Supreme Court Upholds Maintainability Of Appeals Filed By Airports Economic Regulatory Authority Against Orders Of TDSAT On Tariff Imposition

The bench led by CJI DY Chandrachud comprising Justices JB Pardiwala and Manoj Misra allowed the appeals to filed by AERA in the following order : 

"The appeals by AERA against TDSAT order are held to be maintainable. Registry to list the appeals for hearing."

The Court also asked the counsels to formulate the key issues of law. 

The Court was hearing a challenge to the decision of Telecom Disputes Settlement and Appellate Tribunal which held that Airports Economic Regulatory Authority (AERA) does not have powers to impose tariffs on Ground Handling Services (GHS) and Cargo Handling Services (CHS) conducted by Specific City Airport handling companies (like Delhi / Mumbai International Airport Limited) or their contractors.

The Tribunal also held that under the AERA Act 2008, GHS and CHS are to be considered as 'Non-Aeronautical Services' and thus beyond the tariff imposition powers of AERA. 

The issue framed by the Court for consideration was :

"Whether an appeal against an order passed by TDSAT in the exercise of its appellate jurisdiction under S.18 of the AERA Act 2008 can be maintained at the behest of AERA?"

S.18 of Airports Economic Regulatory Authority (AERA) Act 2008 provides that the Centre or State government or local authority or any person may appeal to the TDSAT (Telecom Disputes Settlement and Appellate Tribunal) for adjudication of any dispute under S.17(a).

S.17(a) lists the subject matters of dispute as follows :

(a) adjudicate any dispute-

(i) between two or more service providers;

(ii) between a service provider and a group of consumer:

Provided that the Appellate Tribunal may, if considers appropriate, obtain the opinion of the Authority on any matter relating to such dispute;

Notably, S. 17(a) bars dispute with regards matter under jurisdiction of Monopolies and Restrictive Trade Practices Commission; Consumer Disputes Redressal Forum; Competition Act, 2002 and appeals under section 28K of the Airports Authority of India Act, 1994.

Senior Advocates Arvind Datar and AM Singhvi appearing for the Airport handling companies (DIAL/MIAL) contested the challenge to maintainability of the present appeal by AERA. It was mainly argued that that since the Govt of India had entered into private agreements with the respondents, the issue pertains to contractual obligations before the coming of the AERA Act 2008. The AERA cannot file an appeal in 'public interest' and was not a regulator to determine GHS and CHS tariffs. 

ASG N Venkataraman appearing for AERA countered this by relying upon the statement of objectives of the 2008 Act. He stressed that as per the objectives of the 2008 Act, AERA has a duty towards public in creating level playing field, fostering healthy competition, encouraging investments and regulating tariffs. He underlined that well-being of the passengers was part of the larger public interest.

What Are The Facts Leading Up To The Present Challenge?

Delhi International Airport Limited (DIAL) had entered into a contract with Airport Authority of India (AAI) for Operation, Management and Development (OMDA) of Indira Gandhi International Airport (IGI) in 2006. Another agreement was entered into with the Union in April 2006- 'State Support Agreement' (SSA) and by virtue of this agreement, Government of India has laid down principles for tariff fixation. Similar agreements were entered with the Mumbai International Airport Limited (MIAL).

As per the OMDA, DIAL and its concessionaires were free to fix charges and float a contract for non-aeronautical services. However, as per two communications issued on 17.03.2021 and 18.05.2021 by AERA, if the Ground Handling Services (GHS) and Cargo Handling Services (CHS) are done by this appellant then it is Non-Aeronautical Services and the charges collected thereunder are known as Non-Aeronautical charges, whereas, if the aforesaid two services - GHS and CHS, if done through the contractor then these services are Aeronautical Services and the charges collected or the revenue generated by these two services are known as Aeronautical Charges.

The impugned order dated January 13, 2023 by the Telecom Disputes Settlement and Appellate Tribunal held that GHS and CHS were to be construed as Non-Aeronautical services irrespective of them

being provided by DIAL/MIAL or third party concessionaires/Independent Service Providers (ISPs).

It further stuck down the impugned communications by AERA observing :

"Consequently, the said communications dated 17.03.2021 and 18.05.2021 are bad in law and thus cannot be sustained. We hold that AERA has no jurisdiction to determine tariff of Cargo Handling Services & Ground Handling Services provided by MIAL or third-party concessionaires/ Independent Service Providers (ISPs). MIAL shall be entitled to determine the tariff/charges for Cargo Handling Services & Ground Handling Services provided at Mumbai Airport by itself or through third party concessionaires/Independent Service Providers (ISPs)."

The AERA however took umbrage to the subsequently enacted AERA Act of 2008 under S.13(1)(a) which states that the AERA shall have the authority to determine the tariff for 'aeronautical services' taking into consideration. AERA contended that GHS and CHS are to be considered as aeronautical services.

The tribunal rejected the above contention by observing that "AERA Act, 2008 fully respects and recognizes the concession offered by the Central Government by the virtue of agreements (like OMDA & SSA). Under the OMDA & SSA, once the CHS & GHS are non-aeronautical even after AERA Act, 2008 came into force, appellants have power to determine the charges for CHS & GHS."

Referring to S. 13(1)(a)(vi), the Tribunal held that the 2008 Act does not dissolve the earlier concessions granted by the Central Government " in any agreement or memorandum of understanding or otherwise" . In addition, it reiterated that GHS and CHS were non-aeronautical services and would be outside the scope of S.13.

"In fact, by virtue of this subsequently enacted law (i.e- AERA Act, 2008) maintains the concession given by the Central Government through the agreements as per Sec.13(1)(a)(vi) of AERA Act, 2008 therefore CHS & GHS which are Non-Aeronautical Services as per concession offered by Central Government by virtue of Schedule 6 of the OMDA remains as it is."

"The AERA Act,2008 was never intended to usurp the earlier legally binding contractual agreements, which were entered into AAI & DIAL through OMDA & supported by Central Government through SSA, hence, the concession accorded by the Central Government has to be taken into account by AERA, which is clearly a duty incumbent upon it as per the contents of Section 13 (1) (a) (vi) of AERA Act, 2008."

Case Details : AIRPORTS ECONOMIC REGULATORY AUTHORITY OF INDIA vs. DELHI INTERNATIONAL AIRPORT LTD.| C.A. No. 003098 - 003099 / 2023 and connected matters