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AIRPORTS AUTHORITY OF INDIA vs DELHI INTERNATIONAL AIRPORT LIMITED & ANR.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI
RESERVED ON – 23.01.2025
% PRONOUNCED ON –07.03.2025
+ O.M.P. (COMM) 186/2024
AIRPORTS AUTHORITY OF INDIA …..Petitioner
Through: Mr. Tushar Mehta, Learned SGI with Mr. Raghavendra P Shankar, learned ASG with Mr. Karan Lahiri, Mr. Prateek Arora, Mr. Neelabh Bist, Ms. Rishieka Ray, Ms. Pallavi Misra, Advocates
versus

DELHI INTERNATIONAL AIRPORT
LIMITED & ANR. …..Respondents
Through: Mr. Parag Tripathi, Mr. Raj Shekhar Rao, Sr. Advs. with Mr. Rishi Agarwala, Mr. Apoorv P. Tripathi, Mr. Dheeresh Kumar Dwivedi, Mr. Manu Krishnan, Mr. Daksh Arora, Mr. Nikhil, Advocates for DIAL.
CORAM:
HON’BLE MR. JUSTICE DINESH KUMAR SHARMA
J U D G M E N T
S. No
Particulars
Page Nos.
A.
Preface
2
B.
Factual Matrix
3-17
C.
Submissions on behalf of Petitioner
17-32
D.
Submissions on behalf of the DIAL
32-44
E.
Finding and Analysis
45-86

DINESH KUMAR SHARMA, J.:

A. PREFACE
1. The present petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as ‘Act’) challenging the impugned arbitral award dated 21.12.2023 as corrected under Section 33 of the Act vide order dated 16.01.2024.
2. Airports Authority of India (hereinafter referred to ‘the Petitioner’ and/or ‘AAI’), is a statutory authority established under the Airports Authority of India Act, 1994, responsible for maintaining and managing civil aviation infrastructure in India.
3. Delhi International Airport Ltd. (hereinafter referred to as ‘Respondent No. 1’ and/or ‘DIAL’), is a joint venture entity entrusted with the operation, management, and development of Indira Gandhi International Airport, Mumbai (‘IGIA’) under an Operation, Management and Development Agreement (hereinafter referred to as ‘OMDA’) dated 04.04.2006 executed between AAI and DIAL.
4. ICICI Bank limited (hereinafter referred to as ‘ICICI’ or ‘Respondent No.2’) is a private sector bank and the designated escrow agent under the Escrow Agreement executed as part of the financial arrangement governing the OMDA. ICICI has been arrayed as a pro forma party in these proceedings

B. FACTUAL MATRIX
5. Briefly stated the facts of the case as mentioned in the petition are that in March 2020, upon the outbreak of the COVID-19 pandemic and subsequent governmental restrictions aviation operations were severely disrupted. Consequently, DIAL sought relief under Article 16 of the OMDA, citing Force Majeure vide email dated March 19, 2020 and requested AAI to refrain from instructing the escrow bank regarding the Monthly Annual Fee (‘MAF’) for April 2020, contending that the existing business plan was no longer applicable. DIAL committed to submitting a provisional business plan for FY 2020-21 by March 31, 2020, taking into account the economic impact of the pandemic. The said request was acknowledged by AAI on March 23, 2020. Consequently, DIAL submitted an interim business plan for April 2020 on March 27, 2020, and sought a three-month waiver upto June, 2020 on MAF payments due to the nationwide lockdown.
6. Thereafter, on March 31, 2020, DIAL formally invoked Force Majeure, asserting that the outbreak of COVID-19 constituted an unforeseeable event under Article 16 of the OMDA, significantly impacting business operations and revenue. DIAL sought a waiver of MAF for April to June 2020 and indicated that its Business Plan for FY 2020-21 would only be finalized after obtaining Board approval by June or mid-July 2020. In response, AAI, through an email dated April 2, 2020, requested a board resolution confirming the invocation of Force Majeure. DIAL, on April 3, 2020, informed AAI that it was in the process of securing Board approval and requested permission for the Escrow Bank to retain funds equivalent to MAF for April in the AAI Fee Account until approval was obtained.
7. Despite disputing DIAL’s entitlement to invoke Force Majeure under Article 16.1.1, AAI, acting in good faith, accepted DIAL’s request and granted a three-month deferral of MAF payments from April to June 2020 on a “without prejudice” basis. Under this arrangement, DIAL was required to pay the cumulative MAF for April, May, and June 2020, computed on actual revenues, by July 15, 2020, without incurring interest under Article 11.1.2.2. Additionally, AAI extended the submission deadline for the business plan for FY 2020-21 from March 31, 2020 to June 30, 2020. However, DIAL did not provide the required board resolution confirming the invocation of Force Majeure and continued to pay the MAF for April, May, and June 2020.
