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IN THE HIGH COURT AT CALCUTTA, (CIRCUIT BENCH AT JALPAIGURI)
I. P. MUKERJI, J.
M/s. Amazing India Contractors Pvt. Ltd. – Petitioner
Versus
The Airport Authority of India and Ors. – Respondents
C.O. 66 of 2022
Decided On : 28-06-2023
AIRPORT AUTHORITY OF INDIA - ARBITRATION - APPOINTMENT OF ARBITRATOR - VALIDITY OF ARBITRATION CLAUSE - DISPUTE RESOLUTION COMMITTEE - SECTION 12(5) OF THE ARBITRATION AND CONCILIATION ACT, 1996 - SEVENTH SCHEDULE - BIAS - IMPARTIALITY - ELIGIBILITY - COURT'S POWER TO EXAMINE EXISTENCE OF ARBITRATION AGREEMENT - SECTION 11(6A) OF THE ARBITRATION AND CONCILIATION ACT, 1996 - VALIDITY OF ARBITRATION CLAUSE - COURT'S POWER TO APPOINT ARBITRATOR.
Fact of the Case:
The petitioner, Amazing India Contractors Pvt. Ltd., entered into an agreement with the respondent, Airport Authority of India, for running a restaurant at Bagdogra Airport. The agreement contained an arbitration clause providing for the appointment of a sole arbitrator by the Chairman/member of the authority. A dispute arose between the parties, and the petitioner invoked the arbitration clause. However, the respondent refused to appoint an arbitrator, relying on a clause in the agreement that required the petitioner to deposit the disputed amount with the respondent before the dispute could be referred to the Dispute Resolution Committee.
Finding of the Court:
The court held that the clause requiring the petitioner to deposit the disputed amount before availing of arbitration was invalid and contrary to law. The court also held that the arbitration clause providing for the appointment of a sole arbitrator by the Chairman/member of the authority was violative of Section 12(5) of the Arbitration and Conciliation Act, 1996, read with the Seventh Schedule, as it was likely to result in the appointment of a biased arbitrator. The court further held that it had the power to examine the existence of the arbitration agreement under Section 11(6A) of the Act and, finding the arbitration clause to be invalid, appointed a sole arbitrator to adjudicate the disputes between the parties.
Issues: 1. Whether the clause requiring the petitioner to deposit the disputed amount before availing of arbitration was valid. 2. Whether the arbitration clause providing for the appointment of a sole arbitrator by the Chairman/member of the authority was violative of Section 12(5) of the Arbitration and Conciliation Act, 1996, read with the Seventh Schedule. 3. Whether the court had the power to examine the existence of the arbitration agreement under Section 11(6A) of the Act.
Ratio Decidendi: 1. A clause requiring a party to deposit the disputed amount before availing of arbitration is invalid and contrary to law as it fetters the right of the party to avail of arbitration, which is a statutory right. 2. An arbitration clause providing for the appointment of a sole arbitrator by a person who is likely to be biased in favor of a party is violative of Section 12(5) of the Arbitration and Conciliation Act, 1996, read with the Seventh Schedule. 3. The court has the power to examine the existence of an arbitration agreement under Section 11(6A) of the Act and, if it finds the arbitration clause to be invalid, can appoint an arbitrator to adjudicate the disputes between the parties.
Final Decision: The court disposed of the application by referring the disputes between the parties to be adjudicated by a learned arbitrator. The court appointed the Hon'ble Mr. Justice Pinaki Chandra Ghose, a former Judge of the Supreme Court of India, as the sole arbitrator to decide the disputes between the parties and make and publish his award.
JUDGMENT :
(I. P. Mukerji, J.) :
1. This is an application under Section 11 of the Arbitration and Conciliation Act, 1996 asking the court to appoint an arbitrator to adjudicate upon the claims made therein by the petitioner.
2. The application is by a body corporate, Amazing India Contractors Pvt. Ltd. having its registered office at Bhagalpur in Bihar. Reliefs are sought against the Airport Authority of India, the respondent No. 1 (the respondent).
3. The respondent, on 11th January, 2017 entered into an agreement with the petitioner. It was for running of a restaurant on the first floor of the Terminal Building at Bagdogra Airport. On 27th March, 2017 a licence agreement was executed between the parties for a period of seven years from the date of execution till 26th March, 2024. The petitioner was to pay a licence fee of Rs.21,55,001/-per month plus service tax as applicable for the first year and gradually increasing at more or less 10% per annum till the end of the term for use of the airport space to run this business. It also had to deposit Rs.1,29,30,006/-as security money with the respondent. It was terminable by either side by giving 180 days’ notice. Under Clause 33(iii) of the special terms and conditions any dispute between the parties except those covered by the Eviction of Unauthorized Occupants Act was to be referred to a Dispute Resolution Committee (DRC). If not resolved within 45 days of reference, then the dispute would be referred to the sole arbitrator of a person to be appointed by the Chairman/member of the authority. Clause 33 (iii) is set out below:-
4. A reference to the Dispute Resolution Committee could only be made if an application requesting for it was made by the licensee. The licensee would have to first deposit the “disputed amount” with the respondent.
5. Citing fall in passenger traffic, restrictions in arrival of passengers into the restaurant, fall in passenger traffic due to the Covid-19 pandemic, the petitioner by their email dated 8th April, 2020, followed by a letter dated 5th June, 2020 and an email dated 10th August, 2020 requested the respondent to altogether waive the license fee or to grant concession in respect of it. This was refused by the respondent by their letter dated 19th August, 2020. Instead in that letter, the respondent was prepared to give some concessions to the petitioner if they cleared the outstanding rental for the airport space till March, 2020. Between 27th September, 2020 and 28th September, 2020 the petitioner sent two emails to the respondent asking them to refer the dispute to the Dispute Resolution Committee. The respondent in their reply dated 6th N
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