TMI Blog2020 (10) TMI 1371X X X X Extracts X X X X X X X X Extracts X X X X ..... all perusal of the clauses in the RFP as also in the Concessionaire Agreement, I find that the clauses in the Concessionaire Agreement which deal with the same subject matter as the corresponding clause in the RFP were intended to override the latter clauses in the RFP. The contention of the learned senior counsel for the respondent cannot be accepted that it is only in the event of a challenge to clause 5.15 of the RFP on the ground that it is violative of the fundamental rights of the petitioner under Article 14 of the Constitution of India, that this Court can hold the said clause, in the RFP, as illegal. After the amendment of the 1996 Act in 2015, the law must be taken to be that any clause in an agreement, that requires one of the contracting parties to make a deposit of amount as a precondition for invoking the arbitration, has to be seen as rendering the entire clause arbitrary, being not only excessive or disproportionate but leading to a wholly unjust situation in arbitration proceedings, that are ordinarily to be encouraged on account of the high pendency of cases in courts and the ever-increasing cost of litigation - it is opined that even if the clause in the RFP i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the petitioner could not commence commercial operations before the said date, and hence, there was no occasion to raise any invoice in respect of the period prior to 20.7.2018. The petitioner alleges, however, that the respondent wrongfully, and in breach of the terms of the Concession Agreement, raised invoices in the month of September, 2018 with effect from 6.4.2018. Although the petitioner disputed such invoices, some payments were made to the respondent, under protest. Further, in view of the continued losses that had accumulated on account of the alleged inaction on the part of the respondent, the petitioner was constrained to issue a termination notice dated 16.4.2019, and vacated the premises on 13.8.2019. 3. It is the case of the petitioner that, thereafter, the respondent unilaterally invoked the bank guarantee that had been furnished by the petitioner as security deposit, and also proceeded to blacklist the petitioner from participating in future tenders floated by the respondent for a period of three years. It is stated that the invocation of the bank guarantee was injuncted by an order dated 5.9.2019 of the Principal District Judge, Manjeri passed in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod of thirty (30) days from the date on which the Concessionaire has sought resolution of the dispute from Authority. If the dispute involves financial implication above Rs. 7,00,000/- (Rupees seven lakhs) the Concessionaire would be free to seek Arbitration under Arbitration and Conciliation Act 1996 duly amended from time to time. The Concessionaire by means of a written application can seek appointment of an Arbitrator and Authority would appoint such an Arbitrator within 30 days of receipt of the application, subject to fulfilling, the pre-requisites for appointment of the Arbitrator as laid hereunder:- i. The case shall be referred to the Sole Arbitrator as per AA1 delegation of powers in vogue subject to the condition that the Concessionaire shall have to deposit the disputed amount with AA1 as condition precedent and the consent shall have to be obtained from the concessionaire for acceptance of the recommendations of Arbitrator before making reference to the Arbitrator for adjudication of dispute. ii. During the arbitral and dispute resolution proceedings, the licensee(s) shall continue to pay the full amount of license fees/dues regularly as per the LOIA/Concessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utual consensus for the disputes with financial implication up to Rs. 7,00,000/- (Rupees seven lakhs). The parties agree to use their best efforts for resolving all disputes arising under or in respect of this Agreement promptly, equitably and in good faith, and further agree to provide each other with reasonable access during normal business hours to all non-privileged records, information and data pertaining to any dispute. 22.2. Arbitration 22.2.1 Any dispute with financial implication above Rs. 7,00,000/- (Rupees seven lakhs, as provided in clause 22.1.1, shall be finally decided by reference to arbitration by a Sole Arbitrator to be appointed by the tender approving authority as per AAI delegation of Power in vogue. Such arbitration shall be subject to the provisions of the Arbitration and Conciliation Act, 1996 and shall include amendments to or any re-enactments thereof, as in force from time to time. The venue of such arbitration shall be Regional Head Quarters Airports Authority of India, Southern Region, Chennai and the language of arbitration proceedings shall be English. The cost of arbitration shall be borne equally by both the parties. 