8. Through a letter dated April 16, 2020, DIAL sought adjustments for an alleged excess Annual Fee payment from the previous financial year. In a response dated April 28, 2020, AAI informed that any adjustments would be made as per the OMDA after verification by the Independent Auditor. AAI also reminded DIAL that the Board resolution approving the invocation of Force Majeure had not yet been submitted and that DIAL, per its own proposal, was continuing MAF payments until such approval was granted.
9. On May 1, 2020, DIAL reaffirmed its commitment to paying MAF and proposed that the MAF for May 2020 be adjusted against the alleged excess AF payments from the previous financial year. In response, AAI, via a letter dated May 18, 2020, reiterated that adjustments would only be considered once DIAL’s statutory auditor and board approved its accounts, which would then be submitted for independent verification. Subsequently, on May 27, 2020, DIAL requested AAI to permit MAF payments for FY 2020-21 to be based on cash receipts rather than the accrual basis, citing the adverse impact of COVID-19 on its revenue and cash flow.
10. Building upon this, in an email dated June 11, 2020, DIAL informed AAI of its intention to seek Board approval for the following: (i) deferment of the preparation and approval of the Annual Operating Plan (AOP) until business operations resumed to a reasonable level; (ii) continued submission of monthly revenue projections until AOP approval; (iii) a request for AAI to defer the payment of Revenue Share to support DIAL’s cash flow; and (iv) an alternative arrangement allowing MAF payments on a cash-received basis rather than advance payments based on estimated revenues. DIAL sought this relief as a one-time measure for the remainder of FY 2020-21.
11. The aforesaid proposals were approved by the Board of DIAL on June 17, 2020 and consequently on June 24, 2020, DIAL formally requested deferment of MAF payments on a cash basis, submitting Board meeting minutes and a document titled “Detailed Note on Relaxation in Business Plan Submission and Payment of MAF.” This note referenced various OMDA provisions and COVID-19’s impact, arguing for special consideration under Article 20.3.1. AAI, in a response dated June 25, 2020, rejected DIAL’s request and reiterated that MAF payments must continue as per the approved plan from July 2020 onwards and called upon DIAL to submit the Business plan for financial year 2020- 2021 by 30.06.2020.
12. On June 30, 2020, DIAL submitted its projected financials for July 2020–March 2021 and requested an interest-free deferral of MAF payments for Q2 (July–September 2020). AAI, in a letter dated August 7, 2020, rejected this request and directed DIAL to comply with its OMDA obligations. Subsequently, DIAL formally sought to be excused from MAF payments via a letter dated August 27, 2020, submitting a Board resolution dated August 20, 2020, which permitted DIAL to request AAI to apply Force Majeure from April 1, 2020, and suspend MAF payments. Nonetheless, remittance of MAF continued as per the usual practice by DIAL.
13. Subsequently, DIAL invoked Article 15.1.1 of the OMDA vide notice on September 18, 2020, seeking resolution within 60 days, failing which the notice stated that DIAL would initiate arbitration under Clause 15.2. AAI rejected DIAL’s Force Majeure claim on November 23, 2020, stating that DIAL had accepted AAI’s position without protest for months and had failed to demonstrate an inability to perform its obligations.
14. Learned AT was constituted on 13.01.2021 and vide Procedural Order dated 23.08.2021, the learned AT fixed the following Issues/Points for Determination:
“(i)Whether the Claimant is entitled to the claims/reliefs raised in the present proceedings? (OPC)
(ii) Whether either/both Parties are entitled to interest on their respective claims, and if so, for which period(s) and at what rate? (Onus on parties)
(iii) Whether either/both Parties are entitled to costs on their respective claims, and if so, for what sums?(Onus on parties)”
15. During the pendency of the arbitral proceedings, the Delhi High Court partially allowed a petition filed by Mumbai International Airport Authority (MIAL) under Section 9 of the Act and consequently, DIAL, through a letter dated 02.12.2020, contended that the directions contained in the aforementioned judgment constituted decisions in rem and that the AAI was bound to apply these directions to DIAL as well.
