Rajiv Sahai Endlaw, J.

1. Objections by the defendant under the Arbitration Act, 1940 to the arbitral award dated 6th November, 2001 and as corrected on 24th December, 2001 are for consideration. The arbitrator was appointed vide common order dated 28th February, 1996 in suit No. 622A/1995 filed by the plaintiff and suit No. 1808A/1995 filed by the defendant, both for appointment of arbitrator. On demise of the appointed arbitrator, vide order dated 30th July, 1998 in OMP. No. 160/98 the arbitrator who rendered the award was appointed as the sole arbitrator to continue with the proceedings.

2. Disputes arose between the parties out of an agreement titled Hotel Operation Agreement dated 8th August, 1980 between the parties. Under the said agreement, the plaintiff being entitled to land, building and super-structure collectively known as Gulab Bhawan and later christened as Oberoi Palace Hotel at Srinagar, allowed the defendant to operate the said hotel. The said agreement was for a term of 20 years. The agreement was terminated by the parties by mutual consent on 18th June, 1993. Even prior to the Hotel Operation Agreement dated 8th August 1980, the property had been let out to by owners thereof and who now control the shares of the plaintiff to Rai Bahadur M.S. Oberoi since the year 1954 and the hotel was being run therein. However, the lease was terminated w.e.f. 1st December, 1975 and thereafter a Hotel Operation Agreement dated 24th November, 1975 was entered into between the parties hereto. That was followed by the agreement dated 8th August, 1980 aforesaid.

3. The plaintiff made the following claims against the defendant before the arbitrator:

i. of minimum guarantee of Rs 20 lacs per year under the agreement, for the years 1990-1991, 1991-1992 and 1992-1993.

ii. for declaration that the agreement stood terminated on 18th June, 1993 and the defendant was liable to meet all gross operating expenses of the hotel and liable for losses to the tune of Rs 30,28,218/- suffered during the said three years.

iii. for declaration that the liability for wages and fees of the employees of the hotel for the said period, to the tune of Rs 47,82,220/- was of the defendant.

iv. for declaration that the defendant is liable to pay the gross operating expenses of electricity charges, outstanding payments to Telecommunication Department, bills of P&T Department, milk vendors claims and amounts of sundry creditors for the said three years.

v. for recovery of amounts needed for carrying out repairs to the building occasioned due to negligence of the defendant in maintaining the building during the said years. A sum of Rs 1,13,78,000/- was claimed on this account.

4. The defendant besides resisting the aforesaid claims also made a counter claim for total Rs 94,68,389 comprising of (i) Rs 47,31,208/- as the amount payable towards supplies and services rendered by the defendant to the hotel business; (ii) Rs 35,65,461/- as insurance premium paid by the defendant on behalf of the plaintiff and treated as loan; (iii) Rs 11,71,720/- owed by the plaintiff to the defendant on various counts.

5. It was, inter alia, the case of the defendant before the arbitrator that the business of the Hotel was in fact of the plaintiff and the defendant was merely the operator, analogous to a Manager and for the remuneration of 10% of the gross operating profits - the defendant was thus not at all responsible for hotel operation expenses as claimed by the plaintiff. It was further the case of the defendant before the Arbitrator that due to insurgency conditions prevailing in the State, the agreement between the parties stood frustrated in May 1990 itself and in any case due to presence of force majeure conditions, the obligations under the agreement stood suspended. It was further the case of the defendant that the minimum guarantee amount was payable out of the gross profit of the hotel and if there was no profit there could be no question of payment of minimum guarantee.

6. The award allows only the claim of the plaintiff of minimum guarantee of Rs 60 lacs. All the other claims of the plaintiff have been disallowed by the arbitrator. The arbitrator also found that there was no contest by the plaintiff to the claim of the defendant of Rs 94,68,389/- against the plaintiff. The award thus after adjusting Rs 60 lacs held to be due from the defendant to the plaintiff from the total sum of Rs 94,68,389/- admittedly due from the plaintiff to the defendant, directed the plaintiff to pay the balance of Rs 34,68,389/- to the defendant together with interest at 18% per annum from the date of the award till the award was made rule of the court.