22.2.2. The Arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the RFP and the Concessionaire Agreement, priority has to be accorded to the clauses in the concessionaire agreement, and viewed thus, Article 22 of the Concessionaire Agreement has to be seen as the Arbitration Agreement between the parties. In view of the apparent conflict between clause 5.15 of the RFP and Article 22 of the Concessionaire Agreement, the former has to yield to the latter, for the purposes of determining the Arbitration agreement between the parties. In the alternative, even if it were to be assumed that Article 22 of the Concessionaire agreement and clause 5.15 of the RFP are to be read together and as supplementing each other, then the conditions in the RFP, obliging the petitioner to choose an Arbitrator from among a panel suggested by the respondent, fall foul of the law declared by the Supreme Court in Perkins Eastman Architects DPC Anr. v. HSCC (India) Ltd.-as also by the Bombay High Court in the judgment dated 4.12.2019 in Commercial Arbitration Application (L) No. 495/2019-[Lite Bite Foods Pvt. Ltd. v. Airports Authority of India] between the very same parties and in respect of an identical agreement. It is also relevant to note that, the cond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there was no challenge to the clause concerned, as violative of Article 14 of the Constitution. He contends that in the absence of a challenge to clause 5.15 of the RFP as violative of Article 14, in the instant petition, the earlier judgment of the Supreme Court in S.K. Jain v. State of Haryana-[(2009) 4 SCC 357] must be seen as binding for the purposes of this case. 9. I have considered the rival submissions and have also gone through the terms of the Concessionaire Agreement entered into between the parties. At the very outset, this Court has to remind itself that the limited role that is expected of it, in proceedings under Section 11 of the 1996 Act, after its amendment in 2015, is to look at one aspect alone, namely, the existence of an arbitration agreement between the parties. In the instant case, the submissions advanced on behalf of the petitioner and the respondent indicate that there is no dispute among them as regards the existence of an arbitration agreement between them, the question urged being only as to whether the petitioner was required to fulfill certain preconditions before invoking the arbitration under the said agreement. 10. On a reading of Article 1. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssionaire Agreement, Article 22 of the said Agreement must be seen as constituting the Arbitration Agreement between the parties. 11. Even if one were to treat clause 5.1 of the RFP as supplementing in some way, the terms of Article 22 of the Concessionaire Agreement, the conditions in clause 5.15 of the RFP, that require the petitioner to choose an Arbitrator from among a panel suggested by the respondent, as also the condition that requires the petitioner to make a pre-deposit of amounts as a condition for invoking the arbitration, would fall foul of the law declared by the Supreme court in the decisions reported as Perkins Eastman Architects DPC Anr. v. HSCC (India) Ltd.-and ICOMM Tele Ltd. v. Punjab State Water Supply and Sewerage Board and Anr.-[(2019) 4 SCC 401] respectively. I am not persuaded to accept the contention of the learned senior counsel for the respondent that it is only in the event of a challenge to clause 5.15 of the RFP on the ground that it is violative of the fundamental rights of the petitioner under Article 14 of the Constitution of India, that this Court can hold the said clause, in the RFP, as illegal. After the amendment of the 1996 Act in 2015, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication, as soon as possible, and in any case sufficiently in advance of his entering upon the reference to his arbitration. That statement will be retained by the Registrar on the file of this application. Copies will be given to both sides. (d) Appearance before the Arbitrator: Parties will appear before the learned Sole Arbitrator on such date and at such place as he nominates to obtain appropriate directions in regard to fixing a schedule for completing pleadings, etc. (e) Contact/communication information of the parties: Contact and communication particulars are to be provided by both sides to the learned Sole Arbitrator within one week of this order being uploaded. The information is to include a valid and functional email address. (f) Application under Section 16: Liberty is granted to either side to file an application before the learned Sole Arbitrator under Section 16 in regard to any matter or claim and its arbitrability, jurisdiction and the arbitral tribunal competence. (g) Interim Application/s: (i) Liberty is granted to both sides to make an interim application or interim applications including (but not limited to) interim applications under Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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