The Muthoot Plaza Airports Operations (a unit of Muthoot Hotels and Infrastructure Ventures (P) Ltd) v Union of India

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE ANTONY DOMINIC** **MONDAY, THE 21ST NOVEMBER 2011 / 30TH KARTHIKA 1933** **WP(C).No. 25679 of 2011(H)** **--------------------------** **PETITIONER(S):** **----------------------** **THE MUTHOOT PLAZA AIRPORTS OPERATIONS, (A UNIT OF MUTHOOT HOTELS AND INFRASTRUCTURE VENTURES (P) LTD, MUTHOOT CENTRE, PUNNEN ROAD, THIRUVANANTHAPURAM-695 034, REPRESENTED BY ITS SENIOR MANAGER, SABU ZACHARIA K.** **BY ADV. SMT.SUMATHY DANDAPANI, SENIOR ADVOCATE SRI.MILLU DANDAPANI** **RESPONDENT(S):** **------------------------** **1. UNION OF INDIA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, RAJIV GANDHI BHAVAN, SAFDARJUNG AIRPORT, NEW DELHI-110 037.** **2. THE AIRPORT AUTHORITY OF INDIA, HAVING ITS REGISTERED OFFICE AT RAJIV GANDHI BHAVAN,SAFDARJUNG AIRPORT, NEW DELHI-110 037. REPRESENTED BY ITS EXECUTIVE DIRECTOR.** **3. THE MANAGER, (COMMERCIAL), TRIVANDRUM INTERNATIONAL AIRPORT, THIRUVANANTHAPURAM-695 008.** **4. THE AIRPORTS DIRECTOR, TRIVANDRUM INTERNATIONAL AIRPORT, THIRUVANANTHAPURAM-695 008.** **5. ADDL.R5- THE ASSISTANT GENERAL MANAGER, STATE BANK OF INDIA, COMMERCIAL BRANCH, THYCAUD, TRIVANDRUM - 695014. (ADDL.R5 IS IMPLEADED AS PER ORDER DATED 30.09.2011 IN IA.15653/2011)** **ADV. SRI.P.PARAMESWARAN NAIR,ASG OF INDIA FOR R1 SRI.V.SANTHARAM FOR R2 TO 4 SRI.K.L.NARASIMHAN, SC, TVM AIRPORT ATY FOR R2 TO 4 SRI.R.S.KALKURA FOR ADDL.R5** **THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21/11/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **WPC NO.25679/11** ## **APPENDIX** ## **PETITIONER'S EXHIBITS** **EXHIBIT P1. PHOTOCOPY OF LICENCE AGREEMENT DATED 7/2/2002 ENTERED INTO BETWEEN THE 2ND RESPONDENT AND THE PETITIONER, FOR CONDUCTING SERVICE AT DOMESTIC TERMIONAL AT TRIVANDRUM AIRPORT.** **EXHIBIT P2. PHOTOCOPY OF LICENCE AGREEMENT DATED 7/2/2002 ENTERED INTO BETWEEN THE 2ND RESPONDENT AND THE PETITIONER, FOR CONDUCTING SERVICE AT DOMESTIC TERMIONAL AT TRIVANDRUM AIRPORT.** **EXHIBIT P3. PHOTOCOPY OF LETTER N.AAT/COM/3(23.1)/918 DATED 24/12/2008 OF THE 2ND RESPONDENT TO THE PETITIONER.** **EXHIBIT P4. PHOTOCOPY OF THE REPLY DATED 6/1/2009 OF THE PETITIONER TO THE 2ND RESPONDENT.** **EXHIBIT P5. PHOTOCOPY OF REPLY DATED 21.1.2009 TO THE PETITIONER BY THE 2ND RESPONDENT, VIDE NO.AAT/F&A/REV/MUTHOOT/2008-09/116.** **EXHIBIT P6. PHOTOCOPY OF COVERING LETTER DATED 6.3.2009 OF THE PETITIONER SUBMITTED TO THE 2ND RESPONDENT.** **EXHIBIT P7. PHOTOCOPY OF LETTER DATED 31.3.2009 OF THE PETITIONER TO THE 2ND RESPONDENT.** **EXHIBIT P8. PHOTOCOPY OF LETTER NO.AA/F&A/OD/2009/70 DATED 2/4/2009 OF THE 4TH RESPONDENT TO THE PETITIONER.** **EXHIBIT P8A. PHOTOCOPY OF REPLY DATED 15/4/2009 SUBMITTED BY THE PETITIONER BEFORE THE 4TH RESPONDENT.** **EXHIBIT P9. PHOTOCOPY OF LETTER NO.AAT/F&A/REV/209-10 DATED 23/4/2009 OF THE 2ND RESPONDENT.** **EXHIBIT P10. PHOTOCOPY OF LETTER NO.AAT/COM/3(23.1) 273 DATED 27/28/4/2009 BY THE 2ND RESPONDENT TO THE PETITIONER.** **EXHIBIT 11. PHOTOCOPY OF REPLY DATED 29/4/2009 TO THE 2ND RESPONDENT TO THE PETITIONER.** **EXHIBIT P12. PHOTOCOPY OF NOTICE VIDE NO.AAT/COM/3(23.1)/508 DATED 27/7/2009 OF THE 2ND RESPONDENT TO THE PETITIONER.** **EXHIBIT P13. PHOTOCOPY OF LETTER DATED 15/09/2009 OF THE PETITIONER TO THE 3RD RESPONDENT.** **EXHIBIT P14. PHOTOCOPY OF LETTER DATED 7/12/2009 OF THE PEITIONER TO THE ASSISTANT GENERAL MANAGER (ACCOUNTS), AIRPORTS AUTHORITY OF INDIA.** **EXHIBIT P15. PHOTOCOPY OF REPLY DATED 8/12/2009 VIDE NO.AAT/F&A/MUTHOOT/2009-10 TO THE PETITIONER BY ASSISTANT GENERAL MANAGER (ACCOUNTS), AIRPORTS AUTHORITY OF INDIA.** **WPC NO.25679/11** **-2-** **EXHIBIT P16. PHOTOCOPY OF REPLY DATED 28/7/2010 OF THE PETITIONER TO THE ASSISTANT GENERAL MANAGER (ACCOUNTS), AIRPORTS AUTHORITY OF INDIA.** **EXHIBIT P17. PHOTOCOPY OF REPLY DATED 29/7/2010 VIDE NO.AAT/F&A/MUTHOOT/2010-11 TO THE PETITIONER BY ASSISTANT GENERAL MANAGER (ACCOUNTS), AIRPORTS AUTHORITY OF INDIA.** **EXHIBIT P18. PHOTOCOPY OF NO DUE CERTIFICATE ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER VIDE NO.AAT/F&A/MUTHOOT/2010-11 DATED 25/1/2011.