16. On 05.12.2020, DIAL also filed an application under Section 9 of the Act, OMP (I) (COMM.) No. 409 of 2020, seeking a declaration that, pending the hearing and final disposal of the arbitration proceedings, as well as the making and implementation of the arbitral award, its obligation to pay the AF under the OMDA should be excused. On the same day, AAI also filed an appeal, bearing FAO (OS) (COMM.) 168/2020, under Section 37 of the Act, challenging the order dated 27.11.2020 passed by the learned Single Judge in OMP (I) (COMM.) 174 of 2020 titled ‘Mumbai International Airport Limited v. Airports Authority of India & Anr.’ This appeal was disposed of by an order dated 14.01.2021. The Division Bench of the Delhi High Court, while deciding the appeal, issued directions that partially modified the directions issued by the learned Single Judge in its order dated 27.11.2020 in MIAL’s case.
17. Meanwhile, on 05.01.2021, in OMP (I) (COMM.) No. 409 of 2020, the learned Single Judge of the Delhi High Court issued an order staying the transfer of funds from the Proceeds Account to the AAI Fee Account until further orders. The court also permitted DIAL to utilize the amounts in the Proceeds Account for the operation of the IGI Airport and related activities. Despite observing that there was “effectively no distinction whatsoever between the present case and MIAL’s case,” the learned Single Judge did not extend the same protection to AAI’s share as had been granted in MIAL’s case. Consequently, DIAL stopped making payments of the Annual Fee to AAI from January 2021 onwards. On 05.02.2021, AAI filed an appeal, FAO (OS) (COMM.) 22 of 2021, challenging the learned Single Judge’s order dated 05.01.2021 in OMP (I) (COMM.) 409 of 2020 (DIAL’s Section 9 Petition).
18. While the matter rested thus, the parties entered into a Settlement Agreement on 25.04.2022 governing the interim arrangement for the payment of the AF. Without prejudice to their respective rights and contentions, and subject to the final outcome of the arbitration, the parties agreed that an AF/MAF at the rate of 45.99% of the projected revenue of the DIAL for the financial year 2022-23 would be deposited from the Proceeds Account into the AAI Fee Account, in accordance with the OMDA and the Escrow Agreement. It was agreed that DIAL would withdraw its application under Section 9 of the Act filed before the learned Single Judge of the Delhi High Court in OMP (I) (COMM.) 409 of 2020 and AAI would withdraw its appeal under Section 37 of the Act filed before the Division Bench of the Delhi High Court. It was also agreed that within five days of compliance with the above provisions, DIAL would be liable to pay the Annual Fee for April 2022, with subsequent monthly payments to be made in accordance with the OMDA and the Escrow Agreement. The Settlement Agreement superseded the ad-interim order dated 05.01.2021, passed by the Delhi High Court and pursuant to the same DIAL resumed MAF payments from April 2022 onwards, and this arrangement has continued since.
19. DIAL filed its Statement of Claim before the learned Arbitral Tribunal (AT) on 25.03.2021. In response, AAI filed its Counterclaims along with its Statement of Defence to DIAL’s claims on 01.07.2021. Subsequently, on 31.07.2021, DIAL submitted its Statement of Defence to AAI’s Counterclaims.
20. Final arguments were heard, and the learned AT reserved its Award on 21.03.2023. With the consent of both parties, the AT’s mandate was extended for six months from 28.02.2023, setting its expiration date at 31.08.2023. Thereafter, the Court granted a further three-month extension of the mandate, commencing from 01.09.2023, followed by an additional three-month extension starting from 01.12.2023.
21. The Impugned Award was passed on 21.12.2023 by the learned AT, which was pronounced on 06.01.2024 and on 16.01.2024, the learned AT, suo motu, passed an Order under Section 33 of the Act, correcting “stenographical errors” in the Award dated 21.12.2023.
22. Learned AT granted the claims of DIAL, while rejecting all the counter-claims of AAI. In the above background, AAI has sought to assail the Impugned Arbitral Award on the grounds that it is patently illegal and contrary to public policy, warranting its setting aside under Section 34 of the Act. The grounds for challenge as stated in the petition are as follows:
a. Learned AT ignored vital evidence on record, including but not limited to relevant documentary and oral evidence particularly the extensive evidence demonstrating DIAL’s ability to pay the AF, relying on DIAL’s own documents and oral evidence. The learned AT disregarded the entirety of this evidence, which forms no part of the impugned award.
b. Learned AT has not only rewritten the contract, but has also rendered certain contractual provisions ineffective. The impugned award nullifies Articles 16.1.1 and 16.1.2(e) of the OMDA by removing the requirement of demonstrating ‘inability to perform obligations’ to claim the benefit of Force Majeure. Furthermore, learned AT has not only failed to examine whether the notice was issued in compliance with the provisions of OMDA, but instead has altogether deleted the requirement of a notice under Article 16.1.5(a) of the OMDA. The award effectively deletes this provision by treating the occurrence of a pandemic and government recognition of the same as co-equal to the issuance of a notice by DIAL under Article 16.1.5(a) of the OMDA.