7. The plaintiff has not preferred any objection to the award. The defendant has preferred objections limited to the finding of the sum of Rs 60 lacs being due from the defendant to the plaintiff. It is thus the case of the defendant that if the said part of the award of the sum of Rs 60 lacs being due from the defendant to the plaintiff is set aside, the defendant shall be entitled to recover the said amount also from the plaintiff. The sum of Rs 34,68,389/- awarded by the arbitrator to the defendant against the plaintiff has already been paid by the plaintiff.

8. Before dealing with the objections of the defendant, two preliminary objections of the plaintiff are considered. The counsel for the plaintiff firstly contended that the objections were barred by time. It was stated that the notice of filing of the award was served on the defendants on 23rd May, 2003 and the limitation for filing the objections expired on 24th June, 2003, while the objections had been filed on 5th July, 2003. However, it was found that the objections had been preferred on the first reopening day after the intervening summer vacation and during which the limitation was suspended for the purposes of institution. The said preliminary objection of the plaintiff is thus meritless.

9. The second preliminary objection of the counsel for the plaintiff is that the defendant after having received payment from the plaintiff of the sum of Rs 34,68,389/- as well as the amount found due under the other arbitration before the same arbitrator between the same parties, was not entitled to prefer the objections. It was contended that such conduct of the defendant amounted to acceptance of the awards and if the objections are entertained it will lead to injustice to the plaintiff. I, however, do not find any merit in the said submission also of the counsel for the plaintiff. Nothing has been shown that the amount was paid or received in full and final settlement and/or in waiver of the right of defendant to prefer objection to the part of award against it or as to how the plaintiff has suffered any injury by such payment. As noticed in the award itself and to which no objection has been filed by the plaintiff, the plaintiff had not contested the counter claim of the defendant. The amount of the counter claim was thus in any case payable by the plaintiff to the defendant and payment thereof would not debar or estop the defendant from challenging that part of the award which is against the defendant. The inference of waiver statutory right of preferring objections to the award cannot be drawn so lightly.

10. That brings me to the core issue in the present matter. Since some time has elapsed since the parties were heard, it is deemed expedient to list out in detail the submissions of the senior counsel for the defendant.

i. The challenge is only to issues No. 2 and 5 in the list of issues in para 4 of the award and relatable to whether the defendant was liable under the clause in the agreement of minimum guarantee.

ii. The parties to the contract are the plaintiff and the defendant only and none else. This was highlighted because Article XI titled "Minimum Guarantee" of the Agreement is as under:

Oberoi guarantees a payment of Rs 20 lacs per year as owners share of profit. Operator will pay to the owner a minimum amount of Rs 15 lacs every year. Operator will make up the difference between Rs 15 lacs and Rs 20 lacs per year on or before the expiry of every three years period. This clause shall constitute an essential element of the agreement and shall remain in force for the term of the agreement except that the last period shall be of two years. For the first financial year pro rata payment will be made.

It was contended that the use of the word "Oberoi" can refer only to the defendant and not to Shri M.S. Oberoi. The definition of gross operating profits in Article 1(xi) was referred, to contend that it was the difference between the income and the gross operating expenses. It was contended that the minimum guarantee clause referred to the same being the "owners share of profit" and thus the question of payment of minimum guarantee arose only when profits were earned, even if of much less than the guaranteed amount and could not arise when no profits were earned or when the venture was in losses.

iii. Attention was invited to Article XXIV and XXVII of the Article to buttress the aspect of frustration and force majeure. It was contended that there could be no agreement for minimum guarantee if the contract stood frustrated or a force majeure circumstances intervened.

(iv) Attention was invited to the affidavit of Mr. V. Srinivas Raju Company Secretary of the plaintiff filed before the arbitrator and containing in paragraph 16 thereof the computation of payments made by the defendant to the plaintiff towards minimum guarantee during the year 1982-1990 and it was contended that the same showed that minimum guarantee amount was paid only when the hotel earned profits. It was urged that there could be no payment of the minimum guarantee amount during the years 1990-1993 when the hotel did not earn any profit and was, in fact, incurring losses.

