Bombay High Court
H L V Limited Authorized Person … vs Airports Authority Of India on 9 June, 2025
2025:BHC-AS:22615
ARAST.12153.2021 (HLV).doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
ARBITRATION APPEAL (STAMP) NO.12153 OF 2021
WITH
INTERIM APPLICATION NO.1358 OF 2021
IN
ARBITRATION APPEAL (STAMP) NO.12153 OF 2021
WITH
ARBITRATION APPEAL NO.83 OF 2024
WITH
INTERIM APPLICATION NO.11778 OF 2024
Digitally IN
signed by
SHRADDHA
SHRADDHA KAMLESH
ARBITRATION APPEAL NO.83 OF 2024
KAMLESH TALEKAR
TALEKAR Date:
2025.06.09
17:49:06
+0530
HLV Limited
(Formerly Known as Hotel Leela Venture Limited) ...Applicant
Versus
Airports Authority of India
Through Its Chairman ...Respondent
ORDINARY ORIGINAL CIVIL JURISDICTION
COMMERCIAL ARBITRATION APPLICATION NO.28 OF 2017
WITH
COMMERCIAL ARBITRATION APPLICATION NO.64 OF 2025
WITH
INTERIM APPLICATION (L) NO.1196 OF 2025
IN
COMMERCIAL ARBITRATION APPLICATION NO.64 OF 2025
HLV Limited
(Formerly Known as Hotel Leela venture Limited) ...Applicant
Versus
Airports Authority of India Through Its Chairman ...Respondent
Mr. Rafique Dada, Senior Advocate a/w. Mr. Vivek Menon, Mr. Ankoosh
Mehta, Mr. Sarah Navodia, Mr. Advait Shukla, Mr. Alok Agrawal i/b.
Cyril Amarchand Mangaldas, Advocates for Applicant.
Mr. Ashutosh Kumbhakoni, Senior Advocate i/b. Mr. Ajay Khaire a/w.
Mr. Tamanna Bafna, Advocates for Respondent.
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CORAM : SOMASEKHAR SUNDARESAN, J.
Reserved on : February 20, 2025
Pronounced on : June 9, 2025
JUDGEMENT:
Core Controversy:
1. This bunch of proceedings essentially centre around one core question –
whether disputes and differences relating to eviction and recovery of dues under
lease deeds governing two parcels of land, fall within the scope of the arbitration
agreements contained in the lease deeds, particularly in the light of the inherent
deeming declarations and exclusions contained in the lease deeds.
Context and Factual Background:
2. Hotel Leela Venture, now HLV Ltd. (“Leela”) and the Airports Authority of
India, including the former International Airports Authority of India 1 (“AAI”) have
executed three lease deeds in respect of land owned by AAI in favour of Leela. The
first two lease deeds dated October 19, 1983 and November 22, 1983 were for lease
of two parcels of land admeasuring 9,000 square feet each (” 18,000 Land”) to
enable Leela to construct a hotel and a flight kitchen. The lease was for a period
until July 11, 2012 (i.e. 30 years).
3. Thereafter, on February 7, 1996, another lease deed was executed between
the parties in respect of another parcel of land admeasuring 11,000 square metres
1
The IAAI merged into the AAI under the AAI Act.
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(“11,000 Land”) owned by AAI for Leela to construct a hotel wing on such land.
This lease deed was for a period until March 31, 2024.
4. Under the lease deeds for the 18,000 Land, Leela was to pay the stipulated
lease rent and 2% of the gross turnover of the business of running the hotel and
flight kitchen. Under the lease deed for the 11,000 Land, Leela had to pay the
higher of: (i) the amounts set out in the schedule to a supplemental agreement of
the same date (February 7, 1996); and (ii) amounts equal to 7.5% of the turnover of
the new hotel wing. Separately, certain private lands were to be amalgamated with
the 18,000 Land.
5. Each of the lease deeds is near-identical in its terms. Each contains an
arbitration clause, which makes an exception as to what is arbitrable. Prior in
sequence to the arbitration clause, each lease deed contains another clause that
explicitly provides that the land leased by AAI to Leela would be deemed to be
public premises as defined in The Public Premises (Eviction of Unauthorised
Occupants) Act, 19712 (“Public Premises Eviction Act”), regardless of the building
constructed on the land.
6. The arbitration clause in each lease deed provides that all disputes and
differences arising from, or in any way touching or concerning the lease deed are
arbitrable. However, the arbitration clause in each lease deed explicitly excludes
2
There is an error in the title nomenclature for this legislation in some clauses of the lease deeds – the words
in parenthesis in the contracts are “Unauthorised Occupants Eviction” instead of “Eviction of Unauthorised
Occupants”. However, there is no doubt about the legislation the parties had in mind and in other places it is
accurately named.
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from arbitration any facet on which a decision is to be taken otherwise, or to which
the Public Premises Eviction Act and rules made thereunder are applicable.
7. The arbitration clause provides for a unilateral appointment by the Chairman
of AAI. Leela first applied 3 to this Court in respect of the lease deeds relating to the
18,000 Land, under Section 11 of the Arbitration and Conciliation Act, 1996
(“Arbitration Act“) to appoint an arbitrator since the AAI refrained from appointing
an arbitrator. The first Section 11 Application was filed before any eviction
proceedings were initiated by AAI. Another Application under Section 11 of the
Arbitration Act in respect of the 11,000 Land was filed well after the eviction
proceedings had commenced. These Applications (collectively, ” Section 11
Applications”) are also being disposed of by this common judgement.
8. Leela would like this Court to hold that an arbitration agreement being in
existence, an arbitral tribunal must be constituted, leaving it to the arbitral tribunal
to deal with all matters of jurisdiction. On the other hand, AAI would like this Court
to hold that the disputes raised by Leela insofar as they relate to challenging the
eviction and recovery of dues fall squarely out of the scope of the arbitration
agreement. AAI’s contention is based on the explicit deeming fiction contracted by
the parties that 18,000 Land and the 11,000 Land are public premises, coupled with
the exclusion of the subject of eviction and recovery of lease rental dues from the
scope of the arbitration agreement.
