Kerala High Court
Indo Thai Calicut Private Ltd vs The Airport Director on 9 July, 2025
AR No.99 of 2025
1
2025:KER:50181
CR
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE M.A.ABDUL HAKHIM
WEDNESDAY, THE 9TH DAY OF JULY 2025 / 18TH ASHADHA, 1947
AR NO. 99 OF 2025
PETITIONER:
INDO THAI CALICUT PRIVATE LTD
A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES
ACT, 2013, HAVING ITS REGISTERED ADDRESS AT 29/709, 714 STAR
BUILDING, MAVOOR ROAD) PARAYANCHERI, CALICUT AND REPRESENTED
BY FAISAL SIDDIQUI, AGED 49 YEARS, S/O MOHD ZAKAULLAH
SIDDIQUI, DIRECTOR IN INDO THAI CALICUT PRIVATE LIMITED,
29/709, 714 STAR BUILDING, MAVOOR ROAD, PARAYANCHERY,
CALICUT, KOZHIKODE, KERALA, PIN - 673004
BY ADVS.
SHRI.M.K.SUMOD
SMT.VIDYA M.K.
SMT.THUSHARA.K
RESPONDENTS:
1 THE AIRPORT DIRECTOR
AIRPORT AUTHORITY OF INDIA CALICUT INTERNATIONAL AIRPORT,
CALICUT AIRPORT, MALAPPURAM DISTRICT, PIN - 673621
2 AIRPORT AUTHORITY OF INDIA
CALICUT INTERNATIONAL AIRPORT, CALICUT AIRPORT, MALAPPURAM
DISTRICT, CALICUT REPRESENTED BY THE AIRPORT DIRECTOR,
CALICUT INTERNATIONAL AIRPORT, CALICUT AIRPORT, MALAPPURAM
DISTRICT, PIN - 673621
BY ADV SRI.V.SANTHARAM
THIS ARBITRATION REQUEST HAVING BEEN FINALLY HEARD ON 09.07.2025,
THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
AR No.99 of 2025
2
2025:KER:50181
CR
ORDER
Dated this the 09th day of July, 2024
1. This is an Application under S.11(6) of the Arbitration and
Conciliation Act to appoint an Arbitrator under Clause 15.3 of
Annexure A1 Agreement to resolve the dispute between the
Applicant and the respondents arising out of the said Agreement.
2. The Application is opposed by the respondents by filing Counter
Affidavit.
3. I heard the learned counsel for the Applicant, Sri. M.K. Sumod and
the learned counsel for the respondents, Sri. V. Santharam.
4. The Applicant, through its holding Company M/S. Indo Thai Airport
Management Services Pvt. Ltd., executed Annexure A1
Concession Agreement dated 19.07.2021 with the 2nd respondent
represented by the 1st respondent. The Agreement was for
providing ground handling services by the Applicant at Calicut
2025:KER:50181
Airport. The period of Annexure A1 Agreement was for a period of
ten years. The period has not expired and parties have been still
continuing with the Annexure A1 Agreement.
5. The 1st respondent issued Annexure A14 Show Cause Notice
dated 20.12.2021 to the Applicant alleging violation of Annexure
A1 Agreement on account of non-achievement of Certificate of
Operational Readiness (COD) as per the prescribed timeline, non-
intimation of the Tariff Application submitted to AERA and non-
intimation of the details of Escrow Account opened for the purpose
of contract. The Applicant approached this Court by filing WP(C)
No.2611/2022 challenging Annexure A14 Show Cause Notice and
seeking extension for achievement of COD till such time COVID
restrictions upon air travel are lifted completely. This Court
disposed of the said Writ Petition as per Annexure A15 judgment
directing the Applicant to submit explanation to Annexure A14 and
directing the respondents to consider the same within a period of
2025:KER:50181
two weeks. The Applicant submitted A16 Reply to Annexure A14,
mainly contending that the Applicant is entitled to get relaxation of
conditions for achieving COD on account of the COVID pandemic,
as the same has been declared as an event of Force Majeure by
the Ministry of Finance. The 1st respondent issued Annexure A22
Notice demanding Rs.7,31,46,240/- as damage charges on the
allegations that the Applicant achieved COD after a delay of 272
days and that the conditions could not be relaxed on the ground
of Force Majeure. The Applicant challenged Annexure A22 in this
Court by filing WP(C) No.34051/2022 and the same was disposed
of by this Court as per Annexure A25 judgment observing that the
remedy of the applicant is to invoke Arbitration clause in Annexure
A1 Agreement and not to seek relief under Article 226 of the
Constitution of India. Thereafter, the 1st respondent issued
Annexure A26 dated 11.04.2023 calling upon the applicant to
explain as to the non-payment of Rs.6,68,90,087/- towards the
2025:KER:50181
payment of MMG and Rs.7,31,46,240/- towards damage charges.
