Case Note & Summary
The petition under Section 9 of the Arbitration and Conciliation Act, 1996 was filed by Survee Foods Private Limited against Airports Authority of India (AAI) seeking interim protection in respect of a Concession Agreement dated February 21, 2024 for operating a restaurant at Juhu Airport. The agreement was for a period of seven years and the restaurant had commenced operations in September 2024. On March 22, 2025, AAI issued a termination notice alleging that the petitioner had encroached upon 212 sq. mtrs. instead of the allotted 150 sq. mtrs. and had demolished a boundary wall. The notice also mentioned that the competent authority of AAI had ordered a preliminary inquiry into irregularities in the award of the contract. Significantly, eleven similar contracts were terminated on the same day. In four earlier petitions, the parties had consented to the appointment of a sole arbitrator and maintenance of status quo, and the Section 9 petitions were converted into applications under Section 17. AAI appealed those consent orders but the appeals were dismissed, though review petitions were pending. The petitioner contended that the contract was awarded after a public tender and that the termination was part of a collusive mass cancellation by AAI. AAI argued that the director who awarded the contract lacked authority, the petitioner had encroached, and that the dispute fell outside the arbitration clause due to the exclusion for eviction proceedings under Chapter V-A of the Airports Authority of India Act, 1994. The Court noted that under Section 9, its jurisdiction is equitable and meant to preserve the subject-matter of arbitration. It observed that the termination was for cause, and the specific facts raised serious questions about the validity of the termination. The Court distinguished the issue of encroachment beyond the agreed area—for which eviction proceedings could independently lie—from the termination of the contract covering the allocated 150 sq. mtrs. Since a duly executed concession agreement existed, the petitioner’s occupation of the allotted area could not prima facie be considered trespass. The Court found that the exclusion clause did not bar arbitration of the contractual dispute. Relying on the parity with earlier consent orders and the absence of any vigilance or investigative proceedings, the Court held that status quo ought to be maintained for the area covered by the Concession Agreement. The petition was disposed of by converting it into a Section 17 application to be placed before the Arbitral Tribunal comprising Hon’ble Mr. Justice S.C. Dharmadhikari, retired Chief Justice. Both parties were directed to maintain status quo as on date, and AAI was left free to pursue eviction for any area outside the agreement. The petitioner was granted liberty to seek further interim measures before the tribunal.
Headnote
A) Arbitration – Interim Measures – Section 9, Arbitration and Conciliation Act, 1996 – Equitable Jurisdiction – Dispute pertained to termination of a Concession Agreement for running a restaurant at Juhu Airport following allegations of encroachment beyond allotted area and lack of authority of the official who awarded the contract – The Court held that under Section 9 the primary concern is to preserve the subject-matter of the arbitration pending adjudication – Given the executed agreement for a fixed term of seven years and the fact that petitioner had been operating the restaurant, maintaining status quo in respect of the area covered by the Concession Agreement was essential to prevent irreversible prejudice – Status quo order passed directing both parties not to alter the current position relating to the said area (Paras 1, 14, 16). B) Public Premises Eviction – Exclusion from Arbitration – Clause 25.10, Concession Agreement and Chapter V-A, Airports Authority of India Act, 1994 – Interpretation – The Court noted that the termination was for cause (encroachment and lack of authority), and the area in excess of the Concession Agreement was a separate matter for which eviction proceedings under the AAI Act could be initiated – However, the existence of a validly executed Concession Agreement covering the allocated area meant that the usage of that area could not prima facie be treated as trespass warranting eviction – Accordingly, the exclusion clause did not bar arbitration of the dispute regarding termination of the contract itself (Paras 10-11, 15-16). C) Arbitral Reference by Consent – Binding Nature – Consent Orders in Similar Matters – In earlier petitions involving identical termination of contracts by AAI on the same day, the parties had consented to the appointment of a sole arbitrator and maintenance of status quo – Those consent orders were unsuccessfully challenged by AAI in appeal – The Court held that the present petition, being similarly situated, merited the same treatment – Consent given by AAI in earlier matters could not be disregarded merely because review petitions had been filed (Paras 6-8, 16). D) Interim Relief – Scope – Distinction Between Encroachment and Authorised Use – Termination Notice – The termination notice specifically cited encroachment beyond the allocated 150 sq. mtrs. – The Court recognized that if such encroachment existed, eviction proceedings were available – However, for the area within the Concession Agreement, the petitioner’s possession was authorised – Holding otherwise would amount to treating the entire contract as void ab initio without adjudication – The balance of convenience favoured protection of the contractual premises pending arbitration (Paras 2, 15-16). E) Section 9 Petition – Conversion to Section 17 Application – Practice – The Court noted that consistent with the earlier consent orders, the present Section 9 petition should be converted into an application under Section 17 of the Arbitration Act and placed before the Arbitral Tribunal – This allowed the tribunal to consider further interim measures – The Court appointed Hon’ble Mr. Justice S.C. Dharmadhikari, retired Chief Justice, as the sole arbitrator, having taken consent from the learned arbitrator (Paras 9, 17).
Issue of Consideration
Whether interim relief under Section 9 of the Arbitration and Conciliation Act, 1996 should be granted to protect the subject-matter of the arbitration agreement when the Concession Agreement is terminated on grounds of encroachment and lack of authority, and whether the dispute is excluded from arbitration under Clause 25.10 of the Agreement read with Chapter V-A of the Airports Authority of India Act, 1994.
Final Decision
The Section 9 petition is disposed of. Both parties shall maintain status quo as on date in all respects, without altering the position vis-à-vis the area covered by the Concession Agreement. If the petitioner has encroached on area in excess of the Concession Agreement, the respondent is at liberty to initiate eviction proceedings. The petition is converted into an application under Section 17 and placed before the Arbitral Tribunal. The disputes are referred to the sole arbitration of Hon’ble Mr. Justice S.C. Dharmadhikari, retired Chief Justice. The petitioner is at liberty to seek further interim measures before the Tribunal. The respondent's review petitions pending before the Division Bench are to be decided on their own merits, but the present order is passed having regard to consent orders in similar cases and parity of circumstances.
Law Points
- Legal points not extracted
- Section 9
- Arbitration and Conciliation Act
- 1996
- equitable jurisdiction to preserve subject-matter
- interim measures
- distinction between eviction and contractual termination
- effect of exclusion clause
- status quo as interlocutory relief
- conversion of Section 9 petition to Section 17 application
- reference to arbitration by consent
