KARACHI, March 5: Justice A. S. Sarwana has allowed the Civil Aviation Authority’s application for discharge of status quo order against the Aer Rianta International and the recalled an earlier status quo order.
On July 25, 1992, the CAA and Aer Rianta International had executed a license agreement for 10 years under which the CAA had granted a license to the ARI to establish duty free shops at the Jinnah Terminal.
Under the agreement, the ARI was required to pay a fixed fee of US $1 million per annum and a percentage on gross turnover to the CAA after a specified period. A dispute arose between the parties as a consequence of which the CAA filed this suit for specific performance and seeking an injunction against the ARI to perform its part of the contract under the terms of the license agreement and for permanent injunction to restrain the ARI from closing down the business of duty free shops at the Airport until the expiry of the license agreement.
On Nov 10, 1994, the ARI filed an application to restrain the CAA from cancelling and or terminating the license agreement (dated July 25, 1992) executed between the parties till the disposal of the suit or disposal of CMA No. 3977/1994 filed under Section 34 Arbitration Act, 1940.
The court granted status quo-order on the same day which was extended on June 5, 1995. The ARI also filed an application under section 34 of the Arbitration Act, 1940, for stay of proceedings as there was an arbitration clause in the license agreement.
After hearing the parties, the court on Dec 4, 1998, disposed of the application on the folowing terms:
i) The dispute between the parties be referred to arbitration in accordance with the clause (31) of the license agreement as agreed upon by them.
ii) The ARI should pay to the CAA the agreed fixed license fee of US$ 1 million only per annum.
iii) The payment must be made on a quarterly basis in advance before 10th of the month in which it is due as provided in the agreement, whether the licensee/ARI receives any bill or not.
He asserted that the inability of ARI to pay was primarily due to the circumstances created by the CAA and the recession which engulfed the world economy.
In reply, the counsel for the CAA, Zahid Ebrahim and Obaidur Rahman Abbasi, pointed out from the documents filed by the ARI that it had not paid the fixed license fee from August, 1995, to December, 1996, and had also not paid any amount towards the fixed license fee from July 2000.
Justice Sarwana observed that from a bare perusal of the statement filed by the ARI, it was apparent that the ARI did not comply with the provisions of the license agreement and also did not pay any license fee at the rate of US$ 75,000 per quarter which it had again unilaterally changed to US$25,000 per month from July 2000.
The ARI had not even deposited US$ 700,000 per annum with the Nazir of this court. The arguments of Sajid Zahid, counsel for the defendants, that the pendency of review application was a continuation of the proceedings and non-payment of any amount under the order of which review had been sought was not a violation, was misconceived.
Any order, until it is reviewed, continues to be in operation and does not entitle any party to violate the terms of the order unless specifically permitted to do so.
The ARI succeeded in obtaining stay of the proceedings, reference of the dispute to arbitration and an order of status quo, thereby, restraining the CAA from cancelling or terminating the license agreement, but it did not perform its own obligations under the agreement which were very clear that it shall pay, inter alia, license fee of US$ 1.0 million per annum to the CAA for running duty free shops at the Airport, Justice Sarwana observed.
The CAA filed an application to recall the status quo order on the ground that the ARI had not only disobeyed the order of the court but had also not paid the electricity consumption charges.
In the present case, it was clearly established that the ARI had disobeyed the order of the court in not making the deposit with the Nazir as directed by the court and had also not paid the electricity dues in accordance with the agreement, the order said.
In view of the above, Justice Sarwana disposed of the above applications on the following terms:
Application for review under section 114, read with Order XLVII Rule 1 CPC, is rejected and that the application under XXXIX Rule 1 & 2 CPC (CMA No.5547/1994) filed by the ARI is rejected and application for discharge of status quo order under Order XXXIX Rule 4 CPC (CMA No.9166/1994) filed by the CAA is allowed and status quo order granted earlier is hereby recalled.