3
Commercial Arbitration Application No. 28 of 2017 in respect of the 18,000 Land – filed on January 20,
2017; and Commercial Arbitration Application No. 64 of 2025 in respect of the 11,000 Land – filed on
September 29, 2021
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9. AAI sought to evict Leela from the leased land, way back in 2017. By that
time, the lease for 18,000 Land had well expired (in 2012). The lease for the 11,000
Land had not expired by then (it expired later in March 2024). However, Leela has
remained in possession of the entire leased land till date.
10. In the interregnum, Leela also got a declaratory arbitral award in relation to
the 11,000 Land that no amounts are payable in respect of such land. This award
was set aside by a Learned Single Judge of the Delhi High Court with costs. The
outcome was upheld by a Learned Division Bench of that Court for different
reasons, with one paragraph in the impugned judgement being deleted. The
Supreme Court upheld the view and a review petition too stood dismissed. The
upshot is, that the declaration that nothing is payable in relation to the 11,000 Land
has been emphatically struck down, but Leela continues to remain in possession of
that piece of land.
11. The eviction proceedings initiated by AAI were under the special provisions
of Chapter VA of The Airports Authority of India Act, 1994 (“AAI Act“), on the
premise that the leased land was “airport premises” – and not under the Public
Premises Eviction Act in respect of the deemed “public premises”. Chapter VA of
the AAI Act had been introduced into the AAI Act in 2003. In the eviction
proceedings, Leela filed applications under Section 8 of the Arbitration Act on the
premise that the parties have an arbitration agreement that covers disputes and
differences between them (“Section 8 Applications”).
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12. The Section 8 Applications were dismissed by the Eviction Officer. An order
dated August 6, 2019 dismissed the Section 8 Application in respect of the 11,000
Land and an order dated May 5, 2021 dismissed the Section 8 Application in respect
of the 18,000 Land (collectively, “Impugned Orders”).
13. Statutory appeals4 challenging the Impugned Orders have been filed by Leela
under Section 37 of the Arbitration Act read with Section 28-K of the AAI Act
(“Statutory Appeals”). Under Section 28-K of the AAI Act as amended by the
Tribunal Reforms Act, 2021, a statutory appeal lies in the High Court and not before
a tribunal that was meant to be constituted under the AAI Act. These two Appeals
too are being disposed of along with the Section 11 Applications, by this common
judgement.
14. To avoid prolixity, each and every step taken in the web of proceedings
between the parties is not being reproduced in this judgement. A detailed List of
Dates has been tendered by Leela in respect of each of the 18,000 Land and the
11,000 Land. Suffice it to say, that Writ Petitions have been filed and withdrawn by
Leela. The Section 8 Applications were disposed of once, with a remand for
provision of reasons. This led to the Section 8 Applications being heard afresh. In
direct conflict with the stated desire to proceed to arbitration, Leela has filed a
Commercial Suit in this very Court in respect of the 18,000 Land, seeking a
declaration that the lease stood renewed for another 30 years by exchange of
correspondence. Two sets of arbitration proceedings with varying outcomes took
4
Arbitration Appeal No. 83 of 2024 (in respect of the 18,000 Land) and Arbitration Appeal (L) No. 12153 of
2021 (in respect of the 11,000 Land).
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place in relation to the 11,000 Land. As stated earlier, an arbitral award declared
that nothing was payable by Leela in respect of the 11,000 Land on the premise that
the lease stood frustrated, but that has been firmly set aside.
15. AAI too filed amendment applications to enhance the recovery amounts
claimed before the Eviction Officer. Various Interim Applications have been filed
by the parties in the proceedings pending before this Court. Without getting bogged
down by the intricate and strategic web of filings of various proceedings, in this
judgement, the focus has been retained on what is relevant for purposes of
determining the merits of the Statutory Appeals, and indeed, the merits of the
Section 11 Proceedings.
Contentions of the Parties:
16. Mr. Rafique Dada, Learned Senior Counsel on behalf of Leela would contend
that the lease deeds are not conventional leases but they constitute a joint venture
agreement between the parties. He would also contend that private lands were
amalgamated into the 18,000 Land, after which the 18,000 Land could have never
retained the character of “airport premises” or “public premises”. That apart, Mr.
Dada would submit that on December 22, 2009, Leela made a request to AAI to
renew the lease deeds for the 18,000 Land, which led to an offer dated March 31,
2011 (just before the expiry of the lease scheduled for July 11, 2012) from AAI,
indicating a renewal for 30 years from April 1, 2011 to March 31, 2041 on the same
terms and conditions as originally contracted. On September 29, 2011, Leela is said
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to have confirmed an unconditional acceptance of such offer, which led to formation
of a contract of renewal of lease. Since the proposal and acceptance entailed all the
terms of the existing lease deeds being applicable, it is contended that such an
extension is also bound by the arbitration agreement contained in the lease deeds.
Mr. Dada would also point out that when such acceptance was conveyed by Leela to
AAI, a nominee director of AAI was a member of the Board of Directors of Leela –
the upshot being acquiescence by AAI.
17. About a year later, by a letter dated July 18, 2012, AAI stated to Leela that
approval of the “Competent Authority” to the renewal was still awaited, and
therefore, a temporary extension of six months was being granted. On July 24,
2012, Leela confirmed its acceptance of the letter dated July 18, 2012. Thereafter,
multiple ad hoc extensions for periods ranging from three months to a year were
granted by AAI between 2013 and 2015. On November 13, 2014, AAI is said to have
revised the lease rentals for the 18,000 Land, which Leela alleges is contrary to the
offer and acceptance of a 30-year extension on the same terms. By January 11,
2016, the last of the ad hoc extensions by AAI expired.
18. On September 27, 2016, AAI called upon Leela to vacate the land and hand it
over by October 31, 2016 after restoring the floor space index (” FSI”) entitlements
on that land and clearing all outstanding dues. Mr. Dada would submit that this led
to Leela invoking arbitration on October 27, 2016, and on failure of AAI to appoint
an arbitrator, on January 20, 2017, a Section 11 Application was filed by Leela in
respect of the 18,000 Land. However, even while the Section 11 Application was
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pending, Mr. Dada would submit, on February 6, 2017, AAI initiated eviction
proceedings before the Eviction Officer under the AAI Act and not under the Public
Premises Eviction Act. The choice of legislation, Mr. Dada would indicate, has
implications for the exceptions to the arbitrability as contended by AAI.
