Short facts

This is an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as “the Act”) against the order dated 06.09.2021 passed by the learned Single Judge of this Court in OPNo.903 of 2019 by which the application preferred by the appellant pursuant to section 34 of the Law for annulment of the decision dated 06.08.2019 of to the sole arbitrator was rejected.

A License Agreement dated 29.11.2010 was executed between the plaintiff and the respondents whereby the plaintiff was granted a license to carry out ground handling activities at Chennai Airport.

Ex.C-2 dated 05.01.2011 is the Subordinate License Agreement for lease of space/land/facilities granted to the Claimant for office/maintenance and parking of its equipment in the airport area. The said agreement was subsequently renewed by Ex.C-3 dated 23.06.2014.

The dispute arose when the defendants issued Circular Letter vide Ex.C-5 dated 20.11.2014 whereby the rental rates/licence charges were revised with effect from 01.10.2014 astronomically.

The sole arbitrator, after hearing the respective parties, issued the decision dated 08.06.2019.

The award so passed by the learned single arbitrator was challenged by the plaintiff under section 34 of the 1996 Act before the Commercial Division. A wide variety of arguments urged on behalf of the parties were duly considered by the Court and the relevant points were answered in favor of the respondents and hence the judgment was upheld while dismissing the Section 34 application.

Appeals

The appellant submitted that the judgment rendered by the Sole Arbitrator of 06.08.2019, as well as the contested ordinance of 06.09.2021 rejecting the request pursuant to section 34 of the Law in OPNo.903 of 2019 suffers from illegality of the patent, so it is liable to be annulled. .

• That, pursuant to Clause 26 of Ex.C-1 dated 29.11.2010, it is provided that the Plaintiff, as the licensee, would be required to pay only the rental of the built space and the land, as the case may be, from time to time, subject to an annual escalation of 7.5% or as determined by the Airports Authority of India from time to time, other than electricity and water charges, the demand for escalation with combined effect itself was not justified and the applicant raised no objection to it as it was considered to be a trivial one.
• The fact that the land which was leased to the plaintiff was a barren land without any construction and the office space was relatively low in market value and the argument that the other licensees accepted the increase cannot be a reason to insist on such of astronomical growth by the plaintiff. and the defendants’ demand for astronomical increase was also affected by the principle of substantive legitimate expectation of the plaintiff.

On the contrary, the respondents contended that the contention raised before this Tribunal is not maintainable as the plaintiff cannot be accorded special treatment when the revision of land lease rent was applicable to all the licensees and when all the licensees have accepted the same and continue to pay on the revised rates, no concession can be granted to the appellant alone, which would lead to violation of Article 14 of the Constitution.

• That as the letter of award, agreements and general conditions form part of the contract, they must be interpreted cumulatively and the plaintiff cannot be allowed to dissect a particular clause or word to support his position and the principle of contra proferentem is not applicable to the interpretation of the commercial contract apart from the fact that there was no ambiguity as claimed by the plaintiff.
• That the airport premises occupied by the applicant cannot be compared with other premises in the locality, having regard to the special nature of the airport premises and therefore the reliance placed by the applicant on the rental values ​​prevailing in and around the airport premises cannot be taken into account account. taken into account for the purpose of comparison.
• That the theory of legitimate expectation cannot be invoked against the terms of the concluded commercial contract, where only the terms of the contract will be binding. It was based on his decision CVEntreprises vs. Braithwaite & Co. Ltd. (1984).

The Court’s analysis

The court, at the outset, referred to the findings of the learned arbitrator wherein it was observed that the plaintiff with eyes wide open understood the terms and conditions of the contract as per Ex.C.2, with his full involvement in its execution and the financial impact to be suffered.

The arbitrator further noted that by agreeing to such terms and conditions contained therein, the plaintiff has no right to challenge the relevant provision relating to fixation of license fee and its revision from time to time at this remote time. Therefore, Clauses 4, 8 and 10 for the upward revision of license fee in Ex.C.2 are not against any law in force or public policy or conflict with the legal principle of any contract entered into.

The arbitrator further held that, therefore, the plaintiff has no right to challenge the terms and conditions, particularly the provisions relating to fixation of license fee and its revision from time to time.

The arbitrator further rejected the claim of exclusion of the promisor, referring to the judgment of the Supreme Court in Ester Industries Ltd., Vs. State Electricity Board and others. (1996) wherein it was held that since there is a contract duly entered into under the law between the petitioner and the Board of Directors binding them, unless it is revised, the question of promisee does not arise.

The arbitrator also observed that since it is a political decision of the defendants as a state authority that falls within the four corners of Article 12 of the Constitution which seeks to increase the basic rent for the lands allocated to the plaintiff within the Airport premises, it will not prevent in none The respondent authority to exercise its right after considering various factors.

Taking note of the arbitrator’s conclusions, the court in this appeal held that the learned Arbitrator made the decision based on a thorough analysis of the facts, assessing the evidence and in the context of the contemporary legal situation. The views of the learned Single Arbitrator cannot be found at fault. The challenge to the impugned judgment is purely on merits which is also inadmissible and there is no reason to hold that the judgment is manifestly illegal and against public policy of Indian law.

The Court concluded that no ground of appeal under Section 34 of the Act was made out in respect of the award passed by the learned Single Arbitrator. Therefore, the Hon’ble Single Judge of this Court was right in confirming the arbitral award. Accordingly, the present appeal was dismissed.

Title of the case: M/s.Bhadra International (India) Pvt. Ltd vs. Airports Authority of India and Ors.

Citation: 2024 LiveLaw (Crazy) 424

Case reference: OSA(CAD). No. 27 of 2022

Judgment Date: 30.10.2024

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