(v) Letters dated 24th August, 1981, 20th May, 1982, 5th April, 1990, 5th May, 1990, 25th March, 1991, 16th April, 1991 and 27th August, 1991 from arbitrators record were shown to contend that the payments were by way of loan and/or disbursement. Attention was invited to letter dated 5th April, 1993 of Dr Karan Singh to Mr. P.R.S. Oberoi to contend that the same though in favour of the defendant had been construed by the arbitrator as against the defendant.

(vi) The evidence of the witnesses appearing before the arbitrator was read to contend that (a) the liability of the defendant for minimum guarantee was understood by the parties to accrue only if there was a shortfall in profit and not if there was no profit. (b) it stood proved that circumstances justifying frustration of the agreement and/or existence of force majeure conditions existed and owing to which the defendant could not be held liable for the minimum guaranteed amount for the last three years. The balance sheet of the plaintiff and certain other letters/documents were also referred to in this regard. It was urged that the termination of the agreement with mutual consent in August, 1993 was of no consequence because the agreement already stood frustrated in 1990.

(vii) Strong emphasis/reliance was placed on para 80 of the award where the arbitrator has held that "due to force majeure conditions the respondent perhaps could not be made liable for not operating the hotel for the period 1990 - 1993... and it was contended that the award for liability of the defendant of minimum guaranteed amount inspite of the arbitrator finding the existence of force majeure conditions was inconsistent and thus suffered from error on its face and to that extent was liable to be set aside.

(viii) It was contended that the arbitrator has wrongly interpreted the clauses of the contract. It was contended that though the interpretation of contract by arbitrator could not be interfered with if two views/interpretations were possible but if the interpretation adopted by the arbitrator was not possible at all, such interpretation of contract by the arbitrator was liable to be interfered with by the court.

(ix) Fault amounting to error on the face was found with the finding of the arbitrator that there was no impossibility in the defendant paying the minimum guarantee amount to the plaintiff in spite of existence of conditions of force majeure.

(x) It was further contended that the payments at the rate of Rs 1,20,000/- per month being made by the defendant to the plaintiff between the years 1990-1993 were not adjusted in minimum guarantee account by the plaintiff also and were treated by the plaintiff also as loan.

11. Per contra, the counsel for the plaintiff has urged that (i) none of the contentions of the defendant amounted to ground on which award could be interfered with; (ii) misapplication of law by the arbitrator does not entitle the court to interfere with the award; (iii) the argument of the defendant of frustration of the agreement was misconceived inasmuch as, had the contract stood frustrated, the plaintiff in terms of the agreement would not have been liable for insurance etc which the defendant continued to incur, claiming to be on behalf of the plaintiff and for recovery of which amounts the counter claim had been made by the defendant; (iv) force majeure covered a case of total impossibility and not of onerous performance; (v) the arbitrator had collectively looked at the claims and the counter claims and had reached a decision which did not call for any interference; (vi) the defendant had held on to the agreement even after 1990 and did not want to terminate the agreement and in these circumstances no fault could be found with the award holding the defendant liable for the minimum guarantee amount under the agreement; (vii) if the contract stood frustrated, there could be no question of counter claim of the defendant against the plaintiff for amounts as per the agreement due from the plaintiff to the defendant.

12. Before considering the aforesaid contentions, it is appropriate to cull out the findings in the award with respect thereto.

