IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE PIUS C.KURIAKOSE THURSDAY, THE 30TH APRIL 2009 / 10TH VAISAKHA 1931 AR.No. 24 of 2006() ------------------- PETITIONER ------------------------------ ELIZABETH GEORGE (DIED), W/O.LATE K.L.GEORGE,AGED 85 YEARS,KANDATHIL HOUSE, PUNNAN ROAD,THIRUVANANTHAPRUAM. JYOTHI CHALY, AGED 58 YEARS,W/O.LATE BABU CHALY, RESIDING AT KANDATHIL HOUSE, PUNNAN ROAD, THIRUVANANTHAPURAM. (DIED) JYOTHI CHALY, AGED 58 YEARS, W/O. LATE BABU CHALY, RESIDING AT KANDATHIL HOUSE, PUNNAM ROAD, THIRUVANANTHAPURAM. ( ADDL.PETITIONER IS IMPLEADED AS PER ORDER DATED 17/1/2008 IN I.A. NO.15/2006) BY ADV. SRI.SHAJI P.CHALY RESPONDENT(S): --------------- 1. INTERNATIONAL AIRPORT AUTHORITY OF INDIA REPRESENTED BY ITS CHAIRMAN, NEW DELHI. 2. THE AIRPORT DIRECTOR, INTERNATIONAL AIRPORT AUTHORITY OF INDIA, TRIVANDRUM INTERNATIONAL AIRPORT, THIRUVANANTHAPURAM. ADV. SRI.K.L.NARASIMHAN SRI.V.SANTHARAM THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 10/06/2008, THE COURT ON 30/4/2009 DELIVERED THE FOLLOWING: PIUS.C.KURIAKOSE J. ------------------------ A.R.No. 24 OF 2006 ------------------------ Dated this the 30th day April, 2009 ORDER The petitioner in this Arbitration Request under Section 11 (6) of the Arbitration and Conciliation Act 1996 seeks appointment of an independent and impartial arbitrator for resolving certain disputes which she has with the respondent viz. International Airport Authority of India and The Airport Director, International Airport Authority of India, Thiruvananthapuram , arising out of Ext.P1 agreement. The petitioner submits that pursuant to Ext.P1 agreement she is holding a retail outlet for petrol and diesel on land measuring 1067 square meters officially and 910.10 square meters actually. It is submitted that pursuant to Ext.P1, the petitioner is in possession of the land which is separated by compound walls on all sides demarcated from the rest of the airport premises and that the petitioner had constructed permanent structures such as underground storage tanks, dispensing unit and office building, with the permission of the second respondent. The petitioner, however, concedes A.R.No.24 of 2006 2 that the dispensing unit, air compressors and other mechanical equipments and machineries belong to the Bharath Petroleum Corporation Ltd. and that they are also permanent in nature. It is submitted that the terms of Ext.P1 agreement was extended periodically. The term was extended by 5 years from 1/12/1987 to 30/11/1992 by communication dated 22/8/1988 issued by the Controller of Aerodrome Trivandrum Airport. The petitioner alleges that even as discussions were on, as to whether the licence should be further renewed in favour of the petitioner or M/s.Bharath Petroleum Company Ltd., the licensor, the respondents surprisingly issued notice to the petitioner on 26/5/1994 terminating the lease and directing the petitioner to vacate the premises within a period of 30 days. The above direction was challenged by the petitioner by filing O.P. No.9593/1004. This court while hearing the O.P. found that in Ext.P1 licence agreement there is arbitration clause and therefore the subject matter was directed to be decided by invoking the provisions of clause 19 of the agreement and further the parties were directed to maintain the status quo till the arbitrator passes the award. Ext.P2 is the copy of the judgmetn A.R.No.24 of 2006 3 of this court in O.P.9593/1994. Pursuant to Ext.P2, Sri.Sudheer Kumar, Airport Director was appointed as the sole arbitrator and he passed Ext.P3 award. Ext.P3 award was unsuccessfully challenged by the petitioner before the District Court, Thiruvananthapuram and Ext.P4 is a copy of the judgment of the District Court. During the pendency of Ext.P4 proceedings before the District Court, the respondent issued Ext.P5 notice threatening to recover an amount of Rs.22,06,129.20 from the petitioner. To Ext.P5, the petitioner sent Ext.P6 reply contending that the quantification of the amount is not correct and that the petitioner is not liable to make any such payment. The respondent however reiterated their position by issuing another reply. The petitioner approached this court by filing W.P. (C) No.31381/2003. This court granted stay on condition that the petitioner remits a sum of Rs.3,50,000/-. In compliance with the above condition imposed by this court, the petitioner remitted the amount against Ext.P7 receipt. Subsequently this court directed the petitioner to remit a further amount of Rs.3,50,000/- which was also complied with by the petitioner by sending Ext.P8 Demand Draft. Finally this court disposed of the A.R.No.24 of 2006 4 writ petition by passing Ext.P9 judgment directing the District Court, Thiruvananthapuram to dispose of the Original Petition as expeditiously as possible and directing that the recovery proceedings be kept in abeyance provided the petitioner gives bank guarantee for the amount claimed by