** **EXHIBIT P19. PHOTOCOPY OF NO DUE CERTIFICATE ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER VIDE NO.AAT/F&A/MUTHOOT/2011-12 DATED 26.5.2011.** **EXHIBIT P20. PHOTOCOPY OF TENDER DOCUMENT REGARDING ISSUANCE OF LICENCE FOR CONDUCTING SERVICE AT DOMESTIC TERMINAL BUILDING AT TRIVANDRUM AIRPORT.** **EXHIBIT P21. PHOTOCOPY OF TENDER DOCUMENT REGARDING ISSUANCE OF LICENCE FOR CONDUCTING SERVICE AT NEW TERMINAL BUILDING AT TRIVANDRUM AIRPORT.** **EXHIBIT P22. PHOTOCOPY OF COVERING LETTER DATED 31/5/2011 OF THE PETITIONER TO THE ASSISTANT GENERAL MANAGER (COMMERCIAL) AIRPORT AUTHORITY OF INDIA.** **EXHIBIT P23. PHOTOCOPY OF COVERING LETTER DATED 02/06/2011 OF THE PETITIONER TO THE ASSISTANT GENERAL MANAGER (COMMERCIAL) AIRPORT AUTHORITY OF INDIA.** **EXHIBIT P24. PHOTOCOPY OF INVOICE NO.AA1/COM/3(23.1)626 DATED 18/07/2011OF THE 3RD RESPONDENT ISSUED TO THE PETITIONER.** **EXHIBIT P25. PHOTOCOPY OF INVOICE NO.AA1/TV/NT/PR/11-12/09/293 DATED 21/08/2011 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.** **EXHIBIT P26. PHOTOCOPY OF LETTER DATED 23/8/2011 OF THE PETITIONER TO THE 4TH RESPONDENT.** **EXHIBIT P27. PHOTOCOPY OF INVOICE NO.AA1/TV/NT/PR/11-12/10/311 DATED 25/08/2011 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.** **EXHIBIT P28. PHOTOCOPY OF INVOICE NO.AA1/TV/NT/PR/11-12/09/321 DATED 5/09/2011 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.** **EXHIBIT P29. PHOTOCOPY OF LETTER NO.AAT/COM/3(23.7)/873 DATED 13/9/2011 OF THE 4TH RESPONDENT TO THE PETITIONER.** **EXHIBIT P30. PHOTOCOPY OF LETTER NO.AAT/COM/3(23.2)/874 DATED 13/9/2011 OF THE 4TH RESPONDENT TO THE PETITIONER.** **EXHIBIT P31. PHOTOCOPY OF LETTER NO.AAT/COM/3(23.4)/872 DATED 13/9/2011 OF THE 4TH RESPONDENT TO THE PETITIONER.** **WPC NO.25679/11** **-3-** **EXHIBIT P32. PHOTOCOPY OF TENDER NOTIFICATION PUBLISHED BY THE 4TH RESPONDENT IN HINDU DAILY DATED 12/9/2011.** **EXHIBIT P33. PHOTOCOPY OF LETTER NO.AAT/COM/3(23.1)/916 DATED 19/9/2011 OF THE 2ND RESPONDENT TO THE PETITIONER.** **EXHIBIT P34. PHOTOCOPY OF LETTER NO.AAT/COM/3(23.1)/1034 DATED 22/9/2011 OF THE 3RD RESPONDENT TO THE PETITIONER.** **EXHIBIT P35 PHOTOCOPY OF LETTER NO.AAT/COM/10(12)/2011/968 DATED 29.9.11 ISSUED BY THE RESPONDENT AUTHORITY TO THE ADDITIONAL 5TH RESPONDENT.** **EXHIBIT.P36: PHOTOCOPY OF LETTER NO.MISC/ADV/AMT/2/36 DATED 3.10.11 ISSUED BY ADDITIONAL 5TH RESPONDENT TO THE PETITIONER.** **EXHIBIT.P37: PHOTOCOPY OF LETTER DT 8.9.11 OF THE PETITIONER TO THE 4TH RESPONDENT.** **EXHIBIT P38: PHOTOCOPY OF LETTER NO.AAT/COM/3(23.2)/11/924-936 DATED 20.9.11 ISSUED BY THE RESPONDENT AUTHORITY TO M/S.CASINO AIR CATERERS, ANGAMALY.** **EXTHIBIT P39: PHOTOCOPY OF TENDER DOCUMENT FOR OPERATING RESTAURANT WITH KITCHEN IN THE 1ST FLOOR DEPARTURE OF THE PROPOSED DOMESTIC TERMINAL.** **EXTHIBIT P40: PHOTOCOPY OF TENDER DOCUMENT IN RELATION TO EXECUTIVE LOUNGE IN THE NEW INTERNATIONAL TERMINAL.** ## **EXTS OF R3** **EXT.R3(a): TRUE COPY OF THE LETTER DATED 14.7.11. EXT.R3(b): TRUE COPY OF THE COMMUNICATION DT 18.7.11 ISSUEDBY THEPETITIONER TO AAI.** **EXT.R3(c): TRUE COPY OF THE COMMUNICATION NO.AAT/COM/3 (23.1)/866 DATED 12.9.11 ISSUED BY AAI TO PETITIONER.** **EXT.R3(d): TRUE COPY OF THE LETTER DT 26.3.09 ISSUED BY AAI TO THE PETITIONER.** **EXT.R3(e): TRUE COPY OF THE LETTER NO.AAT/COM/3(23.1)/730 DATED 16.8.11 ISSUED BY THE 4TH RESPONDENT.** **EXT.R3(f): TRUE COPY OF THE COMMUNICATION NO.AAT/TVM/F&A/NT REV/201112/47 DATED 7.9.11.** **EXT.R3(g): TRUE COPY OF THE COMMUNICATION NO.AAT/COM/3(18)/2011/723 DATD 10.8.11.** **EXT.R3(h): TRUE COPY OF THE COMMUNICATION NO.AAT/COM/3(23.4)2011/7868 DATED 18.8.11.** **EXT.R3(i) TRUE COPY OF THE COMMUNICATION NO.AAT/COM/3(19)/2011/722 DATED 10.8.11.** **WPC NO.25679/11 -4EXT.R3(j): TRUE COPY OF THE LETTER DT 20.9.11. EXT.R3(k): TRUE COPY OF THE LETTER DATED 22.9.11 ISSUED BY AAI. EXT.R3(l): TRUE COPY OF THE RELEVANT CHAPTERS 4 AND 12 OF THE COMMERCIAL MANUAL OF AAI.** **EXT.R3(m): TRUE COPY OF THE TENDER NOTIFICATION DT 15.11.11 PUBLISHED IN THE HINDU NEWS DAILY.