Plus Max Duty Free Private Limited v Airports Authority of India

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** # **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN ``` # **`MONDAY, THE 1[ST] DAY OF NOVEMBER 2021 / 10TH KARTHIKA, 1943 AR NO. 70 OF 2021`** ## **`PETITIONER:`** ``` PLUS MAX DUTY FREE PRIVATE LIMITED REGISTERED OFFICE NO.86/18, ROYAL COMPLEX, SANKARI ROAD, SEETHARAMPALAYAM, TIRUCHENGODE, NAMAKKAL, TAMIL NADU-637 209, REP.BY ITS MANAGER AND AUTHORISED SIGNATORY, SARAVANAN, AGED 33 YEARS, SON OF SUBRAMANI, RESIDING AT 1/38, KOTHAMPALAYAM AGARAM, NAMAKKAL, TIRUNCHENGODE 637 202. ``` ``` BY ADVS. B.ASHOK SHENOY P.S.GIREESH ARJUN R NAIK ``` ## **`RESPONDENTS:`** - **`1 AIRPORTS AUTHORITY OF INDIA`** ``` REP.BY THE AIRPORT DIRECTOR, TRIVADNRUM INTERNATIONAL AIRPORT, THIRUVANANTHAPURAM 695 008 ``` ``` 2THE CHAIRMAN, AIRPORT AUTHORITY OF INDIA, CORPORATE HEAD QUARTERS, RAJIV GANDHI BHAWAN, SAFDARJUNG AIRPORT, NEW DELHI 110 003 ``` ## **`BY ADV V.SANTHARAM - SC`** ``` THIS ARBITRATION REQUEST HAVING COME UP FOR ADMISSION ON 01.11.2021, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: ``` AR 70/21 2 ## **`O R D E R`** ``` The petitioner is stated to be a company registered under the provisions of the Companies Act and have 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 A2 Agreement with the respondents, but that certain disputes have arisen 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. They say that, however, when they approached the respondents through Annexures A3, A4, A6 and A9 seeking that either their claims be acceded to or a suitable Arbitrator be appointed under the terms of the aforementioned Clause of the Agreement, ``` AR 70/21 3 ``` they responded through Annexures A5, A7 and A10 refusing to accede to either, saying 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. ``` ``` 3.I have heard Sri.B.Ashok Shenoy – learned counsel for the petitioner and Sri.V.Santharam – learned Standing Counsel for the respondents. ``` ``` 4.Sri.V.Santharam commenced his arguments against the grant of reliefs sought for in this Arbitration Request specifically adverting to the counter affidavit filed by his clients, and in particular paragraphs 3 and 11 thereof. He argued that, as per Section 28A(d) of the AAI Act, questions regarding payment of rent and other amounts due to his clients can only be considered by the jurisdictional Estate Officer; and therefore, that the disputes now raised by the petitioner are not arbitrable. ``` AR 70/21 4 ``` 5.As the second contention against the claim of the petitioner in this Arbitration Request, Sri.V.Santharam pointed out 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 A2 Agreement. He showed me that, going by the said Clause, the petitioner should furnish a bank guarantee for an amount 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. ``` ``` 6.In reply, Sri.Ashok Shenoy – learned counsel for the petitioner, submitted that law is now well settled that, while this Court acts under ``` AR 70/21 5 ``` 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 are uncontested and consequently, that this Court is obligated to appoint an Arbitrator in terms of the Agreement. ``` ``` 7.As regards the arbitrability of the disputes are concerned, Sri.Ashok Shenoy submitted that it has been unmistakably declared in Vidya Drolia v. Durga Trading Corporation [2021(2) SCC 1] that the issue whether the disputes are arbitrable or otherwise, is to be considered, at the first instance, by the Arbitrator himself, since he has the statutory competence to do so under Section 16 of the Act. ``` ``` 8.Asregardsthecontentionof Sri.V.Santharam edificed on Clause 22.2.4 of the Agreement is concerned, Sri.Ashok Shenoy submitted that it is clear therefrom that furnishing of a ``` AR 70/21 6 ``` 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, Sri.Ashok Shenoy relied on the judgment of this Court in Lite Bite Foods Pvt Ltd 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. ``` ``` 9.I have given the afore contentions great amount of thought and have also examined the documents on record. ``` ``` 10.It is uncontested that Annexure A2 Agreement is binding upon the parties and that Clause 22.2.1 thereof makes it incumbent that all ``` AR 70/21 7 ``` disputes between the parties be referred to arbitration. ``` ``` 11.However, the first contention of the respondent, as I have seen above, is that the disputes in this case are not arbitrable on account of Section 28A(D) of the Act. However, as rightly argued by Sri.Ashok Shenoy, Vidya Drolia (supra) contains a complete answer to this argument, because it is now affirmatively declared that this issue must also engage the mind of the Arbitrator, while the proceedings are undertaken. I do not, therefore, intent to deal with this contention of Sri.V.Santharam any further. 