the respondents. Though the petitioner preferred Writ Appeal W.A. No. 1584/2005 against Ext.P9 judgment, the Division Bench of this court dismissed the same. Matters standing so, the second respondent issued Ext.P10 notice to the petitioner directing the petitioner to furnish Bank guarantee for an amount of Rs.23,36,391.29. To Ext.P10, the petitioner submitted Ext.P11 reply disputing the amount quantified by the second respondent and requesting that the dispute be referred for arbitration. Grievance of the petitioner that despite Ext.P11, the respondents have not taken any steps to refer the matter for adjudication in terms of clause 19 of Ext.P1 licence. According to the petitioner, there is no valid reason as to why the dispute regarding the quantification of the amount due from the petitioner should not be referred. The subject matter of the quantification of the licence fee was not included in the terms of A.R.No.24 of 2006 5 reference given to the arbitrator appointed earlier. This, according to the petitioner, will be clear from the award of the arbitrator. According to the petitioner, the present demand of the respondents will show that they have enhanced the licence fee at their whims and fancies and that too retrospectively. The petitioner contends that she is not liable to pay any interest and that at any rate interest changed at the rate of 18% is without any basis and these are all disputes which are not subject matter of the earlier arbitration request. On the above reasons, the petitioner prays that an independent arbitrator be appointed for deciding and resolving the disputes raised by the petitioner. 2. On behalf of the respondents the Assistant Manager (Law) under the Airports Authority of India, Thiruvananthapuram, has filed a counter affidavit. It is contended that the Arbitration request is not maintainable in law. The Arbitration request is hit by Section 4 of the said Act since the petitioner has waived whatsoever be his right regarding the matter sought for adjudication consciously and intentionally. There is already adjudication in respect of the matter in issue. The arbitrator has already upheld the clause regarding the amount payable as A.R.No.24 of 2006 6 licence fee. This is evidenced from the answer to the question (F) mentioned in Ext.P3. It was held that the demand for licnece fee is in accordance with the clauses 3(a) &(b) of Ext.P1 which gives right to the Airport Authority to revise the licence fee from year to year at its discretion. The rest of the matters are only a mathematical calculation of the amount actually due and no further adjudication is necessary in this matter. Challenge against Ext.P3 made under Section 34 of the Act was unsuccessful. It is submitted that even if the petitioner feels that the matter in issue covered under Ext.P5, P6, P10 and P11 has not yet been adjudicated, the same cannot any longer be adjudicated in view of Section 4 of the Act, which deals with waiver of the right to object. The counter affidavit submits that the arrangement evidenced by Ext.P1 was purely a licence and nothing more. The purpose and nature of construction allowed in the land was specified under Clause 5 of Ext.P1 licence. Anything done beyond that will be unauthorised and ultravires. Any construction, even if they are permanent, made on the basis of Ext.P1 is liable to be removed at the time of vacating the premises. It is so specified in clause 18 of Ext.P1. Ext.P1 is not A.R.No.24 of 2006 7 an revocable arrangement. The contention that Ext.P1 has become irrevocable is absolutely untenable. The dispensing unit and other structures even if they are permanent in nature will not confer any benefit on the petitioner. The period of Ext.P1 was five years and it was extended for another terms of 5 years by Ext.R2(a). No further extension was granted. The Airport Director of International Airport Authorities of India became constrained to issue letter dated 26/5/1994 inter alia demanding the petitioner to surrender the possession of the plot on the ground that the land is required for the Airport Authorities of India for the development of Thiruvananthapuram Airport specifically for widening the car parking area. Ext.R2(c) is copy of that letter. To Ext.R2(c) the petitioner submitted Ext.R2(d) reply. To Ext.R2(d) reply, the International Airport Authority of India sent Ext.R2(e) expressing inability to extend the licence period beyond 7/7/1994 and also demand settlement of all the dues. Ext.R2(c) and R2(d) were challenged by the petitioner before this court by filing O.P. No.9593/1994 and got an interim order of stay and continued the possession on the strength of the stay order. The Airports Authority filed a detailed counter A.R.No.24 of 2006 8 affidavit in that O.P. It was finally heard and disposed of by passing Ext.P2 judgment. Pursuant to Ext.P2, the disputes were referred and the arbitrator passed Ext.P3 award. Ext.P3 Award was challenged by the petitioner by filing O.P.