Act and section 9 thereof. According to him, any application identical to the one under consideration ought to be filed before the principal civil court of original jurisdiction authorized in law to decide the questions forming the subject-matter of the arbitration. According to Mr. Kotoky, this petition is, thus, liable to be rejected at the threshold. That the provisions of the 1996 Act now apply to the pending dispute has been sought to be affirmed by referring to the order dated 5.8.2007 passed by Justice S.P. Rajkhpwa (Retired) in the arbitration proceeding before His Lordship as well as the order dated 21.7.2003 passed by the learned District Judge, Kamrup, Guwahati in Misc. (Arb) Case No. 200/2003. Contending that even otherwise the reliefs sought for in the instant application are beyond the purview of section 9 of the 1996 Act being mandatory in nature, the learned counsel has drawn the attention .of this court to section 35 and 36 of the 1996 Act to contend against the jurisdiction of this court. Without prejudice to the above, Mr. Kotoky has submitted on instructions that there is no objection of the opposite party if a fresh process is initiated for settlement of a second Snacks Bar at the LGBI Airport. The learned counsel has also placed reliance on the decision of the Apex Court in Brijlal Ramjidas and Anr. v. Govindram Gordhandas Seksaria and Ors., AIR (30) 1943 Bom. 201; Olympus Superstructures (P.) Ltd. v. Meena Vijay Khetan and Ors., (1999) 5 SCC 651 and in Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2001) 6 SCC 356 . We have carefully analyzed the pleadings of the parties and the arguments advanced on the basis thereof. The series of events as alluded hereinabove are borne out by the contemporaneous records. We have carefully analyzed the pleadings of the parties and the arguments advanced on the basis thereof. The series of events as alluded hereinabove are borne out by the contemporaneous records. Admittedly, the opposite party continues to be in occupation of the Snacks Bar at the LGBI Airport on the strength of the compromise decree dated 17.2.1992 on payment of 40% of the licence fee settled by the parties in the year 1989. As noticed hereinabove, the term of the licence granted to the opposite party was for a period of three years which as per the agreement between the parties has otherwise expired on 9.6.1992. Logically, at the time of passing of the compromise deed dated 17.2.1992, the learned court below visualized an early resolution of the disputes then pending by arbitration as ordered by it. Though since then almost two decades have passed, there is no headway in this regard. Though the Arbitrator at the first instance appointed by the applicant had pronounced the award dated 3.1.1997, the same had been rendered non-est in view of the judgment and order dated 9.7.1999 passed by the learned court below in T.S. (Arb.) 124/97 and affirmed by the decision dated 15.11.1999 of this court in FAO 72/99. Several endeavours thereafter to complete the arbitral proceeding through the intervention of this court have failed to yield any resolution of the disputes. Consequently, the opposite party is continuing in possession of the Snacks Bar on the strength of the compromise deed dated 17.2.1992 till date. Though intermittently the parties have countered each other on the maintainability of the interim applications filed before the learned trial court on varying grounds, there is no overwhelming and persuasive material on record to demonstrate conclusively that they had agreed in terms of section 85(2)(a) of the 1996 Act on the application of the 1996 Act to the arbitral proceeding. The facts would reveal that the first of the arbitration proceedings concerning the dispute which exists as on date did commence before the enforcement of the 1996 Act. This court while declining to interfere with the judgment and order dated 9.7.1999 passed in T.S. (Arb.) 124/97 refusing to make the said award a rule of the court had observed that the resolution of the disputes through arbitration was the most viable course of the settlement of the differences between the parties. This court while declining to interfere with the judgment and order dated 9.7.1999 passed in T.S. (Arb.) 124/97 refusing to make the said award a rule of the court had observed that the resolution of the disputes through arbitration was the most viable course of the settlement of the differences between the parties. A direction was issued for appointment of an Arbitrator and a time frame was fixed for him/her to enter upon the reference and complete the proceeding. Vide order dated 4.5.2005 passed in M.C. 617/2005 arising out of FAO 72/1999, this court directed appointment of Justice S.P. Rajkhowa (Retired) as the sole Arbitrator for the same purpose. As stated hereinbefore, the opposite party having failed to get this order reviewed, approached the Apex Court which in its wisdom refused to interfere implying its approval of the arrangement made vide order dated 4.5.2005. Lastly, by order dated 20.12.2011 this court again directed the Chairman, AAI, New Delhi to appoint a sole arbitrator as per clause 34 of the agreement. As referred to hereinabove, in deference to the said order, such appointment has been made and a notice by the arbitrator so appointed has already been issued to the parties requiring them to respond thereto, amongst others, by filing their statement of claims and