2011 (4) TMI 1275 - SC - Indian Laws

Supreme Court: Lessees cannot collect airport development fees. Airports Authority & AERA play key roles.

Consumer Online Foundation, etc. Versus Union of India & Ors., etc.

The Supreme Court held that lessees of airports cannot levy and collect development fees from passengers under the Airports Authority of India Act, 1994. ... Validity of levy of development fees on the embarking passengers by the lessees of the Airports Authority of India at the Indira Gandhi International Airport, New Delhi and the Chhatrapati Shivaji International Airport, Mumbai - Held that:- Development fees could not be levied and collected by the lessees of the two major airports, namely, DIAL and MIAL, on the authority of the two letters dated 09.02.2009 and 27.02.2009 of the Central Government from the embarking passengers under the provisions of Section 22A of the 1994 Act. We declare that with effect from 01.01.2009, no development fee could be levied or collected from the embarking passengers at major airports under Section 22A of the 1994 Act, unless the Airports Economic Regulatory Authority determines the rates of such development fee. We direct that MIAL will henceforth not levy and collect any development fee at the major airport at Mumbai until an appropriate order is passed by the Airports Economic Regulatory Authority under Section 22A of the 1994 Act as amended by the 2008 Act. We direct that DIAL and MIAL will account to the Airports Authority the development fees collected pursuant to the two letters dated 09.02.2009 and 27.02.2009 of the Central Government and the Airports Authority will ensure that the development fees levied and collected by DIAL and MIAL have been utilized for the purposes mentioned in clause (a) of Section 22A of the 1994 Act. We further direct that henceforth, any development fees that may be levied and collected by DIAL and MIAL under the authority of the orders passed by the Airports Economic Regulatory Authority under Section 22A of the 1994 Act as amended by the 2008 Act shall be credited to the Airports Authority and will be utilized for the purposes mentioned in clauses (a), (b) or (c) of Section 22A of the 1994 Act in the manner to be prescribed by the rules which may be made as early as possible. Nothing stated herein shall come in the way of any aggrieved person challenging the public notice dated 23.04.2010 issued by the Airports Economic Regulatory Authority in accordance with law. The impugned judgment of the High Court is set aside and the Writ Petitions filed by the appellants are allowed with these directions. Issues Involved:1. Validity of levy and collection of development fees by lessees of the Airports Authority of India.2. Interpretation of Sections 12A and 22A of the Airports Authority of India Act, 1994.3. Role of the Airports Economic Regulatory Authority under the Airports Economic Regulatory Authority of India Act, 2008.4. Authority of the Central Government to approve and determine the rate of development fees.5. Utilization of development fees collected by lessees.6. Refund of development fees collected by lessees.Issue-wise Detailed Analysis:1. Validity of Levy and Collection of Development Fees by Lessees:The Supreme Court concluded that the lessees of the airports, DIAL and MIAL, do not have the power to levy and collect development fees from embarking passengers under Section 22A of the Airports Authority of India Act, 1994. The Court held that the functions of the Airports Authority, particularly those related to the establishment of new airports or assisting in the establishment of private airports, cannot be assigned to lessees. Therefore, the lessees cannot have the power to levy and collect development fees.2. Interpretation of Sections 12A and 22A of the Airports Authority of India Act, 1994:The Court interpreted Section 12A to mean that the Airports Authority can lease out the premises of an airport to carry out some of its functions but not all, particularly not the functions related to establishing new airports or assisting in the establishment of private airports. Section 22A was interpreted to mean that the development fees levied and collected must be for specific purposes such as funding the upgradation, expansion, or development of the airport, and must be regulated and utilized in the manner prescribed by the rules.3. Role of the Airports Economic Regulatory Authority under the Airports Economic Regulatory Authority of India Act, 2008:The Court emphasized that after the amendment of Section 22A by the Airports Economic Regulatory Authority of India Act, 2008, the rate of development fees to be levied and collected at major airports must be determined by the Airports Economic Regulatory Authority. The Regulatory Authority has the jurisdiction to determine the amount of development fees and has already issued a public notice permitting DIAL to continue to levy the fees on an ad hoc basis pending final determination.4. Authority of the Central Government to Approve and Determine the Rate of Development Fees:The Court held that the Central Government only has the power to grant previous approval for the levy and collection of development fees but does not have the authority to fix the rate at which the fees are to be levied and collected. The rates fixed by the Central Government in the letters dated 09.02.2009 and 27.02.2009 were deemed ultra vires the 1994 Act.5. Utilization of Development Fees Collected by Lessees:The Court directed that DIAL and MIAL must account to the Airports Authority for the development fees collected and ensure that the fees have been utilized for the purposes mentioned in clause (a) of Section 22A of the 1994 Act. The development fees must be credited to the Airports Authority and utilized in the manner prescribed by the rules.6. Refund of Development Fees Collected by Lessees:The Court decided not to order a refund of the development fees collected by DIAL and MIAL due to the practical difficulties in identifying and tracing the embarking passengers who paid the fees. Instead, the Court directed that the collected fees be accounted for and utilized for the specified purposes.Reliefs:1. Development fees could not be levied and collected by the lessees on the authority of the letters from the Central Government.2. No development fees can be levied or collected at major airports without the determination of rates by the Airports Economic Regulatory Authority.3. MIAL is restrained from levying and collecting development fees at the Mumbai airport until an appropriate order is passed by the Regulatory Authority.4. DIAL and MIAL must account for the development fees collected and ensure their utilization for the specified purposes.5. Future development fees must be credited to the Airports Authority and utilized according to the prescribed rules.6. The public notice dated 23.04.2010 by the Regulatory Authority remains unchallenged and valid.7. The High Court's judgment is set aside, and the writ petitions are allowed with the specified directions.8. No order as to costs.9. I.A. No.3 for impleadment stands rejected.