Andhra Pradesh High Court - Amravati
Fusion Food And Hotels Pvt Ltd vs Union Of India on 26 July, 2019
THE HON'BLE SRI JUSTICE M. SEETHARAMA MURTI
Writ Petition No.2827 of 2019
ORDER:
This writ petition, under Article 226 of the Constitution of India, is filed seeking verbatim the following relief:
'..to issue Writ Order or direction more particularly one in the nature of Writ of Mandamus or any other appropriate Writ declaring the action of the respondents 1 to 4 in issuing the proceedings in no.AA1/V2/COMM1/Restaurant/2019/124/206- 204, dated 18.02.2019, terminating the contract as bad, illegal, arbitrary, violative of principles of natural justice and violative of Article 14, 19(1)(g) & 21 of Constitution of India and consequently set aside the same and pass such order or orders as deemed fit and proper in the circumstances of the case.'
2. I have heard the submissions of Mrs. K.Lalitha, learned counsel appearing for the petitioner;of Sri B.Krishna Mohan, learned Assistant Solicitor General of India, appearing for the 1st respondent; and, of Sri P.Vikram, learned counsel appearing for respondents 2 to 4.I have perused the material record.
3. Though the vacate stay petitions are listed for hearing along with the writ petition, as desired by the learned counsel for both the parties, the writ petition is being taken up for hearing and disposal. The parties shall hereinafter be referred to as arrayed in the writ petition.
4. From the pleadings and submissions, the following introductory facts are discernable: 'The petitioner company and the 2nd respondent, represented by the 4threspondent-Airport Director, Airport Authority of India, Visakhapatnam Airport, entered into a licence agreement, dated 18.08.2010, for operation of Restaurant and Snack Bar in NITB (New MSRM, J W.P.no.2827 of 2019 2 Integrated Terminal Building), at Visakhapatnam Airport. The agreement is entered into for the purpose of operating Airport Restaurant & Snack Bar so as to provide amenities and facilities to the passengers and visitors at Airport. The licensed area is of an extent of 259.32 square meters, more fully described in the schedule annexed to the said agreement. The validity period of the licence is ten years, that is, from 08.07.2010 to 07.07.2020, unless terminated earlier either by giving 180 days-notice in writing from either side without assigning any reason or on a short notice by the Airports Authority of India on account of un-satisfactory performance. All the other necessary terms regarding the payments to be made by the licencee, initial deposits etcetera, rates to be charged from users as may be determined in advance by the authority and use of the property, which is permitted to be used by the licencee, are all incorporated in the said agreement. While so, a show cause notice, dated 26.10.2018, was issued by the Regional Director, Bureau of Civil Aviation Security to the petitioner company on being brought to his specific notice that one J.Srinivas Rao (@ J.Srinivas), Service Assistant, of the petitioner company attacked the then YSRCP leader with a knife and thereby violated civil aviation security norms. In the said show-cause notice, the petitioner was called upon to explain within seven days from the date of receipt of the notice as to why action should not be initiated/taken against the petitioner for violation and lack of supervision. To the said show-cause notice, the petitioner gave a detailed reply, dated 31.10.2018. Later, on behalf of the Airport Director, the Assistant General Manager (Commercial), Airports Authority of India, Civil Enclave, Visakhapatnam Airport, issued another show-cause MSRM, J W.P.no.2827 of 2019 3 notice, dated 10.11.2018, to the petitioner adverting to the licence agreement referred to supra and inter alia stating as follows:
" Whereas, it is observed that Shri J.Srinivas, Service Asst of M/s Fusion Foods & Hotels Pvt. Ltd, has approached and attacked with small knife Shri Y.S.Jagan Mohan Reddy, Leader of Opposition in the Andhra Pradesh Legislative Assembly around 12.40 hrs on 25.10.2018 in the V.I.P Lounge of Visakhapatnam Airport on the pretext of having a selfie with him.