19. In sharp contrast, Mr. A.A. Kumbhakoni, Learned Senior Counsel on behalf
of AAI would submit that the parties had consciously chosen to keep eviction from
the leased land out of the scope of arbitration. He would contend that one need not
even look to the statutory framework governing eviction proceedings, since by
contract, the parties had resolved that the land in question was deemed to be
“public premises”, and thereby attract the Public Premises Eviction Act. In
addition, the parties also expressly agreed that any dispute or difference that would
fall within the scope of the Public Premises Eviction Act, would not be arbitrable,
Mr. Kumbhakoni would submit. Therefore, he would contend, the parties
contracted that such disputes would fall within the contracted exclusions to the
arbitration agreement.
20. Mr. Kumbhakoni would submit that the choice by AAI to initiate eviction
under the AAI Act and not the Public Premises Eviction Act, is a valid choice made
well within the jurisdiction of the AAI Act. He would contend that the legislation
governing eviction is hardly relevant for determination of whether the parties had
agreed by contract to arbitrate about eviction. Once the parties had chosen to treat
the land leased by AAI to Leela as public premises and thereby within the scope of
the Public Premises Eviction Act and outside the scope of the arbitration agreement
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between the parties, it is their contracting intention as expressed in writing at the
time of executing the contract that would determine what the parties agreed was not
arbitrable. In the result, he would submit, the Impugned Orders rejecting the
Section 8 Applications deserve to be upheld, while the Section 11 Applications
would need to be rejected insofar as they relate to eviction and recovery of lease
rentals, on the premise that the subject matter of the dispute is not arbitrable.
Analysis and Findings:
21. Before embarking upon the analysis, it would be fruitful to list the
proceedings (the Statutory Appeals and the Section 11 Applications) that have been
tagged and heard for disposal by this judgement:
A) Arbitration Appeal No. 83 of 2024 – a statutory appeal under Section 37
of the Arbitration Act read with Section 28-K of the AAI Act, impugning
rejection of the Section 8 Application in relation to the 18,000 Land;
B) Arbitration Appeal (St.) No. 12153 of 2021 – a statutory appeal under
Section 37 of the Arbitration Act read with Section 28-K of the AAI Act,
impugning rejection of the Section 8 Application in relation to the 11,000
Land;
C) Commercial Arbitration Application No. 28 of 2017 – an application
under Section 11 of the Arbitration Act, seeking appointment of an
arbitrator under the lease deeds for the 18,000 Land; and
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ARAST.12153.2021 (HLV).docD) Commercial Arbitration Application No. 64 of 2025 – an application
under Section 11 of the Arbitration Act, seeking appointment of an
arbitrator under the lease deed for the 11,000 Land.
22. As stated at the threshold, regardless of the web of pleadings and
proceedings involved, the core issue that falls for consideration in these proceedings
is whether the proceedings for eviction and recovery of lease rentals fall within the
scope of the arbitration agreement between the parties.
23. Arbitration is a creature of contract. It is the parties’ autonomy that creates
the jurisdiction for arbitration. If the parties have agreed to bind themselves to
resolving certain disputes by arbitration, only a provision of law that renders such
an agreement illegal, can make that dispute non-arbitrable. However, if the parties
had consciously excluded the scope of certain type of disputes from arbitrability in
the very contract that houses the arbitration agreement, whether any statutory
provision excludes arbitrability and which statutory provision excludes it, would be
totally irrelevant.
24. To see the matter from this prism, it is vital to examine the arbitration
agreement between the parties. Clause 35 in the lease deeds relating to the 18,000
Land and Clause 37 in the lease deed relating to the 11,000 Land are identical in
terms. It would be useful to reproduce them below:-
All disputes and differences arising out of or in any way touching
or concerning this agreement (except these the decision whereof is
otherwise herein before expressly provided for or to which the
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ARAST.12153.2021 (HLV).docPublic premises (Eviction of Unauthorised Occupants) Act, 1971
and the rules framed thereunder which are in force or which may
hereafter come into force are applicable) shall be referred to the
sole arbitration of a person to be appointed by the Chairman of
the Authority or in case the designation of Chairman is changed
or his office is abolished, by the person for the time being
entrusted, whether or not in addition to other functions, with the
functions of the Chairman, International Authority of India, by
whatever designation such person may be called and if the
Arbitrator so appointed is unable or unwilling to act to the sole
arbitration of some other person to be similarly appointed and
willingly to act as such arbitrator. It will be no objection to any
such appointment that the Arbitrator so appointed is a servant of
the Authority that he had to deal with the matters to which this
agreement relates and that in the course of his duties as such
servants of the Authority, he had expressed views on all or any of
the matters in disputes or differences. The award of the arbitrator
so appointed shall be final and binding on the parties. The
Arbitrator may with the consent of the parties, extend from time to
time, the time for making and publishing the award.
[Emphasis Supplied]
25. Even a plain reading of the foregoing would show that the parties had
decided that disputes and differences on which the decision would otherwise be
made (outside arbitration) would not be arbitrable. Likewise, disputes and
differences to which the Public Premises Eviction Act and subordinate legislation
under that law applies, would be outside the scope of the arbitration agreement.
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26. Now, Clause 11 (in all lease deeds) provides as follows:-
The said land the building shall be deemed to be public
premises as defined in the Public Premises (Unauthorised
Occupants Eviction) Act, 1971 notwithstanding the lessee has
constructed a building on the said land.