A. On the "Minimum Guarantee" clause it is held:

Important terms of the contract in question clearly show that the respondent, EIH, virtually was to be in full and complete control of the hotel and there was to be no interference by the claimant in operation of the hotel.... Earlier a clear agreement was in operation which entitled the owner to draw specific monthly rental. The owner spent a lot of money to add more infrastructure to the hotel... and wanted a safe return for all his investments besides hoping to earn substantial income from the operations of the hotel business. The owner wanted to avoid any financial liabilities coming to it in any manner... It is true that the contract provided only 10% income to the respondent out of profits of the business. The gross operating profits were to be arrived at by deducting gross operating expenses from gross operating income being earned from the operation of the hotel. 90% of the said profits were to go to the share of the claimant but minimum of Rs 20 lacs per year had to be paid by the respondent and that was termed as owners profit. It is not the hotel which had given this assurance of minimum guarantee but "Oberoi" had given this guarantee. There is not a whisper in the terms of the agreement that minimum guarantee was not payable in case there was to be zero profit or even loss in the hotel business at any time. There was not even a hint in the whole of the agreement that the losses in the hotel business were to be responsibility of the claimant. ... In order to test the rationality of this contention an extensive example is visualized where the gross profit in any particular year is only one rupee still as per minimum guarantee clause the respondent (Oberoi) were bound to skull out from its pockets the minimum guarantee amount. If liabilities of running the hotel business were to be considered payable by the claimant then the rationality of having minimum guarantee amount payable to the claimant by the respondent becomes illusionary. That could not be the intention of the parties. It is not acceptable that the minimum guarantee amount was only payable out of the gross operating profits of the hotel. The minimum guarantee clause does not say so. The words "owners profit" do not mean the gross operational profits of the hotel business. In case losses to be suffered by the hotel were to be the liability of the claimant then there could be no minimum guarantee clauses promising payment of Rs 20 lacs per year to the claimant. ... The minimum guarantee clause is not linked to any condition or conditions.... if that were to be so the clause could have been worded in different words indicating that minimum guarantee was payable only from gross operating profits and not otherwise. The clause does not say so... In case the claimant was only entitled to share of gross operating profits then there was no need to have minimum guarantee clause at all. The sharing of such profits stood already provided in the contract. The minimum guarantee clause has no connection at all with gross operating profits defined in the contract. The respondent may be having high expectations from the hotel and thus in its business was agreed to give minimum guarantee of payment of Rs 20 lacs guarantee of payment per year to the claimant as its profit whatever may be the financial gains or losses were to occur in running and operating the hotel business by the respondent... There cannot be any other interpretation of the terms of the agreement.

B. On "Frustration" and "Force Majeure" it is held:

The agreement was to remain in force for 20 years w.e.f. Ist January, 1980. The facts as proved on record show that till 3rd May, 1993 the respondent never took the stand that the contract stood terminated since May, 1990 due to frustration. It is a fact that the operations of the hotels virtually came to a standstill from May, 1990. The correspondence exchanged between the parties in between May 1990 to April, 1993 does not depict any intention of the parties for treating the contract as terminated. Perhaps the parties expected the conditions to improve which would revive the operation of the hotel... The respondent did not leave the hotel. It continued to be in charge of the hotel... In case the respondent thought that the contract stood terminated due to frustration, the respondent did not communicate this perception to the claimant before May, 1993. Rather the respondent continued to manage the hotel and continued to remain in possession of the hotel. The respondent did not ask the claimant to take over the hotel at any time in between 1990 to 1993. The contract in question was for a long period of 20 years and only half the period had been covered till 1990 so it is not possible to hold that due to insurgency taking place from 1990 the contract stood frustrated. The parties also never thought so till April, 1993. They agreed to mutually terminate the contract.

It is not correct on the part of the claimant that none of the conditions mentioned in Force Majeure clause existed in Srinagar during relevant period. .... Force Majeure clause does not bring about the termination of agreement as in the case with frustration clause. Only liability of the party for non performing particular terms or condition of the contract stands obliterated and nothing more. ... It is further that the obligation to pay a minimum guarantee amount is not such a term or condition which could not have been performed due to existence of any of the events mentioned in force majeure clause. It is thus evident that due to force majeure conditions the respondent could not perhaps be made liable for not operating the hotel for the period 1990 to 1993 but such force majeure condition neither prohibited nor prevented the respondent from its absolute obligation to pay minimum guarantee amount. This minimum guarantee amount per year was payable during the subsistence of the agreement and debars (dehors ) the actual operation of the hotel and the results thereof. In Force Majeure and Frustration of contract a book edited by Evan Meckendrisk at page 157, it is observed that Force Majeure is the concept whereby the law recognizes that a contracting party may without on its part provide an excuse for non performance when circumstances beyond control render performance impossible. It is further emphasized that the purpose of including such clause in a contract is to seek to limit ones exposure to damages for non performance. .... The respondents obligation to pay minimum guarantee amount has not become impossible of performance due to the hotel becoming non- operable due to force majeure conditions... In case the claimant was to claim any damages from the respondent on its failure to operate or run the hotel, the respondent could be justified to resist such claim on the ground of being prevented from performing its obligation to operate and run the hotel due to presence of force majeure conditions. However, the respondents obligation to pay minimum guarantee has not become impossible to perform as this amount was payable despite the hotel not earning any income or profit. Thus, it is held that the respondents liability to pay minimum guarantee amount for the year 1990-1993 totaling Rs 60 lacs has not become extinct due to force majeure condition and the force majeure clause is not applicable to its liability.