c. The interpretation of the contract contained in the impugned Award is not even a possible view of the contractual terms, which are explicit, unambiguous and irreconcilable. Learned AT rejected the submission of AAI that since AF is calculated as a percentage of revenue, it remains proportionate to revenue and is always capable of being paid and held that that it would be too simplistic to require DIAL to pay 45.99% of its earnings without considering its obligation to ensure smooth airport operations. It has been stated that the said interpretation of AAI was based on the plain and literal reading of Articles 11 and 16 of the OMDA and the decision of the learned AT is in the teeth of contractual provisions. Further, the learned AT’s finding that the occurrence of a Force Majeure event is indisputable contradicts the express terms of the contract and disregards AAI’s contention that the Covid-19 pandemic alone does not justify relief for DIAL unless all requirements under Chapter XVI are met. It has been stated that while the pandemic qualifies as a physical event under Article 16.1.3(vii), it can only constitute Force Majeure if it satisfies the conditions set forth in Articles 16.1.1 and 16.1.2. DIAL failed to demonstrate its inability to perform a specific obligation, a key requirement under these provisions. By ignoring these contractual conditions and treating the pandemic itself as Force Majeure, the learned AT arrived at a conclusion that no fair or reasonable person could have reached.
d. Learned AT has violated the letter and spirit of Section 28(3) of the Act and effectively rewritten Article 11 which required DIAL to pay 45.99% of its ‘Revenue’ to AAI. The definition of ‘Revenue’ and the language of Article 11 is clear and unambiguous and provides that payment of AF was not contingent on whether DIAL generated profits or incurred losses. Learned AT has erroneously converted the revenue-sharing mechanism contemplated under the OMDA into a profit-sharing contract by holding that, during the Force Majeure period, revenue receipts would first be used for running the airport, and only the surplus, if any, would be shared between DIAL and AAI in the contractual ratio
e. Learned AT has rewritten Chapters XVI and XVIII of the OMDA by allowing an extension of the OMDA term for a period commensurate to 19.03.2020 till 28.02.2022. Even assuming, on a demurrer, that DIAL was entitled to the benefit of the Force Majeure clause, the relief of extension of the contract term finds no mention in the Force Majeure clause itself. There is no contractual basis whatsoever for extending the concession period, and the award provides no reasoning for granting such an extension.
f. The Impugned Award contravenes Section 31(3) of the Act as it fails to provide reasoning for its findings and leaves key issues unresolved. A crucial question—whether DIAL was genuinely unable to pay the AF—remains unaddressed. Furthermore, the learned AT failed to determine whether each instalment of the AF is a separate and distinct obligation, which, if unpaid on time, would attract interest under Article 11.1.2.2. The learned AT also did not assess whether all conditions under Article 16.1.2 were met at the time each instalment became due. Additionally, the impugned arbitral award provides no rationale for excusing rather than suspending DIAL’s obligation to pay the AF, despite explicitly raising the question in the award itself. Another core issue left unresolved is what constitutes pre-Covid levels of activity. It has been stated that while the learned AT rejected DIAL’s argument that Air Traffic Movement (‘ATM’) and Passenger Traffic Movement (‘PTM’) should define pre-Covid levels of activity, it failed to provide a clear alternative standard. Factors such as government-imposed Covid-19 restrictions and DIAL’s alleged negative cash flow are discussed but not linked to determining pre-Covid activity levels. Learned AT arbitrarily set 28.02.2022 as the end date for relief based on the Supreme Court’s order extending limitation under general and special laws.
g. The impugned arbitral award has altered the very basis on which bids were invited inasmuch as it alters the ‘key features of the transaction”’ as recorded in the Judgment of the Supreme Court in ‘Reliance Airport Developers (P) Ltd. v Airports Authority of India & Ors.’, (2006) 10 SCC 1 by allowing DIAL to be completely excused from making payment of AF for the period 19.03.2020 to 28.02.2022.
h. The impugned arbitral award altered the waterfall mechanism established in the Escrow Account Agreement dated 28.04.2006. Under the Escrow Account Agreement, the Escrow Bank was required to prioritize deposits as follows: first, statutory dues; second, the monthly AAI Fee; and third, any remaining balance into the Surplus Account. This structure clearly established that DIAL’s obligation to pay the MAF to AAI took precedence over its operational expenses, except for statutory dues. Learned AT, however, held that during the Force Majeure period, revenue receipts should first be used for airport operations, with only any surplus to be shared between DIAL and AAI, thereby overturning the agreed-upon financial structure.
