Delhi airport co can take advance for commercial space: AG

The Attorney General, the government's chief legal advisor, has said that the GMR Group-promoted Delhi International Airport Ltd (DIAL) has the right to raise deposits from bidders of commercial space to part-finance the modernisation of the capital's airport, estimated to cost Rs 8,900 crore.

In his report to the law ministry, from which the civil aviation ministry has sought an opinion on DIAL's plan to take advances, Attorney General Milon K Banerji is understood to have said: "I am of the opinion that DIAL has a legitimate right to raise such deposits and it should not be seen as any substitution of revenues or a foul play on the part of DIAL."

"There is no impediment to DIAL accepting refundable security deposits from developers as part of means to finance its obligations," he said.

The observation could give a boost to DIAL, which is looking to achieve financial closure of the project for which it has proposed to raise Rs 3,144 crore by way of trade advances and deposits.

DIAL had proposed to take 8 to 10 per cent advance lease rental at the rate of Rs 50 crore per acre for 45 acres of commercial space to mop up Rs 2,250 crore.

The Airports Authority of India (AAI) had contested the demand for deposits, saying it would cut into DIAL's revenue.

The GMR-led consortium holds 74 per cent in DIAL and AAI the remaining 26 per cent.

Officials of the civil aviation ministry could not be contacted for comment, but a DIAL spokesperson said the firm was unaware of what had passed between the civil aviation and law ministries.

"We are, however, hoping that the matter will be expedited at the earliest," the spokesperson added.

DIAL has received bids from about 40 aspirants, including national and global hospitality players and commercial developers, for a pie in the project, but the promoter was unable to take a call in view of the resistance from the aviation ministry.

On the contentious issue of whether the deposits raised by DIAL should be accounted for as revenues and shared with AAI, the Attorney General said the deposits were not in the nature of revenue as defined in the Operation, Management and Development Agreement.

Therefore, "the amount of deposits is not liable to be shared between DIAL and AAI," the report said. "Such deposits are capital receipts and would be a liability of DIAL."