objections. The letter dated 16.1.2012 issued by Mr. Kotoky, learned counsel for the opposite party laid before this court clearly conveys the opposite party’s decision not to participate in the arbitration proceeding which, according to him, is illegal and contrary to the letter and spirit of clause 34 of the agreement dated 10.6.1989 as well as the directions contained in the order dated 20.12.2011. Having regard to the issue under scrutiny in the instant application as well as the pendency of the arbitration proceeding, we do not wish to analyze the tenability or otherwise of the grounds recited in the said letter on merit for the present. Suffice it to mention that pending a decision on the objections raised on behalf of the opposite party vis-a-vis the arbitration proceeding pending with Sri S.K. Gupta, the sole arbitrator appointed by the applicant, in the face of such a stand taken by the opposite party, further progress thereof is obviously uncertain at least from the view point of the time frame fixed by this court vide its order dated 20.12.2011. The definition of the expression ‘Court’ used in the two enactments assumes considerable significance at this stage. For ready reference, the same is extracted below: “The Arbitration Act, 1940 2.(c) “Court” means a civil court having jurisdiction to decide the questions forming the subject-matter of the reference if the same had been the subject-matter of a suit, but does not, except for the purpose of arbitration proceedings under section 21 include a Small Cause Court.” The Arbitration and Conciliation Act, 1996: “2.(e) “Court” means the principal civil court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subject-matter of the arbitration if the same had been the subject-matter of a suit, but does not include any civil court of a grade inferior to such principal civil court, or any Court of Small Causes.”, Section 85 of the 1996 Act, as the above factual premise indicates, is also of immense significance and is quoted hereinbelow: “85. Repeal and saving. - (1) The Arbitration (Protocol and Convention) Act, 1937 (6 of 1937), the Arbitration Act, 1940 (10 of 1940) and the Foreign Awards (Recognition and Enforcement) Act, 1961 (45 of 1961) are hereby repealed. (2) Notwithstanding such repeal, - (a) the provisions of the said enactments shall apply in relation to arbitral proceedings which commenced before this Act came into force unless otherwise agreed by the parties but this Act shall apply in relation to arbitral proceedings which commenced on or after this Act comes into force; (b) all rules made and notifications published, under the said enactment shall, to the extent to which they are not repugnant to this Act, be deemed respectively to have been made or issued under this Act.”. It would be apparent from the above section of the 1996 Act that though the same, amongst others, repealed the Arbitration Act, 1940, the provisions thereof were saved to apply in relation to arbitral proceedings which had commenced before the 1996 Act had come into force unless otherwise agreed to by the parties. This provision, however, makes it clear that the 1996 Act would apply in relation to arbitral proceedings that had commenced on or after it had come into force. This provision, however, makes it clear that the 1996 Act would apply in relation to arbitral proceedings that had commenced on or after it had come into force. Whereas section 31 of the 1940 Act dealing with the jurisdiction of the court as defined therein under sub-section (3) thereof mandates that all applications regarding the conduct of arbitration proceedings or otherwise arising out of such proceedings shall be made to the court where the award has been or may be filed and to no other court, no absolutely identical provision is available in the 1996 Act. The requirement of filing of the award before the court under the 1940 Act to make it its rule also is not a prescription under the new enactment. The 1996 Act, however, vide section 9 thereof empowers the courts to provide for interim measures as contemplated therein. Sub-clause (e) comprehends interim measure of protection, logically of the subject-matter of the dispute, as may appear to it to be just and convenient. It is in this context that Mr. Kotoky has insisted that the instant application being within the purview of section 9 of the 1996 Act, having regard to the definition of ‘court’ therein, the present application is not entertain-able by this court. In State of Madhya Pradesh (supra) one of the questions that arose before the hon’ble Apex Court pertained to the permissibility of the filing of the award before it in view of the definition of ‘court’ as available in section 2(c) of the 1940 Act. Their Lordships by noticing the opening lines of section 2 to the effect that “unless there is anything repugnant in the subject or context” ruled that the expression ‘court’ would have to be understood as defined in section 2(c) of the Act only if there was nothing repugnant in the subject or the context. In the contextual facts, their Lordships noticed that the arbitrator concerned had been appointed by it on the consent of the parties to make the award. Observing that in absence of any mention to the contrary in the said order it did not signify divestiture of its jurisdiction to deal with award or matters arising out of the same, the plea against the permissibility of filing of the award before