Rajasthan High Court - Jaipur
V Krishnamurthy vs Airport Director Jaipur Airport And Ors on 8 September, 2017
Author: Mohammad Rafiq
Bench: Mohammad Rafiq
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Arbitration Application No. 56 / 2016
V. Krishnamurthy, aged 66 years, son of N.A. Virudhachala
Reddiar, Proprietor M/s. Meena Advertisers, New No.66 (Old
No.142), Eldams Road, Teynampet, Chennai - 18
----Appellant
Versus
1. The Airport Director, Jaipur Airport, Airports Authority of India,
Jaipur Airport, Sanganer, Jaipur
2. The Chairman, Airport Authority of India, Rajeev Gandhi
Bhawan, Safdarganj Airport, New Delhi
3. The Airport Authority of India through its Chairman, Rajeev
Gandhi Bhawan, Safdarganj Airport, New Delhi
----Respondents
For Appellant(s) : Mr. Ravi Bhojak
For Respondent(s) : Mr. Pratyush Raj on behalf of
Ms. Sukriti Kasliwal
HON'BLE MR. JUSTICE MOHAMMAD RAFIQ
Judgment
08/09/2017
Petitioner V. Krishnamurthy has approached this court by way of present application under Section 11 of the Arbitration and Conciliation Act, 1996 praying for appointment of a sole Arbitrator for adjudication of disputes between the petitioner and respondents arisen out of agreement dated 25.10.2007.
The petitioner deals in advertising business in the name and style of M/s. Meena Advertisers. The petitioner submitted tender in February, 2007 for award of license for advertisement site (indoor and outdoor) at International Airport, Jaipur and the respondents granted him license for the said purpose on 04.06.2007 on the license fee of Rs.23.40 lakh per month. There (2 of 9) [ARBAP-56 / 2016] was also a provision of 10% increase every year in addition to electricity and other charges. The petitioner complied with all the conditions of the tender and started to work under the contract at old terminal building. In the meanwhile, the respondent inaugurated a new terminal on 25.02.2009 and decided to shift all the domestic airlines operations to the new terminal building. The International Airlines were to continue their operations in the old terminal, whereof the petitioner was having advertising rights and consequently due to bifurcations of the passenger traffic, the petitioner's business was affected adversely. The petitioner requested the respondents to grant rebate of 40% in the stipulated license fee, gestation period and extension of contract period, because of shifting and re-eraction of advertisements. However, the respondents finally agreed for 22% rebate in the license fee and that gestation period of 60 days was also allowed but the request for extension in contract period was disallowed. When disputes arose, the petitioner, under the conditions of the agreement entered into between the parties, requested the Chairman, Airport Authority of India (the respondent no.2), to appoint a sole Arbitrator to resolve the dispute and pursuant thereto, the respondent no.2 appointed the sole Arbitrator for adjudication of the disputes.
The sole Arbitrator, vide award dated 17.11.2011, partly allowed the claims of the petitioner. Not fully satisfied therewith, the petitioner challenged the same by filing application under Section 34 of the Arbitration and Conciliation Act, 1996 before the District Judge, Jaipur Metropolitan and the same came to be transferred to the Additional District Judge No.7, Jaipur (3 of 9) [ARBAP-56 / 2016] Metropolitan for decision. During pendency of the said application, the respondents invited petitioner for negotiations and settlement of the remaining disputes/claims. The respondents agreed to give rebate of 34% in license fee, extra gestation period and also extension of contract period on the same condition, which is over and above the claims granted by the sole Arbitrator and also agreed to extend the license for advertising rights, beyond the contract period, till finalization of a new party for the same at the rate of license fee lastly payable in the contract period. In that view of the matter, a joint application was filed before the court, which court modified the award by order dated 04.07.2014. During pendency of the said proceedings, another claim was raised by the petitioner regarding waiver of application of annual escalation clause for the disturbance period of one year i.e. from 04.06.2009 to 03.06.2010, and the same was pending consideration with the respondent no.2.