[Emphasis Supplied]
27. A plain reading of the foregoing would show that the parties had adopted, by
contract, the mechanism of a deeming fiction in relation to the land leased by AAI to
Leela. The parties had agreed that the land and the building constructed on it
would be deemed to be “public premises” within the meaning of the term in the
Public Premises Eviction Act regardless of Leela having constructed a private hotel
on the land so leased. In other words, the parties agreed that for all purposes of
their commercial relationship, the land forming subject matter of the lease deeds
would be treated as “public premises”. The cumulative effect of such an agreement
to deem such land as “public premises”, coupled with the exception in the
arbitration agreement as to matters that shall not be arbitrable, is that the land
would be treated as public premises and thereby attract the Public Premises
Eviction Act, and thereby eviction from the land would not be arbitrable. In my
opinion, a conjoint reading of the two provisions i.e. the deeming provision (Clause
11 of all three lease deeds) read with the arbitration provisions (Clause 35 in relation
to the 18,000 Land lease deeds; and Clause 37 in the 11,000 Land lease deed) would
point to the fact that the parties had explicitly decided that any dispute or difference
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relating to eviction of Leela from the leased land was to be excluded from the scope
of arbitration.
28. In my view, the myriad objections and assertions that have been pressed into
service on behalf of Leela, to challenge the Impugned Orders and to seek referral of
disputes and differences in their entirety to arbitration, stand answered. Each of the
propositions canvassed on behalf of Leela have been dealt with in the paragraphs
that follow. It is important to make clear that nothing contained in this judgement
is an expression of an opinion on merits of the disputes between the parties since
the scope of the judicial consideration in these proceedings is purely a jurisdictional
one as to whether eviction of Leela from the leased land can be subject matter of
arbitration.
The Joint Venture Argument:
29. First, Leela’s primary commercial contention is that the lease deeds are not
conventional lease deeds but instruments that evidence a joint venture. The lease
deeds are said to pose issues that cannot be adjudicated by an Eviction Officer
under the AAI Act, who has limited power to conduct summary proceedings. To
my mind, this contention i.e. the need to treat multiple lease deeds as a composite
joint venture, does not present any consequence for these proceedings. That the
commercial arrangement is one of a joint venture poses no conflict between the
jurisdiction of the arbitrator and the jurisdiction of the Eviction Officer so long as
the subject matter of the dispute is eviction. The parties have explicitly agreed in
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the lease deeds as to what falls outside the jurisdiction of the arbitral tribunal. As
explained above, eviction is clearly outside the scope of arbitration as a matter of
contract.
30. Indeed, the lease rentals in relation to the 18,000 Land and the minimum
guaranteed amount under the supplemental agreement relating to the 11,000 Land,
entail payments based on the turnover of the respective businesses conducted on
the leased land – the business of the hotel and and of the flight kitchen on the
18,000 Land and the business of the new hotel wing on the 11,000 Land. In fact, in
relation to the minimum guarantee amounts payable under the supplemental
agreement executed contemporaneously with the lease deed for the 11,000 Land,
there have been two rounds of arbitration between the parties but those did not
relate to eviction but related to payment of the minimum guaranteed amounts. That
apart, an arbitral award holding that Leela needs to pay nothing on the 11,000 Land
has been quashed and set aside in three concurrent findings all the way to the
Supreme Court, which rejected a review petition too.
31. In the hearing before me, Leela has itself volunteered in writing in the List of
Dates, that it had offered to give up the 11,000 Land. If anything, this would
indicate that Leela was not averse to eviction from the 11,000 Land. Indeed, the
disputes in relation to the 11,000 Land include the contention of AAI that FSI
entitlements on such land has been utilised on the 18,000 Land; and the contention
of Leela that AAI’s delay in in approving building plans and the conditions it
imposed when approving the plans, led to the building of a hotel wing unviable.
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According to Leela this would necessitate examining evidence to assess damages,
which the Eviction Officer cannot conduct.
32. None of these contentions, to my mind are of any consequence, when the
parties’ own sovereign agreement on what is arbitrable has excluded from its scope,
anything that attracts the Public Premises Eviction Act, and the parties have
explicitly agreed that the leased land would be deemed to be public premises for
purposes of that very law.
33. Once the parties have consciously made a contractual choice to arbitrate on
specific disputes, along with an integral conscious choice to exclude specific
disputes from arbitration, it is their bounden duty to abide by the terms of their
arbitration agreement. It was an integral and critical condition of contract that the
land leased by AAI to Leela would be deemed to be public premises and that any
facet of disputes and differences relating to eviction from public premises would
stand excluded from arbitration. Therefore, the parties agreed that there is no
arbitration agreement in existence in relation to the subject matter of eviction. In
these circumstances, even if the wider commercial agreement between the parties
was one of a joint venture, that proposition would by no means erode the agreed
contractual position that disputes over eviction from the leased land is agreed as not
being arbitrable.
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Lease Rentals being Incidental:
34. Second, it has also been argued on behalf of Leela that the lease rental is
ancillary to the lease deeds. This issue too does not lead to the analysis being any
different insofar as the parties’ explicit agreement on what they would not arbitrate
on.
Existence of Arbitration Agreement:
35. Third, it is argued on behalf of Leela that the Eviction Officer has indeed
returned a finding that an arbitration agreement is in existence. Once an arbitration
agreement is in existence, Leela would submit, the Eviction Officer is bound to
allow the Section 8 Applications. This purported error on the part of the Eviction
Officer is attributed by Leela to the pre-2015 version of Section 8 being
incorporated into the Impugned Orders. The submission is that the Eviction Officer
applied the wrong standard when dealing with the Section 8 Applications. Further,
the contention is, once the Eviction Officer arrived at a view that an arbitration
agreement is in existence, what is covered by it and what is excluded from it, is a
matter that ought to have been left to the arbitral tribunal. Towards this end, Mr.
Dada would seek to rely on Vidya Drolia5 and submit that the refusal to refer the
parties to arbitration can only be made when it is found that no valid arbitration
agreement exists.
5
Vidya Drolia & Ors. vs. Durga Trading Corporation – (2021) 2 SCC 1
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36. I am afraid, I am unable to accept this contention. The term “existence” in
relation to the arbitration agreement must necessarily relate to formal existence of
an arbitration agreement in connection with resolution of the very same subject
matter of the dispute as has been presented to the forum in which the Section 8
Application is filed. When a forum is approached by a party to an arbitration
agreement in the teeth of the existence of an arbitration agreement, any other party
to the arbitration agreement may file an application under Section 8. The forum
must then examine if an arbitration agreement exists for purposes of resolving that
subject matter of dispute presented to that forum. If it is found that the subject
matter of the dispute brought before the forum is covered by an arbitration
agreement, the application under Section 8 must be allowed. However, if it is found
that there is no arbitration agreement in relation to the subject matter of the dispute
that the forum is presented with, the application under Section 8 must be rejected.