Whereas, by virtue of the above act, the image of AAI and Visakhapatnam Airport in particular was tarnished by your employee. M/s Fusion Foods & Hotels Pvt Ltd has failed to appoint persons of good character and well behaved in their business and also to monitor the activities in the restaurant, which has led to severe criticism on the safety and security aspects at airport. This is a violation as per clause 10 of General Information/Guidelines of NIT and agreement.
Now, therefore, M/s. Fusion Foods & Hotels Pvt Ltd is hereby called upon to Show Cause as to why action should not be taken for termination of contract under the provision of clause 10 of General Information/Guidelines of NIT and agreement. The reply of M/s Fusion Foods & Hotels Pvt Ltd should reach this office within 7 days from the date of issue of this notice. If no reply is received within the stipulated time, i.e., on or before 16.11.2018, it will be presumed that M/s. Fusion Foods & Hotels Pvt Ltd has nothing to say in the matter and accordingly action shall be taken against M/s Fusion Foods & Hotels Pvt Ltd in accordance with the terms of contract.' To the said show-cause notice, the petitioner gave a detailed reply adverting to clause (10) of the general terms & conditions [hereinafter 'clause 10', for brevity] and offering its explanation and inter alia stating as follows: 'The petitioner has complied with the provisions of clause-10 in letter and spirit.Petitioner's staff/servants are of good character. The jurisdictional police were furnished with the details of employees as envisaged under the said clause. Thereafter only, the members of staff MSRM, J W.P.no.2827 of 2019 4 were employed by the petitioner.There was no objection for employment of staff of the petitioner including the said Srinivas. After clearance from the jurisdictional police only, the said Srinivas was also employed. Prior to the unfortunate incident, which happened in the VIP Lounge, there was no complaint or allegation of misbehavior against the said Srinivas either from the passengers visiting the Airport or from the Airports Authority or from the security personnel or from anyone else. On the date of the unfortunate incident, the said Srinivas went on his duty break at 11.30 AM. It is not known to the Management of the Restaurant that Srinivas would approach the VIP Lounge or that he would be permitted entry into VIP Lounge. It is normal practice and procedure that upon completion of duty, the staff avail a break or leave the premises for the day and are never known to interact with passengers in the Airport including VIPs.' Thereafter, the impugned termination proceedings were issued by the Airport Director-4th respondent to the petitioner intimating the decision to terminate/cancel the licence agreement, dated 18.08.2010, with effect from 2400 hours on 19.03.2019 and calling upon the petitioner to vacate and deliver possession of the premises as stated in the proceedings and to settle all the pending dues upto date including penal interest for delayed payments. In the said termination proceedings, while adverting to Clause-10, the 4th respondent stated that the petitioner failed to appoint persons of good character and well behaved in their business and also to monitor the activities in the restaurant, which have led to severe criticism on the safety and security aspects at airport, and that the petitioner has acted in violation of Clause 10; and, hence, as per clause 1(b) of the Licence agreement, the MSRM, J W.P.no.2827 of 2019 5 Airport Authority of India has right to terminate the licence after giving a short notice on account of unsatisfactory performance and that accordingly, the proceedings, dated 18.02.2019, were issued terminating and cancelling the licence agreement, dated 18.08.2010, with effect from 2400 hours on 19.03.2019. Aggrieved thereby, the petitioner filed this writ petition.'
5. Along with the writ petition, I.A.nos.1 & 2 of 2019 are filed seeking the following prayers:
I.A.no.1 of 2019:
'For the reasons stated in the accompanying affidavit it is therefore prayed that this Hon'ble Court may be pleased to direct the respondents to continue to issue Airport entry permits subject to fulfilment of conditions and pass such other order or orders as deem fit and proper in the circumstances of the case.
I.A.no.2 of 2019:
For the reasons stated in the accompanying affidavit, it is therefore prayed that this Hon'ble Court may be pleased to suspend the operation of the proceedings in No.AA1/V2/COMMI/Restaurant/2019/124/206-204, dated 18.02.2019 and pass such other order or orders as deemed fit and proper in the circumstances of the case.
