N JAYALAXMI Vs. R VEERASWAMY

JUDGEMENT

(1.) An important question regarding the power of arbitrator/arbitral tribunal to terminate proceedings in the light of Section 25 of the Arbitration & Conciliation Act, 1996 ('the Arbitration Act' for brevity) falls for consideration in this writ petition.

(2.) The chronology of events leading to filing of this writ petition may be noticed in brief as follows. The second respondent namely, the Airports Authority of India granted licence to use land admeasuring 1500 Sq.yds. (1253.13 Sq.mtrs.) to the petitioner for a period of three years. The licence was granted for construction of godown for storage of LPG cylinders and office. The licence fee was fixed at Rs.9,097/- per month for the year 1994; Rs.10,007.26p. per month for the year 1995; Rs.11,008.75p. per month for the year 1996; and Rs.12,109.41p. per month for the year 1997. The petitioner constructed godown measuring 40x100ft. with asbestos roof. She also constructed an office room with dimensions 20x40ft. with RCC roof. Subsequently, the licence was granted for yet another period of seven years from 15-7-1997 to 14-7-2004 on yearly licence fee of Rs.1,88,100/- (monthly licence fee comes to Rs.15,675/-). Accordingly, a deed of licence was executed on 9-8-1996. In this case, we are not concerned with other details. Under Clause 19 of the deed of licence, any dispute regarding contract arising out of the licence has to be referred to the Chairman of Airports Authority of India. In case the Chairman is not willing to act as arbitrator, the dispute has to be referred to a person nominated by the Chairman and the award of the arbitrator is final and binding. In 1999, there was a demand to pay increased licence fee. The petitioner approached this Court challenging the demand. The writ petition being W.P.No.23592 of 1999 was dismissed by a learned single Judge of this Court on 8-6-2000. The petitioner's writ appeal being W.A.No.706 of 2000 was also dismissed on 17-8-2000. The petitioner's attempt to seek special leave under Article 136 of the Constitution was also unsuccessful before the Hon'ble Supreme Court of India.

(3.) The second respondent, by a communication dated 17/19-10-2000, informed termination of licence from 1-11-2000, as a result of which the petitioner vacated the premises in November 2000 and handed over possession of the same. Thereafter, the second respondent demanded payment of arrears of licence fee from the petitioner. The petitioner did not pay. Therefore, by communication dated 29-4-2002, the petitioner was asked to give consent for initiation of arbitral proceedings. The petitioner did not accept arbitration. Hence, the second respondent nominated the first respondent herein as arbitrator under Clause 19 of the deed of licence to decide the dispute. The petitioner raised objection for appointment of first respondent on the ground that as he is an employee of the second respondent he cannot be treated as arbitrator. Be that as it is, the second respondent commenced proceedings under the Arbitration Act after giving notice to the petitioner and the second respondent. On 31-7-2002, the second respondent was also directed to submit detailed statement of facts within 30 days from the date of receipt of the letter. Similarly, the petitioner was also directed to submit her statement within 30 days from the date of receipt of statement of facts from the second respondent. The second respondent did not file the statement of facts before the first respondent within the stipulated time nor sought for extension of time. Though the period of 30 days granted to the second respondent expired on 6-9-2002, the first respondent by communication dated 17-9-2002 suo motu granted 21 days further time to the second respondent to submit statement of facts. Assailing the same, the petitioner filed the present writ petition seeking a writ of mandamus declaring the action of the first respondent in continuing the arbitral proceedings after expiry of 30 days granted to the second respondent to file statement of facts as illegal and contrary to the provisions of the Arbitration Act.