37. This is precisely what the Impugned Orders have done. A finding that there
is an arbitration agreement in the lease deeds does not mean that the very
provisions of the arbitration agreement that exclude the type of disputes covered by
it can be ignored. Having examined the existence of the arbitration agreement in
the three lease deeds, I find that arbitration agreements do exist, but in relation to
disputes and differences relating to eviction, the arbitration agreement does not
exist on that subject since that falls in the exclusions. Therefore, they do not exist in
relation to the subject matters contained in the exclusions.
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38. In fact, Paragraph 27 of Vidya Drolia succinctly summarises the position in
the following words:-
27 Arbitration being a matter of contract, the parties are entitled to fix
boundaries as to confer and limit the jurisdiction and legal authority of the
arbitrator. An arbitration agreement can be comprehensive and broad to
include any dispute or could be confined to specific disputes. The issue of
scope of arbitrator’s jurisdiction invariably arises when the disputes that
are arbitrable are enumerated or the arbitration agreement provides for
exclusions as in case of “excepted matters”. The arbitration agreement
may be valid, but the arbitral tribunal in view of the will of the parties
expressed in the arbitration agreement, may not have jurisdiction to
adjudicate the dispute. The will of the parties as to the scope of arbitration
is a subjective act and personal to the parties.
[Emphasis Supplied]
39. Indeed, the parties have fixed boundaries and drawn lines to limit the
jurisdiction and legal authority of the arbitral tribunal. They have agreed on a
broadly worded clause to submit to arbitration, but they have also agreed in
specifically-worded provisions, on the confines of keeping the specific dispute of
eviction outside the scope of arbitration. Indeed, the will of the parties on the scope
of arbitration is a subjective fact and the parties have exercised their sovereign and
free contracting will to agree that the land leased by AAI would be deemed to be
public premises and eviction from such land would not be arbitrable. That contract
must be honoured, and no extent of pointing to inconvenience or inefficiency in
resolution of the disputes and issues involved, can wish away the absence of an
arbitration agreement for such subject matter. Indeed, Leela would not be without
remedy outside arbitration and indeed, it is Leela that has filed a suit seeking a
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declaration that the lease stands extended, thereby negating AAI’s right to evict
Leela.
40. The Court cannot re-write the contract between the parties, and but for this
exclusion, the agreement itself may not have been contracted. Therefore, the
contracted confines and boundaries have to be respected. Put differently, on the
subject matter of eviction, the parties have explicitly agreed that the arbitration
agreement does not exist. Therefore, there is nothing perverse in the Impugned
Orders. The wrong version of Section 8 having been reproduced in the Impugned
Orders is no consequence to the Statutory Appeals.
41. Likewise, it has been argued on behalf of Leela that all ingredients of Section
8 have been met and therefore the Impugned Orders could have never rejected the
Section 8 Applications. Towards this end, relying on the Interplay Judgement6 four
ingredients have been drawn out to state that when these are met, the Section 8
Applications ought to have been allowed. I am afraid, it is evident that two essential
ingredients pressed into service by Leela do not exist. These two ingredients are,
existence of the arbitration agreement and the matching of the subject matter of the
action in question and the subject matter covered by the arbitration agreement.
These two ingredients are sorely missing in the instant case. I have already
discussed above, how the arbitration agreement in existence points to the non-
existence of an arbitration agreement in relation to the subject matter of eviction.
As a corollary, the requirement that the subject matter brought before the Eviction
6
In Re. Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the
Indian Stamp Act, 1899 – 2023 SCC OnLine SC 1666
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Officer can never match the subject matter of the arbitration agreement, which
exists in relation to only those matters that are not excluded.
Extension of Lease by Correspondence:
42. Fourth, invoking Section 7 of the Arbitration Act, it is argued on behalf of
Leela that Leela’s request for extension of lease for the 18,000 Land was met with
an offer of extension from AAI on the same terms for 30 years, which offer was in
turn accepted by Leela, leading to the formation of a contract. Since the reference
was to an extension on the same terms, the contention is that such an extension by
exchange of letters included the arbitration agreement.
43. Without meaning to pronounce on merits, simply assuming for the sake of
argument that this is a valid proposition, it does not take Leela’s case any further.
Although no lease renewal has been actually executed and registered, and although
Leela agreed that pending approval of the Competent Authority, ad hoc extensions
from time to time applied, it would still inexorably follow that the arbitration clause
that would have been incorporated by reference by way of such correspondence, is
still the very same arbitration agreement that excludes disputes over eviction from
the deemed public premises from the scope of arbitration.
AAI Act is not the Public Premises Eviction Act:
44. Fifth, Leela contends that the exclusion to arbitrability carved out by the
parties relates to the Public Premises Eviction Act and not the AAI Act, under which
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ARAST.12153.2021 (HLV).docthe AAI has initiated the eviction proceedings. This is a red herring and again does
not change the analysis made in this judgement.
45. When the AAI Act was amended in 2003 to include Chapter VA under which
AAI is now proceeding to effect eviction from the leased land, Leela contends that
the parties never chose to amend the lease deeds to replace references to the Public
Premises Eviction Act with references to the AAI Act. The AAI Act also does not
repeal the Public Premises Eviction Act insofar as it relates to airport premises. So
also, Leela contends, the AAI Act does not have a provision of ouster of jurisdiction
of other courts in the manner of the effect of the Public Premises Eviction Act.
Consequently, the contention is that eviction under AAI Act is not covered by the
exclusion from arbitration.
46. In my opinion, these contentions attempt to raise abstruse points which can
at best be argued on merits in the final hearing of the eviction proceedings. They
have no relevance to whether the Eviction Officer under the AAI Act has jurisdiction
as a matter of law, and whether eviction is at all arbitrable.
47. The proceedings adopted by AAI are under the statutory provisions available
under the AAI Act. The reference to the Public Premises Eviction Act in the lease
deeds, both in the deeming position contracted by the parties and in the provision
of exclusion from the arbitration, enables identification of the leased land as public
premises in the context of eviction proceedings. The effect of these provisions is
that eviction from the leased land stands excluded from the arbitration agreement.