6. On 05.03.2019, this Court granted an interim order in I.A.nos.1&2 of 2019. The operative portion of the said interim order reads as follows:
'The questions of fact are to be gone into in this writ petition, and at this preliminary stage, it appears that the petitioner has prima facie case and balance of convenience in his favour, and therefore, the interim orders sought for in I.A.No.1 of 2019 and I.A.no.2 of 2019 are granted, till 19.03.2019.' MSRM, J W.P.no.2827 of 2019 6 The said interim order is being extended from time to time and the same is in force. The respondents 2 & 4 filed I.A.no.3 of 2019 seeking to vacate the aforesaid interim order.
7. In this backdrop, the case of the petitioner in support of the challenge to the termination proceedings, is as follows: 'To the two Show-Cause notices, dated 26.10.2018 & 10.11.2018, the petitioner submitted prompt and detailed replies, dated 31.10.2018 & 14.11.2018.
The petitioner company employed all its staff including Srinivas after furnishing all the details of the proposed employees to the jurisdictional police and on clearance. Till the unfortunate incident happened, on 25.10.2018, there are no complaints or objections against the petitioner or its members of staff/servants. On 25.10.2018, the date on which the unfortunate incident took place, Srinivas went on his duty break at 11.30 AM. It is not known to the Management of the Restaurant that Srinivas would approach the VIP Lounge or that he would be permitted entry into VIP Lounge. It is normal practice and procedure that upon completion of duty, the staff avail a break or leave the premises for the day and are never known to interact with passengers in the Airport including VIPs. The responsibility lies with the 4th respondent for taking adequate security measures in the Airport and to see that the security is not breached. Since before employing Srinivas, the petitioner company has taken all the steps and his employment is after clearance, the responsibility lies with the 4th respondent. The instrument used for attack by Srinivas against the Leader in the VIP Lounge is not the instrument of the petitioner company is clearly stated in the reply to the Show-cause notice. As per the security guidelines at the Airport, a MSRM, J W.P.no.2827 of 2019 7 register of knives and sharp items has to be maintained. The petitioner has maintained such a register and it is being regularly audited by the 5th respondent-Regional Director, Bureau of Civil Aviation Security. The said Register was audited in August, 2018. As per the said Register, the instrument used for attack by Srinivas is not part of the instruments in the register maintained by the petitioner company. No opportunity of personal hearing was given before the impugned order was passed. Therefore, the petitioner was under the impression that the reply given to the Show-Cause notice was convincing. Police initiated investigation into the crime. The petitioner submitted all the documents, which are available with it, and it is continuing to cooperate with the Airport Authority of India as well as the police investigating into the crime registered against the said Srinivas. Investigation, to the knowledge of the petitioner, has not disclosed any adverse remarks against the petitioner. An e-mail, dated 07.12.2018, was sent stating that the outstanding dues to be payable by the petitioner company are Rs.8,80,830/- for the months of November & December, 2018. A reply, dated 07.12.2018, was given stating that already amounts were paid through cheque no.123361 of State Bank of India, Airport Branch, and the same was deposited and cleared. A confirmation was sought in the above regard. By making several enquiries through e-mails, the petitioner was harassed; and, on some occasions, information, which is not available with the petitioner, was also sought. The respondents 2 to 4 continued harassment against the petitioner and stopped issuing Airport entry passes to their employees. Though there are 27 employees working with the petitioner restaurant, only 15 passes were granted to the employees MSRM, J W.P.no.2827 of 2019 8 after a gap of 45 days and it has become very difficult for the petitioner to continue the operations at the Airport. Huge rentals to a tune of more than Rs.6 lakhs were collected for the 44 days duration, though the Restaurant and Snack Bar was closed for want of Airport Entry passes. Bills were raised even though the petitioner was not permitted to operate the Restaurant and Snack Bar. Several requests were made to the respondents 2 to 4 to give Airport Entry passes. The order impugned is passed without considering the replies, dated 31.10.2018 & 14.11.2018 given by the petitioner and in violation of the principles of natural justice. Basing on Clause-10, the licence cannot be terminated as there is no violation of Clause-10. The ShowCause notices issued are a mere an eye wash. The Airport authorities are pre-determined to pass an order fastening the burden on the petitioner, though the petitioner has not committed any mistake or violated the terms of the licence agreement. The respondents 2 to 4 are acting in a highhanded manner to dispossess the petitioner. Hence, the writ petition is filed.'