13. The contentions of the senior counsel for the defendant can now be dealt under two heads; Firstly, the interpretation of minimum guarantee clause and secondly Frustration and Force Majeure.

14. The interpretation by the arbitrator of the minimum guarantee clause in the agreement between the parties is not found to be such which could not have been reached by any person. The senior counsel for the defendant also agreed that if two views were possible, the interpretation adopted by the arbitrator could not be interfered with. In the present case, the defendant had been running and managing the hotel since 1954; till 1975 on payment of fixed rent for the premises to the plaintiff and with effect from 1975 also on payment of fixed amount annually, which, though under the hotel operation agreement was termed by the parties as minimum guaranteed profits rather than as rent.

15. I had, during the hearing, also put to the senior counsel for the defendant that it appears that such change in nomenclature of the fixed amount being paid to the plaintiff in lieu of the premises where the hotel was being run/operated belonging to the plaintiff appeared to be guided by reasons of tax planning/management; Otherwise there does not appear to be any difference in the transaction between the parties. The control and management of the hotel vested in the defendant under the lease deed as well as under the hotel operation agreement, though under the latter agreement the possession was deemed to be with the plaintiff. The plaintiff however had nothing to do whatsoever with the running and management of the hotel, even under the Hotel Operation Agreement, as under the Lease Deed. Even if this Court in exercise of power under Sections 30 and 33 of the Arbitration Act, 1940, was entitled to interfere with a possible interpretation of agreement, on an interpretation of Article XI read with remaining agreement, I am not able to find any fault with the interpretation placed by the arbitrator thereon. The said clause contains an obligation on the defendant to pay to the owner the minimum amount without reference to profits or losses. The first sentence of the clause only gives the colour of the head under which the said minimum amounts to be paid by the defendant to plaintiff were to be held i.e., as the profit and not as rent. The payment had to be described by some name. Since the parties had switched from lease deed to Hotel Operation Agreement, whereunder the earning of the plaintiff were to be its profits from hotel business being carried in the property and not rent as earlier described in lease deed, the expression "owners share of profit" finds mention in Article XI of the Agreement. However, immediately thereafter, the obligation is undertaken by the defendant "to pay to owner minimum amount". The clause is described as "Constituting an essential element of the Agreement" and to remain in force for the entire term of the agreement. Inkling of the mandatory nature of payment is also apparent from the clause providing for payment of minimum Rs 15 lakhs each year and for difference between Rs 15 lakhs and Rs 20 lakhs being made up before the expiry of every three years.

16. The Apex Court in State of Gujrat v. Dharangdhra Chemical Works Ltd. : [1985]3SCR630 in relation to a minimum guarantee clause in contract in that case held that it had been deliberately inserted with the object and purpose of ensuring that even in respect of lean years when the production fell short, the minimum guaranteed amount had to be paid. It was held to be a special provision in the contract. It was further held that any other interpretation, as taken by the High court whose judgment was in appeal, would result in completely rendering the clause of minimum guarantee otiose and such interpretation could not be made.

17. The provision for minimum charges are often found in electricity supply contracts. The Division Bench of Punjab High Court in Watkins Mayor & Co. v. Jullundur Electric Supply Co Ltd. held that a minimum charge is not really a charge which has for its basis the consumption of electrical energy; it is based on the principle that the supplier incurs a certain amount of capital expenditure in plant and machinery on which he is to have a reasonable return; he gets a return when energy is consumed by a consumer and when no such energy is consumed by consumer, he is allowed minimum charges which are really a return on his capital outlay for a particular consumer.