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Once it is clear that eviction is excluded from arbitrability, in my opinion, it does
not matter which other provision or forum is available in law to enable eviction. So
long as eviction is not covered by arbitration, the availability of a new provision of
law that came into force after the execution of the lease deeds for effecting eviction,
cannot become unavailable to AAI to pursue eviction. The reference in the lease
deeds is to the Public Premises Eviction Act with the objective of excluding eviction
from the scope of arbitration. At that stage, it was not possible to have envisaged to
refer to Chapter VA of the AAI Act, since it did not exist. What the provisions
clearly point to is that the parties intended to exclude eviction from the leased land
from arbitration.
48. Towards this end, Mr. Kumbhakoni is precisely right in submitting that to
discern the contracting intent of the parties when interpreting the contract, regard
must be had to the position in fact and in law as prevailing at the time of execution
of contract. By choosing the reference to the Public Premises Eviction Act, what the
parties achieved in the lease deeds is the recording of what is not arbitrable. That is
all that matters for purposes of dealing with the Section 8 Applications. Merely
because the parties chose to exclude eviction and related recoveries from
arbitrability by reference to the Public Premises Eviction Act, it would not follow
that the AAI is estopped from utilising other powers specially made available in the
AAI Act to effect eviction. Such a reading is absurd to say the least. When the
objective of the contract is achieved – to exclude eviction from arbitration, it would
not mean that the exclusion from arbitration would present a legal handicap to AAI,
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forcing it not to avail of special powers conferred by Parliament to achieve the same
objective.
49. Therefore, whether it is the Public Premises Eviction Act or the AAI Act that
is the correct legislation for AAI to utilise, is a question that is not relevant to the
accuracy of the decision under Section 8 of the Arbitration Act. Once it is clear that
eviction is not amenable to arbitration, any appropriate forum – any other than an
arbitral tribunal – would be available for eviction. For the reasons set out above, in
my opinion, the arbitration agreement is not in existence insofar as it relates to
eviction and related recoveries. Therefore, the scope of eviction and related
recoveries being outside the scope of arbitration, no fault can be found with either
the AAI or with the Impugned Orders on the premise that it was the AAI Act that
was invoked and not the Public Premises Eviction Act.
50. Notably, despite being a party that asserts the existence of an arbitration
agreement (for which the Section 8 Applications have been filed), Leela has
conducted itself inexplicably and cynically by filing Commercial Suit No. 1375 of
2019 in this very Court seeking declaratory reliefs on the very same subject matter.
That suit is pending. What is inexplicable is that the very party that asserts that the
dispute is arbitrable has filed a suit. The upshot is that the kitchen sink is being
thrown by Leela at the situation, to somehow or the other remain in possession of
the leased land, and continue to enjoy the land without paying revised leased
rentals linked to current market prices, and worse, to continue to be in possession
despite the very lease periods having expired in respect of each of the leases.
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51. Every possible forum has been tapped, and a maze of proceedings has been
created, as a result of which, with concurrent strands of dispute resolution are being
pursued. Meanwhile, Leela remains entrenched in the leased land despite expiry of
the lease periods. Indeed, the Suit seeks specific performance of the purported
extension of the lease by 30 years over the 18,000 Land, by way of correspondence.
However, going purely by Leela’s own position that the arbitration agreement is
extremely wide and that the dispute is arbitrable, Leela ought not to have even
contemplated the Suit if it were sincere about its contentions on the existence of
arbitration agreement in relation to eviction. In my opinion, the filing of the
Commercial Suit by itself undermines Leela’s position. If it was genuinely of the
view that the arbitration agreement is so wide that it brings within its coverage any
facet relating to the lease deeds, and that too in the teeth of the exclusion, it would
follow that the arbitration agreement, with its exclusion, would cover the
correspondence over the extension of the lease.
52. I leave it at that and say nothing more so as to not wade into merits at this
stage. Indeed, the Eviction Officer has not made any comment on the filing of the
Suit in the analysis contained in the Impugned Orders, but it would be
inappropriate not to take judicial notice of the approach to this litigation by Leela.
Leased Land and “Airport Premises”:
53. Sixth, Leela has come up with a novel argument to contend that the leased
land does not at all constitute “airport premises”. In this regard, it is Leela’s
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contention that the AAI Act would not at all have jurisdiction. In my opinion, it
would be necessary to examine this argument on merits, because the Statutory
Appeals are being pressed not only under Section 37 of the Arbitration Act but also
in reliance on Section 28-K of the AAI Act. The latter provision now provides for a
statutory appeal to the High Court – the institution of a tribunal to hear appeals
against orders of Eviction Officer has been replaced by the Tribunal Reforms Act,
2021, with a statutory appeal now lying before the High Court.
54. The Impugned Orders, in my opinion, rightly note that the definition of the
term “airport premises” as contained in Section 28-A(a) would cover any premises
belonging to an airport. The term “premises” is defined as any land or building or
part of a building including a garden, grounds and outhouses connected to such
building, and any fittings to such building, for more beneficial enjoyment of the
building. Chapter VA of the AAI Act enables eviction of unauthorised occupants of
such “airport premises”.
55. It must be remembered that the definitions set out in Section 28-A of the AAI
Act, as is the norm for statutory definitions, provides meanings “unless the context
otherwise requires”. It is now trite law that definitions have to be purposively and
contextually construed such that the context in which a defined term is used does
not inflict violence to the legislative objective of the provision in which the
definition is used. If the language of the definition presents an incongruity to the
context in which the defined term is used, a departure from the language defining
the defined term is permitted, and a commonsensical meaning of the term in a
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manner that subserves the purpose of the legislation may be adopted, abandoning
the defined language. It is truly trite law that the interpretation of the language in a
definition must not be repugnant to the legislative objective or be made in a manner
that is likely to defeat the purpose of the legislation itself 7.