8. Per contra, the case of the vacate stay petitioners/respondents 2 to 4 and the submissions made on their behalf, are as follows: 'The licence agreement, dated 18.08.2010, was terminated on account of the unsatisfactory performance of the petitioner. Left with no other option, the respondents herein invoked Clause 1(b) of the Licence Agreement and Clause 10 of the General Terms and Conditions to terminate the License Agreement, dated 18.08.2010. Therefore, there is no illegality, arbitrariness or violation of any fundamental rights of the petitioner and on that ground alone, the writ petition is liable to be set aside. If the petitioner wants to challenge the termination of the License Agreement, MSRM, J W.P.no.2827 of 2019 9 it has to invoke Clause no.29 of the General Terms and Conditions, which provides for arbitration. The present dispute is arising out of a commercial transaction/contract. It is settled law that the power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest or to decide contractual disputes. On this ground alone, the present writ petition is liable to be dismissed. The allegations in the affidavit filed in support of the petition are denied. The termination is not arbitrary and illegal. The contentions that termination can only be done after 180 days' notice and that the petitioner was running business without violating the conditions of Licence Agreement and without complaint from any quarter are all false and are denied. The termination was done because of unsatisfactory performance of the petitioner company as per Clauses 1(b), 18 & 19 of the License Agreement and Clause 10 of the General Terms and Conditions. The allegation that the termination was done only on account of the incident, dated 25.10.2018, is false and is denied. The security of entire airport including the VIP Lounge is the responsibility of Central Industrial Security Force (CISF). In fact, it is the petitioner, who has acted in a negligent and in an irresponsible manner by employing staff, without proper background check and who are of not sound mind; and, therefore, the petitioner is responsible for the actions of its employees and their activities. The background check of Srinivas was carried out by Airport police station at the time of his joining the establishment of the petitioner. However, in the month of August, 2018, a fresh antecedent report was given by the Station House Officer of the police station in whose jurisdiction, the said Srinivas was residing. The MSRM, J W.P.no.2827 of 2019 10 allegation that by making enquiries and sending several mails, the petitioner was harassed by the Airport Authority of India is not correct. The petitioner paid the licence fee of November, 2018. But, the old dues of Rs.4,56,261/- are still pending. Entry Passes were not granted to some of the employees of the petitioner because, the petitioner, inspite of the unfortunate incident and constant follow-up, had applied for Entry Passes without proper police verification and complying with the other requirements.Several complaints regarding the unsatisfactory performance of the petitioner were received. As per the Bureau of Civil Aviation Security (BCAS) guidelines, Temporary Airport Entry Pass (TAEP) can be issued only upto 90 days by the Airport operator during which Permanent Airport Entry Pass (PAEP) has to be applied & obtained from BCAS by the petitioner. Aviation Security (AVSEC) training & passport are mandatory. As some of the employees of the petitioner have failed to comply with the BCAS requirements, passes were not issued to them. Further, the Temporary Passes issued by the Airport Authority of India were to ensure minimum passenger facilitation and ensuring business for the licencee. The employees shall be under the general discipline of Airport Authority of India. The petitioner is responsible for the acts of all of its employees. There is no violation of principles of natural justice. No attempts of forceful dispossession of the petitioner from the premises are made as being falsely contended in the affidavit. The termination is in accordance with the agreement. There is no illegality. There are no violations of principles of natural justice and fundamental rights. The writ petition is liable to be dismissed.' MSRM, J W.P.no.2827 of 2019 11
9. Learned counsel appearing for the petitioner placed reliance on the following decisions:
(i) Harbanslal Sahnia v. Indian Oil Corporation Limited1
(ii) Deep Industries Ltd. V. Oil and Natural Gas Corporation Ltd.2
(iii) Union of India v. Tantia Construction Private Limited3 9.1 Learned counsel appearing for the respondents placed reliance on the following decisions:
(i) M/s. Satptagiri Restaurant v. Airports Authority of India4
(ii) Corporation of Calicut v. K.Sreenivasan5
(iii) Jagdish Mandal v. State of Orissa and others6
(iv) Union of India v. E.G.Nambudiri7
(v) Saptagiri Restaurant v. Airports Authority of India8
10. The relevant portion of Clause 1 of the Licence Agreement reads as under:
"The licence for the said facility shall be valid for the period of 10 (ten) years from 08.07.2010 to 07.07.2020, unless terminated earlier on account of following:
(a)....