Subsequently, the dispute regarding waiver of annual escalation for disturbance period i.e. from 04.06.2009 to 03.06.2010, was referred to arbitration by the respondent no.2, and accordingly second arbitration proceedings were initiated. In these proceedings, claim of the petitioner was allowed partly by the sole Arbitrator vide award dated 13.08.2015, who granted relief in annual escalation for eleven months i.e. from June, 2009 to April, 2010 and directed the respondents to recalculate the payable license fee accordingly and apply interest on extra payment made by the petitioner and vice versa. The said two awards were not challenged by the Airport Authority of India, Jaipur and the same attained finality. In compliance of the second (4 of 9) [ARBAP-56 / 2016] award dated 13.08.2015, the respondent was under legal obligation to recalculate the payable license fee within fifteen days but nothing was done. To the utter surprise of the petitioner, the respondent sent a notice dated 12.10.2015 to the petitioner along-with statement of account, demanding outstanding payment, wherein, as per the petitioner, absolutely illegal amounts were mentioned totally ignoring the binding effect of the said two awards as well as the out of court settlement.
Mr. Ravi Bhojak, learned counsel for the petitioner submitted that as per the recalculation made according to the arbitration award dated 13.08.2015, the petitioner made excess payment of Rs.6,02,687/- and he was thus entitled to interest thereon. A statement of account, recalculated as per the award dated 13.08.2015, was sent to the respondents on 17.10.2015, however, the respondent did nothing. A joint meeting was held on 10.05.2012 and both the parties agreed on several conditions including the condition of extension of the contract and the Airport Authority of India had expressly agreed to extend and to allow the petitioner to have advertising rights, till the Airport Authority of India finalized new tenders of the advertising rights for Jaipur Airport, on the last paid/payable license fee.
Learned counsel for petitioner submitted that though the original contract was for five years i.e. from 04.06.2007 to 03.06.2012 but in the out-of-court-settlement arrived at in the meeting held on 10.05.2012, it was agreed to be extended till finalization of new tenders, on the license fee, last paid or payable in the original contract. The respondents, pursuant thereto, extended the license for advertising rights initially up to (5 of 9) [ARBAP-56 / 2016] 03.12.2012 and thereafter on three times for a period of six months up to 03.06.2014 at the same rate of license fee at the rate of Rs.22,61,156/- per month.
Learned counsel submitted that the petitioner sent a formal request of the respondent on 06.05.2014 for extension of the license for advertising rights at Jaipur Airport, but instead of giving a positive response the respondent, vide letter dated 12.05.2014, they refused to extend the license. On such premises, the petitioner gave a legal notice to the respondents on 26.05.2014. The respondents, however, replied to that notice vide reply dated 26.06.2014 and conveyed that as per the terms of out-of-court-settlement dated 22.05.2012, the license agreement dated 25.10.2007 was extended only for a period of six months and subsequent extensions were on mutual consents, which last expired on 04.06.2014 and thereafter no contractual or statutory right vested in the petitioner to claim further extension of the said license agreement. Yet the respondent no.1 extended the license only for two months, but acting absolutely in an arbitrary manner, the respondent no.1 demanded enhanced monthly license fee, enhancing it from Rs.22,61,156/- to Rs.26,39,009/-.
It is submitted that the petitioner never accepted the said unilateral action of the respondent and all the payments were made by the petitioner under protest. Since no other party was coming forward to take contract of advertising rights of Jaipur Airport and in view of the likely loss of revenue to the public exchequer, the extensions were granted to the petitioner but acting absolutely in an arbitrary and illegal manner, the respondents unilaterally attempted to impose higher rate of (6 of 9) [ARBAP-56 / 2016] license fee, for which the petitioner never agreed and made all the payment of monthly license fee under protest.
Learned counsel for petitioner submitted that the respondents, vide letter dated 21.08.2014, granted last extension for six months from 04.08.2014 to 03.02.2015, but, despite repeated requests, no extension letter was given, however, thereafter only monthly bills were raised by the respondents and the petitioner paid the same under protest. After completion of the original contract period as well as extended period under the arbitration award on 03.12.2012, the license of advertising rights was extended three times i.e. from 04.12.2012 to 03.06.2013, 04.06.2013 to 03.12.2013 and 04.12.2013 to 03.06.2014, applying the same rate of license fee at the rate of Rs.22,61,156/-, which was agreed in the out-of-court-settlement dated 10.05.2012.
Learned counsel for petitioner also argued that the petitioner has paid extra amount of Rs.19,59,377/- to the respondents up to February and March, 2016 and in case the interest clause is applied correctly, the accounts of petitioner would also be in credit with the respondents. It is submitted that the Government of India has entered into a Memorandum of Understanding with the Government of Singapur for privatization and development of Jaipur and Ahmedabad Airports, which bears approval of the Union Cabinet. The Commercial Advisory Board of the respondent no.3, in its meeting dated 15.03.2016, took a decision not to invite/grant any further tender at the above two airports i.e. Jaipur and Ahmadabad, till December, 2016. The dispute between the petitioner and the respondents, to the extent the respondents (7 of 9) [ARBAP-56 / 2016] have legitimately increased the license fee subsequent to the period of second arbitration award, is therefore liable to be referred to sole Arbitrator for its adjudication.