(Arb.) No.144/2003. That Arbitration O.P. was dismissed by passing Ext.P4 order. 3. The counter affidavit concedes that Ext.P5 notice was issued seeking recovery of the amount mentioned therein . To Ext.P5, the petitioner sent Ext.P6 reply. While disputing claim, the petitioner sought for getting any action pursuant to Ext.P5 remain in abeyance till the civil court passes the judgment one way or the other. The petitioner approached this court by filing W.P.(C) No.31381/2003. This court passed interim order directing the petitioner to deposit Rs.3,50,000/- which was paid by the petitioner as evidenced from Ext.P7. Subsequently, the petitioner paid Rs.3,50,000/- by Ext.P8 draft. There was no prayer in the above writ petition for referring the disputes for Arbitration. On the contrary the prayer was that the recovery proceedings be kept in abeyance till arbitration O.P.No.144/2003 filed by the petitioner is disposed of finally. It is pointed out A.R.No.24 of 2006 9 that W.P.(C) No.31381/2003 was finally disposed of by this court directing the learned District Judge to dispose of O.P.(Arb.) No.144/2003 expeditiously and observing that if the petitioner provides bank guarantee for the balance amount further coercive steps against the petitioner pursuant to the demand will be kept in abeyance. Though the petitioner was asked to furnish bank guarantee, he never chose to furnish bank guarantee. Instead, she filed W.A. No.1584/2005 before this court, which was dismissed by Ext.R2(f) judgment. O.P.(Arb) No.144/2003 was finally dismissed by the District Judge by Ext.P4 judgment confirming Ext.P3 award. Ext.P4 has become final. It has been clearly found that the Airport Authority is entitled to make possession of land as per the stipulation in the agreement. It is submitted that pursuant to Ext.P10 demand notice and also in consequence of the dismissal of the O.P.(Arb) 144/2003 confirming the award Ext.P3, the Estate Officer has taken steps to recover the amount. The clause under which the licence fee was demanded which is evident from Clauses 3(a) and (b) and Clause 17 of Et.P1 has finally been adjudicated and upheld by the sole arbitrator vide Ext.P3 award which was confirmed by Ext.P4 A.R.No.24 of 2006 10 judgment of the District Court. Now it is only a mathematical calculation as to what is the actual amount due from the petitioner. No further adjudication is required. It is contended that the petitioner is trying to re adjudicate the issue which is finally settled by alleging that the computation was not adjudicated by the sole arbitrator. Even if that be so, the same cannot at this distance of time be referred for arbitration in view of Section 4 of the Act since even if adjudication is necessary, the same is deemed to have been waived by the petitioner. It is also pointed out that as per clause 3(b) of Ext.P1 the failure to pay licence fee and other charges provided on the respective dates, simple interest at the rate of 12% per annum shall also be payable i.e. without prejudice to grantors other rights and remedies. This is an exclusive clause provided under Ext.P1 agreement and on the basis of this provision also the Airports Authority of India can initiate recovery proceedings especially when the clause provides for recovery of licence has been upheld by the sole arbitrator as per Ext.P3 award. On the basis of this exclusion Clause also, the steps now initiated by the Estate Officer for recovery of the dues is to be held legal and A.R.No.24 of 2006 11 sustainable. It is submitted that the estate proceedings against the petitioner licensee was commenced on 20/7/2006 by issuing a show cause notice under Section 4 of the Public Premises (Eviction of Unauthorised Occupants) Act 1971. The authorised representative of the petitioner Sri.Abraham Chali appeared before the officer and sought 6 months time to vacate the premises. Sri.Abraham Chali also assured that he would be submitting the bank guarantee for a sum of Rs.16,75,791/- by 16/8/2006 in favour of Airports Authority of India and thereafter the case was posted for further proceedings to 31/8/2006. However, on 31/8/2006 Sri.Abraham Chali produced a letter and informed that the licensee passed away on 4/8/2006 and stated that he would continue to represent the licensee. It is seen from the records that it was after the assurance that the licensee will vacate the premises within six months and assured of submitting a bank guarantee, the above arbitration request was filed. It is submitted that after 31/8/2006 while intimation was passed on in respect of the death of the licensee, as abundant precaution, the authorised representative Mr.Abraham Chali was advised to produce the legal heir certificate together with the A.R.No.24 of 2006 12 power of attorney of legal heirs of late Elizabeth George to the effect that Sri.Abraham Chali would continue to represent the licensee and subsequently the