The Request of the Applicant dated 18.08.2023 for referring the
dispute to the Dispute Resolution Committee (DRC) was
approved by the 1st respondent, constituting the DRC at the
station level by Annexure A29 dated 11.09.2023. In Annexure
A29, the Applicant was demanded to pay the damage charges in
accordance with clause 7.1.6 of the Annexure A1 Agreement
subject to the condition that if the dispute is settled in favour of the
Applicant, the 2nd respondent shall refund the disputed dues as
per the decision of the DRC or arbitration, without any interest.
The Applicant as per Annexure A31 dated 10.02.2025 notified the
1st respondent, his willingness to adjudicate the dispute through
Arbitration by suggesting the name of the Arbitrator. In Annexure
A31, the Applicant informed the 1st respondent that the Applicant
is willing to hold further discussions in order to resolve the
disputes amicably. The 1st respondent issued Annexure A32
2025:KER:50181
dated 10.03.2025 stating that they had closed the Dispute
Resolution Committee because of the failure of the Applicant to
make pre-deposit and insisted the applicant to make the pre-
deposit for referring the dispute for arbitration in line with Clause
15.6 and 7.1.6 of Annexure A1 Agreement.
6. The contention of the Counsel for the Applicant is that the
insistence of the respondents for pre-deposit for referring the
dispute for arbitration by referring Clauses 15.6 and 7.1.6 of the
Annexure A1 Agreement is unreasonable and the same is
violative of Article 14 of the Constitution of India. The learned
counsel further contended that the Applicant sought for
appointment of an Arbitrator since the attempts of the Applicant to
settle the dispute amicably and through the DRC failed on account
of the illegal insistence of the respondents for payment of the
disputed amount. The learned counsel contended that the
appointment of the Arbitrator provided under clause 15.3 of
2025:KER:50181
Annexure A1 Agreement is not conditional or subject to Clause
15.6. Clause 15.3 provides that DRC has to give its
recommendation within 45 days of the reference of the case. Even
after the expiry of 45 days, the DRC did not give its
recommendation and hence the resolution of the dispute through
the DRC could not be taken as an objection against the
appointment of the Arbitrator. Clause 15.6 if construed as
mandating payment of the disputed amount as a pre-condition for
invoking Arbitration clause, the same is violative of Article 14 in
view of the decision of the Hon'ble Supreme Court in ICOMM Tele
Limited v. Punjab State Water Supply and Sewerage Board
and Another [(2019)4 SCC 401] and Lombardi Engineering
Limited v. Uttarakhand Jal Vidyut Nigam Limited [(2024) 4
SCC 341].
7. The learned Counsel for the respondents contended mainly that
the Applicant has not complied with the pre-conditions for invoking
2025:KER:50181
the Arbitration clause under clause 15 of Annexure A1 Agreement.
Annexure A1 Agreement provides for a three-tier Dispute
Resolution Mechanism - firstly, through amicable settlement,
secondly, in case the dispute remains unresolved amicably, by
reference to the DRC of the 1st respondent and thirdly, in case the
dispute remains unresolved through the DRC, by reference to the
Arbitral Tribunal. As per Clause 15.6 read with Clause 7.1.6, the
payment of the disputed amount is a pre-condition for invoking the
three-tier dispute resolution mechanism provided in Annexure A1
Agreement. Learned counsel cited the decisions of the Hon'ble
Supreme Court in Visa International Limited v. Continental
Resources (USA) Limited [(2009) 2 SCC 55] and M.K. Shah
Engineers & Contractors v. State of M.P. [(1999) 2 SCC 594],
the decisions of the Delhi High Court in Sushil Kumar Bhardwaj
v. Union of India [2009 SCC OnLine Del 4355], Ved Prakash
Mithal & Sons v. Delhi Development Authority and Another
2025:KER:50181
[2018 SCC OnLine Del 9884] and Sanjay Iron and Steel
Limited v. Steel Authority of India [2021 SCC OnLine Del 4566]
and the decisions of the Bombay High Court in Quick Heal
Technologies Limited v. NCS Computech Private Limited and
Another [2020 SCC OnLine Bom 693] and Capacite
Infraprojects Ltd. v. T. Bhimjyani Realty Pvt. Ltd. [2023 SCC
OnLine Bom 1657] in support of his contentions.
