Airports Authority Of India vs M/S Grover International Ltd. & ...
2011 Latest Caselaw 484 Del

             *IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                 Date of decision: 28th January, 2011

+                             CS(OS) No.1507A/2000

        AIRPORTS AUTHORITY OF INDIA                   ..... Plaintiff
                     Through: Mr. S.C. Agarwala, Sr. Advocate with
                              Mr. Digvijay Rai, Advocate.

                                              Versus

        M/S GROVER INTERNATIONAL LTD. & ANR. ......Defendants
                     Through: Mr. Rahul P. Dave with Mr. Bhaskar
                              Tiwari & Mr. Rohit Mahajan,
                              Advocates.
                              Mr. Ravi Verma with Mr. Abhishek
                              Sharma, Advocates for DIAL.

                                              AND

                                     CS(OS) No.1532A/2000

        M/S GROVER INTERNATIONAL LTD.               ........Plaintiff
                     Through: Mr. Rahul P. Dave with Mr. Bhaskar
                              Tiwari & Mr. Rohit Mahajan,
                              Advocates.

                                                Versus

   AIRPORTS AUTHORITY OF INDIA & ANR.           ..... Defendants
                 Through: Mr. S.C. Agarwala, Sr. Advocate with
                          Mr. Digvijay Rai, Advocate.
CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
1.       Whether reporters of Local papers may
         be allowed to see the judgment?                          No

2.       To be referred to the reporter or not?                   No

3.       Whether the judgment should be reported                  No
         in the Digest?



CS(OS) No.1507A/2000 & CS(OS) No.1532A/2000                                 Page 1 of 26
 RAJIV SAHAI ENDLAW, J.

1. Both arbitration suits have been filed by the two parties to the

arbitration namely the Airports Authority of India (AAI) and Grover

International Ltd. (GIL) under Sections 14 & 17 of the Arbitration Act, 1940

for filing of the arbitration award dated 1st June, 2000 in this Court. GIL in

its suit being CS(OS) 1532A/2000 has also sought making of the award rule

of the Court. Upon the award being filed in this Court, AAI filed objections

thereto being I.A. No.550/2001 in CS(OS) 1507A/2000 and which

objections now fall for adjudication. No objections to the award have been

filed by GIL. However GIL in its suit has filed applications for interim

relief.

2. Arbitrable disputes arose between the parties out of "Agreement

regarding land for Five Star Hotel including Hotel Shopping Arcade" dated

7th September, 1989. In the said agreement AAI is described as lessor and

the GIL as the lessee. AAI vide the said agreement granted lease to GIL of

28000 sq. mtrs. of land for a term of 30 years for the purpose of constructing

and running of not less than 400 living rooms Five Star Hotel including the

Hotel Shopping Arcade. After the expiry of the term of the lease, the Hotel

with the fixtures and fittings was to become the property of AAI without

payment of any further compensation. The said agreement in Clause 37

thereof provided for reference to the sole arbitration of a person to be

appointed by the Chairman of the AAI, of all disputes and differences

arising out of or in any way touching or concerning the agreement except

those, the decision whereof was otherwise provided for in agreement or to

which the Public Premises (Eviction of Unauthorized Occupants) Act, 1971

(PP Act) and the Rules framed thereunder were applicable.

3. GIL filed a Suit being CS(OS) No.2287/1994 in this Court under

Section 20 of the Arbitration Act, 1940, seeking reference of disputes which

had arisen between the parties, to arbitration. It was the case of the GIL that

though under the agreement aforesaid, AAI was required to hand over

possession of the land subject matter of the agreement to GIL on 7 th

September, 1989 and though on 22nd February, 1990 some papers regarding

delivery of possession were signed but when on 24 th February, 1990 the site

was inspected, it was found that there was an electric sub-station on the land

along with underground and overhead live electrical cables/poles and owing

whereto GIL could not take over the actual possession of the land; that a lot

of correspondence was exchanged between the parties in this regard and it

was only on 3rd November, 1993 that GIL was informed that the electrical

sub-station had been removed from the land and whereafter GIL could be

delivered possession of the land on 11th November, 1993 only. It was the

case of GIL that though it had not been put into possession of the land but

AAI unilaterally enhanced the rate under the agreement and had served a

notice dated 7th /9th June, 1994 upon GIL to show cause as to why the

agreement be not terminated. It was the case of GIL that since it had been

put into possession on 11th November, 1993 only, it was not liable to pay

any amounts agreed to be paid by it under the agreement to AAI for any

period prior thereto. According to GIL the following disputes had arisen

between the parties:-

(i) What is the date of handing over possession of the site to GIL.