proceedings were adjourned to 11/9/2006 by the Estate Officer. On that day also the alleged authorised representative has not produced any documents to the effect that he would continue to represent the licensee. Hence the case was again posted to 19/9/2006. On that day he produced copy of the death certificate and sought a weeks time for producing other documents. Hence the case was again posted to 28/9/2006 on which day Sri.Abraham Chali came to the office of the Airport Authority of India and informed that he would not be able to come for hearing scheduled for the day. It is contended that the proceedings initiated by the Estate Officer by issuing a show cause notice was conveniently suppressed by the petitioner in the Arbitration request. It is further contended that the petitioner ought to have contested the proceedings before the Estate Officer and any grievances is there on getting any unfavourable order the same can be challenged before the appellate forum provided under Public Premises (Eviction of Unauthorised Occupants) Act 1971. A.R.No.24 of 2006 13 4. I have heard submissions of Sri.S.P.Chaly, learned counsel for the appellant and those of Sri.V.Santharam, learned counsel for the respondents. While Sri.Chaly would make submissions on the basis of the averments in the application and arbitration clause contained in Ext.P1, Mr.Santharam would drew my attention to Exts.P1, P2, P3, P5, P9, P10, P11, Ext.R2(f) and also Sections 4 and 23 of the Arbitration Act. The learned counsel drew my attention also to Section 2(f), 7 and 9 of the Public Premises (Eviction of Unauthorised Occupants) Act 1971. 5. I have anxiously considered the rival submissions addressed at the Bar in the light of the documents placed on record and various statutory provisions to which my attention was drawn by the learned counsel. I find considerable merit in the submissions of the learned counsel for the respondents that in the teeth of Ext.P3 award, there is no scope for further disputes regarding the right of the respondents to demand licence fees in accordance with the clauses 3(a) and (b) of Ext.P1 and also regarding the Airports Authorities' right to revise the licence fee from year to year and that the surviving dispute if at all is only dispute regarding quantification of the amount presently A.R.No.24 of 2006 14 due. This, according to me, is a dispute which should have been raised by the applicant earlier i.e. when at the applicant's behest and pursuant to Ext.P2 judgment the dispute between the parties were referred to Arbitration. In short, I find considerable merit in the contention of the respondent that the present objection regarding the quantification of the amount due to the respondents from the applicant has to be deemed to have been waived by the applicant in terms of Section 4 of the Arbitration and Conciliation Act 1996. 6. Moreover it is seen that on getting demand notice from the respondent, the petitioner approached this court and filed W.P.(C) No.31381/2003. The prayer therein was only that the proceedings be kept in abeyance till the arbitration O.P. filed under Section 34 against Ext.P3 is disposed of. The petitioner did not comply with the conditions imposed by this court regarding furnishing of bank guarantee. Ext.P4 judgment has become final. Arbitration O.P. was also dismissed finally. Moreover, it is seen that the estate proceedings have been initiated against the petitioner on 20/7/2006 by issuing show cause notice under Section 4 of the Public Premises (Eviction of Unauthorised A.R.No.24 of 2006 15 Occupants) Act 1971 and the petitioner through her authorised representative had been participating in the proceedings. It is open to the additional petitioner to participate in those proceedings as a legal heir of the deceased original applicant. In terms of Section 8 the Estate Officer has all the powers vested in the Civil Court while trying suit in respect of summoning and examining witness, discovery and production of documents. Section 9 of the Public Premises (Eviction of Unauthorised Occupants) Act 1971 provides an appeal against every order of the Estate Officer made in respect of public premises under Section 5. Since the present dispute appears to be correlated with the proceedings now pending before the Estate Officer, which it is not only for getting recovery of possession of the premises but also for getting recovery of amounts demanded by the respondents, I permit the petitioner to raise the present dispute before the Estate Officer and direct the Estate Officer to adjudicate upon the disputes regarding the correctness of the amount demanded also. It is needless to mention that if the order of the Estate Officer comes to be against the applicant she will have remedy by way of appeal to the District Judge under A.R.No.24 of 2006 16 Section 9. Result of the above discussion, The Arbitration Request will stand dismissed. No costs. PIUS.C.KURIAKOSE,JUDGE dpk