i. Learned AT rendered that since force majeure steps in only upon the occurrence of an unforeseen event caused by a superior or irresistible force, an act of God, or an event entirely beyond human control (as opposed to a third-party event) and thus cannot be covered under Section 32 contradicts the public policy of India as the said interpretation conflicts with settled law, as established in ‘Associate Builders v. DDA’, (2015) 3 SCC 49 and reaffirmed in ‘Ssangyong Engg. & Construction Co. Ltd. v. NHAI’, (2019) 15 SCC 131. It has been stated that learned AT disregarded the binding judicial precedents—despite being made aware of them
j. Learned AT has granted DIAL relief in excess of what it sought in its letters 19.03.2020 and 31.03.2020. DIAL only sought certain waivers such as adjustments against past payments, payment on cash basis etc. under Article 20.3.1 of the OMDA but learned AT granted complete excusal from making payment of AF for the period 19.03.2020 to 28.02.2022 and also extended the term of the OMDA. Learned AT failed to address AAI’s objection that suspension or excusal of obligations applied only to those arising during the Force Majeure event which DIAL itself claimed ended on 17.03.2021, and that only the time for performing such obligations can be extended. Article 16.1.5(c) does not determine the right to excusal or suspension of obligations, which is governed by Articles 16.1.1 to 16.1.3, nor does it prescribe what relief can be granted under Chapter XVI. It has been stated that Article 16.1.5(c) applies only when obligations are suspended—not excused entirely as evident from the plain and ordinary meaning of the contract’s terms, and any other view contradicts its clear and unambiguous language.
k. The allocation of costs to DIAL is patently illegal and lacks justification under Indian law. The award on interest is also unreasoned, patently illegal, and against the fundamental policy of Indian law.
l. The finding that AAI admitted the occurrence of Force Majeure in its letter dated 04.04.2020 is false, patently erroneous and contrary to the record. The letter, issued under Article 16.1.5(d) of the OMDA, explicitly disputed DIAL’s claim that no AF was payable due to Force Majeure. It has been stated that while AAI, acting in good faith, granted DIAL an extension until 30.06.2020 to submit its annual business planned and deferred the time for payment of MAF till 15.07.2020 without interest, to align with the revised timeline given the difficulties cited due to the lockdown and. This was purely a procedural accommodation, not an acknowledgment of Force Majeure. The letter expressly rejected DIAL’s entitlement under Chapter XVI of the OMDA, and learned AT’s conclusion that it amounted to an admission is legally untenable and a patently erroneous finding that no fair-minded arbitrator could have reached.
23. It has been stated in the petition that the impugned arbitral award warrants interference on two more counts. First, the learned AT’s reliance on AAI granting relief to its own concessionaires to justify relief for DIAL is patently illegal and has no contractual basis under the OMDA. It has further been stated that the learned AT ignored key evidence that DIAL itself did not extend revenue share relief to its own concessionaires at Delhi Airport. Furthermore, AAI’s argument that DIAL’s claim was not contractual but premised on public law grounds beyond the jurisdiction was not even considered. Learned AT erroneously equated DIAL, an airport operator, with small retail concessionaires (such as cafés) at AAI-run airports, despite the fundamental difference in their roles. DIAL holds an exclusive right to operate Delhi airport, with its primary financial obligation being the payment of the AF, whereas AAI’s concessionaires operate individual shops without comparable obligations. It has been stated that AAI never excused or suspended revenue share payments for its own concessionaires, making the learned AT’s conclusion factually and legally flawed. Additionally, it has been stated the impugned arbitral award’s reasoning is extra-contractual, relying on AAI’s treatment of other agreements rather than the specific terms of the OMDA, rendering it liable for setting aside under Section 34(2)(A) of the Act. It has also been stated that the learned AT also wrongly asserted that AAI ignored the term “excuse,” despite AAI’s written submissions addressing this distinction extensively. Furthermore, the finding that the contract would have become void “but for” the Force Majeure clause is entirely unsupported by evidence and overlooks the necessity of proving an actual inability to perform.
C. SUBMISSIONS ON BEHALF OF THE PETITIONER
24. Sh. Tushar Mehta, learned Solicitor General submitted that the impugned award is liable to be set aside as it is perverse, contrary to law, and fundamentally alters the contractual framework between the parties. It was submitted that an arbitral award is liable to be set aside, if the arbitrator construes the contract in a manner that no fair-minded or reasonable person would, and the arbitrator’s view is not even a possible view, or if the award wanders outside the contract. It has been submitted that the contract, which is the culmination of the parties’ agency, is to be given full effect, and no provision thereof can be frustrated or rendered otiose. It has been submitted that an arbitral award can also be set aside if the award is (i) unreasoned, in contravention of Section 31(3) of the Act; (ii) perverse and, hence, patently illegal; (iii) contrary to the fundamental policy of Indian law, inter alia for the reason that it disregards judgments/orders passed by superior courts. Reliance has been placed on Ssangyong Engg. & Construction Co. Ltd. v. NHAI, (2019) 15 SCC 131 to emphasize that if an arbitrator gives no reason for an award, it contravenes Section 31(3) of the Act that would certainly amount to patent illegality on the face of the award. It was submitted that though perversity may no longer be a ground for challenge “under public policy of India” it would certainly amount to patent illegality appearing on the face of the award.