it was negated. In Mcdermott International Inc. Observing that in absence of any mention to the contrary in the said order it did not signify divestiture of its jurisdiction to deal with award or matters arising out of the same, the plea against the permissibility of filing of the award before it was negated. In Mcdermott International Inc. (supra), the Apex Court while appointing the arbitrator also directed him to file the award before it. Noticeably, no proposition of law to that effect had been laid down in that decision. Their Lordships of the Supreme Court in Milkfood Ltd. (supra) in the process of examining the aspect of commencement of arbitral proceeding under the 1996 Act, concluded that the service of notice for appointment of an arbitrator would be the relevant date therefor and that any change in the constitution of the arbitral tribunal would be irrelevant for the said purpose. In that context, their lordships, amongst others, observed with reference to section 85 of the said Act that the court has to interpret the repeal and savings clause in such a manner so as to give a pragmatic and purposeful meaning thereto. That it is possible to contemplate commencement of the arbitration proceeding in the context in which it was referred to was also underlined. The authorities cited on behalf of the opposite party lack pertinence vis-a-vis the issues seeking adjudication. On a cumulative consideration of the facts and circumstances of the case, more particularly the sequence of events narrated hereinabove, successive appointments of Arbitrators by this court the dismissal of FAO No. 72/1999 notwithstanding; submissions of the parties to the arbitral proceedings though without any final resolution of the disputes as well as the legal propositions laid down by the decisions referred to hereinabove, we are of the view that this court is not bereft of the jurisdiction to entertain the instant application. It having time and again appointed arbitrators for the settlement of the same dispute generated by the initial differences leading to the cancellation of the licence at the first instance, considering the bearing of the saving clause embodied in section 85(2)(a) and absence of any agreement of the parties concerned on the applicability of the 1996 Act to the arbitration proceedings pending from time-to-time, we are inclined to hold that those (arbitral proceedings before the arbitrators appointed by this court) are to be construed, in the singular factual background of this case, to be in continuation of the one which ended in the award dated 3.1.1997. In the teeth of the subject or the context configured by the present facts and circumstances, ‘court’ as defined in section 2(e) of the 1996 Act, in our view, does not denude this court of its jurisdiction to entertain this application. The plea against want of jurisdiction of this court or maintainability of the instant application, therefore, stands negated. The plea that the interim measures contemplated by section 9 are only preemptive in nature also does not weigh with us. The candid plea of Mr. Kotoky that the opposite party has no objection to the initiation of a fresh process for settlement of a second Snacks Bar at the LGBI Airport is noteworthy. As the arbitration proceeding before the arbitrator claimed by the applicant to have been appointed in terms of the order dated 20.12.2011 of this court is still pending, we do not intend, for obvious reasons, to offer any comment on the merit of the rival claims which await adjudication for final resolution. We are, however, in view of the undue delay in the finalization of the arbitral proceeding, inclined in the facts of the present case to grant leave to the applicant to initiate a fresh process for settlement of the Snacks Bar at the LGBI Airport presently held by the opposite party. On being queried by us, Mr. Choudhury on instructions has submitted that the selection process can be completed within a period of one month from the date of the initiation thereof. This leave to the applicant, we reiterate, is in the prevailing facts and circumstances with due regard to the intervening events and the noticeably undue delay in the completion of the arbitration proceeding. Choudhury on instructions has submitted that the selection process can be completed within a period of one month from the date of the initiation thereof. This leave to the applicant, we reiterate, is in the prevailing facts and circumstances with due regard to the intervening events and the noticeably undue delay in the completion of the arbitration proceeding. We make it clear that we have not imputed any role to any one of the parties contributing to the delay. However, we may record that in passing this order we have taken note of the nature of the claims raised before the arbitrator which as we have referred to earlier are predominantly monetary in nature and, in our view, do not have any bearing on the opposite party’s right of occupation of the premises involved. The arbitral proceeding in terms of the order dated 20.12.2011 would, however, continue in accordance with law and all endeavours would be made to complete the same within the time frame mentioned therein. The Arbitrator on the completion of the proceeding would submit the award before this court for further orders, if any, as would be called for in future. Miscellaneous case stands disposed in the above terms. __________________