** ## **//TRUE COPY//** **P.A. TO JUDGE** **Rp** ## **ANTONY DOMINIC, J. ================ W.P.(C) NO. 25679 OF 2011 =====================** ## **Dated this the 21[st] day of November, 2011** ## **J U D G M E N T** Petitioner is a Company incorporated under the provisions of the Companies Act, 1956. They have filed this writ petition, seeking to quash Exts.P29, P30 and P32 to P34 communications issued by respondents 2 to 4 and for consequential reliefs. 2. Exts.P1 and P2 are two licence agreements executed between the petitioner and the respondents authorising the petitioner to conduct a restaurant and two snack bars at the Domestic Terminal and one restaurant and three snack bars at the International Terminal of the Thiruvananthapuram International Airport. The period of the licences was ten years from 21/07/2001. In so far as it is relevant, clause 6 of the licence agreement provides for payment of interest at the rate of 18% on delayed payments and clause 30 provides for resolution of disputes by arbitration. 3. On the strength of the licence agreements, petitioner commenced the business and sometime later, it appears that disputes arose between the parties regarding the area to be **WPC No. 25679/11** **-2-** occupied by the petitioner and on other related issues. These disputes were finally settled between the parties and Ext.P3 communication dated 24/12/2008 was issued by respondents 2 to 4, which reads as under:- _“Please refer to your letter dated 22.11.2008 on the subject cited above._ _In this regard, as per communication received from Hqrs. vide letter No.COM/912/7.3/2001/Vol.I dated 17.12.2008, based on the negotiation carried out by the committee of AAI officers at Trivandrum Airport and confirmation of the terms of the negotiation by you, approval of the Competent Authority is hereby conveyed on the issue as under:-_ _a) To settle the outstanding dues up to the period 21.7.06 and to pay the licence fee from 22.7.06 @ 50% for the balance period of contract along with applicable annual escalation and also taxes, if any including service tax._ _b) To surrender the balance area after retaining 700 Sq.Ft. for restaurantcum-kitchen from the date of decision_ **WPC No. 25679/11** **-3-** ## _conveyed by AAI._ _c) All other electricity /water charges shall be as applicable._ _d) The contract shall be valid only upto its original date of expiry as per award._ _e) Agreed to clear the outstanding dues and submit valid bank guarantee immediately after the excess space is taken back._ _In view of above, you are requested to pay the licence fee up to the period 21.07.06 as per the original agreement and to pay the licence fee from 22.7.06 @ 50% for the balance period of contract along with applicable annual escalation and also taxes, if any, including applicable service tax, electricity, water charges as applicable. You may also surrender the balance area after retaining 700 Sq.Ft. for Restaurant and Kitchen as agreed by you._ _You shall also clear all the outstanding dues up to date and submit valid Bank Guarantee for Rs.34,49,515/- (Rupees Thirty four lakhs forty nine thousand five hundred and fifteen only) (i.e._ **WPC No. 25679/11** **-4-** _Rs.30,70,056/- being security deposit on 10[th] years licence fee and Rs.3,79,459/- by Service tax @ 12.36%) immediately for the balance period of contract as agreed which shall be valid for the entire period of the contract plus 6 months overlapping period as per policy (i.e. upto 20.01.2012)_ _You are, therefore, requested to comply with the above immediately and to pay the licence fee regularly as agreed to AAI for the continuance of the Restaurant and Snack bars in the International Terminal at this airport.”