(ii) From what date AAI is entitled to claim rent from GIL.

(iii) Whether AAI has justifiable cause of action to issue notice of

cancellation of lease and carry out its threat to cancel the lease.

(iv) Whether GIL has suffered any loss/damage and if so, how

much.

(v) Whether GIL is entitled to claim the amount of loss/damage, if

any, from AAI and if so, to what extent.

4. AAI contested the said suit under Section 20 of the Arbitration Act,

1940 filed by GIL. According to AAI, possession of the land was delivered

on 22nd February, 1990; that GIL was aware of and was supposed to be

aware of the site conditions, having been required to inspect the same prior

to entering into the agreement; that the hindrance in the form of sub-station

and cables were not on the entire stretch of land but towards one side of land

and were not in any way likely to affect the construction project; GIL had

breached the terms of the agreement by not constructing the hotel on the

plot; that the electrical sub-station, cables or poles could not in any manner

affect construction; that it was GIL which had failed to perform its part of

the agreement.

5. The said CS(OS) 2287/1994 under Section 20 of the Arbitration Act,

1940 was disposed of vide judgment dated 8 th May, 1995 in which it is

recorded:-

(A) That it was the contention of AAI that the cancellation of

lease/agreement could not be a part of reference before an

arbitrator.

(B) That the claims of GIL were in the nature of specific

performance of the agreement and which was not arbitrable.

(C) It was held by this Court that GIL was not seeking specific

performance of the agreement and the disputes raised by GIL

were only about the validity of the notice of cancellation of

lease, the date of commencement of rent or damage or injury.

(D) Accordingly, the disputes aforesaid as enumerated in para 3

hereinabove and which is equivalent to para 31 of the

petition/plaint of GIL under Section 20, were referred to the

sole arbitration of a retired Judge of this Court.

(E) It was also ordered that the Arbitrator will have jurisdiction to

entertain the counter claim of AAI.

(F) On the application of GIL for interim relief, it was also directed

that GIL shall not be dispossessed without due process of law

from the premises in question.

6. The Arbitrator appointed having died, a substitute Arbitrator, also a

retired Judge of this Court, was appointed and who has rendered the award

dated 1st June, 2000 (supra). The award records that the following issues

were framed:-

(i) Whether the termination of the lease was wrongful and illegal.

If so, to what amounts were the claimant (GIL) entitled as

damages.

(ii) Whether the claimants (GIL) entitled to interest on the amount

of damages found due. If so, at what rate and for what period.

(iii) What amount, if any, were the respondents (AAI) entitled

towards license fee, minimum guarantee royalty.

(iv) Were the respondents (AAI) entitled to interest on the amount

found due from the claimant (GIL). If so, at what rate and for

what period.

7. The Arbitrator on issue no.(i) aforesaid found:-

(A) That even if GIL before tendering had inspected the site and

was aware of the electrical sub-station, cables, poles etc., the

same did not absolve AAI of its liability to hand over the site

free from all encumbrances.

(B) That it was obligatory for AAI to get the site cleared of the sub-

station.

(C) That the correspondence exchanged showed that GIL was

anxious to start the construction of the Hotel and had even got

approved from the competent authority the plans therefor.

(D) The contention of AAI that the electrical sub-station was in one

corner of the land and GIL could have commenced the

construction was negatived and it was held that GIL could not

have commenced construction till the removal of the electrical

sub-station, poles, cables etc.

(E) It was therefore held that the possession of the plot was

delivered to GIL only on 11th November, 1993.

(F) That GIL was entitled to suspend the payment of lease money

for the period during which it was deprived of the use of the

plot in question.

(G) Issuance of show cause notice dated 7th / 9th June, 1994 for

determining the lease on account of non-payment of lease

money was not justified and contrary to law and the order dated

17th October, 1994 of termination of lease is illegal.

(H) AAI was entitled to lease amount only from 11 th November,

1993 and not for the period before that.

(I) That GIL was not financially sound enough to immediately

start the project or capable of starting the project at the time of

delivery of possession on 22nd February, 1990 or on 11th

November, 1993 when the electrical sub-station was removed.

