Supreme Court upholds AERA powers in setback to GMR, Adani groups

The court has overturned the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) order and listed the matter to be heard on merits

The Supreme Court (SC) on Friday upheld the powers of the Airports Economic Regulatory Authority (AERA) to fix tariffs for certain non-aeronautical services such as ground handling services and cargo handling services, in a setback to GMR and Adani Groups.
 

The apex court overturned the Telecom Disputes Settlement and Appellate Tribunal order and listed the matter be heard on merit.

GMR-led Delhi International Airport Limited and Adani Enterprises-led Mumbai International Airport Limited argued that AERA’s determination of tariffs for aeronautical services is an adjudicatory function, raising concerns on whether it has the power to fix tariffs for non-aeronautical services.

The court, however, rejected this argument, saying in itself is not sufficient to conclude that the AERA’s determination of tariffs for aeronautical services is an adjudicatory function.

“In the previous section, we have in detail explained that principles of natural justice are not just a requirement for ‘judicial’ actions. They are required to be complied with even in the exercise of administrative actions. Thus, the requirement of the principles of natural justice does not render the determination an adjudication,” the Bench comprising Chief Justice of India (CJI) DY Chandrachud and Justices JB Pardiwala and Manoj Misra said.

The court said AERA has a statutory duty to regulate tariff upon a consideration of multiple factors to ensure that airports are run in an economically viable manner without compromising on the interests of the public.

“This statutory role is evident, inter alia, from the factors that AERA must consider while determining tariff and the power to amend tariff from time to time in public interest as discussed above,” the court said.

It also said that when AERA determines the tariff for aeronautical services in terms of Section 13(1)(a) of the AERA Act, it is acting as a regulator and an interested party.

“It (AERA) is interested not in a personal capacity. Its interest lies in ensuring that the concerns of public interest which animate the statute and the performance of its functions by AERA are duly preserved. Thus, AERA is a necessary party in the appeal against its tariff order before TDSAT and it must be impleaded as a respondent,” the Bench said.

Under DIAL's agreement with the government, the airport operator can fix charges for non-aeronautical services not directly related to aircraft or flight operations.
 

In 2021, AERA issued orders stating that ground handling and cargo handling would be classified as non-aeronautical services if provided directly by DIAL but as aeronautical services if handled through contractors. DIAL challenged these orders before TDSAT, which, on January 13, 2023, ruled that both services are non-aeronautical, irrespective of the provider.

TDSAT said AERA lacked jurisdiction for regulating tariffs for ground-handling and cargo-handling services.

AERA argued that its authority under the AERA Act of 2008 allowed it to regulate these services but the TDSAT said the Act respects existing agreements, and both services remain non-aeronautical and thus outside the powers of AERA.

In 2017, the Airports Economic Regulatory Authority Appellate Tribunal was merged with TDSAT. 
 

Business Standard reached out to DIAL and MIAL but did not receive a response by press time.