Safiya Malik

The Delhi High Court has dismissed a petition filed by the Airports Authority of India (AAI) under Section 34 of the Arbitration and Conciliation Act, 1996, challenging an arbitral award dated December 21, 2023, which was corrected under Section 33 on January 16, 2024. The dispute concerned the applicability of the force majeure clause in the Operation, Management, and Development Agreement (OMDA) between AAI and Delhi International Airport Limited (DIAL) regarding the Monthly Annual Fee (MAF) during the COVID-19 pandemic.

Justice Dinesh Kumar Sharma, presiding over the case, examined AAI’s claims and dismissed the petition. The judgment states: "The Court can interfere under Section 34 of the Act on the limited grounds provided therein. The award can only be interfered with if the Court reaches the conclusion that the perversity of the award goes to the root of the matter and there is no possibility of alternative interpretation which may sustain the arbitral award."

AAI, a statutory body established under the Airports Authority of India Act, 1994, entered into OMDA with DIAL, a joint venture responsible for operating, managing, and developing Indira Gandhi International Airport. ICICI Bank was also a party to the agreements as an escrow agent.

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DIAL invoked the force majeure clause in March 2020 due to the COVID-19 pandemic, citing its impact on airport operations and revenue. By an email dated March 19, 2020, DIAL requested AAI not to instruct the escrow bank to deduct MAF for April 2020 and proposed a revised business plan for the financial year 2020-21. AAI acknowledged the request and granted a three-month deferral of MAF payments (April–June 2020) on a "without prejudice" basis. DIAL subsequently issued a formal notice on March 31, 2020, invoking force majeure under Article 16 of OMDA and seeking a waiver of MAF payments. AAI requested a board resolution confirming the invocation, which DIAL did not provide.

DIAL continued making MAF payments while seeking further relaxations, including the ability to pay based on actual cash receipts rather than projected revenue. AAI rejected these proposals and maintained that MAF payments were contractually required under OMDA.

In September 2020, DIAL invoked the dispute resolution mechanism under Article 15.1.1 of OMDA. After AAI rejected its force majeure claim in November 2020, the matter proceeded to arbitration. The tribunal was constituted in January 2021 and framed key issues, including whether DIAL was entitled to relief under the force majeure clause and whether interest or costs should be awarded.

DIAL argued that COVID-19 materially impaired its ability to perform obligations under OMDA, making it unable to pay MAF. AAI contended that force majeure did not apply to financial obligations and that DIAL’s continued payment of MAF negated any claim of financial inability.

The arbitral tribunal found that COVID-19 significantly impacted DIAL’s ability to perform under OMDA. It held that the phrase "suspend or excuse" in Article 16.1.1 entitled DIAL to be excused from MAF payments from March 19, 2020, to February 28, 2022. The tribunal also directed an extension of OMDA’s term for a period equivalent to the force majeure period. AAI challenged the award on multiple grounds, including:

• The tribunal’s interpretation disregarded Article 16.1.1’s requirement to demonstrate an inability to perform obligations.

• The extension of OMDA’s term had no contractual basis.

• The tribunal’s findings contradicted legal precedents such as Energy Watchdog v. CERC.

• The award was patently illegal and contrary to public policy.

The Delhi High Court reviewed these arguments and stated: "It is no longer res integra that the Court while exercising the jurisdiction under Section 34 cannot clothe itself with the appellate jurisdiction. The Court is bound to respect the finality of the arbitral award."

AAI argued that the tribunal had rewritten the contract by nullifying Articles 16.1.1 and 16.1.2(e) of OMDA, which required proof of an inability to perform obligations. The judgment records that AAI contended DIAL failed to demonstrate such an inability, as evidenced by its continued MAF payments. The court considered these submissions but observed: "The perusal of the award makes it clear that it cannot be said that the view taken by the Arbitrator is not a possible and plausible view. It is also a settled proposition that even if the alternative view is available, the Court cannot substitute its own."

The court also examined the extension of OMDA’s term and AAI’s assertion that the tribunal lacked the authority to order such relief. The judgment states: "The contentions of AAI regarding the interpretation of Article 16, if accepted, will be too hyper-technical. While making the interpretation of a commercial contract, the adjudicator has to interpret the same as a facilitator and not as an obstructer."

Regarding force majeure, the judgment records that the tribunal considered COVID-19’s financial impact on DIAL and stated: "The tribunal, upon reviewing the financial evidence, found that DIAL’s revenue generation was severely affected, impacting its ability to meet contractual obligations." The court stated that there was no legal basis to overturn this finding.

AAI also argued that the tribunal’s award contradicted OMDA’s financial structure, which prioritized MAF payments over operational expenses. AAI contended that the tribunal had altered the agreed financial arrangement. The judgment addresses this by stating: "The tribunal has taken a holistic view of the OMDA’s provisions, trade usage, and the financial realities of the pandemic’s impact."

The court dismissed AAI’s argument that the tribunal had ignored evidence. The judgment states: "The findings of the tribunal are based on evidence presented and do not suffer from such perversity that would warrant interference under Section 34." It further recorded that AAI’s claim that force majeure did not apply to financial obligations was not a basis for intervention.

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The High Court concluded: "In view of the above, the Court considers that there is no illegality or perversity in the impugned award passed by learned AT. Hence, the present petition along with pending applications, if any, stands dismissed."

Advocates Representing the Parties

• For AAI: Tushar Mehta, Solicitor General of India,  Raghavendra P. Shankar,Additional Solicitor General Karan Lahiri, Prateek Arora, Neelabh Bist, Rishieka Ray, and Pallavi Misra, Advocates.

• For DIAL: Parag Tripathi and Raj Shekhar Rao, Senior Advocates,  Rishi Agarwala, Apoorv P. Tripathi, Dheeresh Kumar Dwivedi, Manu Krishnan, Daksh Arora, and Nikhil, Advocates.

Case Title: Airports Authority of India v. Delhi International Airport Limited & Anr.

Neutral Citation: 2025: DHC: 1523

Case Number: O.M.P. (COMM) 186/2024

Bench: Justice Dinesh Kumar Sharma

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