The court established that eviction disputes from public premises, as identified in lease agreements, are not arbitrable, requiring adherence to the specific contractual exclusions. This determination respects the parties' contractual intentions.

JUDGMENT :

SOMASEKHAR SUNDARESAN, J.

Core Controversy:

1. This bunch of proceedings essentially centre around one core question – whether disputes and differences relating to eviction and recovery of dues under lease deeds governing two parcels of land, fall within the scope of the arbitration agreements contained in the lease deeds, particularly in the light of the inherent deeming declarations and exclusions contained in the lease deeds.

Context and Factual Background:

2. Hotel Leela Venture, now HLV Ltd. (“Leela”) and the Airports Authority of India, including the former International Airports Authority of India [The IAAI merged into the AAI under the AAI Act] (“AAI”) have executed three lease deeds in respect of land owned by AAI in favour of Leela. The first two lease deeds dated October 19, 1983 and November 22, 1983 were for lease of two parcels of land admeasuring 9,000 square feet each (“18,000 Land”) to enable Leela to construct a hotel and a flight kitchen. The lease was for a period until July 11, 2012 (i.e. 30 years).

3. Thereafter, on February 7, 1996, another lease deed was executed between the parties in respect of another parcel of land admeasuring 11,000 square metres (“11,000 Land”) owned by AAI for Leela to construct a hotel wing on such land. This lease deed was for a period until March 31, 2024.

4. Under the lease deeds for the 18,000 Land, Leela was to pay the stipulated lease rent and 2% of the gross turnover of the business of running the hotel and flight kitchen. Under the lease deed for the 11,000 Land, Leela had to pay the higher of: (i) the amounts set out in the schedule to a supplemental agreement of the same date (February 7, 1996) and (ii) amounts equal to 7.5% of the turnover of the new hotel wing. Separately, certain private lands were to be amalgamated with the 18,000 Land.

5. Each of the lease deeds is near-identical in its terms. Each contains an arbitration clause, which makes an exception as to what is arbitrable. Prior in sequence to the arbitration clause, each lease deed contains another clause that explicitly provides that the land leased by AAI to Leela would be deemed to be public premises as defined in The Public Premises (Eviction of Unauthorised Occupants) Act, 1971 [There is an error in the title nomenclature for this legislation in some clauses of the lease deeds - the words in parenthesis in the contracts are “Unauthorised Occupants Eviction” instead of “Eviction of Unauthorised Occupants.” However, there is no doubt about the legislation the parties had in mind and in other places it is accurately named] (“Public Premises Eviction Act”), regardless of the building constructed on the land.

6. The arbitration clause in each lease deed provides that all disputes and differences arising from, or in any way touching or concerning the lease deed are arbitrable. However, the arbitration clause in each lease deed explicitly excludes from arbitration any facet on which a decision is to be taken otherwise, or to which the Public Premises Eviction Act and rules made thereunder are applicable.

7. The arbitration clause provides for a unilateral appointment by the Chairman of AAI. Leela first applied [Commercial Arbitration Application No. 28 of 2017 in respect of the 18,000 Land – filed on January 20, 2017 and Commercial Arbitration Application No. 64 of 2025 in respect of the 11,000 Land – filed on September 29, 2021] to this Court in respect of the lease deeds relating to the 18,000 Land, under Section 11 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) to appoi