8. I have considered the rival contentions.
9. The execution of Annexure A1 Agreement and the existence of
the Arbitration Clause therein are admitted by the parties.
Admittedly, there is a dispute between the Applicant and the
respondents with respect to the demand of a sum of
Rs.7,31,46,240/- towards damage charges by the 1st respondent
from the Applicant on the ground that the Applicant achieved COD
after a delay of 272 days. The contention of the Applicant is that
the Application has legal justification for the delay as the Applicant
2025:KER:50181
is prevented by Force Majeure on account of the COVID
Pandemic. The respondents have raised two objections against
the invocation of the Arbitration clause. Firstly, the Applicant did
not invoke the first two modes for the dispute resolution
mechanism before invoking the third mode of dispute resolution,
namely, the arbitration. Secondly, the Applicant has not made
payment of the disputed amount in order to invoke the dispute
resolution mechanism provided in the Annexure A1 Agreement.
10. In ICOMM Tele Limited (supra), the Hon'ble Supreme Court held
that the clause insisting on pre-deposit for invoking the Arbitration
clause is discriminatory and arbitrary. In the said case, the Hon'ble
Supreme Court struck down Clause 25(viii) of the Notice Inviting
Tender therein which mandated pre-deposit of 10 per cent for
invoking Arbitration on the ground that it would discourage
arbitration, contrary to the object of declogging the court system
and would render the arbitral process in effective and expensive.
2025:KER:50181
The said decision in ICOMM Tele Limited is followed by the
Hon'ble Supreme Court in Lombardi (Supra) in which the Hon'ble
Supreme Court ordered to ignore the pre-condition to deposit total
amount contained in clause 55 of the GCC on the ground that the
same is violative of the fundamental rights guaranteed under the
Constitution. The Hon'ble Supreme Court further held that the
Court dealing with an Application under 11(6) can consider
whether a particular condition in the Arbitration clause is arbitrary
or violative of Article 14 of the Constitution of India. In the light of
the principles laid down in the aforesaid two decisions of the
Hon'ble Supreme Court, I hold that Clause 15.6 so far as it insists
payment of pre-deposit for the purpose of invoking the dispute
resolution mechanism provided under Clauses 15.2 and 15.3 in
Annexure A1 Agreement is illegal as it is arbitrary and violative of
Article 14 and the same is to be ignored while considering the
request to invoke the dispute resolution mechanism provided in
2025:KER:50181
Annexure A1 Agreement. Since I have found that the clause
insisting on pre-deposit is liable to be ignored, the question
whether clause 15.3 providing arbitration clause is subject to
clause 15.6 providing pre-deposit does not arise for consideration.
