An arbitrator exceeding jurisdiction by misinterpreting clear contractual terms, particularly regarding unilateral fee enhancement, renders the award void.

1This appeal was filed by the third respondent in O.P.(ARB.)No 197 of 1986 on the file of the Principal Sub Court, Trivandrum.

2The challenge is against an award passed by an arbitrator which was made rule of court. An agreement dated 22.2.1974 was entered into between Divisional Superintendent of Southern Railway (hereinafter called Railway Administration) on the One Part and the petitioner and third respondent (hereinafter called the licensees) on the Other Part for the use of railway land approximately 49 cents for the purpose of erecting bulk oil installation. As per Clause.5(a) of the agreement, licensees should pay from the date of the agrement to the Railway Administration in advance on the First day of April of every year rent of Rs 5,586\plus shed rent of Rs 40\and municipal taxes as demanded by the Corporation separately and also any charges due in respect of water on presentation of bills. As per the agreement, above mentioned rates are subject to revision from time to time on one month's notice being given to the licensees. Clause.5 (f) of the agreement states that licensees shall deposit a sum of Rs 5,586/- being equivalent to the amount thereon and municipal taxes, if any, for an year as security for the due and faithful observance and compliance with the terms of the licence. In the event of increase in licence fee, shed rent etc. the security deposit shall also be increased to that extent and the licensees shall deposit the extra amount. The minimum deposit shall be Rs 20/-. The said security deposit shall not bear any interest and shall be returned to the licensees on the determination of the licence after adjustment of any amount that may be found due to the Government. Clause.5(e) enables the Railway to review the rate of licence fee periodically and enhance the same if it considers necessary. The meaning and the purpose of the daid clauses will be dealt with in the latter part of the judgment. Clause.5 (h) enables the . Railway Administration to forfeit the entire deposit money referred to in Clause.5 (f) thereof on the licensees making default in payment of the fees, shed rents etc. Within four months i.e. before the end of July each year after the due date for payment of the same as stipulated in Clause.5(e) thereof failing which the Railway Administration could initiate eviction proceeding. We will deal with the said clause in detail later.

3Railway Administration in the year 1983 involing Clause.5(e) unilaterally revised the licence fee payable by the licensees at the rate of Rs 1,11,160/- per year with effect from 30.4.1983. by issuing notice dated 13.4.1983. Demand made by the Railway Administration was objected to by the licensees by letter dated 26.5.1983 on the ground that the increase sought, for was not supported by quid pro quo and the licensees were not made known the basis or reasons for such revision. Licensees again by letter dated 22.12.1983 objected to the revision of licence fee stating that the unilateral revision of licence fee is arbitrary and illegal. The Railway Aministration however took steps to realise the amount by invoking the provisions of the Revenue Recovery Act. One of the licensees approached this court by filing O.PNo 11080 of 1983 to quash the revenue recovery proceedings initiated against the licensees and for other consequential reliefs. Since licensees were continuing without paying the enhanced licence fee and proceeding were initiated under the Public Premisses (Eviction of Unauthorised Occupants) Act 1971 to evict the licensees from the premises. Notice to that effect dated 20.10.1984 was issued to them. One of the licensees filed Original Suit (ARB) No 300 of 1984 on 22.10.1984 before the Principal Sub Court, Trivandrum for referring the dispute to an arbitrator and also for other consequential reliefs. The Estate Officer later issued a notice dated 20.10.1984 directing the licensees to vacate the premise. That order was challenged by the licensee in C.M.ANo 120 of 1