_ 4. The terms stated in Ext.P3 was confirmed by the petitioner by Ext.P4 communication. At this stage itself, it needs to be noticed that, despite the provision contained in clause 6 of Exts.P1 and P2 providing for interest for delayed payments, Ext.P3 did not provide for any such liability. However, when Ext.P5 communication was issued by the respondents on 21/01/2009, the petitioner was informed that, including interest, its liability as per Ext.P3 was `1,40,52,629/- and they were requested to settle the outstanding. On receipt of Ext.P5, the **WPC No. 25679/11** **-5-** demand for interest was disputed by the petitioner by Ext.P7 letter dated 31/03/2009, and in the meanwhile, petitioner made a part payment by way of Ext.P6 letter and also furnished a Bank Guarantee, for the amount specified in Ext.P3. This was followed by Ext.P8 letter of the respondents, informing the petitioner that as on 31/03/2009, the total outstanding in its account was `1,24,40,211/- and requiring the petitioner to pay the amounts. On its receipt, petitioner replied by Ext.P8(a) again disputing the interest demanded. 5. Subsequently, respondents issued Ext.P9 dated 23/04/2009, confirming that as on 31/03/2009, the balance outstanding from the petitioner towards various heads specified therein was `57,32,159.50 and this was followed by Ext.P10 letter from the respondents on 27/04/2009, as a reply to Ext.P8(a) and requesting the petitioner to make payment of the amount due. The petitioner again by Ext.P11 letter protested the demand for interest and also enclosed cheque for `30,93,600/- exclusive of TDS `9,06,400/-. Immediately thereafter, by Ext.P12 letter dated 27/07/2009, the respondents informed the petitioner that as on **WPC No. 25679/11** **-6-** 30/06/2009, the total outstanding liability due from the petitioner was `37,12,139/-. It is to be stated that in this letter among the dues of the petitioner, there was no mention of any interest. On receipt of Ext.P12, petitioner, by Ext.P13, forwarded a cheque for `30,47,054/- towards full settlement of the outstanding dues as on 14/09/2009, clarifying that the amount is exclusive of TDS `8,83,906/-. 6. According to the petitioner, this was followed by Ext.P14 dated 07/12/2009, enclosing another cheque for `5,02,783/- and requesting for the issuance of No Due Certificate. In response to Ext.P14, the respondents issued Ext.P15 certificate indicating that up to 30/11/2009, an amount of `14,86,547/- was due and that in addition, an amount of `40,69,426/- was also due towards interest of delayed payment. 7. It is stated that on 28/07/2010, petitioner made yet another request for a No Due Certificate and in response thereto, Ext.P17 certificate was issued, in which, the liability of the petitioner up to 30/06/2010 was indicated to be `11,76,514/-. It was also mentioned that, towards interest, `38,96,149/- was due **WPC No. 25679/11** **-7-** from the petitioner. Subsequently, Exts.P18 and P19 certificates were issued to the petitioner on 25/01/2011 and 26/05/2011 respectively, which indicated that an amount of `39,34,746/- till 31/12/2010 and `39,60,400/- till 26/05/2011, towards interest was due from the petitioner. These certificates also say that the amounts mentioned was subject to the decision of the Airport Authority of India. These certificates read as under:- ## _“_ _**Ext.P18**_ _This is to certify that M/s.Muthoot Plaza has cleared all bills raised on them till 31.12.2010. They shall have to pay Service Tax Arrears Rs.5,77,927/- subject to Court decisions since the same is pending before Hon'ble High Court of Kerala and interest on outstanding dues Rs.39,34,746/- (till 31.12.2010) subject to AAI decision on the same.”_ _(emphasis supplied)_ ## _**Ext.P19**_ _The details of outstanding dues of M/s.Muthoot Plaza amounting to Rs.50,37,785/- as on 26/5/2011 are given below:_ **WPC No. 25679/11** **-8-** _PARTICULARS REMARKS 1) Service Tax ArrearSubject to Rs.5,77,927/-. court decisions, since the same is pending before Honourable High Court of Kerala. 2) Licence Fee for the month of May 2011 : Rs.4,99,458/-_ _3) Interest on delayed payments - Rs.39,60,400/(Thirty Nine lakhs Sixty Thousand Four Hundred only till 26.5.2011) towards interest on delayed payment. The matter is pending with AAI, RHQ, Chennai.”