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2023 Supreme(Online)(MP) 7838
1
IN THE HIGH COURT OF MADHYA
PRADESH
A T I N D OR E
BEFORE
HON'BLE SHRI JUSTICE SUBODH ABHYANKAR
ON THE 21st OF DECEMBER, 2023
WRIT PETITION No. 28521 of 2023
BETWEEN:-
M/S
HIMALAYA
TRADERS
THROUGH
ITS
AUTHORISED OFFICER G-2/119 A, GULMOHAR
COLONY, TRILANGA ROAD (OPP. PNB), BHOPAL
(MADHYA PRADESH)
.....PETITIONER
(BY SHRI RISHABH SINGH CHOUHAN - ADVOCATE )
AND
1.
UNION OF INDIA SECRETARY MINISTRY
OF CIVIL AVIATION RAJIV GANDHI
BHAWAN,
BLOCK
B,
SAFDARJUNG
AIRPORT AREA, NEW DELHI (DELHI)
2.
AIRPORT
AUTHORITY
OF
INDIA
THROUGH
ITS
DIRECTOR
GENERAL
RAJIV
GANDHI
BHAWAN
BLOCK
B
SAFDARJUNG
AIRPORT
AREA
NEW
DELHI (DELHI)
3.
DEVI
AHILYABAI
HOLKAR
AIRPORT
THROUGH
ITS
DIRECTOR
DEVI
AHILYABAI HOLKAR AIRPORT NEAR
BISASEN
MATA
MANDIR
INDORE
(MADHYA PRADESH)
Signed by: PANKAJ
PANDEY
Signing time: 04-01-2024
16:41:04
Signature Not Verified
2
4.
DEVI
AHILYABAI
HOLKAR
AIRPORT
THROUGH DEPUTY GENERAL MANAGER
COMMERCIAL
DEVI
AHILYABAI
HOLKAR AIRPORT NEAR BISASEN MATA
MANDIR INDORE (MADHYA PRADESH)
.....RESPONDENTS
(BY SHRI PIYUSH SHRIVASTAVA – ADVOCATE FOR RESPONDENT NOS.2
TO 4 )
…………………………………………………………………………………………
This petition coming on for admission this day, the court passed
the following:
Shrey Raj Saxena,Deputy Solicitor General
Disputes arising from the interpretation and implementation of a contract, including those involving statutory bodies, should be resolved through the ordinary principles of contract law and arbitration, rather than through writ petitions under Article 226 of the Constitution of India.
Headnote:
ARBITRATION - LICENSE AGREEMENT - DISPUTE RESOLUTION - [The court held that a dispute between the parties to a license agreement, which contains an arbitration clause, is purely commercial in nature and not suitable for adjudication through a writ petition under Article 226 of the Constitution of India. The appropriate remedy is to invoke the arbitration clause and seek resolution through arbitration.]
Fact of the Case:
The petitioner, a partnership firm engaged in the liquor business, was granted a license to operate a duty-paid liquor shop at an airport. A dispute arose between the petitioner and the respondents, leading to the forfeiture of the petitioner's security deposit and the invocation of a bank guarantee. The petitioner filed a writ petition under Article 226 of the Constitution of India, challenging the respondents' actions.
Finding of the Court:
The court found that the dispute between the parties was purely commercial in nature and that the license agreement contained an arbitration clause. The court held that the petitioner should have invoked the arbitration clause and sought resolution through arbitration, rather than filing a writ petition.
Issues: 1. Whether the dispute between the parties was suitable for adjudication through a writ petition under Article 226 of the Constitution of India. 2. Whether the petitioner should have invoked the arbitration clause contained in the license agreement.
Ratio Decidendi: The court relied on the Supreme Court's decision in Kerala State Electricity Board v. Kurien E. Kalathil, which held that disputes arising from the interpretation and implementation of a contract cannot be the subject matter of a writ petition. The court also noted that the license agreement contained an arbitration clause, which provided an alternative dispute resolution mechanism.
Final Decision: The court dismissed the writ petition, holding that the petitioner should have invoked the arbitration clause and sought resolution through arbitration.
1]
Heard finally, with the consent of the parties.
2]
This writ petition has been filed by the petitioner – M/s.
Himayala Traders under Article 226 of the Constitution of India
against the order dated 26.10.2023 and 31.10.2023 (Annexures P/8
and P/9) passed by the respondent No.4. Vide letter dated 26.10.2023
the security deposit has been forfeited by the respondents and bank
guarantee has been invoked, whereas vide letter dated 31.10.2023 the
respondent No.4 has also issued a letter seeking payment of
outstanding dues and in case the petitioner fails to do so, it was
threatened to terminate the license agreement.
3]
In brief, the facts of the case are that the petitioner is a
partnership firm, engaged in the business of liquor. The petitioner was
granted license at Devi Ahilya Bai Holkar Airport, Indore for the
purposes of operating duty paid liquor shop in arrival hall. The license
agreement was executed on 31.08.2022. The license was valid for a
period of five years with effect from 03.12.2022 to 02.12.2027 unless
terminated. Admittedly, a dispute has arisen in respect of the aforesaid
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agreement.
4]
Counsel for the petitioner has submitted that the action taken by
the respondents runs contrary to the provisions of law as no
opportunity of hearing was granted to the petitioner before passing the
same. It is also submitted that respondents have created various
hurdles for the petitioner to operate the shop, which has led to heavy
losses being suffered by the petitioner and the petitioner has already
involved the internal dispute resolution clause contained in the
agreement. However, the respondents have still adjusted the security
deposit and an amount of Rs.19,58,382/- is shown as outstanding on
account of demurrage charges. It is also stated that the respondents
have illegally painted the entire shop with black colour.
5]
A preliminary objection has been raised by the counsel for the
respondents contending that since there is an arbitration clause
contained in the license agreement, the petition itself is liable to be
dismissed as the same is not maintainable on account of availability of
the remedy under the Arbitration and Conciliation Act,1996. Counsel
has also drawn the attention of this Court to clause 29 of the general
terms and conditions of the license, which provides alternate dispute
resolution system. In support of his submissions, counsel for the
respondents has also relied upon certain decisions in the cases of
Nirmal Software Services Private Limited Vs. Dr. Babasaheb
Ambedkar Marathwada University and others reported as (2019) 7
SCC 356; Kerala State Electricity Board and another Vs. Kurien
E. Kalathil and others; reported as (2000) 6 SCC 293; State of U.P.
and others Vs. Bridge & Roof Company (India) Ltd. reported as
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(1996) 6 SCC 22; E to E Transportation Infrastructure Private
Limited
Through
its
Authorized
Representative
Anurag
Choudhary Vs. Ircon International Limited Through its
Chairman Having Corporate reported as 2022 SCC OnLine MP
2143; and State of Kerala and others Vs. M. K. Jose reported as
2016 (2) MPLJ 327.
6]
Having considered rival submissions, perusal of the documents
filed on record, this Court finds that so far as the license agreement is
concerned, the dispute resolution clause of the same reads as under:-
“29. All disputes and differences arising out of or in any
way touching or concerning this Agreement (except those
the decision whereof is otherwise herein before expressly
provided for or to which the AAT ACT,1994 and the rules
framed there-under which are now enforced or which may
here-after come into force are applicable), shall, in the first
instance, be referred to a Dispute Resolution Committee
(DRC) setup at the airports, for which a written application
should be obtained from the party and the points clearly
spelt out. In case the dispute is not resolved within 45 days
of