11. The next question is whether the applicant is entitled to invoke the
Arbitration Clause without resorting to the amicable settlement
provided in clause 15.2 and without resorting to the resolution of
the dispute through the DRC provided under the first part of
Clause 15.3. On going through the scheme of the agreement, it is
seen that a three-tier dispute resolution mechanism is provided in
it. At first, the Applicant has to attempt an amicable settlement. In
case the dispute remains unresolved amicably, the same shall be
referred to the DRC. In case the dispute still remains unresolved
after the recommendation of the Dispute Resolution Committee,
the same shall be referred to the Arbitral Tribunal. It is clear from
Annexure A29 letter dated 11.09.2023 issued by the 1st
2025:KER:50181
respondent that the Applicant had requested for referring the
dispute to the DRC and the 1st respondent had constituted the
DRC. But in the very same letter, the 1st respondent insisted for
payment of damage charges in accordance with clause 7.1.6 of
Annexure A1 Agreement. On account of the insistence on such an
unreasonable condition of pre-deposit, the respondents have
made the resolution of the dispute through DRC nugatory. It is
seen from Annexure A31 issued by the Applicant to the 1st
respondent that the Applicant has stated that the Applicant is
willing to hold discussions in order to resolve the disputes
amicably. The said letter was replied to by Annexure A32 by the
1st respondent, stating that the refusal of the applicant to make
payment of the disputed amount led to the closure of DRC
proceedings. Even though the Applicant made an offer to hold
discussions to resolve the disputes amicably, the respondent did
not respond to the said offer. Thus, it is clear that the Applicant
2025:KER:50181
attempted to resolve the dispute through amicable settlement and
through DRC, but the same did not take place on account of the
unreasonable demand made by the respondents to make the pre-
deposit, which I have already found arbitrary. Then the question
arises whether the applicant is to be directed to start from the first
mode of the dispute resolution mechanism provided in Annexure
A1 Agreement without the condition to make the pre-deposit and
to entertain the application for appointment of the Arbitrator only
after exhausting the first two modes in the dispute resolution
mechanism.
12. Let me analyse the decisions cited by the learned counsel for the
respondents in this regard.
13. In M.K. Shah( supra), the Hon'ble Supreme Court held that the
steps preceding the coming into operation of the arbitration clause
though essential are capable of being waived and if one party has
by its own conduct or the conduct of its officials, disabled such
2025:KER:50181
preceding steps being taken, it will be deemed that the procedural
prerequisites were waived and that the party at fault cannot be
permitted to set up the bar of non-performance of prerequisite
obligation so as to exclude the applicability and operation of the
arbitration clause.
14. In Visa International (supra), in answer to the contention that the
pre-condition for amicable settlement of the dispute between the
parties has not been exhausted and therefore the application
seeking appointment of arbitrator is premature, the Hon'ble
Supreme Court held that from the correspondence exchanged
between the parties it is clear that there was no scope for amicable
settlement, for both the parties have taken rigid stand making
allegations against each other; that the exchange of letters
between the parties undoubtedly discloses that attempts were
made for an amicable settlement but without any result leaving no
option but to invoke arbitration clause. In the case on hand, the
2025:KER:50181
parties have not taken a rigid stand. There is still scope for
amicable settlement between the parties, especially when the
parties have been continuing with the contract discharging their
obligations.
15. In Sushil Kumar (supra), the Delhi High Court rejected the
Application for the appointment of an arbitrator as premature on
the ground that there is no pleading or proof of compliance of the
procedure prescribed in the Arbitration clause. In the said case,
the decision of the Superintending Engineer was a pre-condition
for invocation of arbitration clause. It is held that steps preceding
arbitration are to encourage conciliation and the designate of the
Chef Justice ought to encourage such mechanism for conciliation
agreed upon by the parties. The said decision was followed by the
Delhi High Court in the subsequent decision in Ved Prakash
(supra), dismissing an Application for the appointment of an
arbitrator, referring to non-compliance with the hierarchical
2025:KER:50181
manner of adjudication of the claims with specific timeline for the
decision of each authority. In the said case, the relevant clause
required the party to explore the possibility of an amicable
settlement before seeking the appointment of an arbitrator. In
Sanjay Iron (supra), the Delhi High Court opined that the very
purpose of keeping conciliation clause in any Agreement is to
shorten the path for settlement of disputes between the parties
and then directed the parties to first explore the possibility of
resolution of disputes through conciliation.
16. In Quick Heal (supra), the Bombay High Court dealt with a
provision for amicable settlement prior to the arbitration and the
same was held to be mandatory. In Capacite (supra), the
Bombay High Court held that when the parties agreed that before
they trigger the arbitration agreement, they would agitate their
grievance through Dispute Adjudication Board, then it was the
choice of the parties to so determine and once this choice is made,
2025:KER:50181
it must be adhered to, and in its absence Section 11 is not
permitted to be invoked.