(J) At least till 17th October, 1994 when AAI had terminated the

agreement, there was no movement or activity of starting the

construction of the Hotel project.

(K) That there was thus no financial loss to GIL owing to delay by

the AAI in removing the sub-station and delivering the actual

physical possession of the land after three years of the

commencement of the lease agreement and GIL has not

suffered any damages.

8. Accordingly, it was also held in the award that AAI having not

delivered possession of the land to the GIL, was also not entitled to any

monies under the agreement/lease.

9. The Arbitrator accordingly declared:

(i) the order dated 17th October, 1994 of termination of

lease/agreement is illegal not enforceable in law and was set

aside.

(ii) the period of lease agreement shall stand extended for a period

of 30 years from the date of making/publishing the award

minus the period from 11th November, 1993 to 17th October,

1994, on the same terms and conditions as incorporated in the

agreement dated 7th September, 1989 between the parties.

(iii) GIL was not held entitled to any damages or interest.

(iv) AAI was not entitled to any damages or interest.

(v) the amounts already paid by GIL were directed to be adjusted

for the period from 11th November, 1993 to 17th October, 1994.

10. As aforesaid, GIL has not filed any objections to the award. AAI has

objected to the award on the grounds:-

(a) of the same being on the subject with respect to which no issues

were framed.

(b) that the Arbitrator having held that GIL was not ready and

willing to perform its part of the agreement has erred in setting

aside the termination of the contract.

(c) that the Arbitrator having held that GIL was not ready and

willing to perform its part of the contract erred in granting

extension of the lease term.

(d) that the award is beyond jurisdiction of the Arbitrator

(e) that the Arbitrator had wrongly allowed suspension of rent.

11. On application being I.A. No.8132/2007 of GIL in CS(OS)

1532A/2000, a Local Commissioner was appointed vide order dated 9 th

August, 2007 to ascertain the status of the plot of land aforesaid. The Local

Commissioner filed his report and which was discussed in the order dated

23rd November, 2007 in CS(OS)1532A/2000 and certain directions issued

for removal of batching plant, generator house, cement storage house found

on the plot. I.A. No.6619/2008 has been filed by GIL in CS(OS)

1532A/2000 averring disobedience of the order dated 23 rd November, 2007

by which AAI was directed to remove batching plant, cement storage house,

generator etc.

12. An application being I.A. No.7605/2008 has been filed by Delhi

International Airport Pvt. Ltd. (DIAL) for impleadment in

CS(OS)1532A/2000 for the reason that it had been given an exclusive right

and authority for performing the functions of operating and maintaining the

Indira Gandhi International (IGI) Airport and has stepped into the shoes of

AAI and the land in question is a part of the IGI Airport and as per the new

Master Plan of IGI Airport, is a part of the operational area of the IGI

Airport and is required for development, modernization and re-structuring of

Delhi Airport. Though no formal order on the application allowing

impleadment has been made but the counsels for DIAL have also been

heard.

13. Though AAI has not objected to the award expressly on the ground of

the findings in the award of the termination of the agreement by AAI being

bad for the reason of being not arbitrable, it was at the outset enquired from

the counsels as to how the said findings in the award could be sustained. It

is felt that when the arbitration clause expressly excludes the matters

covered by the PP Act and when it is also the law that the disputes which are

in the exclusive jurisdiction of the Estate Officer under the PP Act cannot be

arbitrable (see Kesar Enterprises v. UOI (1994) 30 DRJ 176), how the

Arbitrator could return the finding of termination being illegal; under the PP

Act, it is the Estate Officer who is vested with the jurisdiction to determine

whether possession of any public premises, as the land in question

admittedly is, is unauthorized or not; the said question would necessarily

entail a finding on the validity of termination effected by a public authority.

If it were to be held that the Arbitrator though not entitled to pass an order of

eviction with respect to the public premises, is nevertheless entitled to

adjudicate whether the possession is authorized or unauthorized, whether the

termination is valid or not, it will be in the teeth of the enquiry which the

Legislature has contemplated to be done by the Estate Officer. It was as

such also enquired whether AAI has initiated any proceedings under the PP

Act. The answer is in the negative.

14. The senior counsel for AAI has contended:-

(i) that GIL had not claimed the relief of extension of the lease; the

same also did not find mention in the order of reference to the

Arbitrator and the grant of the relief of extension of lease by the

Arbitrator is bad.