(b) Terminated by AAI on a short notice on account of unsatisfactory performance."
Clause 10 of the terms & conditions of the Licence Agreement, dated 18.08.2010, reads as follows:
'The licensee shall employ only such servants as shall have good character and as well behaved and skillful in their business. He shall furnish the Authority in writing with the names, parentage, age, residence and specimen signature or thumb impression of all servants whom he proposes to employ 1 (2003) 2 Supreme Court Cases 107 2 AIR 2018 AP 45 3 (2011) 5 Supreme Court Cases 697 4 2015 SCC On Line Del 9555: (2015) 151 DRJ 116 5 (2002) 5 Supreme Court Cases 361 6 (2007) 14 Supreme Court Cases 517 7 (1991) 3 Supreme Court Cases 38 8 2014 SCC Online Del 1906 MSRM, J W.P.no.2827 of 2019 12 for the purpose of this Agreement before they are so employed and the Authority shall be at liberty to forbid the employment of any person whom it may consider undesirable.
The servants employed by him shall be under the general discipline of the Authority and shall confirm to such directions as may be issued by the Authority in respect of points or routes of entry to and exit from the premises and in respect of use of toilet and washrooms. He shall also have the character of all persons employed by him verified by the police to the satisfaction of the Authority, before the employment.'
11. Dealing first with the contention as to the maintainability of the writ petition, it is necessary to refer to the Clause 29 of General Terms & Conditions dealing with arbitration, which reads thus:
"All disputes and differences arising out of or in any way touching or connecting this agreement (except those the decision whereof is otherwise herein before expressly provided for or to which the public premises (Eviction of Unauthorized Occupants) Act and the rules framed thereunder (which are now in force or which may hereafter come into force or applicable) shall be referred to the sole arbitration of a person to be appointed by the Chairman/Member of the Authority. The Award of the arbitrator so appointed shall be final and binding on the parties. The Arbitration and Conciliation Act, 1996, shall be applicable."
Placing reliance on the above clause, the respondents contended that the writ petition is not maintainable. Placing reliance on the decisions in Deep Industries Ltd., (2nd supra) and Harbanslal Sahnia and another (1st supra), it is contended on behalf of the petitioner that rule of exclusion of writ jurisdiction by availability of an alternative remedy is a rule of discretion and not one of compulsion and that when the licence of the petitioner was terminated for an irrelevant and nonexistent clause, the writ petition is maintainable. It is also submitted that the petitioner need not be driven for initiation of arbitration proceedings and that even MSRM, J W.P.no.2827 of 2019 13 in cases there is a specific dispute resolution mechanism by way of an arbitration, as a rule, there is no bar, but the writ Court would be slow in entertaining a Writ Petition. Placing reliance on Tantia construction Pvt. Ltd., (3rd supra), it is further contended on behalf of the petitioner that an arbitration clause is not a bar to invocation of writ jurisdiction, when injustice is caused and rule of law is violated. It is finally urged that the Constitutional powers vested in the High Court are not fettered.
