SC upholds AERA powers, setback for GMR and Adani Groups

22 Oct 2024 CW Team

Delhi International Airport Limited (DIAL), led by GMR, and Mumbai International Airport Limited, under Adani Enterprises, challenged AERA’s tariff-setting authority for non-aeronautical services. They argued that AERA’s tariff determination is an adjudicatory function and raised doubts about its jurisdiction to regulate non-aeronautical services.

The Supreme Court rejected this argument, clarifying that even administrative actions, such as AERA’s tariff regulation, require adherence to principles of natural justice, without necessarily being adjudicatory. A bench comprising Chief Justice of India DY Chandrachud, and Justices JB Pardiwala and Manoj Misra emphasised that AERA’s primary duty is to ensure economically viable airport operations without compromising public interest.

The court noted that AERA, acting as a regulator, must factor in multiple considerations to determine and amend tariffs as required in the public interest. It ruled that AERA is a necessary party in appeals against its tariff orders and must be included as a respondent in such cases before TDSAT.

The conflict arose from a 2021 AERA order, which classified ground and cargo handling services as non-aeronautical when directly provided by DIAL but as aeronautical when managed through contractors. DIAL contested this order before TDSAT, which ruled in January 2023 that both services are non-aeronautical regardless of the provider. TDSAT also held that AERA lacked the jurisdiction to regulate tariffs for these services, citing existing agreements under which airport operators could set charges for non-aeronautical services.

However, AERA argued that its 2008 Act empowers it to regulate these services, even though TDSAT ruled otherwise. With the Supreme Court’s latest decision, AERA’s regulatory authority is reaffirmed, marking a significant shift in the regulatory landscape for India’s airports.

(Business Standard)

The Supreme Court (SC) has upheld the authority of the Airports Economic Regulatory Authority (AERA) to set tariffs for non-aeronautical services such as ground handling and cargo handling, dealing a blow to the GMR and Adani Groups. This decision overturns a ruling by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) and orders that the matter proceed for hearing on merit. Delhi International Airport Limited (DIAL), led by GMR, and Mumbai International Airport Limited, under Adani Enterprises, challenged AERA’s tariff-setting authority for non-aeronautical services. They argued that AERA’s tariff determination is an adjudicatory function and raised doubts about its jurisdiction to regulate non-aeronautical services. The Supreme Court rejected this argument, clarifying that even administrative actions, such as AERA’s tariff regulation, require adherence to principles of natural justice, without necessarily being adjudicatory. A bench comprising Chief Justice of India DY Chandrachud, and Justices JB Pardiwala and Manoj Misra emphasised that AERA’s primary duty is to ensure economically viable airport operations without compromising public interest. The court noted that AERA, acting as a regulator, must factor in multiple considerations to determine and amend tariffs as required in the public interest. It ruled that AERA is a necessary party in appeals against its tariff orders and must be included as a respondent in such cases before TDSAT. The conflict arose from a 2021 AERA order, which classified ground and cargo handling services as non-aeronautical when directly provided by DIAL but as aeronautical when managed through contractors. DIAL contested this order before TDSAT, which ruled in January 2023 that both services are non-aeronautical regardless of the provider. TDSAT also held that AERA lacked the jurisdiction to regulate tariffs for these services, citing existing agreements under which airport operators could set charges for non-aeronautical services. However, AERA argued that its 2008 Act empowers it to regulate these services, even though TDSAT ruled otherwise. With the Supreme Court’s latest decision, AERA’s regulatory authority is reaffirmed, marking a significant shift in the regulatory landscape for India’s airports. (Business Standard)

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