(ii) that the term of the lease was 30 years from the date of

commencement thereof, mentioned in the lease deed as 7th

September, 1989; it was not provided in the lease that the term

thereof would be for 30 years from the date of possession; that

thus even if the finding of the arbitrator of the possession

having been delivered on 11th November, 1993 were to be

correct, the same would not alter the term of the lease which

would remain 30 years from 7th September, 1989 and the

arbitrator could not have made the same 30 years with effect

from the date of the award;

(iii) that neither the Court nor the arbitrator has power to frame a

new contract for the parties; such power has only been vested in

the labour/industrial jurisdiction;

(iv) that GIL had only claimed damages from AAI for non-delivery

of possession by AAI and had not claimed the relief of

extension of the lease;

(v) GIL rather by electing to claim damages only under Section 21

of the Specific Relief Act and not damages in addition to

specific performance had rather elected to walk out of the

contract;

(vi) that the said question had arisen at the time of arguments in

C.S.(OS) No.2287/1994 under Section 20 of the Arbitration

Act, 1940 also and GIL had expressly stated that it was not

claiming specific performance;

(vii) attention is invited to the claim petition of GIL before the

arbitrator to also demonstrate that no claim for extension of

lease was made;

(viii) that the substratum of the contract has disappeared; with effect

from 7th September, 1989, 21 years out of 30 have already

passed and the terms of the agreement can by no stretch of

imagination be performed in the remaining 9 years; the only

question remaining is thus of damages and which GIL has been

held to be not entitled;

(ix) that the contract of lease by its very nature is determinable and

for this reason also is not specifically enforceable;

         (x)      attention is invited to -

                (a)     E.Venkatakrishna v. Indian Oil Corporation JT 2000 (10)

SC 558 laying down that the question of restoration of distributorship did not arise under the agreement and was thus not arbitrable;

(b) Orissa Mining Corporation Ltd. v. Prannath Vishwanath Rawlley (1977) 3 SCC 535 on the proposition that the arbitrator cannot enlarge the reference;

(c) Associated Engineering Co. v. Government of Andhra Pradesh (1991) 4 SCC 93 also laying down that umpire cannot widen the jurisdiction;

(d) State of Rajasthan v. Nav Bharat Construction Company (2006) 1 SCC 86 where award on claims not referred was set aside;

(xi) though the senior counsel for AAI has also challenged findings

of the arbitrator of the construction being not possible till the

electrical sub-station was removed but the same being findings

of fact were not allowed to be entertained.

The senior counsel for AAI thus contended that the part of the award

declaring the term of the lease/agreement to have been extended is liable to

be set aside.

15. The senior counsel for DIAL has contended that the implementation of

the agreement in favour of GIL is now not feasible for operational reasons;

it will disrupt the airport; that the GIL in its claim petition before the

arbitrator had not made any claim for setting aside of the determination of

the contract. It is urged that the same is indicative of GIL being satisfied

with the claim for damages only and which has been rightly denied by the

arbitrator. The counsel for GIL of course strongly opposed the right of

DIAL to address arguments.

16. The counsel for GIL has contended -

(A) that the present is a oppressive litigation and owing whereto

GIL has been made to suffer.

(B) that though under the agreement, GIL was to get three years to

construct the hotel but at no point of time it got three clear

years for constructing the hotel; after the removal of the

electrical sub-station also, it got only six months time

whereafter notice to show cause against termination was issued;

(C) that there are no equities in favour of AAI in as much as it has

put DIAL, a private party into possession and DIAL has its own

commercial interests in as much as it is developing a hospitality

district housing hotels also which are directly in conflict to the

agreement with GIL;

(D) that the agreement is a lease deed pure and simple and not a

joint venture which is terminable as suggested by AAI and thus

not terminable prior to the expiry of term thereof; merely by

sharing profits in lieu of rent does not convert the lease of

immovable property into a joint venture;

(E) that AAI before accepting the tender of GIL had satisfied itself

as to the financial capacity of GIL;

(F) the conduct of AAI is malafide since beginning; though there

was no provision for furnishing a Bank Guarantee of

nationalized Bank but the same was insisted upon;

(G) attention is invited to proviso to Clause 27 of the agreement

providing for relief against forfeiture;

(H) that the spirit of the agreement was that GIL would have about

30 years of operation of the hotel in as much as all the monies

and other expenses to be incurred by GIL in building and

setting up the hotel was to after 30 years, belong to AAI free of

cost;

(I) that thus extension of lease was necessary in as much as GIL

could not be asked to build the hotel in the year 2010 and to

hand over the same to AAI in the year 2019 when 30 years

from the execution of the lease would expire; attention is

invited to Faqir Chand Gulati v. Uppal Agencies Pvt. Ltd.