17. It is the choice of the parties to agree on a particular mode of
dispute resolution when they enter into an agreement. The parties
are free to frame a hierarchy by prescribing a stage-wise dispute
resolution mechanism one after another. Courts will have to
respect and follow such dispute resolution mechanism agreed by
the parties, so long as the same does not offend any law. A
hierarchy for dispute resolution is made for easy settlement of the
disputes and to shorten the path for dispute resolution. It is always
a lighter mode that is invoked first than a heavier mode to resolve
the dispute. In view of the legal principle laid down by the Hon'ble
Supreme Court and various High Courts, I hold that when a
dispute resolution mechanism is provided in an Agreement, the
parties can seek reference to arbitration provided therein only
after exhausting the previous modes for dispute resolution.
2025:KER:50181
18. Let me examine the dispute resolution mechanism in the present
case to check whether it prevents the Applicant from seeking
appointment of an arbitrator without resorting to amicable
settlement and settlement of the dispute through DRC.
19. It is clear from Annexure A29 and A31 that the Applicant
requested for holding discussions for amicable settlement and
reference to DRC for resolving the dispute. On account of the
insistence of the respondents to make the pre-deposit as required
under Clause 15.6, the dispute could not be attempted to be
resolved through amicable settlement and through DRC. On
account of the existence of Clause 15.6, the parties were under
bonafide dispute with respect to the requirement of pre-deposit.
Such dispute is settled only in this judgment. The parties have not
terminated the Annexure A1 Agreement and they have still been
continuing with the Annexure A1 Agreement. Hence, there is still
scope for holding amicable settlement and dispute resolution
2025:KER:50181
through DRC to resolve the dispute. In such situation, the parties
are to be relegated to the first two modes of dispute resolution
mechanism before invoking the Arbitration Clause. In case the
dispute is not resolved after resorting to the first two modes, the
applicant can very well approach this Court with a fresh Request
for appointment of an Arbitrator.
20. The learned counsel for the applicant pointed out that the DRC is
constituted at the station level and in order to make the dispute
resolution through DRC more powerful and effective, the officers
from the head office of the 2nd respondent are also to be included.
The Applicant is free to make such requests to the respondents
and the respondents shall consider such request while
constituting the DRC.
21. In the light of the aforesaid findings, this Arbitration Request is
dismissed, reserving liberty to the applicant to approach this Court
again in case the dispute is not resolved after resorting to the first
2025:KER:50181
two modes in the dispute resolution mechanism provided in
Annexure A1 Agreement and declaring that Clause 15.6 so far as
it insists on the payment of pre-deposit for the purpose of invoking
the dispute resolution mechanism provided under Clauses 15.2
and 15.3 in Annexure A1 Agreement is illegal and the same is to
be ignored while considering the request to invoke the dispute
resolution Mechanism provided in Annexure A1 Agreement.
Sd/-
M.A.ABDUL HAKHIM
JUDGE
Jma/shg
2025:KER:50181
PETITIONER ANNEXURES
Annexure A1 A COPY OF THE AGREEMENT DATED 19/07/2021 AND