12.As far as Clause 22.2.4 of the Agreement is concerned, there is great force in the submissions of Sri.Ashok Shenoy because, in Lite Bite Foods Private Ltd (supra), this Court has already taken the view that any Clause which provides for a pre-condition to the invocation of the arbitration Clause is to be disregarded, after the amendment of the Act in the year 2016. ``` AR 70/21 8 ``` 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. ``` ``` 13.That apart, even when one examines Clause 22.2.4 of the Agreement very carefully, it does not mandate the furnishing of a bank guarantee, for the disputed amount, as being a condition 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 ``` AR 70/21 9 ``` through such process. ``` ``` 14.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. ``` ``` 15.In the afore perspective, certainly, as long as Clause 22.2.4 – even though it sub verbo is under Clause 22.2 of the 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 thelocus to raise the issue before the Arbitrator, by way of a counter claim or such other. ``` ``` 16.At this time, being aware of the mind of ``` AR 70/21 10 ``` 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. ``` ``` 17.Sri.Ashok Shenoy – learned counsel for the 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: ``` AR 70/21 11 ``` (a) I nominateMr.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 A2 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 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. ``` AR 70/21 12 ``` (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 06.12.2021. ``` ``` Sd/- ``` ``` RR ``` ``` DEVAN RAMACHANDRAN JUDGE ``` AR 70/21 13 ## `APPENDIX OF AR 70/2021` ``` PETITIONER ANNEXURE ``` - `Annexure A1 TRUE COPY OF LETTER OF INTENT TO AWARD (LIOA) DATED 6.1.2016 ISSUED BY 1ST RESPONDENT` - `Annexure A2 TRUE COPY OF CONCESSION AGREEMENT DATED 22.8.2017 EXECUTED BETWEEN PETITIONER AND 1ST RESPONDENT` - `Annexure A3 TRUE COPY OF LETTER NO.AGM/S/0772/2019 DATED 27.12.2019 ISSUED BY PETITIONER TO 2ND RESPONDENT` - `Annexure A4 TRUE COPY OF LETTER NO.PM/DFS/TVD/202021/107 DATED 25.9.2020 ISSUED BY PETITIONER TO 1ST RESPONDENT.` - `Annexure A5 TRUE COPY OF LETTER NO.AAT/COM/2(3)/2020/150 DATED 25.9.2020 ISSUED BY 1ST RESPONDENT TO PETITIONER` - `Annexure A6 TRUE COPY OF LETTER NO.PM/DFS/TVD/202021/132 DATED 3.12.2020 ISSUED BY PETITIONER TO 1ST RESPONDENT.` - `Annexure A7 TRUE COPY OF LETTER` - `NO.AAT/COM/2(3)/2020/200 DATED 21.12.2020 ISSUED BY 1ST RESPONDENT TO PETITIONER` - `Annexure A7(A) TRUE COPY OF LETTER NO.AAT/COM/2(3)/2021/13 DATED 12.1.2021 ISSUED BY 1ST RESPONDENT TO PETITIONER` - `Annexure A7(B) TRUE COPY OF LETTER NO.AAT/COM/9(32)/2021/49 DATED 16.2.2021 ISSUED BY 1ST RESPONDENT TO PETITIONER` - `Annexure A7(C) TRUE COPY OF LETTER` AR 70/21 14 - `NO.AAT/COM/9(32)/2021/67 DATED 23.3.2021 ISSUED BY 1ST RESPONDENT TO PETITIONER` - `Annexure 7(D)` - `TRUE COPY OF LETTER NO.AAT/COM/2(3)/2021/11 DATED 20.4.2021 ISSUED BY 1ST RESPONDENT TO PETITIONER` - `Annexure A8` - `TRUE COPY OF LETTER NO.PM/DFS/TVD/202021/146 DATED 8.1.2021 ISSUED BY PETITIONER TO 1ST RESPONDENT.` - `Annexure A8(A)` - `TRUE COPY OF LETTER NO.PM/DFS/TVD/202021/147 DATED 16.1.2021 ISSUED BY PETITIONER TO 1ST RESPONDENT.` - `Annexure A8(B) TRUE COPY OF LETTER NO.PM/DFS/TVD/202021/157 DATED 23.2.2021 ISSUED BY PETITIONER TO 1ST RESPONDENT.` - `Annexure A8(C)` - `TRUE COPY OF LETTER NO.PM/DFS/TVD/202122/001 DATED 9.4.2021 ISSUED BY PETITIONER TO 1ST RESPONDENT.` - `Annexure A9` - `TRUE COPY OF LETTER DATED 24.4.2021 ISSUED BY PETITIONER TO 1ST RESPONDENT` - `Annexure A10` - `TRUE COPY OF LETTER NO.AAT/COM/2(3)/2021/125 DATED 9.6.2021 ISSUED BY 1ST RESPONDENT TO PETITIONER.` - `Annexure A11 TRUE COPY OF LETTER NO.PM/DFS/TVD/202021/035 DATED 21.6.2021 ISSUED BY PETITIONER TO 1ST RESPONDENT.` - `Annexure A12 TRUE COPY OF MINUTES OF THE MEETING BETWEEN THE PETITIONER AND 1ST RESPONDENT WAS CONDUCTED ON 17.8.2020` AR 70/21 15 ``` RESPONDENTS’ EXTS:TRUE COPY OF THE LETTER NO.AAT/COM/2(3)/2020/114 DATED ANNEXURE R1(A)03.08.2020 ```