(2008) 10 SCC 345 to contend that the nature of the agreement

in the present case was such whereunder rights in property in

favour of GIL were created;

(J) reliance is placed on McDermott International Inc. v. Burn

Standard Co. Ltd. (2006) 11 SCC 181 to contend that

interpretation of agreement is in the domain of the arbitrator;

(K) that the arbitrator felt that clear 30 years should be provided to

GIL to do complete justice between the parties. Reliance in this

regard is placed on Food Corporation of India v A. M. Ahmed

& Co. (2006) 13 SCC 779 (para 32) and on Associated

Construction v. Pawanhans Helicopters Pvt. Ltd. AIR 2008

SC 2911 (para 7);

(L) Reference is made to Satish Kumar and Ors. v. Surinder

Kumar AIR 1970 SC 833 (para 22) to contend that where there

is no contractual prohibition, the arbitrator may make such

award as meets the end of justice and that in the event of the

award creates rights in property, at the time of being made rule

of the Court, the decree thereupon may be registerable under

the Registration Act;

(M) attention is invited to the finding of the arbitrator in the award

that till the underground cables were removed, nothing could be

done on the land;

(N) that the arbitrator had framed an issue as to the validity of the

termination of the agreement without any objection from AAI;

(O) attention is invited to Section 39(1)(iv) of the Arbitration Act,

1940 and it is contended that the order dated 8th May, 1995 of

this Court of reference to arbitration was/is deemed to be after

due regard to the question of arbitrability of the dispute and no

appeal was preferred thereagainst and has attained finality and

the arbitrability of the dispute cannot now be gone into.

Attention in this regard is invited to Telecommunications

Consultants India Ltd. v. Nangia Constructions (India) Pvt.

Ltd. 72 (1998) DLT 733 (para 9);

(P) that no ground of arbitrability was raised before the arbitrator.

Attention is invited to JG. Engineers (P) Ltd. v. NBCCL Ltd.

(2009) 107 DRJ 557 (para 9) holding that ground not taken

before arbitrator cannot be agitated;

(Q) with reference to ITPO v International Amusement Ltd. 142

(2007) DLT 342 (DB) to which attention of the counsel for the

GIL had been invited during the course of hearing, it is

contended that it is the case where the Estate Officer had issued

notice under the PP Act; in the present case no such notice has

been issued and as such there was no fora before which GIL

could have raised the said issues except before the arbitrator. It

is contended that thus it cannot be held at this stage that the

arbitrator had no jurisdiction to determine the validity of

termination of agreement. Attention is invited to Oriental

Building & Furnishing Co. Ltd. v. Union of India AIR 1981

Del 293 wherein (para 14) it was held that a party cannot be left

remediless. It is further contended that the dispute of validity of

termination is not barred under Section 15 of the PP Act;

(R) With reference to the reply to IA No.6619/2008, it is shown

that the hotel project still is within the Master Plan and that the

existing leases are to be honoured;

(S) Attention is also invited to Reliance Airport Developers P. Ltd.

v. Airports Authority of India (2006) 10 SCC 1 (para 21 & 23)

in this regard;

(T) Attention is invited to ONGC v. Western Company of North

America (1987) 1 SCC 496 in para 14 whereof it was held that

life is infused into the award when it becomes enforceable. On

the basis thereof it is argued that upon dismissal of the

objections of AAI, 30 years time is to be granted to GIL;

17. The senior counsel for AAI in rejoinder besides reiterating the earlier

arguments has contended that complete justice has to be within the realm of

jurisdiction and after GIL in the earlier proceedings under Section 20 of the

Arbitration Act, 1940 had expressly stated that it was not seeking specific

performance, no relief of grant of 30 years of lease could have been or can

be granted to GIL.

18. The aforesaid exhaustive record of proceedings and arguments would

show that the bone of contention between the parties is the extension of

lease allowed in the award, of 30 years from the date of award and which

GIL now claims of 30 years from the date the award becomes enforceable.

Else there is no objection to the remaining award denying the claim of AAI

as well as GIL of damages and other charges against each other.

