Case: International Airports Authority of India Now Known As Airports Authority of India Vs. Hotel Leela Venture Limited

the respondent had contributed land of 3219.50 sq.mtrs. for construction of the hotel. 27. However, there is serious dispute about further contribution by the respondent. It is the case of the respondent that it had taken 4305.50 sq.mtrs. land on lease from the promoter company and it was used for the purpose of F.S.I., cooling towers, which is a part of the air condition establishments, laundry, etc. However, the learned Arbitrator rightly found that out of this 4305.5 sq.mtrs. land, 2304.50 sq.mtrs. was used for the bungalow of the Chairman and the Managing Director and that land could not be treated as the land with the hotel. The learned Arbitrator found that 2001 sq.mtrs. land out of the same was actually used for the hotel. However, record reveals that on the said land there was a building consisting of ground plus 3 floors and only ground floor was used as laundry and for other purposes of the hotel. Record reveals and the learned Single Judge noted that remaining three floors were used for the purpose of a factory, which had not concern with the hotel. It is true that the laundry is essential for the hotel but if only ground floor of that premises are used for the hotel and three upper floors are used for the factory unconnected with the hotel, the respondent could be entitled to count only 1-4th of that land as the land under use of the hotel. By no stretch of imagination whole of 2001 sq.mtrs. land can be counted as the part of the hotel. Therefore, we find that out of the said 2001 sq.mtrs. land, only 500.25 sq.mtrs. land could be treated as contribution of the respondent towards the hotel. This much land was taken and was used for the hotel from 1st July, 1989. 28. According to the respondent, it had taken further 2102.82 sq.mtrs. land from the Anmol properties on 29th December, 1989 and it was used for parking cars and has been treated as area of the hotel. The learned Arbitrator treated this as contribution with effect from 1st January, 1990. Serious objection was taken to this on the ground that sufficient land of the petitioner was available for the purpose of car parking and, therefore, there was no need to purchase this land and to treat the same as land under the hotel. It is also contended that 11,000 sq.mtrs. land of the petitioner under licence is being used for the purpose of garden, squash court, golf course, swimming pools and other recreational facilities, which are also very essential for five star hotel but that land is not being counted as contribution of the petitioner. It is further contended that this addition of the land was to reduce the share of the petitioner out of the gross turnover of the hotel and, therefore, this could be taken only with consent or approval of the petitioner, who is major contributor of the land on which hotel is constructed. It is contended that the respondent had not taken any such consent. We find substance in this contention. There is no record to show that this land was taken by the respondent with consent of the petitioner. It is true that parking space is necessary for five star hotel but it can not be said that other facilities like Golf Course, Squash Court, Swimming Pool and other recreational facilities are unnecessary. They are also equally contributing to the attraction of the hotel and its business. Even though the matter was referred to the Arbitrator for the first time in the year 1992, the respondent had made a request to refer the dispute to the Arbitrator on 3rd April, 1989. After that request, the respondent was not expected to make any substantial changes without consent of the respondent. In our considered opinion, this addition could not be taken into consideration particularly when it was made without consent of the petitioner and that too after the respondent had made request to the petitioner to refer the dispute to the Arbitrator. This logic and reason could also be applied to the contribution of the land taken for the purpose of laundry but in our considered opinion the laundry is to be treated as part of the building of the hotel without which five star hotel can not be run. Therefore, while that contribution will have to be counted, the above 2102.28 sq.mtrs. land purchased from Anmol properties on 29th December, 1989 for car parking can not be counted to reduce the proportion of the petitioner in the gross turnover of the hotel.29. In view of the above observations, we find that the total area of the hotel was as follows:(a). Upto 30th June, 1989, 21,219.50 sq.mtrs. (b). From 1st July, 1989, 21,719.75 sq.mtrs.30. In view of the total land of the hotel and the I.A.A.I. (Petitioners) land being 18,000 sq.mtrs., the proportion of the petitioners land will be as follows: a). Upto 30th June, 1989, 18,000/21,219.50 equal to 85%.b). From 1st July, 1989 onwards, 18,000/21,719.75 sq.mtrs. equal to 82.87%.Therefore, in terms of the Clause 3A(b) of the lease agreements read with the agreement by the respondent by their letters, the petitioner will be entitled to get share out of the 4% gross turnover of total as follows:(a). Upto 30th June, 1989, 85% of 4% of the gross turnover equivalent to 3.4% of the total turnover. (b). From 1st July, 1989 onwards, 82.87% of 4% of the gross turnover equal to 3.31% of the total turnover. 31. After careful perusal of record, We find that the learned Arbitrator did not consider the vital documentary evidence and facts before passing the award. In our opinion it has resulted in miscarriage of justice and if we do not interfere it would result in perpetuation of injustice. The learned Single Judge also did not consider the relevant documents before dismissing the petition challenging the award. Therefore, we find it necessary to set aside the impugned judgment and the award.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]17. It is contended on behalf of the respondents that this was only offer to pay 4% of the gross turnover on condition of conversion of licence to lease in respect of the remaining land. The learned Arbitrator accepted this contention and held that as the petitioner had not accepted the proposal of conversion, the respondent is also not liable to pay 4% of the gross turnover. The learned Arbitrator observed that the matter was referred to him only for the purpose of interpretation of the Clause 3A(b) of the contract and on the basis of language of the said Clause, the petitioner could not claim 4% of the gross turnover. The learned Arbitrator observed that the Clause 3A(b) in both the agreements being similar, the petitioner could claim only that part of the 2% of the gross turnover of the hotel which the I.A.A.I. (Petitioners) land area bears to the total area of the hotel. In view of this language, the learned Arbitrator came to conclusion that with the increase in land proportion will also tilt in favour of the petitioner but the total gross turnover for sharing the profit on the basis of contribution of the land could not be more than 2% of the grossview of the facts, circumstances and the unconditional and unambiguous admission made by the respondent in the aforesaid three letters, there remains no doubt that the respondent had agreed to pay fee to the petitioner on the basis of 4% of the gross turnover of the hotel.In view of the above observations, we find that the total area of the hotel was as follows:(a). Upto 30th June, 1989, 21,219.50 sq.mtrs.From 1st July, 1989, 21,719.75 sq.mtrs.30. In view of the total land of the hotel and the I.A.A.I. (Petitioners) land being 18,000 sq.mtrs., the proportion of the petitioners land will be asUpto 30th June, 1989, 18,000/21,219.50 equal to 85%.b). From 1st July, 1989 onwards, 18,000/21,719.75 sq.mtrs. equal to 82.87%.Therefore, in terms of the Clause 3A(b) of the lease agreements read with the agreement by the respondent by their letters, the petitioner will be entitled to get share out of the 4% gross turnover of total as follows:(a). Upto 30th June, 1989, 85% of 4% of the gross turnover equivalent to 3.4% of the total turnover.From 1st July, 1989 onwards, 82.87% of 4% of the gross turnover equal to 3.31% of the total turnover.After careful perusal of record, We find that the learned Arbitrator did not consider the vital documentary evidence and facts before passing the award. In our opinion it has resulted in miscarriage of justice and if we do not interfere it would result in perpetuation of injustice. The learned Single Judge also did not consider the relevant documents before dismissing the petition challenging the award. Therefore, we find it necessary to set aside the impugned judgment and the award.