Bombay High Court: Eviction and Dues Recovery Excluded from Arbitration in AAI-HLV Lease Dispute.


09 June 2025 Arbitration Law >> Business & Commercial Law   |   Lease >> Property & Real Estate  

The High Court of Judicature at Bombay, in a recent judgment delivered on June 9, 2025, by Justice Somasekhar Sundaresan, addressed a core controversy concerning whether disputes related to eviction and recovery of dues under lease deeds fall within the scope of arbitration agreements. The case involved HLV Limited (formerly Hotel Leela Venture Limited) and the Airports Authority of India (AAI).

The long-standing dispute centered on three lease deeds executed between Leela and AAI for parcels of land in Navi Mumbai. The first two deeds, dated October 19, 1983, and November 22, 1983, covered 18,000 square feet for a hotel and flight kitchen, with a lease period until July 11, 2012. A third lease deed, from February 7, 1996, pertained to an additional 11,000 square meters for a new hotel wing, set to expire on March 31, 2024.

 
 

Each of these lease deeds contained an arbitration clause, but with explicit exclusions. A key provision in all deeds stipulated that the leased land would be deemed to be public premises as defined in The Public Premises (Eviction of Unauthorised Occupants) Act, 1971 ("Public Premises Eviction Act"), regardless of the structures built on them. Furthermore, the arbitration clauses explicitly excluded from arbitration any matter to which the Public Premises Eviction Act and its rules were applicable.

The Core Controversy:

The central question before the High Court was whether disputes related to eviction and recovery of dues fell within the scope of these arbitration agreements, especially given the contractual deeming declarations and exclusions.

Leela initiated proceedings under Section 11 of the Arbitration and Conciliation Act, 1996 ("Arbitration Act") to appoint an arbitrator after AAI refrained from doing so. AAI, conversely, initiated eviction proceedings under Chapter VA of The Airports Authority of India Act, 1994 ("AAI Act"), arguing that the leased land constituted "airport premises". Leela’s applications under Section 8 of the Arbitration Act to refer the eviction disputes to arbitration were dismissed by the Eviction Officer. These dismissal orders were challenged by Leela in statutory appeals before the High Court.

Contentions of the Parties:

Mr. Rafique Dada, Senior Counsel for Leela, contended that the lease deeds constituted a joint venture and that the land could not retain its "airport premises" or "public premises" character after amalgamation with private lands. He also argued that a contract for lease renewal for 30 years had been formed through an exchange of correspondence, which should incorporate the original arbitration agreement.

In contrast, Mr. A.A. Kumbhakoni, Senior Counsel for AAI, emphasized that the parties had consciously excluded eviction from the scope of arbitration through their contract. He argued that regardless of the specific legislation AAI chose for eviction (AAI Act vs. Public Premises Eviction Act), the contractual intent to deem the land as public premises and exclude eviction disputes from arbitration was paramount.

Court's Analysis and Findings:

Justice Sundaresan, after hearing arguments at length, ruled that the parties' explicit contractual agreement to exclude eviction and related recoveries from arbitration was decisive. The Court emphasized that arbitration is a "creature of contract" and parties are free to define its scope.

The judgment clarified that the "existence" of an arbitration agreement must relate to the formal existence in connection with the specific subject matter of the dispute. While arbitration agreements exist in the lease deeds, they explicitly exclude disputes concerning eviction. Therefore, for matters of eviction, the arbitration agreement "does not exist on that subject".

The Court further held that the subsequent introduction of Chapter VA of the AAI Act in 2003, empowering AAI to evict unauthorized occupants, did not alter the contractual exclusion of eviction disputes from arbitration. The reference to the Public Premises Eviction Act in the original deeds was primarily to identify the class of disputes excluded from arbitration, not to limit AAI's ability to use other statutory powers for eviction.

Regarding Leela's argument that the leased land ceased to be "airport premises" after being leased for a hotel and flight kitchen, the High Court found this contention absurd. The Court noted that the land was leased for purposes integral to the airline industry, such as a flight kitchen and a hotel in close proximity to the airport, making it fall under "airport premises". The legislative purpose of Chapter VA of the AAI Act is to enable the recovery of public resources from unauthorized occupants.

The Court also observed that Leela had continually occupied the land, even after the lease periods expired, paying rates contracted in the 1980s and 1990s. This prolonged occupation and the "maze of proceedings" initiated by Leela were seen as a strategic attempt to remain in possession without paying current market rates.

Conclusion and Directions:

The High Court dismissed the appeals filed by Leela under Section 37 of the Arbitration Act, upholding the Eviction Officer's orders that dismissed the Section 8 applications.

The Court explicitly directed that:

  • The arbitration agreements do not cover eviction of unauthorized occupation by Leela and recovery of associated rent and damages.
  • Eviction and related recoveries are outside the scope of arbitration, regardless of which legislation (Public Premises Eviction Act or AAI Act) is utilized by AAI.
  • Both leases have expired, and Leela's continued occupation is prima facie unauthorized, bringing the matter squarely within the jurisdiction of Chapter VA of the AAI Act.
  • The Eviction Officer is directed to conduct the eviction proceedings expeditiously, even on a day-to-day basis.
  • Leela is at liberty to proceed to arbitration on any facet of the lease deeds other than eviction from the leased land. Justice (Retd.) Sanjay V. Gangapurwala has been appointed as the Arbitral Tribunal for these other disputes.
Considering the "lack of reasonableness" in some of Leela's contentions and the resultant prolonged enjoyment of expired leasehold land, the High Court imposed costs of Rs. 10 lakh on Leela, to be paid to AAI within four weeks from the judgment's upload date.


Public Premises (Eviction of Unauthorised Occupants) Act, 1971  

Section 8, Arbitration and Conciliation Act - 1996  

Section 11, Arbitration and Conciliation Act - 1996  

Section 37, Arbitration and Conciliation Act - 1996  

Arbitration and Conciliation Act, 1996