18. The Division Bench of this Court also in Gulab Rai v. MCD also took the same view.

19. A reading of Article IV of the agreement shows that the entire operation of the hotel including letting of shops therein was with the defendant. Under Article V of the authorized representative of the plaintiff was permitted access to the hotel and right to enter only for the purposes of inspection and with as little dislocation to operations of hotel as possible. The actual arrangement between the parties can be gathered from the stand of the defendant in its reply cum counter claim before the arbitrator to the effect that inspite of force majeure and frustration of contract in 1990, the plaintiff did not come forward even to secure the property and abandoned the property and to protect its interest and for this reason, the defendant as a prudent person had no choice but to continue in the property. It shows that the entire responsibility of earning profits from the hotel was of the defendant only and though the agreement was that the gross profits shall be shared between plaintiff and defendant in the ratio of 90:10, the defendant in lieu of the property provided by the plaintiff and other expenses thereon under the agreement to be incurred by the plaintiff and irrespective of whether the defendant brought earnings to the hotel or not had assured a minimum return of Rs 20 lacs per annum to the plaintiff on its investment in infrastructure and upkeep. This was to be irrespective of whether the operations of the hotel entrusted to the defendant resulted in profits or not. If the operations resulted in profits, and share of plaintiff therein was in excess of Rs 20 lakhs, the plaintiff was to get the excess.

20. I find the controversy around use of "Oberoi" in Article XI to be of no avail. The earlier agreements it appear were with Mr M.S. Oberoi personally. The bank accounts of the hotel, under the agreement were to be operated by the defendant. Similarly the books of account were also to be maintained by the defendant. The use of "Oberoi" in the clause shows that the defendant was to make good the payment mentioned therein to the plaintiff, and the same was not dependent on monies in the accounts/books of the hotel.

21. There is thus no error on the face of the award in this respect.

22. That brings me to the second challenge i.e., qua Frustration/Force Majeure. The argument of senior counsel for the defendant is that the award for minimum guarantee payment in spite of finding existence of force majeure conditions is erroneous; if force majeure had intervened, all obligations under the contract including of payment of minimum guaranteed amounts would be suspended/discharged.

23. Both Force Majeure and Frustration dealt under separate heads in the award are facets of Section 56 of the Indian Contract Act, 1872. The arbitrator, under Frustration, has found that the parties did not treat the contract to have been frustrated and on the contrary treated the same as subsisting. The same facts/circumstances/conditions were pleaded for the plea of Frustration as well as Force Majeure. As noticed above, the plea of the defendant was that though the agreement stood terminated in May 1990 but since the plaintiff had abandoned the hotel and did not come forward to take control/charge of the hotel, the defendant as a prudent person continued to do so - not under the agreement.

24. The senior counsel for the defendant urged that under Article XXIV of the agreement, relating to termination, there is no requirement to give notice; the same is the position in Article XXVII relating to Force Majeure. It was argued that upon finding the conditions for termination under Article XXIV (1) (ii) existing, irrespective of whether the defendant had informed the plaintiff so or not, the agreement stood terminated and the liability for payment of minimum guarantee amount came to an end.

25. The award finds that ten years of agreement were remaining in 1990. The contemporaneous correspondence shows that the defendant was denying liability to pay minimum guarantee amount for the reason of same being due only when there were profits and not for the reason of agreement having been frustrated. That reason has been found incorrect, hereinabove. The defendant in pleadings before arbitrator set up case of agreement having come to an end under Article XXIV thereof i.e., Frustration. If that were to be so, the coming into operation of Article XXVII i.e., Force Majeure would not arise.

