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A division bench of the Delhi High Court issued notices to Delhi International Airport Ltd. (DIAL), a subsidiary of GMR Airports Ltd., and Mumbai International Airport Ltd. (MIAL) following a petition filed by the Airports Authority of India (AAI). The petition challenges a 2022 arbitral award that directed AAI to refund excess annual fees paid by the two airports. The court noted that DIAL and MIAL would not enforce the arbitral award until further orders. The next hearing is scheduled for January 29.
Background of the Case
The dispute originates from operation, management, and development agreements signed in 2006 between AAI and the airport operators. These agreements included a revenue-sharing model in which airport operators paid an annual fee to AAI based on their gross receipts, comprising income from aeronautical and non-aeronautical services.
The operators argued that the annual fees had been calculated incorrectly, as they were based on gross receipts rather than revenue as outlined in their business plans. DIAL identified the error in February 2016, while MIAL discovered it in January 2019. This led to claims of excess payments made to AAI over several years.
Arbitral Award and AAI’s Challenge
In the 2022 arbitral award, the tribunal directed AAI to refund the excess fees paid by DIAL and MIAL. The ruling was upheld by a single-judge bench of the Delhi High Court in October 2023, which dismissed AAI’s petitions under Section 34 of the Arbitration and Conciliation Act, 1996. Justice Yashwant Varma stated, “The court finds no ground to interfere with the awards as rendered.”
AAI has now appealed to the division bench, arguing against the arbitral tribunal’s interpretation of revenue calculations. The tribunal had recommended appointing an independent auditor to determine the amounts liable to be deducted from the gross receipts of the operators for the period June 21, 2015, to the date of the award.
Operators’ Claims
- Delhi International Airport (DIAL):
Sought a total refund of ₹10,537 crore, including interest from October 1, 2018, till payment, along with additional sums for subsequent excess payments.
- Mumbai International Airport (MIAL):
Claimed ₹3,583 crore as of March 31, 2018, along with ₹585 crore for excess payments in the fiscal year ending March 31, 2019. MIAL also sought additional refunds for later excess payments.
Root of the Dispute
The operators argued that their annual fee calculations had been based on gross receipts credited to their profit and loss accounts, including income from aeronautical services, non-aeronautical services, and other sources. They maintained that this interpretation was inconsistent with the revenue-sharing terms in the agreements. AAI, however, upheld its original calculation methods, leading to divergent views on the term “revenue” and the scope of its application in the agreements.
Source – Business Today