56. The leased land is land belonging to the AAI. Leela’s contention is that the
land in question had not been acquired for airport-related purposes such as
passenger facilities or aircraft operations. Once leased for a hotel, Leela would
contend, the land would automatically get excluded from the term “airport
premises”. I am unable to agree with this argument. Evidently, Chapter VA of the
AAI Act was introduced in 2003 to enable premises belonging to an airport to be
regained from those who are occupying it without authorisation. Treating the very
land as not being “airport premises” for no reason other than the land having been
leased to Leela, is absurd to say the least. The absurdity is writ large in the premise
that a lessee who overstays the lease cannot be evicted, only because he is a lessee.
57. It must not be forgotten that the land leased to Leela by AAI is, among
others, for the purpose of running a flight kitchen and indeed constructing and
running a hotel in close proximity to the airport. The leased land is located near the
airport. Flight kitchen services are a vital ancillary element for the airline industry.
Section 12(3)(f) of the AAI Act explicitly provides that one of the functions of AAI is
to establish and maintain hotels, restaurants and restrooms at or near airports.
Leela seeks to sparse this language to say all other provisions of Section 12(3) use
7
K.V. Muthu vs. Angumuthu Ammal – AIR 1997 Supreme Court 628 – to cite just one judgement on the point.
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the word “at” while this provision alone uses “at or near” and therefore, land “at”
the airport is a class distinct from land “near” the airport. To my mind this splitting
of hairs on Leela’s behalf is symptomatic of throwing the kitchen sink at the
problem. The submission inflicts violence to the plain, simple and commonsensical
meaning of the provisions contained in Section 12(3)(f) of the AAI Act.
58. Premises owned by AAI are premises that the public exchequer has paid for.
Such premises are public premises. The parties consciously agreed that the land
leased for the hotel and the flight kitchen would be treated as public premises. The
law governing public premises and eviction of unauthorised occupants was always
applicable to the land leased to Leela by AAI. In 2003, the AAI Act was amended to
empower the AAI to directly exercise powers to evict unauthorised occupants. The
availability of a new law is of no import to the non-existence of an arbitration
agreement insofar as eviction is concerned – I have already dealt with this issue
above. To now inflict violence to the beneficial provisions of Chapter VA of the AAI
Act, aimed at achieving a wider public purpose of ensuring that private parties
whose leases have expired, do not squat on the AAI’s land, is unacceptable.
59. The objective and purpose of Chapter VA of the AAI Act is to enable smooth
eviction of unauthorised occupants from public premises owned by the AAI. The
right to occupy the 18,000 Land and the 11,000 Land flowed from the lease deeds.
Leela is itself not keen to retain the 11,000 Land, and has asserted in its
submissions filed in this Court that it has often offered to return the same. As
regards the 18,000 Land, Leela has been the beneficiary of ad hoc extensions from
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time to time and is prima facie in occupation, without authority of a lease deed.
Whether it has a contract for extension on the same terms for another 30 years, and
that too when admittedly such extension has not yet been granted sanction by the
Competent Authority, is a matter that can squarely be determined by the Eviction
Officer when he hears the matter on merits.
60. At this stage, it is simply the exercise of jurisdiction by the Eviction Officer
that has been challenged and has been kept hanging since 2017, with Leela paying
rates contracted in the 1980s and 1990s. The leases were for 30 years and as of
now, have all expired. This is precisely the situation that Chapter VA empowers the
AAI to deal with. Therefore, to split hairs about profound and deep differences
between land “at” the airport and land “near” the airport is prima facie a self-
serving strategic initiative to continue squatting on land at old expired rates, and
resisting paying lease rentals at current market rates. The legislative purpose of
Chapter VA is to free public resources and the land that indeed belongs to AAI and
for which it is the public exchequer that has funded its purchase. The interpretation
canvassed by Leela would vitiate and obliterate the very purpose of the legislation.
Therefore, I have no hesitation in rejecting this absurd contention.
Effect of Amalgamating Private Land:
61. Seventh, Leela’s contention is that since private lands have been
amalgamated into the AAI land, the land leased by AAI has ceased to have the
character of public premises. This too has to be stated to be rejected. If land is
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amalgamated for purposes of its development, it would not follow that the lease
deed and its terms would cease to exist. The amalgamation of the private lands with
the leased land is a conditional permission given pursuant to the lease but that does
not take away the character of the portion of land owned by a public authority and
leased to Leela. In the very same lease deed, the parties positively contracted AAI’s
land leased to Leela shall be deemed to be public premises for purposes of the
Public Premises Eviction Act. Merely because some other portions of land are
amalgamated, it would not follow that AAI would lose its ownership of the land
leased to Leela. That portion of the land shall remain owned by AAI and shall
remain public premises and also airport premises. Therefore, this is yet another red
herring that detracts from the core issue, and I have no hesitation in rejecting it.
Costs to Follow the Event:
62. At this stage, the Impugned Orders have only had to contend with whether
the Eviction Officer is without jurisdiction, and that too primarily on account of the
arbitration clause in the lease deeds. All the contentions being raised by Leela are
contentions that can be raised in response to the show cause notice for eviction
issued by the Eviction Officer. On the basis of the Section 8 Applications, the
matter has not progressed for close to a decade – the eviction proceedings began in
2017. In fact, in relation to the 11,000 Land, the Section 11 Application has been
filed by Leela only in 2021.
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63. Meanwhile the proceedings have meandered on the docket of this Court until
these matters were tagged and kept for final hearing on February 20, 2025. All
through this period, Leela has continued to enjoy the usage of the premises on
expired lease rental terms and despite the expiry of the very lease periods. On the
basis of a statement that no precipitate steps would be taken pending these
proceedings, the enjoyment of the land by Leela has continued without revision to
the lease rentals and that too way beyond the expiry of the lease periods.
64. In these circumstances, for the reasons set out above, I have no hesitation in
dismissing these Appeals filed under Section 37 of the Arbitration Act, and hereby
uphold the Impugned Orders that dismissed the Section 8 Applications. Leela is at
liberty to proceed to arbitration on any facet of the lease deeds other than eviction
from the leased land. Needless to say, the Eviction Officer shall conduct the final
proceedings on eviction on merits, uninfluenced by the observations made in this
judgement, which is restricted to testing the veracity of the challenge laid to the
Impugned Orders under Section 37 of the Arbitration Act read with Section 28-K of
the AAI Act.