25. Learned SG has also relied on the judgment in DMRC Ltd. v. Delhi Airport Metro Express Pvt. Ltd., 2024 INSC 292 to emphasize that in a similar case involving public funds, the Apex Court approved the exercise of power under Section 34 to set aside an Award holding it to be perverse and resulting in a miscarriage of justice, on the ground that the tribunal adopted an “unreasonable” and “uncalled for interpretation” of the contract which frustrated the relevant contractual provision(s). Learned SG submitted that in DMRC Ltd. v. Delhi Airport Metro Express Pvt. Ltd.,(Supra) reliance was placed upon ‘Ssangyong Engg. & Construction Co. Ltd. v. NHAI’, (Supra) wherein it was inter alia held that though construction of the terms of a contract is primarily for an arbitrator to decide. However, if the arbitrator construed a contract in a manner that no fair minded or reasonable person would or that the arbitrator’s view is not even a possible view to take or if the arbitrator wanders outside the contract and deals with the matter not allotted to him, the arbitrator commits an error of jurisdiction. Learned SG submitted that this ground of challenge now falls within the new ground added under Section 34(2)(A) of the Act. It was submitted that a finding based on no evidence at all or an award which ignores vital evidence in arriving at its decision would be “perverse” and liable to be set aside on the ground of “Patent Illegality”.
26. Learned SG has relied upon Energy Watchdog v. CERC, (2017) 14 SCC 80 in which reliance was placed upon Alopi Parshad & Sons Ltd. v. Union of India, (1960) 2 SCR 793: AIR 1960 SC 588 wherein it was inter alia held that the performance of a contract is never discharged merely because it may become onerous to one of the parties. In Energy Watchdog (Supra) reliance was also placed upon Naihati Jute Mills Ltd. v. Khyaliram Jagannath, (1968) 1 SCR 821, wherein it was inter alia held that a contract is not frustrated merely because the circumstances in which it was made are altered. It was further inter alia held that the courts have no general power to absolve a party from the performance of its part of the contract merely because its performance has become onerous on account of an unforeseen turn of events.
27. Similarly, in Energy Watchdog (Supra) reliance was also placed upon Tsakiroglou & Co. Ltd. v. Noblee Thorl GmbH (1961) 2 WLR 633 wherein the House of Lords inter alia held that even though the contract had become more onerous to perform, it was not fundamentally altered. It was further inter alia held that where performance is otherwise possible, a mere rise in freight price would not allow one of the parties to say that the contract was discharged by impossibility of performance.
28. Learned SG has also placed reliance upon NTPC Limited v Jindal ITF Limited & Anr.2025 SCC OnLine Del 511 wherein it was inter alia held that despite the minimum judicial interference, the Court would not mechanically uphold the award of the learned Arbitral Tribunal without examining the same on the anvil of the settled judicial principles and principles of natural justice. In this case, it was inter alia held that the legislature may have circumscribed the jurisdiction of the Court but still it has bestowed a duty upon the Court to examine the same within a limited sphere
29. Learned SG has submitted that the Force Majeure clause in the OMDA, i.e., Chapter XVI is a self-contained code governing ‘Force Majeure’ which provides conditions that must be satisfied for an event to qualify as an event of ‘Force Majeure’ within the meaning of the OMDA for the benefit of suspension/excusal to be availed. Learned SG has taken this court through the scheme of Chapter XVI of the OMDA and submitted that Article 16 of the OMDA requires that the party claiming the benefit of the Force Majeure provision can seek suspension/excusal of the relevant contractual obligation “to the extent that” it is “unable to render such performance”. It was submitted that in any case “Force Majeure” is not an admitted position, while the pandemic is covered as one of the physical events set out in Clause 16.1.3, however, as per the same clause, it is evident that the pandemic would qualify as Force Majeure only “to the extent that they, or their consequences satisfy the requirements set forth in Article 16.1.1 and Article 16.1.2”, i.e., inability is a sine qua non for an event described in Article 16.1.3 to constitute “Force Majeure” under the OMDA and thereby avail the benefit of Chapter XVI.
