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High Court of Judicature at Bombay
S.C. DHARMADHIKARI & G.S. PATEL, JJ.
Housing Development and Infrastructure Limited
Versus
Mumbai International Airport Private Limited & Others
Appeal (L) No. 365 of 2013 in Arbitration Petition (L) No.902 of 2013
Decided on : 28-11-2013
Whether the Slum Rehabilitation Contract is a contract for land, and HDIL's claims are in the nature of a claim for land.
Fact of the Case:
HDIL was awarded the Airport Slum Rehabilitation Project ("Project") by MIAL. HDIL was required to perform some of MIAL's obligations under the OMDA. Among those obligations were the clearance of the Airport slums and the rehabilitation of eligible slum dwellers. The construction of rehabilitation tenements and HDIL's contractual arrangements with SRA were referenced in the Slum Rehabilitation Contract between MIAL and HDIL, but they could hardly be said to be part of that single transaction. For, the conveyances are clearly severable, and it is entirely conceivable that HDIL could have obtained rehabilitation lands, constructed rehabilitation tenements on them, conveyed those to SRA and obtained TDR benefits without this in any way affecting the Slum Rehabilitation Contract. To put it another way, it is perhaps a matter of convenience or happenstance rather than contractual obligation that HDIL acquired these lands and conveyed them to SRA. It cannot be said that unless HDIL and HDIL alone acquired these lands and conveyed them to SRA, the entire project of slum clearance would necessarily fail.
Finding of the Court:
The Slum Rehabilitation Contract is not a contract for land, and HDIL's claims are not in the nature of a claim for land. The definition of “Developer's Portion” as also Clause 4 of the Slum Rehabilitation Contract along with the termination clause (Clause 25) make it clear that HDIL's entitlement to a share in some of the lands released from encroachment was contingent upon the successful performance of its obligations under the Slum Rehabilitation Contract and that these obligations had to be fulfilled within the time frame stipulated. Indeed Clause 4.1 of the Slum Rehabilitation Contract opens with the words “Upon completion of complete Scope of Work for Phase 1(i), 1(ii) and a portion of Phase 1(iii) for a minimum 28,000 hutments”. This is also evident from the definition of “Developer's Portion” itself, for the earmarking of pockets of the Released Land necessary to constitute the Developer's Portion could not be done till these three phases were completed. In other words, HDIL's entitlement, if any, did not crystallise upon the execution of the Slum Rehabilitation Contract. If it did not fulfil its obligations it acquired no rights. This is quite distinct from a contract for land, in which, usually, a vested right in respect of identified land accrues or crystallised on execution of the contract itself. In this case, HDIL's claim is that this is a contract for two different tracts of land. One is the rehabilitation land (“Developer's Land”) on which rehabilitation tenements were to be constructed. We have found, as has the court below, that this land is not the subject matter of the Slum Rehabilitation Contract. That leaves only the second tract, the so-called “Developer's Portion”, an area of about 65.2 acres from part of the Phase 2 lands. HDIL had no rights in the Developer's Portion on the execution of the Slum Rehabilitation Contract. Its acquisition of those rights depended on its fulfilment, in a time-bound manner, of certain defined contractual obligations. Unless those obligations were met, HDIL acquired no rights in the Developer's Portion. Therefore, the argument that the Slum Rehabilitation Contract is a contract for land depends entirely on HDIL being able to show that it has fully complied with those conditions precedent. At the cost of repetition, these conditions precedent are HDIL's successful completion of its Scope of Work for Phase 1(i), 1(ii) and a portion of Phase 1(iii) for a minimum 28,000 hutments. HDIL has not met these conditions. It has not fulfilled these obligations. HDIL's recompense is expressly dependent on, and a factorial of, this completion schedule. Failing to meet this requirement resulted in HDIL losing its entitlement. HDIL cannot, therefore, be said to have any interest in the lands comprised in the Developer's Portion either.
Issues: Whether the Slum Rehabilitation Contract is a contract for land, and HDIL's claims are in the nature of a claim for land.