_ _(emphasis supplied)_ 8. Thus, while the respondents were demanding interest from the petitioner, the amount of which was varying in each of the communications issued by them, they issued Exts.P20 and P21 tender notices, inviting fresh tenders for the restaurants, Executive Lounge and the Snack Bars in the Domestic and International Terminals of the Thiruvananthapuram International Airport for the period subsequent to the licence period. In response to the tender notices, petitioner submitted Exts.P22 and P23 bids. While the bids were under consideration, Ext.P25 invoice was issued to the petitioner, indicating that it had a **WPC No. 25679/11** **-9-** liability of `49,36,005.16 towards interest. In Ext.P26 communication, petitioner again objected to the demand and immediately thereafter, the respondents issued Ext.P27 invoice, cancelling Ext.P25 and demanding an amount of `42,05,810.08 towards interest. This was followed by Ext.P28, cancelling Ext.P27 and demanding `41,05,942.37 towards interest. 9. While the petitioner was thus disputing its liability to pay interest, Exts.P29 and P30 were issued by the respondents on 30/09/2011, rejecting the tender submitted by the petitioner in response to Exts.P20 and P21 and returning the EMD. These communications are identically worded and for reference Ext.P29 is extracted below:- _“Please refer the subject cited above._ _Your tender for the subject facility has been rejected by the Competent Authority due to the non-payment of interest on delayed payments._ _The EMD submitted by you for an amount of Rs.1,05,660/- vide DD dated 30.05.2011 drawn on IDBI Bank Ltd is returned herewith._ _Thank you for participating in the_ **WPC No. 25679/11** **-10-** _tender process._ ## _Kindly acknowledge receipt.”_ 10. From this communication itself, it is evident that the non payment of interest on delayed payments is the only reason for rejecting the petitioner's tender. It appears that the petitioner's offer was the highest for the Executive Lounge in the International Terminal and one restaurant in the Domestic Terminal and in view of Exts.P29 and P30 rejecting the petitioner's bids, the respondents published Ext.P32 fresh tender notice inviting bids for the Lounge to restaurant. They also issued Ext.P33, demanding from the petitioner, remittance of an amount of `44,24,994.37, which includes `39,32,742.37 towards interest. 11. It was at that stage, the writ petition was filed with the following prayers:- _“ (i) Call for the records leading to the documents, Exts.P29, P30, P32, P33 and P34 issued by the second respondent and issue a writ of certiorari or any other appropriate writ, order or direction quashing Exts.P29, P30, P32, P33 and P34. (ii) Issue a writ of mandamus or any_ **WPC No. 25679/11** **-11-** _other appropriate writ, order or direction, directing 2[nd] respondent not to encash the Bank Guarantee furnished by the petitioner as per Ext.P33._ _(iii) Issue a writ of mandamus or any other appropriate writ, order or direction, directing second and third respondents to take any follow-up action in pursuance of Ext.P32._ _(iv) Issue a writ of mandamus or any other appropriate writ, order or direction, directing respondents 2 and 3 to permit the petitioner to continue the service as per Ext.P24.”_ 12. A counter affidavit has been filed by the respondents. According to the respondents, petitioner was always a chronic defaulter in paying the various charges that were due to them under Exts.P1 and P2 licence agreements. It is stated that the dispute between the parties were settled by Ext.P3 and the amount due in terms of Ext.P3 were to be paid by the petitioner in terms of Exts.P1 and P2 licence conditions. In other words, what is contended is that although Ext.P3 did not state that the amount due thereunder will carry interest, in view of the provisions **WPC No. 25679/11** **-12-** contained in Exts.P1 and P2 licence agreements, petitioner was liable to pay interest. It was contended that this demand was reiterated by the respondents in the various communications issued by them. It is stated that despite various demands, petitioner did not pay the interest due and in such circumstances, the petitioner being a defaulter, the respondents had no option, but to reject the tender submitted by the petitioner pursuant to Exts.P20 and P21 tender notices. 