30. Learned SG submitted that in the present case, DIAL has not been able to prove that it was “unable” to pay the AF from 13.03.2020 onwards. It has been submitted that DIAL had substantially discharged its obligation to pay AF to AAI during the subsistence of the alleged Force Majeure event, i.e., between 19.03.2020 to17.03.2021. DIAL was, admittedly, able to pay AF at least for the period March 2020 to December 2020, evident from the fact that it actually paid Rs.465.77 Crores during this period, discharging its liability to pay Annual Fee for this period in full. It was also submitted that on 17.03.2021 immediately prior to the expiry of 365 days from the date it allegedly sought relief, i.e., 19.03.2020, DIAL issued a letter declaring the end of Force Majeure.
31. Learned SG submitted that despite being able to pay the AF, DIAL, in its Statement of Claim, sought excusal from payment of the AF from March 13, 2020, till such time period it achieves the level of activity prevailing before occurrence of Force Majeure. Additionally, DIAL sought an extension of the term of the OMDA. Significantly, these reliefs were sought without a single pleading in the Statement of Claim asserting that DIAL was “unable” to pay the AF, as required under Chapter XVI of the OMDA.
32. Learned SG submitted that even DIAL itself candidly admitted that it had been “constantly making” payments of the AF. DIAL contended that it was not required to demonstrate such inability to claim the benefit of Chapter XVI—an argument that directly contradicts the requirement under Article 16.1.1 to demonstrate an inability to perform the obligation in question. Learned SG emphasized that when a party has in fact been able to perform its obligations, it cannot claim an inability to do so or seek an excuse from performance.
33. Learned SG further submitted via email dated 19.03.2020, DIAL informed AAI of an alleged decline in its revenues due to reduced traffic volumes caused by the COVID-19 pandemic. DIAL stated that it would submit a provisional Business Plan for FY 2020-21 before 31.03.2020, incorporating the effects of the pandemic, based on which it would determine its MAF payment for April 2020. Subsequently, on 27.03.2020, while submitting its interim business plan for April 2020, DIAL took the position that it would not be in a situation to discharge its obligation to pay the monthly AF to AAI for at least the next three months, up to June 2020. Following this, via an email dated 31.03.2020, DIAL made a request under Article 16 of the OMDA, stating that the outbreak of COVID-19 constituted a Force Majeure event under Article 16 of the OMDA, which had significantly impacted its business and severely affected its revenues. Accordingly, DIAL sought a waiver not a suspension or excusal of the MAF payments for the period up to June 2020. However, it has been submitted that none of these communications satisfied the requirements of Article 16.1.5(a), primarily because they did not explicitly claim an inability to fulfill the obligation to pay AF, as required under Chapter XVI of the OMDA. Moreover, none of these communications asserted any right or relief concerning an extension of the term of the OMDA, either under Chapter XVI or otherwise. It was further submitted that, despite raising concerns about its financial position, DIAL did not avail itself of the one-time, without-prejudice deferral offered by AAI (which was initially requested by DIAL itself). Instead, DIAL continued making regular and complete payments of the Annual Fee throughout the peak of the pandemic, from March 2020 to December 2020.
34. Learned SG has submitted that in addition, the impugned arbitral award not only holds that DIAL is excused from making any payment of the Annual Fee to AAI during the period 19.03.2020 to 28.02.2022, but it also holds that DIAL is entitled to an extension of the very term of the OMDA despite the fact that, no clause in the OMDA, including the Force Majeure clause, contemplates such relief and, further that no such relief was sought at the relevant time by DIAL while purportedly invoking Article 16 of the OMDA. It has been submitted that DIAL has been granted a “double dip” of both excusal of its obligation to pay the AF and also an extension of the term of the OMDA and has been unjustly enriched at the cost of public monies.
35. Learned SG submitted that the learned AT has rewritten the contract between the parties and rendered otiose certain key provisions thereof. It has been submitted that DIAL’s case was that Article 16 of the OMDA provided for suspension/excusal of DIAL’s obligation to pay the AF to AAI under Article 11 in the event the revenues received by DIAL during the corresponding period were insufficient to operate and manage the Airport. It has been submitted that nothing in the language of either Article 16 or Article 11 contains such a stipulation. It has been submitted that without explicitly giving expression to the term it was implying in the OMDA, the learned AT concludes that during the so-called force majeure period, revenue receipts would have to be used firstly for running the Airport, and in the event that there is a surplus thereafter, the surplus would have to be shared. It has been submitted that this stipulation finds no place in the OMDA, but has been written into the contract by the Award.
