Case Note & Summary
The petitioner, Garuda Aviation Services Pvt. Ltd., was granted a license by the Airport Authority of India (AAI) to operate a car parking facility at Pune Airport under a license agreement dated 03.03.2010 for five years. Clause 15 of the agreement allowed AAI to change the location of the premises at any time and require the licensee to vacate and accept an alternative site at its own cost, with no entitlement to compensation. In 2012, AAI directed the petitioner to shift to an alternative site due to construction of a new terminal. The petitioner complied but claimed that the alternative site was inadequate, causing loss of business. Disputes arose, and the matter was referred to arbitration. The sole arbitrator rejected the petitioner's claim for losses, holding that Clause 15 permitted the relocation without compensation and that the petitioner failed to prove any loss. The petitioner challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court. The Court examined the scope of interference under Section 34, noting that it is limited to cases of patent illegality, perversity, or contravention of public policy. The Court found that the arbitrator's interpretation of Clause 15 was plausible and that the findings of fact regarding adequacy of the alternative site and absence of loss were based on evidence. The Court held that there was no ground to interfere with the award and dismissed the petition.
Headnote
A) Arbitration - Section 34 of Arbitration and Conciliation Act, 1996 - Scope of Interference - Petition challenging arbitral award under Section 34 - Court held that interference is limited to grounds of patent illegality, perversity, or contravention of public policy - No reappreciation of evidence or merits unless award is irrational or against terms of contract (Paras 1, 14-18).
B) Contract Interpretation - License Agreement - Clause 15 - Change of Location - Licensee bound to vacate and accept alternative premises at own cost - No entitlement to compensation for shifting or loss of business - Court held that arbitrator's interpretation of Clause 15 was plausible and not perverse (Paras 4, 12-13).
C) Evidence - Alternative Site Adequacy - Claimant alleged alternative site was inadequate and caused loss - Arbitrator found no evidence of loss or inadequacy - Court held that findings of fact based on evidence cannot be interfered with under Section 34 (Paras 10-11).
Issue of Consideration
Whether the arbitral award rejecting the petitioner's claim for losses due to relocation of car parking site is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996.
Final Decision
The Bombay High Court dismissed the petition, upholding the arbitral award dated 20.11.2017.
Law Points
- Section 34 of Arbitration and Conciliation Act
- 1996
- scope of interference
- public policy
- interpretation of contract clauses
- alternative site adequacy
- no evidence of loss
Case Details
2019 LawText (BOM) (04) 89
Commercial Arbitration Petition No. 570 of 2017
Mr. Simil Purohit i/b. Mr. V. P. Pandya for Petitioner, Mr. Mayur Khandeparkar a/w Ms Lopa Munim i/b. M/s. Rajesh Kothari & Co. for Respondent
Garuda Aviation Services Pvt. Ltd.
Airport Director of Pune Airport
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Nature of Litigation
Petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenging an arbitral award.
Remedy Sought
Setting aside of the arbitral award dated 20.11.2017.
Filing Reason
The petitioner claimed that the arbitrator erred in rejecting its claim for losses due to relocation of the car parking site.
Previous Decisions
The sole arbitrator passed an award on 20.11.2017 rejecting the petitioner's claim.
Issues
Whether the arbitral award is liable to be set aside under Section 34 of the Arbitration and Conciliation Act, 1996 on grounds of patent illegality or perversity?
Whether the arbitrator's interpretation of Clause 15 of the license agreement was correct?
Submissions/Arguments
Petitioner argued that the alternative site was inadequate and caused loss of business, and that the arbitrator failed to consider evidence.
Respondent argued that Clause 15 permitted relocation without compensation and that the petitioner failed to prove any loss.
Ratio Decidendi
The scope of interference under Section 34 of the Arbitration and Conciliation Act, 1996 is limited to patent illegality, perversity, or contravention of public policy. The arbitrator's interpretation of Clause 15 of the license agreement was plausible and not perverse. Findings of fact based on evidence cannot be reappreciated under Section 34.
Judgment Excerpts
This petition under Section 34 of the Arbitration and Conciliation Act, 1996 challenges an Award dated 20.11.2017 passed by the learned sole arbitrator adjudicating the disputes and differences which had arisen between the petitioner / claimant and the respondent – Airport Authority of India under a license agreement dated 03.03.2010.
In Clause 15 of the license agreement, parties agreed as under: '15. That the authority reserves to itself the right to change the location of the Premises at any time and may at its discretion call upon the License to vacate the site and may give him an alternative premises for the purpose of this licence. In such a case, the licensee shall be bound to vacate the premises immediately and accept the said alternate premises. The entire expenditure on such shifting shall be borne by him and the licensee shall not be entitled to claim...'
Procedural History
The petitioner filed a claim before the sole arbitrator, who passed an award on 20.11.2017 rejecting the claim. The petitioner then filed Commercial Arbitration Petition No. 570 of 2017 under Section 34 of the Arbitration and Conciliation Act, 1996 before the Bombay High Court, which was dismissed on 16.04.2019.
Acts & Sections
- Arbitration and Conciliation Act, 1996: 34