13. In so far as the difference in the amounts demanded in the various communications issued by them is concerned, that contradiction is sought to be explained by the learned counsel for the respondents by stating that various officers have issued the aforesaid communications and therefore omission to take one element or the other amount due from the petitioner has resulted in the variation in the amounts due from the petitioner. Learned counsel has also submitted that since there is a dispute regarding the demand for interest, such a dispute is a matter which should form subject matter of arbitration proceedings in terms of Exts.P1 and P2 licence agreements. However, according to the counsel, **WPC No. 25679/11** **-13-** petitioner is presently a defaulter and hence they were justified in rejecting the tender. 14. It was also brought to the notice of this Court that among the tenders received in response to Exts.P20 and P21, petitioner's offer for the executive Lounge in the International Terminal and one restaurant in the Domestic Terminal were the highest. It is stated that on account of the rejection of the petitioner's tender, retenders were invited by Ext.P32 and that the attempt was unsuccessful. It is submitted that thereafter Ext.R3 (m) tender notice was again issued by the respondents and that the matter stands at that stage. It was also clarified that, in so far as the other items covered by Exts.P20 and P21 tender notices, viz., one restaurant and three snack bars in the International Terminal and one snack bar in the Domestic Terminal are concerned, tenders submitted by another tenderer, being the highest, were accepted and licence agreements have already been entered into with them. Counsel also placed reliance on the Apex Court judgment in _**Jagdish Mandal v. State of Orissa**_ {(2007) 14 SCC 517} and contended that the conduct of the 1[st] **WPC No. 25679/11** **-14-** respondent did not spell out any arbitrariness and that there is no public interest involved in the matter, warranting interference of this Court. 15. I have considered the submissions made by both sides. 16. First of all, I wish to clarify that it is not the endeavour of this Court to decide whether in the facts of the case, petitioner is liable to pay interest or not, nor is this Court expected to quantify the amount that is allegedly due from the petitioner. On the other hand, the scope of the enquiry undertaken by this Court is only to examine whether in view of the controversy that is prevailing between the parties, it was arbitrary on the part of the respondents to have rejected the tender submitted by the petitioner in response to Exts.P20 and P21 on the ground that the petitioner had defaulted payment of interest demanded by the respondents. 17. Admittedly, there is a dispute between the parties as to whether interest is due from the petitioner. Petitioner admits that in Exts.P1 and P2, Clause 6 provides for payment of interest at the rate of 18% for delayed payment of the dues. However, the **WPC No. 25679/11** **-15-** case of the petitioner is that on account of various reasons such as reduction in the area allotted, there were disputes between the parties and as a result, the payments also were remaining outstanding. It is stated that, on negotiation, this dispute between the parties was settled and Ext.P3 was issued by the respondents, which has been extracted in the earlier portion of this judgment. According to them, since Ext.P3 did not provide for any interest, they are not liable to pay interest for the amount due under Ext.P3. 18. On the other hand, the case of the respondents is that the amount due under Ext.P3 has to be paid in terms of the provisions contained in Exts.P1 and P2 licence agreements, which provide for payment of interest on belated payments by the licencee. It is contended that therefore the petitioner is liable to pay interest for the amount due under Ext.P3. It is this controversy which give rise to the dispute between the parties regarding the liability for interest. 