26. Articles XXIV, XXV and XXVII appear to be overlapping each other and are set out below:

XXIV. THIS AGREEMENT SHALL STAND TERMINATED:

(i) In the event either party hereto shall suspend or discontinue business or shall be adjudicated a bankrupt or insolvent or shall make an assignment for benefit of creditors or a composition with creditors, or shall file a voluntary petition or an answer admitting the jurisdiction of the court, and the material allegation of an insolvency petition or shall consent to an involuntary petition pursuant to any bankruptcy, reorganization or insolvency law of any jurisdiction or country, or an order shall be entered and continue in effect for sixty days pursuant to any such law approving an involuntary position seeking reorganization or to effect an arrangement or plan for, or appointing any receiver or trustee of or for either party, or for all or any substantial portion of the property of either party, or either party shall apply for or consent for the appointment of such receiver or trustee.

(ii) If the Hotel or any part thereof at any time during the term of this agreement becomes inoperable as Hotel by reason of compulsory acquisition, expropriation, condemnation or other act of any competent authority, or from any cause beyond the reasonable control of the Owner or the Operator or by act of God (subject, however, to the rights of Operator to claim compensation from the appropriate authority).

(2) The Owner retains the right to require the Operator by written notice to remedy within sixty days any non-performance and/or nonobservance of the conditions of this agreement and/or nonpayment of any amount lawfully due to Owner under this agreement. Unless the matters so complained of are adjusted within the period specified above, the Owner may give a further written notice to the Operator of its intention to terminate this agreement upon a date to be specified in such notice which date shall not be less than sixty days from the date of such further notice. In the event, such further notice is given and he matters complained of are still not complied with, this agreement shall terminate on the date specified in such further notice unless within thirty days from the date of receipt of such further notice either party hereto shall have requested arbitration as provided for in this agreement, in which event this agreement shall remain in force and effect pending the decision in such arbitration proceedings.

XXV. DESTRUCTION OR SUSPENSION OF OPERATION OF HOTEL

In case the Hotel shall be destroyed or damaged to an extent which shall materially interfere with the operation of the Hotel, Owner shall undertake within ninety days after the commencement of such interference to begin repairs, rebuilding or replacing, within a reasonable period of time, so that after such repairs, rebuilding or replacing the Hotel shall be substantially the same. If the Hotel becomes totally inoperable and it is not viable for the Owner to rebuild it, either party shall have the right, without limiting any other rights which either party may have hereunder, to terminate this agreement by notice in writing to the other party. However, it will not be open to the Owner to rebuild the hotel and to manage it either itself or to handover the operations to any third party during the original term of this agreement and the Operator shall have the right to operate the said hotel in terms and conditions contained herein in the event the hotel has been rebuilt, repaired or restored for satisfactory running as a hotel for the remainder of the term.

XXVII. FORCE MAJEURE

This agreement shall not in any way be affected nor shall any party hereto be held liable for any failure or delay in the performance of any undertaking, term or condition herein, if such failure or delay is due to any cause or causes beyond its control, including but not limited to fire, flood, damage by the elements, perils of the sea or air accident, act of God, strike, lock out or other labour disorder, act of foreign or domestic de jure or de facto government, whether by law, order, legislation, decree, rule, regulation or otherwise, revolution, civil disturbance, breach of the peace, declared or undeclared war, act of interference or action by civil or military authorities or due to any other cause beyond the control of Owner or Operator.

27. The settled principle of interpretation of contracts is that first an attempt should be made to give effect to each and every clause of the contract and only if that is not possible, the clause appearing first prevails over that appearing latter.

28. Clause XXIV (1) (ii) deals with cases where the hotel is inoperable for reasons mentioned therein. Clause XXV also deals with hotel becoming inoperable for reason of destruction of property and requiring any rebuilding work. Clause XXVII deals with failure of a party to the agreement to perform its obligations for reasons mentioned therein. To harmoniously construe these clauses it has to be necessarily held that what is expressly covered in one is not within the ambit of the other. Thus, Clause XXVII would apply only where inspite of circumstances mentioned therein, the agreement is not terminated under clause XXIV.

29. The obligation of the plaintiff under the agreement was only to make its property/business of hotel being run therein available to the defendant for operation and to provide initial inventories and capital, insure the hotel and to carryout structural repairs. The obligation of the defendant was to operate the hotel and gross profits of which business where to be shared to the extent of 90% by the plaintiff, subject to payment of minimum of Rs 20 lakhs per annum by the defendant to the plaintiff.