Mr. Pratyush Raj, brief holder of Ms. Sukriti Kasliwal, learned counsel for answering-respondent no.2, opposed the application and submitted that due to opening of new terminal no.2, certain disputes arose between the parties and the matter was referred to the Arbitrator. Learned Arbitrator decided the issue and passed award dated 17.11.2011. It was thereafter that the petitioner raised yet another dispute and the same was referred to arbitration and the Arbitrator adjudicated the matter vide award dated 13.08.2015 and those awards have not been challenged before the Tribunal. The said awards have attained finality. The same dispute therefore cannot be subject matter of fresh adjudication by third Arbitrator regarding amount of license fee actually payable. The award aforesaid is clear about the license fee payable. It is contended that the petitioner did not file objection under Section 38(4) of the Act of 1996 and the out-of- court-settlement was arrived at between the parties during pendency of the said objections on 28.05.2012, which goes to show that term of license was merely extended for a period of six months. Both the parties submitted a joint application under Section 34(4) requesting the civil court to modify the award and accordingly modified award was passed on 04.07.2014. The answering-respondent, vide letter dated 12.10.2015 called upon the petitioner to deposit the outstanding dues amounting to Rs.1,44,00,608/-. This amount was calculated in terms of the modified award dated 04.07.2014 as well as the award dated (8 of 9) [ARBAP-56 / 2016] 13.08.2015. The petitioner never bothered to reply to the said notice. As per the modified award dated 04.07.2014 as well as second award dated 13.08.2015 the total outstanding comes to Rs.3,97,89,439/-. It is denied that as per the modified and second award, the petitioner made any excess payment to the answering respondent. The decision not to issue fresh tender up to December, 2016 was taken only in respect of food and beverage license and general retail services. This is not applicable to the license issued for advertising rights. Fresh tender has been issued after due approval of the competent authority. In fact when the fresh tender was issued, the petitioner filed Writ Petition No.7039/2016, which came to be dismissed vide order dated 01.08.2016. The Special Appeal (Writ) No.1155/2015, filed there- against, came to be dismissed vide order dated 16.08.2016. The petitioner then filed second writ petition also, which is presently pending. It is therefore prayed that the application be dismissed.
I have given my anxious consideration to rival submissions and perused the material on record.
As far as earlier disputes between the parties case are concerned, they have already been crystallized in the award passed earlier on 17.11.2011, which was modified by the Civil Court in the proceedings under Section 34 of the Act of 1996 vide order dated 04.07.2014 and thereafter the subsequent award dated 13.08.2015. The present dispute is to the effect whether the respondents could have, having extended the license period in favour of the petitioner from time to time in different phases up to 03.06.2014, unilaterally increased the license fee and if so, at what rates. Besides, the petitioner claims to have paid excess (9 of 9) [ARBAP-56 / 2016] amount of Rs.19,59,377/- to the respondents up to February and March, 2016. Despite therefore award passed twice earlier, there still exist disputes between the parties and also there is an arbitration clause in the agreement between them. On the other hand, the respondents are demanding a sum of Rs.1,44,00,608/-. From the petitioner.
In order to resolve the dispute, the application filed by the petitioner therefore deserves to succeed and same is allowed. Hon'ble Mr. Justice Sunil Ambwani, former Chief Justice of this Court, R/o E-190, Ground Floor, Kalkaji, Opposite Nehru Place, Police Station Road, New Delhi - 110 019 (cellphone number 09415238954) is hereby appointed as an independent sole arbitrator to resolve the disputes between the parties. Payment of the cost of arbitration proceedings and the arbitration fees shall be made as per the Fourth Schedule of the Arbitration and Conciliation (Amendment) Act, 2015 read with Manual of Procedure for Alternative Dispute Resolution, 2009 of this Court, as amended from time to time.
A copy of this order be sent to Hon'ble Mr. Justice Sunil Ambwani, former Chief Justice of this Court, R/o E-190, Ground Floor, Kalkaji, Opposite Nehru Place, Police Station Road, New Delhi - 110 019 (cellphone number 09415238954) for needful.
(MOHAMMAD RAFIQ),J //Jaiman//8