12. Per contra, the learned counsel for the respondents contended that in the case on hand, Show Cause notice was duly issued as per the terms of Licence Agreement and General Terms &Conditions and that the termination was as per the clauses, which are binding on the parties and, therefore, there is no violation of any kind including rule of law and hence, the writ petition is not maintainable as jurisdiction of writ Court is excluded by arbitration agreement.
13. On a plain consideration of the rival contentions, which are referred to supra, in detail, the contention of the petitioner that this is a case attracting rule of discretion and that the petitioner need not be driven to arbitration cannot be countenanced, as, before the termination that gave rise to the dispute, Show-Cause notices were issued and replies were received and eventually the termination order/proceeding came to be passed/issued. Hence, this Court holds that the writ petition is not maintainable.
14. Coming to the next aspect,that is, on the aspect of maintainability of writ petition, what is to be noted is that the respondents contended that the writ petition is not maintainable as the matter relates to a MSRM, J W.P.no.2827 of 2019 14 licence agreement with the Airport Authority of India and that invoking power of judicial review in matters of licence agreements is impermissible and that the writ Court would generally not interfere in contractual matters like the present matter related to a Licence Agreement between the parties. Reliance is placed on the decision in Jagdish Mandal [6th supra]. In reply, learned counsel for the petitioner reiterated the same contentions, which were advanced in answer to the respondents' contentions that the writ petition is not maintainable when the dispute is arbitrable. This Court already held that the contentions of the petitioner advanced for invoking writ jurisdiction are devoid of merit.
15. Further, admittedly, the petitioner is a licencee. The licence was terminated after show cause notices and receipt of replies. As per Section 64 of the Indian Easements Act, 1882, a licencee, even if evicted in the absence of grounds for revocation of licence or is forcefully evicted, his only remedy is to recover compensation from grantor and not to resume occupation. [See:The Corporation of Calicut v. K. Sreenivasan {(2002) 5 SCC 361}]. In Trivandrum Golf Club v. State of Kerala {(2010)12 SCC 723}, the Supreme Court refused to interfere with an order declining to grant an interim injunction against dispossession of a licencee. In the case on hand, there is a clause for revocation and the clause for revocation was invoked before termination of the licence and the dispute ensuing pursuant to such termination is arbitrable as per clause 10 referred to supra. In that view of the matter also, I am of the considered view that in this matter related to revocation of a licence granted under a licence agreement, the petitioner is not entitled to MSRM, J W.P.no.2827 of 2019 15 invoke power of judicial review as undisputedly the licence granted to the petitioner is a commercial arrangement between the parties and the dispute is arbitrable and even otherwise damages would be an adequate remedy if the petitioner is aggrieved and is having a justiciable right in that regard, which the law permits. In Noble Resources Limited v. State of Orissa {(2006)10 SCC 236}, the Supreme Court held that ordinarily, a specific performance of contract would not be enforced by issuing a writ of/or in the nature of mandamus particularly when keeping in view the provisions of Specific Relief Act, 1963, damages may be an adequate remedy.
16. For all the afore-stated reasons and legal position obtaining, this Court holds that on both the counts, viz., that the dispute is arbitrable as per the arbitration agreement and that this is not a case for invoking writ jurisdiction, the writ petition is not maintainable.
17. In the light of the said finding it is axiomatic that there is no need to advert to any other aspects touching the merits of the contentions of the parties including the contention as to the validity of the termination proceedings as the said aspect is an arbitrable dispute in the light of the arbitration clause and as it is already held that this is not a case for exercise of power of judicial review and that the writ petition is not maintainable.
18. In the result, the Writ Petition is dismissed.
MSRM, J W.P.no.2827 of 2019 16 There shall be no order as to costs.
Miscellaneous petitions pending, if any, shall stand closed.
_______________________ M. SEETHARAMA MURTI, J Dt.29.07.2019 Note:- Issue CC by 31.07.2019 (B/o) RAR MSRM, J W.P.no.2827 of 2019 17 URGENT THE HON'BLE SRI JUSTICE M. SEETHARAMA MURTI Writ Petition No.2827 of 2019 RAR 29-07-2019