EXECUTED BETWEEN THE PETITIONER AND THE 2ND
RESPONDENT HEREIN
Annexure A2 A TRUE COPY OF THE LOIA DATED 19/02/2021 ISSUED BY
THE GENERAL MANAGER OF THE 2ND RESPONDENT TO THE
PETITIONER
Annexure A3 A TRUE COPY OF THE LETTER DATED 16TH MARCH 2021
ISSUED BY THE PETITIONER TO THE 1ST RESPONDENT
Annexure A4 A COPY OF THE LETTER DATED 3RD JUNE 2021 ISSUED BY
THE PETITIONER THROUGH ITS HOLDING COMPANY TO THE
CHAIRMAN OF THE 2ND RESPONDENT
Annexure A5 A COPY OF THE LETTER ISSUED BY THE 2ND RESPONDENT
TO THE PETITIONER DATED 28TH JULY 2021
Annexure A6 TRUE COPY OF THE LETTER DATED 10/09/2021 BY THE
PETITIONER TO THE 1ST RESPONDENT
Annexure A7 TRUE COPY OF THE LETTER DATED 15/09/2021 BY THE
PETITIONER TO THE 1ST RESPONDENT
Annexure A8 A TRUE COPY OF THE LETTER DATED 18TH OCTOBER 2021
BY THE 1ST RESPONDENT TO THE PETITIONER
Annexure A9 TRUE COPY OF THE CIRCULAR DATED 26TH NOVEMBER 2021
ISSUED BY THE DIRECTOR GENERAL OF CIVIL AVIATION
Annexure A10 TRUE COPY OF THE CIRCULAR DATED 1ST DECEMBER 2021
ISSUED BY THE DIRECTOR GENERAL OF CIVIL AVIATION
Annexure A11 TRUE COPY OF THE CIRCULAR DATED 9TH DECEMBER 2021
ISSUED BY THE DIRECTOR GENERAL OF CIVIL AVIATION
Annexure A12 TRUE COPY OF THE CIRCULAR DATED 19/01/2022 ISSUED
BY THE DIRECTOR GENERAL OF CIVIL AVIATION
Annexure A13 A COPY OF THE REPLY LAWYER NOTICE DATED
02/12/2021AND ISSUED BY 1ST RESPONDENT'S LAWYER TO
THE PETITIONER'S LAWYER
Annexure A14 A COPY OF THE SHOW CAUSE NOTICE DATED 20TH DECEMBER
2021 ISSUED BY THE 1ST RESPONDENT
Annexure A15 A COPY OF THE JUDGMENT DATED 27TH JANUARY 2022 IN
WRIT PETITION (CIVIL) NO. 2611 OF 2022 BY THIS
HON'BLE COURT
Annexure A16 A TRUE COPY OF THE EXPLANATION DATED 17TH FEBRUARY
2022 SUBMITTED BY THE PETITIONER TO THE 1ST
RESPONDENT
Annexure A17 A COPY OF THE LETTER ISSUED BY THE 1ST RESPONDENT
2025:KER:50181
TO THE PETITIONER DATED 18TH MARCH 2022
Annexure 18 A COPY OF THE LETTER ISSUED BY THE PETITIONER TO
THE 1ST RESPONDENT DATED 4TH APRIL 2022
Annexure A19 A COPY OF THE 1ST RESPONDENT'S LETTER TO THE
PETITIONER DATED 19TH APRIL 2022
Annexure A20 A TRUE COPY OF THE LETTER ISSUED BY THE PETITIONER
TO THE 1ST RESPONDENT DATED 29TH APRIL 2022
Annexure A21 A TRUE COPY OF THE LETTER ISSUED BY THE 1ST
RESPONDENT DATED 6TH JUNE 2022
Annexure A22 A COPY OF THE 1ST RESPONDENT'S LETTER DATED 6TH
SEPTEMBER 2022
Annexure A23 A TRUE COPY OF THE APPLICANT'S LETTER DATED 4TH
NOVEMBER 2022
Annexure A24 A TRUE COPY OF THE LETTER ISSUED BY THE 1ST
RESPONDENT DATED 8TH FEBRUARY 2023 TO THE
PETITIONER
Annexure A25 A COPY OF THE ORDER DATED 24TH MARCH 2023 IN WRIT
PETITION (CIVIL) NO. 34051 OF 2022
Annexure A26 TRUE COPY OF THE LETTER DATED 11/04/2023 AND ISSUED
BY THE 1ST RESPONDENT TO THE PETITIONER
Annexure A27 TRUE COPY OF THE LETTER DATED 20/04/2023 AND ISSUED
BY THE PETITIONER TO THE 1ST RESPONDENT
Annexure A28 TRUE COPY OF THE LETTER DATED 04/07/2023 AND ISSUED
BY THE 1ST RESPONDENT TO THE PETITIONER
Annexure A29 TRUE COPY OF THE LETTER DATED 11/09/2023 AND ISSUED
BY THE 1ST RESPONDENT TO THE PETITIONER
Annexure A30 TRUE COPY OF THE LETTER DATED 28/03/2024 AND ISSUED
BY THE 1ST RESPONDENT TO THE PETITIONER
Annexure A31 TRUE COPY OF THE LETTER DATED 10/02/2025 AND ISSUED
TO THE 1ST RESPONDENT
Annexure A32 TRUE COPY OF THE LETTER DATED 10/03/2025 AND ISSUED
BY THE 1ST RESPONDENT TO THE PETITIONER
Annexure A33 A TRUE COPY OF THE RESOLUTION OF THE BOARD OF
DIRECTORS OF THE PETITIONER COMPANY DATED
21/04/2025
