M/S FLEMINGO DUTYFREE SHOP PVT. LTD. v Airports Authority of India and Ors

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** # **`PRESENT`** # **`THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN TUESDAY, THE 21[ST] DAY OF DECEMBER 2021 / 30TH AGRAHAYANA, 1943 AR NO. 5 OF 2021`** ## **`APPLICANT:`** ``` M/S FLEMINGO DUTYFREE SHOP PVT. LTD., D-73/1, TTC INDUSTRIAL AREA, MIDC-TURBHE, NAVI MUMBAI 400 075, REPRESENTED BY ITS AUTHORIZED SIGNATORY MR SHRIJITH NAIR ``` ``` BY ADV.HARIKUMAR G. NAIR ``` ## **`RESPONDENTS:`** - `1 AIRPORTS AUTHORITY OF INDIA, THROUGH CHAIRMAN, CORPORATE HEADQUARTERS, RAJIV GANDHI BHAWAN, SAFDARJUNG AIRPORT, NEW DELHI 110 001` ``` 2AIRPORT DIRECTOR, AIRPORTS AUTHORITY OF INDIA, CALICUT INTERNATIONAL AIRPORT (PO) KERALA 673 647 ``` ``` BY ADVS. SRI.V.SANTHARAM SRI.LAKSHMEESH.S.KAMATH ``` ``` THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 21.12.2021, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ``` AR 5/21 2 ## **`O R D E R`** The petitioner is stated to be a company registered under the provisions of the Companies Act, 1956 and has approached this Court invoking Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’ for short). 2. According to the petitioner, they had entered into Annexure A1 Agreement with the respondents, but that certain disputes have arisen between them with respect to its terms and in relation to it; thus constraining them to approach this Court because, as per Clause 22 thereof, all such disputes can be adjudicated and resolved only through the mechanism of arbitration. 3. The petitioner says that, however, when they approached the respondents through Annexure A3 seeking that either their claims be acceded to or a suitable Arbitrator be appointed under the terms of the aforementioned Clause of the AR 5/21 3 Agreement, they responded through a reply refusing to accede to either, contending that the disputes are not arbitrable as per the provisions of the Airport Authority of India Act (AAI Act for short). They say that, therefore, they are left without any other option, but to approach this Court through this Arbitration Request. 4. I have heard Sri.Harikumar G. Nair – learned counsel for the petitioner and Sri.V.Santharam – learned Standing Counsel for the respondents. 5. Sri.V.Santharam commenced his arguments against the grant of reliefs sought for in this Arbitration Request specifically adverting to the counter affidavit dated 28.02.2021 filed by his clients, and in particular paragraphs 3 and 28 thereof. He added that the disputes are not arbitrable, but conceded that this is something which the Arbitrator will have to decide. 6. As the second contention against the claim of the petitioner in this Arbitration Request, Sri.V.Santharam pointed out AR 5/21 4 that, even assuming that this Court obtains jurisdiction to refer the parties to arbitration, such an order can be issued only if the petitioner complies with the contractual provisions of Clause 22.2.4 of Annexure A1 Agreement. He showed me that, going by the said Clause, the petitioner should furnish a bank guarantee equal to the disputed amount, which shall be initially kept valid for two years and then extended until the decision of the Arbitrator is issued. He predicated that since the petitioner has not provided any such bank guarantee, this Court is incapacitated from allowing their request for appointment of a sole Arbitrator and thus prayed that this Arbitration Request be dismissed. 7. In reply, Sri.Harikumar G. Nair – learned counsel for the petitioner, submitted that law is now well settled that, while this Court acts under Section 11 of the Arbitration and Conciliation Act, 1996, it is only enjoined to verify whether there is an arbitration Agreement in existence and if it provides for an arbitration Clause. He submitted that in this case, both aspects AR 5/21 5 are uncontested and consequently, that this Court is obligated to appoint an Arbitrator in terms of the Agreement. 8. As regards the arbitrability of the disputes, Sri.Harikumar G. Nair submitted that same issue was considered by the Honourable High Court of Bombay in AR 689/2021 and found to be so, and that the Airport Authority had accepted it. He, therefore, argued that this issue cannot be raised by them again before the learned Arbitrator to be nominated by this Court. 9. As regards the contention of Sri.V.Santharam edificed on Clause 22.2.4 of the Agreement is concerned, Sri.Harikumar G. Nair submitted that it is clear therefrom that furnishing of a bank guarantee is not a condition precedent for the reference of disputes to an Arbitrator; and that, in any event of the matter, after the amendment of the Act in the year 2016, this Court will have to disregard such Clauses. In support of this argument, he relied upon the judgment of this Court in Lite Bite Foods Pvt Ltd AR 5/21 6 v. Airport Authority of India [MANU/KE 2914/2020]. He pointed out that this judgment answered the afore issue against the Airport Authority of India itself and that they have chosen to accept it and not to file an appeal; and consequently, that they cannot now reprobate and try to re-agitate it in this case. He thus reiteratingly prayed that this Arbitration Request be allowed. 10. I have given the afore contentions great amount of thought and have also examined the documents on record. 11. It is uncontested that Annexure A1 Agreement is binding upon the parties and that Clause 22.2.1 thereof makes it incumbent that all disputes between the parties be referred to arbitration. 