19. Apart from the dispute on the liability for interest, even if it is held that petitioner is liable, the further dispute to be **WPC No. 25679/11** **-16-** resolved is regarding the exact amount due towards interest. As can be seen from the various communications issued by the respondents themselves, they have been demanding different amounts from the petitioner towards interest in the different communications issued by them. In Ext.P9 issued on 23/4/2009, the respondents say that the total amount including interest due as on 31/3/2009 was `57,32,159.50/-. Subsequently, when they issued Ext.P12 on 27/7/2009, it was stated that, as on 30/6/09, `37,12,139/- was due and this did not include any amount towards interest. Still later, on 8/12/2009, when Ext.P15 was issued, it was stated that `40,69,426/- was due towards interest. This was followed by Ext.P17 dated 29/7/2010 where it was stated that upto 30/6/2010, the interest due was `38,96,149/- Again in Ext.P18 dated 25/1/11, it was stated that till 31/12/2010, an amount of `39,34,746/- was due towards interest and that the said demand was subject to the decision of the Airport Authority of India. This was followed by Ext.P19 where also they state that till 26/5/11, the amount due towards interest was `39,60,400/-. In this document also it was stated that the question of interest was **WPC No. 25679/11** **-17-** pending before the Regional Headquarters of the Airport Authority of India. Again, when they issued Ext.P25 invoice, it was indicated that interest due from the petitioner was `4,936,005.16. When the petitioner objected by Ext.P26, they issued Ext.P27 cancelling Ext.P25 and demanding `4,205,810.08. This was followed by Ext.P28 cancelling Ext.P27 and stating that the amount due from the petitioner was `4,105,942.37. Subsequently, when Ext.P33 was issued, the amount demanded was `39,32,742.37/-. 20. I have made reference to these documents only to indicate two aspects. First is that, while they are asserting that the petitioner is liable, the respondents themselves are not certain about the amount allegedly due from the petitioner towards interest. The second aspect of the matter is that in Exts.P18 and P19, respondents themselves said that the demand for interest is subject to the decision of the Airport Authority of India and nowhere in their pleadings or documents, has the respondents disclosed that any final decision in the matter has been taken by them. Thus, not only that there is a dispute on the liability for interest, but also the amount demanded from the **WPC No. 25679/11** **-18-** petitioner towards interest is yet to be determined fully and finally. Thus, the resultant position that is emerging is that the liability of interest is in dispute, and that, if at all there is liability, the amount due is yet to be determined. Further, even according to the Airport Authority, as they themselves have stated in Exts.P17 and P18, the demand is subject to decision by the Airport Authority of India. Both sides are in agreement that Exts.P1 and P2 licence deeds provide for resolution of disputes by way of arbitration and both sides are also in agreement that the disputes between them are arbitrable disputes. Therefore, since the demand for interest and the amount due are arbitrable disputes and it is for the parties to get the disputes resolved in arbitration proceedings held in terms of the agreement between themselves. 21. While the aforesaid dispute remains unresolved, it also is to be noticed that a bank guarantee furnished by the petitioner, the value of which according to the additional fifth respondent Bank is `54,44,935/- is available with the respondents, and even according to the last communication issued by the Airport **WPC No. 25679/11** **-19-** Authority viz., Ext.P33, the total amount due from the petitioner is only `44,24,994.37. This would therefore show that if at all any amount is held to be due to the respondents, that is also fully secured. It is despite all these, the petitioner's bids were rejected on the allegation that it had defaulted payment of interest. 