19. Section 30 of the Arbitration Act, 1940 permits setting aside of an

award inter alia when an award is otherwise invalid. An award would be

invalid when it purports to do something which is not permissible in law.

What thus has to be first determined is whether the arbitrator or for that

matter even the Court has any power to so extend the term of a lease or an

agreement. If it is found that there is no such power, the award would

certainly be invalid.

20. For the aforesaid purposes, first the nature of the agreement between

the parties is to be determined. The agreement though not titled as a lease of

immovable property is nevertheless registered as a lease deed for a term of

30 years as is necessarily required to be. If the intent of the parties had not

been to create a lease of immovable property, the question of registration

would not have arisen. The agreement also describes the parties as lessor

and lessee and records grant of lease of land by AAI to GIL. The provision

in the agreement of payment by GIL of a portion of its gross turnover to the

AAI in addition to the rents/lease money would not change the character of

the agreement from that of a lease.

21. The senior counsel for AAI is correct in contending that the term of

the lease was provided as 30 years measurable from the date of

commencement mentioned in the agreement i.e. 7th September, 1989. The

lease deed does not record that possession of the leased land had been

delivered by AAI to GIL. On the contrary, it is clear from the lease that the

possession of the land was to be delivered after the execution of the lease. It

is the admitted case of parties that documents of delivery of possession were

in fact signed on 22nd February, 1990. Thus, though the possession was not

being delivered simultaneously with the execution of the lease deed but the

parties still chose to measure the term of the lease from the date of execution

of the lease deed and not from the date of delivery of possession.

22. The question which arises is, as to what is the remedy of a lessee

against a lessor who delays delivery of possession; whether such a lessee

can ask for the period of the lease to be counted from the date of delivery of

possession or is to be only entitled to compensation/damages for delay in

delivery of possession.

23. A lease is a matter of contract. The parties having agreed to count the

period of lease from the date of execution of the lease deed and not from the

date of delivery of possession, the lessee has no right to claim that the period

of the lease should be counted from the date of delivery of possession.

Specific performance can be sought only of the terms of the agreement and

not of something which is not provided in the agreement. Section 108 of the

Transfer of Property Act, 1882 lays down the rights/obligations/liabilities of

the lessor and the lessee in the absence of a contract to the contrary. Section

108 (A)(b) of the Act provides that the lessor is bound on the lessee's

request to put him in possession of the property. It was held by the Privy

Council way back in Ram Lal Dutt Sarkar v. Dhirendra Nath Roy in AIR

1943 Privy Council 24 and in Mt. Razia Begum v. Mohd. Daud AIR 1926

Patna 508 that the remedy of a lessee not delivered possession is for

damages or the lessee may sue for possession or the lessee may rescind the

contract. The Supreme Court also in Surendra Nath Bibra v. Stephen Court

Ltd. AIR 1966 SC 1361 held that the right of a lessee not put in possession

is of suspension of rent.

24. In none of the judgments I find a right in the lessee to have the term of

the lease extended.

25. Section 106 of the Transfer of Property Act provides for the term of

the lease in the absence of a contract to the contrary. Thus when there is a

contract as to the term of the lease, the term of the lease would be governed

by the said contract only. In the present case the parties clearly made the

term of the lease measurable from the date of execution of the lease and not

measurable from the date of delivery of possession though possession was

admittedly not delivered on the date of execution of the lease. The remedy

against non-delivery of possession thus cannot be extension of term of the

lease. I may in this regard also notice that the law [Section 108 (B)(e) of

Transfer of Property Act] even in the case of destruction of the leased

property vests an option in the lessee only to void the lease and does not vest

any option in the lessee to, from the agreed period of the lease exclude the

period during which the lessee was deprived of use of the demised premises.

Thus it is not the implied term of the lease that a lessee is entitled to enjoy

the agreed term of the lease and to exclude therefrom the period during

which is prevented for the reasons attributable to the lessor from enjoying

the premises. There is no such indication in Section 111 of the Act dealing

with determination of leases also.

26. If there is no such right in the lessee, the arbitrator or even the Court

cannot give to a party what it is not entitled to in law.

27. Thus the award in so far as it directs the term of the lease to stand

extended is clearly contrary to law and invalid and which also amounts to

misconduct on the part of the arbitrator.