30. The arbitrator found the defendant to have between 1990-1993 not taken a stand that the agreement stood terminated under Article XXIV. That finding of arbitrator bring factual cannot be interfered with. Even otherwise I find the defendant to have in letter dated 12th August, 1991 denied liability for minimum guarantee amount for the reason of there being no profits and not for the reason of agreement having been terminated. However, before the arbitrator stand was taken that agreement stood terminated under Clause XXIV. If the insurgency conditions fell within XXIV, then naturally XXVII would not apply. I do not find any error in the finding of arbitrator in this regard also. I do not agree with the contention of the senior counsel for defendant that no notice was required to be given. Undoubtedly the agreement does not provide giving of a notice. But where the circumstances were such that the defendant could have either immediately treated the contract as terminated or in expectancy of improvement, treat the agreement as subsisting, notice was essential specially when control/charge of hotel admittedly remained with the defendant. Here the contract on inception was not to do an impossible act to make it void ab initio. According to the defendant, the act of operation of hotel became impossible after ten years of inception of contract. Ten years of contract were still remaining. If according to the defendant the contract had become void, it ought to have given a notice under Section 66 of the Contract Act. In SBI v. Earnest Traders : 67(1997)DLT218 relied upon by the senior counsel for the defendant, there was a banning order dissolving the contract and in that context it was held there was no need for termination notice in case of Frustration. There was no such order in this case and thus notice was essential.

31. The defendant having not succeeded on Article XXIV wants to fall on Article XXVII. But as aforesaid they are mutually exclusive. The defendant cannot blow hot and cold i.e., on the one hand say that the agreement stood terminated and on the other hand say that it was saved and only performance of obligation dispensed.

32. Be that as it may it having been found that minimum guaranteed amount was payable irrespective of profits and for the reason of the plaintiff having made available its property and business to defendant and which the plaintiff was not prevented even by events pleaded, from doing, as long as the defendant held the said property and business and as it admittedly did till 1993, the defendant remained bound to pay the said amount. No error is found with this part of award also.

33. Though I have reached the same conclusion as the arbitrator. I must notice State of UP v. Allied Constructions : (2003)7SCC396 , Sudershan Trading Co. v. Govt of Kerala : [1989]1SCR665 , Union of India v. A.L. Rallia Ram : [1964]3SCR164 , Firm Madan Lal Roshan Lal Mahajan v. Hukamchand Mills Ltd. and Champsey Bhara & Co. v. The Jivrag Ballo Spinning & Weaving Co Ltd. 28 CWN 397 cited by counsel for the plaintiff, all on the proposition that on interpretation of contract, on findings on plea of frustration of contract, the court cannot substitute its own opinion for that of arbitrator and that court cannot correct mistakes if any in adjudication unless objection to legality is apparent on the face of the award.

34. Per contra, the senior counsel for the defendant cited (a) Trustees of Port of Madras v. Engineering Constructions Corporation Ltd. : AIR1995SC2423 holding that arbitrator cannot go beyond the contract and cannot misapply the law.

(b) Rajasthan State Mines & Minerals Ltd. v. Eastern Engineering Enterprises : AIR1999SC3627 holding that arbitrator cannot award an amount which is ruled out or prohibited by the agreement.

(c) Steel India Authority of India Ltd. v. J.C. Budhiraja : AIR1999SC3275 again holding that if arbitrator disregards express term of contract, interference is called for.

It was in the light of these judgments and at first blush finding some inconsistency in award in holding defendant liable for minimum guarantee amount inspite of existence of force majeure that I independently verified the correctness of the findings. I have reached the same result as the arbitrator.

35. The senior counsel for the defendant has also filed a number of other judgments on the concept of Frustration. However, in the facts above and this being a jurisdiction under Sections 30 and 33 of the Arbitration Act it is not deemed expedient to deal with those.

36. The objections to the award are dismissed. The arbitral award is made rule of the court. Decree in terms thereof be drawn up. However, in view of the past relations of parties and the other payments as per award having already been made and admittedly no business having been carried in last three years it is not deemed expedient to impose any costs.