Ratio Decidendi: The Slum Rehabilitation Contract is not a contract for land, and HDIL's claims are not in the nature of a claim for land. The definition of “Developer's Portion” as also Clause 4 of the Slum Rehabilitation Contract along with the termination clause (Clause 25) make it clear that HDIL's entitlement to a share in some of the lands released from encroachment was contingent upon the successful performance of its obligations under the Slum Rehabilitation Contract and that these obligations had to be fulfilled within the time frame stipulated. Indeed Clause 4.1 of the Slum Rehabilitation Contract opens with the words “Upon completion of complete Scope of Work for Phase 1(i), 1(ii) and a portion of Phase 1(iii) for a minimum 28,000 hutments”. This is also evident from the definition of “Developer's Portion” itself, for the earmarking of pockets of the Released Land necessary to constitute the Developer's Portion could not be done till these three phases were completed. In other words, HDIL's entitlement, if any, did not crystallise upon the execution of the Slum Rehabilitation Contract. If it did not fulfil its obligations it acquired no rights. This is quite distinct from a contract for land, in which, usually, a vested right in respect of identified land accrues or crystallised on execution of the contract itself. In this case, HDIL's claim is that this is a contract for two different tracts of land. One is the rehabilitation land (“Developer's Land”) on which rehabilitation tenements were to be constructed. We have found, as has the court below, that this land is not the subject matter of the Slum Rehabilitation Contract. That leaves only the second tract, the so-called “Developer's Portion”, an area of about 65.2 acres from part of the Phase 2 lands. HDIL had no rights in the Developer's Portion on the execution of the Slum Rehabilitation Contract. Its acquisition of those rights depended on its fulfilment, in a time-bound manner, of certain defined contractual obligations. Unless those obligations were met, HDIL acquired no rights in the Developer's Portion. Therefore, the argument that the Slum Rehabilitation Contract is a contract for land depends entirely on HDIL being able to show that it has fully complied with those conditions precedent. At the cost of repetition, these conditions precedent are HDIL's successful completion of its Scope of Work for Phase 1(i), 1(ii) and a portion of Phase 1(iii) for a minimum 28,000 hutments. HDIL has not met these conditions. It has not fulfilled these obligations. HDIL's recompense is expressly dependent on, and a factorial of, this completion schedule. Failing to meet this requirement resulted in HDIL losing its entitlement. HDIL cannot, therefore, be said to have any interest in the lands comprised in the Developer's Portion either.
Final Decision: Appeal dismissed.
G.S. Patel, J.
1. This appeal is directed against an order dated 23rd August 2013 passed by a learned Single Judge of this Court dismissing the Appellants’ petition under Section 9 of the Arbitration & Conciliation Act, 1996 (“the Arbitration Act”). By consent, we took up the matter for final disposal at the stage of admission. We heard learned Counsel for the appearing parties at considerable length.
2. The Airports Authority of India (“AAI”), constituted under the Airport Authority of India Act, 1994, is responsible for the development, management, and maintenance of airports in India. It owns or controls about 1,980 acres of land in Mumbai. This is the land of Mumbai’s Chhatrapati Shivaji International Airport (“CSIA”; “the Airport”). An estimated one-sixth of this land is encroached and is unavailable for CSIA operations and use. Some of the slums and shanties on this encroached land are in perilous proximity to the CSIA. In the past decade or so, and particularly with the entry of private airline operators, the demands on CSIA’s facilities have surged. These facilities are now over-stretched, and the CSIA requires expansion, modernisation and upgrading. Any such expansion necessarily involves a relocation and resettlement of those who live in the slums on the airport land. This is not just a matter of eviction and bulldozing structures: this is, after all, a human problem, one of town planning and alternative housing. Given the extent of encroachment, clearing this land for CSIA use is possibly the single largest slum re-development and rehabilitation project in the history of this country; certainly in the history of this city.
3. The 2nd Respondent, Mumbai International Airport Pvt. Ltd, (“MIAL”) is a joint venture company. The AAI holds 26% of MIAL’s equity. The rest is divided between GVK Airport Holdings Pvt. Ltd, Bid Services Division (Mauritius) Ltd and ACSA Global Ltd, and there is a shareholders’ agreement of 4th April 2006 between these entities. MIAL was incorporated specifically to take over the operations, expansion and upgrading of CSIA. Also on 4th April 2006, AAI and MIAL entered into another agreement by which AAI granted MIAL exclusive rights for the operation, management and development of CSIA. Under this agreement, referred to as the “OMDA”, MIAL was tasked with the “function of operating, maintaining, developing, designing, constructing, upgrading, modernising, financing and managing” CSIA; and MIAL had exclusive rights and authority in respect of these functions. Though wide, these are only some of AAI’s functions; others, such as customs, immigration, security, etc., remained with AAI. The OMDA is essentially a public-private partnership, where a public function (or set of public functions) to be performed by an authority constituted under a statute, the AAI, was permitted to be carried out by a private enterprise, MIAL.
4. To be effective, the OMDA required the execution of several further documents and agreements. We are not concerned with all of these. It is sufficient to note that among the other documents, deeds and agreements executed pursuant to the OMDA were two lease deeds, an agreement in respect of CNS/ATM facilities, a state support agreement with the Union of India and an escrow agreement. Other than a supplemental lease deed, which is dated 15th May 2009 and which added an additional 101,175 sq.mts. to MIAL’s lease, all the other agreements were executed between 26th and 28th April 2006. The two agreements following the OMDA and material for our purposes are (i) A State Support Agreement dated 27th April 2006 between the State Government and MIAL for providing MIAL with State Government support for the modernization and upgrading of the Airport; and (ii) an Agreement dated 12th December 2006 between MIAL and the 5th Respondent, the Mumbai Metropolitan Regional Development Agreement (“MMRDA”) for freeing some of the AAI land of encroachments.
5. Modernizing, upgrading and ex
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