28. I am also not satisfied with the reply of the counsel for GIL to the

query posed at the outset. The question of validity or invalidity of

termination of the agreement effected by AAI was a dispute to which PP Act

and the rules framed thereunder applied and which was thus excluded from

the arbitration clause. A tenant/lessee of a public premises, upon its

tenancy/lease being determined cannot, before the public authority has had

an opportunity to initiate proceedings for eviction under the PP Act, rush

and raise the dispute of validity of termination in a Court or in arbitration

proceedings and invite adjudication thereon and contend that the same is

maintainable for the reason of the proceedings under the PP Act having not

been initiated till then. If the public authority does not initiate the

proceedings under the PP Act, the termination in any case would be to no

avail, whether it be valid or invalid. However if proceedings under the PP

Act are initiated, then the invalidity of the termination has to be set up as a

defence in the said proceedings only and cannot be a subject matter of

adjudication before any other fora. Under Section 5 of the PP Act the

satisfaction to be accorded whether a person is an unauthorized occupant or

not is of the Estate Officer and not of any other fora. If the argument of the

counsel for GIL were to be accepted, it would frustrate the jurisdiction of the

Estate Officer. On the contrary if it were to be held that a finding by a Civil

Court or an arbitrator is not binding on the Estate Officer, rendering such a

finding would be meaningless and which no Court or arbitrator would

return. The finding of invalidity is thus in the teeth of the bar of Section 15

of the PP Act. The Supreme Court in Ashoka Marketing v. Punjab

National Bank AIR 1991 SC 855 held PP Act to be a special legislation

enacted to deal with the mischief of rampant unauthorized occupation of

public premises. The Division Bench of this Court in Fabiroo Gift House v.

ITDC 2003 (66) DRJ 243 also held that claims adjudicable before Estate

Officer are not arbitrable.

29. The counsel for GIL in the written submissions filed after the oral

arguments has also relied upon Beg Raj Singh v. State of U.P. (2003) 1

SCC 726 to contend that where the instrumentality of the State is itself

responsible for the delay caused to the project, then the term of the lease can

be extended. However the observations in the said judgment and in the other

judgments aforesaid cited would not come to the rescue of GIL in the face of

the provisions aforesaid of the Transfer of Property Act.

30. The counsel for GIL in the written submissions aforesaid also cited (i)

Bhagawati Oxygen Ltd. v. Hindustan Copper Ltd. AIR 2005 SC 2071; (ii)

Lily Thomas v. Union of India AIR 2000 SC 1650; (iii) Bharat Coking

Coal Ltd. v. L.K. Ahuja (2004) 5 SCC 109 & (iv) Ispat Engineering &

Foundry Works v. SAIL (2001) 6 SCC 347 on the scope of interference

under Section 30 of the Arbitration Act, 1940. However the relief granted by

the arbitrator having been found to be one not permissible in law, the case

would squarely fall in the category of invalidity of the award, within the

meaning of Section 30 of the Act.

31. Rather I tend to agree with the senior counsel for AAI that the award

of extension of the lease is beyond the reference and beyond the claim of

GIL before the arbitrator. It is clearly an afterthought. No issue whatsoever

also was framed thereon. Claim of GIL was for damages/compensation for

delay in delivery of possession; had the claim of GIL been of extension of

the lease as has been awarded, there would have been no occasion for the

claim of damages. It appears that not finding any claim for damages to have

been proved/made out, the relief of extension was granted as a largesse to

GIL.

32. In fact the award also suffers from the malady of inconsistencies. On

the one hand the arbitrator has found that GIL was not ready and willing to

perform its part of the agreement and did not have the resources to build the

Hotel and on the other hand granted a fresh lease to GIL. A party which has

not been ready and willing has no right to such a relief.

33. Thus, looked at in either way, the award in so far as extends the

period of lease or declares the termination invalid cannot be sustained and is

set aside. The said part being severable from rest of the award, need is not

felt to remit/remand the matter.

34. The judgments cited by the counsel for GIL of the courts/arbitrator

being required to do complete justice between the parties are not found

apposite. Justice cannot be outside the law. What is sought to be justified in

the name of justice is clearly illegal.

35. IA No.550/2001 in CS(OS) No.1507A/2000 therefore succeeds and is

allowed to the aforesaid extent. The remaining award is made rule of the

Court. I refrain from imposing any costs on GIL.

Decree in terms of award save the part set aside be drawn up.

RAJIV SAHAI ENDLAW (JUDGE) JANUARY 28, 2011 bs/pp