65. Considering that the disputes in question are commercial disputes, and
factoring in the nature of the pleadings and contentions on the law, and in view of
my assessment of the lack of reasonableness in some of the contentions raised on
behalf of Leela and the resultant continuance of enjoyment of expired leasehold
land by Leela, in my opinion, it would be most appropriate that costs should follow
the event. Taking a holistic view of the matter, and factoring in the time spent in
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the matter in having to deal with the nature of the contentions that have enabled
such prolonged enjoyment of the leased land, Leela is directed to pay to AAI, costs
in the sum of Rs. 10 lakhs within a period of four weeks from the date of uploading
this judgment on the website of this Court.
Conclusions and Directions:
66. In the result, it would be appropriate to summarise my findings thus:
a) The arbitration agreements executed between AAI and Leela, which are
contained in the lease deeds, do not cover within their ambit, the subject
matter of eviction of unauthorised occupation by Leela of the leased land,
and recovery of associated rent and damages;
b) The parties had explicitly agreed to the position that the land leased to
Leela would constitute public premises despite the construction of the
building for conduct of business of the hotel and flight kitchen. Therefore,
one need not look beyond the contract and into legislation to determine if
eviction is excluded from the scope of arbitration;
c) The reference to the Public Premises Eviction Act in each of the lease
deeds leads to the identification of the class of disputes and differences
for their exclusion from coverage by arbitration. The reference to the said
legislation has the effect of affirming the parties’ consensual commitment
by contract that eviction and related recoveries would fall outside the
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ARAST.12153.2021 (HLV).docscope of arbitration. This is not a provision by which AAI is obliged not to
avail of statutory powers to effect eviction of unauthorised users of the
land;
d) The introduction of Chapter VA in the AAI Act is a new power granted by
Parliament after execution of the lease deeds, to enable a public authority
such as the AAI to recover its premises being used by persons without
authority. Eviction and recovery of lease rentals from public premises
being outside the scope of arbitration, whether some other legislation is
utilised is of no consequence to the core issue arising in these
proceedings. That legislative purpose and objective of the AAI Act is
being undermined by the contentions and arguments about such land not
being “airport premises” which is neither relevant nor in consonance with
the committed contractual position that the land leased to Leela by AAI
constitutes public premises;
e) There was no requirement to amend the lease deeds to replace references
to Public Premises Eviction Act with references to the AAI Act. Such a
course of action was totally unnecessary since what is achieved by the
provisions of the lease deeds is to exclude eviction and recovery from
arbitration;
f) Both the leases – for the 18,000 Land and the 11,000 Land – have
expired. Prima facie, the continued occupation of the land is
unauthorised and squarely brings the matter within the jurisdiction of
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ARAST.12153.2021 (HLV).docChapter VA of the AAI Act. This has no implication for the arbitration
agreements, which in any case, provided for eviction of the land under the
then applicable law, to be outside the scope of arbitration;
g) Whether or not one could hold that the lease for the 18,000 Land was
extended for another 30 years on the same terms without any revision
and on the same terms and conditions, is a facet of the matter that can be
eminently argued by Leela before the Eviction Officer when attempting to
show cause in reply to Eviction Officer’s notice. Prima facie, the parties
not having actually executed and registered a new lease deed, and the
parties having accepted the ad hoc short term extensions of the lease, and
the last extension has expired;
h) The filing of the Suit by Leela seeking a declaration that the extension of
lease for another 30 years has been granted, undermines Leela’s
submissions about the dispute being arbitrable. On the contrary, it
signals an attempt to litigate across forums, with the hope to continue the
status quo and thereby prolong the enjoyment of the leased land at
outdated lease rentals and that too beyond the expiry of the contracted
lease periods;
i) Past arbitrations in relation to the minimum guaranteed amounts payable
under the lease for the 11,000 Land have nothing to do with eviction
proceedings. In fact, the Delhi High Court has had occasion to stricture
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confirming that no amounts are payable by Leela in relation to the 11,000
Land – that position attained finality after approach to the Supreme
Court;
j) In any event, it is Leela’s case that it is ready and willing to hand over the
11,000 Land and therefore it should not have any issue with handing the
same over. Any dispute or difference relating to implications of
utilisation of FSI entitlements on such land and damages therefor, can
indeed be subjected to arbitration;
k) Eviction proceedings shall be conducted by the Eviction Officer in
question with due dispatch and if necessary, on a day-to-day basis in
accordance with law. Leela is directed to participate in the proceedings to
enable completion of the same expeditiously;
l) All disputes and differences other than those relating to eviction and
recovery of lease rentals are amenable to arbitration. Considering that
this component of the disputes are covered by the arbitration agreement
in existence, no useful purpose would be served by keeping the Section 11
Applications pending and alive. In these circumstances, such
components of disputes and differences (other than eviction and related
dues) are hereby referred to arbitration by Justice (Retd.) Sanjay V.
Gangapurwala, former Chief Justice of Madras High Court and this
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ARAST.12153.2021 (HLV).docCourt. The parties shall approach the Learned Arbitral Tribunal within a
period of one week of the upload of this judgement on the website of this
Court to take instructions on how to proceed further in the matter; and
m) Considering the nature of the contentions raised and the implications of
long-term protection secured on an interim basis, and considering the
quality of the contentions raised by the losing party, costs must follow the
event. The costs imposed above shall be honoured by Leela within a
period of four weeks from the upload of this judgement on the Court’s
website.
67. With the aforesaid directions, both the captioned Appeals filed under Section
37 of the Arbitration Act read with Section 28-K of the AAI Act; and both the
Section 11 Applications are hereby finally disposed of. Interim Applications, if any,
in each of the Statutory Appeals and each of the Section 11 Applications shall also
stand disposed of.
68. Learned Senior Counsel on behalf of the Appellant/Applicant requests for a
stay on the operation of this order. Since the matter has been pending for quite
some time, the Eviction Officer is requested not to fix the next date within the next
four weeks.
69. All actions required to be taken pursuant to this order, shall be taken upon
receipt of a downloaded copy as available on this Court’s website.
[SOMASEKHAR SUNDARESAN J.]
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