22. Taking into account these circumstances, I am satisfied that rejection of the petitioner's tenders submitted pursuant to Exts.P20 and P21 on the ground that the petitioner had defaulted interest on belated payments was arbitrary and cannot be sustained. 23. However, during the course of the arguments, it was pointed out on behalf of the respondents that during the pendency of the writ petition, the Terminal has been shifted and that the area available to the contractor is also reduced. According to them, these specifications have been shown in Ext.R3(m) tender notice and that having regard to these developments, petitioner should participate in the tender. However, having regard to the fact that the rejection of the petitioner's tender has now been held to be illegal, and since the **WPC No. 25679/11** **-20-** shifting of the Terminal is a subsequent development, such shifting of the Terminal or variation in the area cannot affect the rights of the petitioner. I say so for the reason that if the petitioner were awarded contract accepting Exts.P22 and P23 submitted by it, in view of the subsequent shifting of the Terminal, automatically the petitioner would have been permitted to occupy the areas earmarked in the new Terminal. 24. Therefore, I quash Exts.P29 and P30 and direct the petitioner to immediately resubmit the EMD that was returned as per Exts.P29 and P30, in which event, the licence agreements will be entered into between the parties allotting the petitioner the earmarked areas in the Terminals subject to the other tender conditions. 25. Admittedly, there are disputes between the parties about the liability for interest that is due under Ext.P3 and if the petitioner is held to be liable, the amount due also has to be ascertained. As already seen, Exts.P1 and P2 licence agreements provide for arbitration and both parties are in agreement that the aforesaid disputes between them are arbitrable disputes. In fact, **WPC No. 25679/11** **-21-** the petitioner has already asked for the appointment of an Arbitrator as per Ext.P26 dated 23/8/11. In such circumstances, in order to have an early resolution of the disputes, I direct the 2[nd] respondent, the designated authority under the licence agreements, to appoint an Arbitrator in terms of the provision contained in the agreements. Such appointment shall be made without any further delay. 26. As already seen, the last communication issued by the respondents demanding interest and other dues is Ext.P33, where the total amount including interest demanded is `44,24,994.37/-. Now that the 2[nd] respondent has been ordered to appoint an Arbitrator to resolve the disputes between the parties, in order to ensure that in case award is passed in favour of the respondents, necessary amount is available to realise the dues, I direct that an amount of `45,00,000/- (Rupees Forty five lakhs only) will be kept in deposit by the 5[th] respondent in the name of the 4[th] respondent in an interest bearing Fixed Deposit Account. The amount shall be kept in deposit till award is passed in the arbitration dispute and on conclusion of the dispute, the amount will be appropriated **WPC No. 25679/11** **-22-** among the parties, in terms of the directions in the award. 27. It is informed by the counsel appearing for the 5[th] respondent that the Bank guarantee was invoked by the Airport Authority and accordingly, Demand Draft for `54,44,935/- was drawn on 29/9/11, and that, in view of the order dated 30[th] of September, 2011, this Demand Draft is still retained by the 5[th] respondent itself. 28. Having regard to the fact that this Court has ordered that an amount of `45,00,000/- be kept in deposit by the Bank till award is rendered by the Arbitrator to be appointed by the 2[nd] respondent, it is also directed that the 5[th] respondent will cancel the Demand Draft drawn on 29/9/11. Out of the amounts available, `45,00,000/- (Rupees Forty five lakhs only) will be kept in deposit as ordered above and if the respondents have no other claim on the balance, such amount will be credited in the petitioner's account or released to them. Writ petition is disposed of as above. ## **ANTONY DOMINIC, JUDGE** Rp