12. However, as regards the first contention of Sri.V.Santharam that the disputes between the parties are not arbitrable, these are issues that will have to be decided by the learned Arbitrator under the mandate of Section 16 of the Act. I do not think that, therefore, this Court will be impeded from AR 5/21 7 allowing this Arbitration Request on that ground. 13. As far as Clause 22.2.4 of the Agreement is concerned, there is great force in the submissions of Sri.Harikumar G. Nair because, in Lite Bite Foods Private Ltd (supra), this Court has already taken the view that any Clause which provides for a precondition to the invocation of the arbitration Clause is to be disregarded, after the amendment of the Act in the year 2016. Interestingly, this judgment was delivered against the Airport Authority of India and it is unequivocally admitted that they have chosen to accept the declarations therein and not to file an appeal against it. Therefore, since the Airport Authority of India has accepted Lite Bite Foods Private Ltd (supra), I fail to understand how they can now turn around and impel the same contentions in this Arbitration Request. 14. That apart, even when one examines Clause 22.2.4 of the Agreement very carefully, it does not mandate furnishing of a bank guarantee, for the disputed amount, as being a condition AR 5/21 8 precedent for the petitioner to invoke the arbitration Clause. It is, therefore, apodictic that this Court is not inhibited by Clause 22.2.4, when I consider whether the parties have to be referred to arbitration, especially when it is without any doubt or objection that all disputes under the Agreement and in relation to its terms, will have to be adjudicated and resolved only through such process. 15. That so said, it is also well settled by the Honourable Supreme Court in various judgments, including in N.N.Global Mercantile Private Ltd v. Indo Unique Flame Ltd and Others [(2021) 4 SCC 379] , that an arbitration Clause acts independent from the other Clauses in the Agreement and that this Court will be enjoined to refer the parties to arbitration, if the said Clause is found to be valid, even if the other parts of the Agreement are to be found otherwise. 16. In the afore perspective, certainly, as long as Clause 22.2.4 – even though it sub verbo is under Clause 22.2 of the AR 5/21 9 Agreement – cannot stop this Court from allowing this Arbitration Request, because if such a bank guarantee is not furnished, then certainly the respondents will obtain the locus to raise the issue before the Arbitrator, by way of a counter claim or such other. 17. At this time, being aware of the mind of this Court as afore, Sri.V.Santharam submitted that if this Court is inclined to nominate a sole Arbitrator, he will not stand in the way but prayed that it may be a retired Judge of this Court, because the disputes involve substantial amount of money. He also submitted that, in such event, his client may be left full liberty to move the learned Arbitrator with the contention that the disputes are not arbitrable and further that the mandate of Clause 22.2.4 of the Agreement be allowed to be impelled as either a counter claim or as a condition precedent to the arbitration proceedings being continued forward. He also prayed that the seat of arbitration be fixed at Ernakulam. 18. Sri.Harikumar G. Nair – learned counsel for the AR 5/21 10 petitioner, did not oppose any of the afore requests of Sri.Santharam and left to this Court to nominate a suitable Arbitrator. In the conspectus of the above, I allow this Arbitration Request with the following directions: (a) I nominate Mr.Justice C.N.Ramachandran Nair, 3B, Bhavani, Kunnumpuram, Kakkanad, Kochi 682 030, as the sole Arbitrator to adjudicate and resolve the disputes and differences between the parties to this case arising from Annexure A1 agreement. (b) The Registry is directed to communicate a copy of this order to the learned Arbitrator, within a period of two weeks from today and to obtain a Statement of Disclosure from him under Section 11(8) read with Section 12(1) of the Arbitration and Conciliation Act, 1996. (c) Once the Disclosure Statement is obtained from the learned Arbitrator, the Registry shall release the certified copy of AR 5/21 11 this order, with a copy of the said statement appended to it, retaining the original of the same on the files of this case. (d) The fees of the Arbitrator shall be governed by the Fourth schedule to the Arbitration and Conciliation Act, 1996. (e) The parties to this case are ad idem that they will share the arbitration costs and fees equally and it is so recorded. (f) In order to enable the Arbitrator to commence the proceedings without delay, I direct the parties to mark appearance before him at 11 a.m. on 20.01.2022. ``` Sd/- ``` ``` RR ``` ``` DEVAN RAMACHANDRAN JUDGE ``` AR 5/21 12 ## **`APPENDIX OF AR 5/2021`** ``` PETITIONER ANNEXURES ``` ``` ANNEXURE A1TRUE COPY OF THE CONCESSION AGREEMENT DATED 22-04-2016 ANNEXURE A2TRUE COPY OF NOTICE DATED 04-09-2020 ISSUED BY THE APPLICANT ANNEXURE A3TRUE COPY OF NOTICE DATED 10-09-2020 ISSUED BY THE APPLICANT ANNEXURE A4TRUE COPY OF LETTER DATED 17-12-2020 ISSUED BY THE AA1 GOA ANNEXURE A5TRUE COPY OF REPLY LETTER DATED 19-12- ``` ``` TRUE COPY OF REPLY LETTER DATED 19-12- 2020 ISSUED BY THE APPLICANT TO AA1 GOA ``` ``` RESPONDENTS EXTS: ``` ``` ANNEXURE R1 ``` ``` TRUE COPY OF THE LETTER NO.AAI/CL/B.12019/8/CAS/2145 DATED 04.02.2021. ```