36. Learned SG submitted that an essential contractual precondition, i.e., that a party must be unable to perform a particular contractual obligation in order to claim the benefit of the force majeure provision, has been written out of existence by the learned AT. It has been submitted that since DIAL actually paid the AF during the worst of pandemic, DIAL cannot possibly be said to be “unable” to perform its obligation under Chapter XI of the OMDA. Therefore, the decision to order a refund of amounts paid over by DIAL to AAI is a patently illegal conclusion.
37. Learned SG submitted that learned AT has also inserted a provision on extension of the term of the OMDA. It has been submitted that no provision of the contract, either in Chapter XVI or XVIII or otherwise, contemplates the extension of the term of the OMDA on account of force majeure events. It has been submitted that in its letter dated March 31, 2020, DIAL did not seek such an extension, and during the arbitration proceedings, in the course of its oral submission, DIAL expressly admitted that there was no contractual basis for this relief, instead relied on the principles of business efficacy for seeking the relief of such extension. It has been submitted that the impugned arbitral award does not examine or address these fundamental arguments, nor does it engage with the admission. It has been submitted that learned AT ignored this contention of AAI. It has further been submitted that the learned AT summarily granted the relief of extension in a single paragraph, without substantive reasoning or contractual justification, thereby effectively rewriting the contract by altering the term of the OMDA (Chapter XVIII), expanding the relief under the force majeure clause beyond what is permitted (Chapter XVI) and changing the basis on which bids were invited. It has been submitted that the learned AT erroneously inserted a provision for extension that does not exist in the contract.
38. Learned SG submitted that learned AT’s justification, as set out in of the impugned arbitral award, is legally ‘unsustainable’ and ‘unreasoned’, as it asserts that in several contracts where the tenure spans a long term, alleviation/relief is accommodated by extending the tenure of the contract without citing any legal authority, contractual provision, or factual basis. Further, it was submitted that learned AT misinterpreted Article 16.1.5(c), which does not contemplate an extension of the term and erroneously relied on AAI’s letter dated March 30, 2020. It has been submitted that there is no letter dated 30.03.2020 in the record of the present case and even otherwise, if AAI’s letter dated 04.04.2020, which speaks of Article 16.1.5(c) is taken into consideration, it only provides that AAI would be willing to have recourse to the said Article to in respect of payment of MAF for the months of April, May and June 2020.
39. Learned SG submitted that learned AT has converted the OMDA into a Profit-Sharing Contract. It has been submitted that under the OMDA, DIAL shares 45.99% of its Revenue with AAI, and the said obligation to pay the Annual Fee is not contingent on DIAL being able to meet its operational costs or establishing that DIAL is encountering negative cash flow. Learned SG has submitted that the conversion of revenue-based model into profit-based model essentially rewrites the OMDA and also has an effect of rewriting the Priority Cash-flow Application provided in clause 3.2(B) of the Escrow Account Agreement, wherein payment of AAI Fee is given precedence over meeting of DIAL’s operational and other expenditure.
40. Learned SG submitted that the impugned arbitral award is unreasoned and perverse on multiple key issues. Learned AT stated that the transpiration of a force majeure event is beyond cavil or disputation, thereby rendering otiose any notice as envisaged in Article 16.1.5 of the OMDA. It has been submitted that this observation by the learned AT effectively negates the contractual requirement of demonstrating an inability to perform obligations before invoking Force Majeure, thereby bypassing a fundamental prerequisite under the contract. It has been submitted that the learned AT fails to undertake any analysis of whether DIAL was actually unable to pay the AF which is a critical issue for determining the validity of its claim under Chapter XVI of the OMDA. Further, it has been submitted that the learned AT also held that it was unnecessary for it to return an opinion on the question whether OMDA envisions either revenue sharing or profit sharing, despite AAI specifically arguing that acceptance of DIAL’s claims would fundamentally alter the contractual framework. Learned SG submitted that this failure to engage with AAI’s argument undermines the reasoning of the impugned arbitral award. Additionally, it has been submitted that the impugned arbitral award is plainly perverse and internally contradictory as on one hand the learned AT recorded that DIAL conceded that all conditions under Article 16.1.2 must be satisfied in order to claim relief under Chapter XVI, yet on the other hand, it has recorded the submission of DIAL that Chapter XVI does not require proof of inability to pay. Learned SG submitted that this contradiction further underscores the perverse nature of the impugned arbitral award, as it fails to provide a consistent and reasoned approach to the interpretation of the contractual provisions.
41. Learned SG submitted that the impugned award is contrary to the public policy as the learned AT held that Section 32 of the Indian Contract Act would only be attracted if the contingency of the outbreak of COVID or any other closely similar contagion had specifically been postulated and dealt with in the contract. However, it has been submitted that this statement disregards the binding effect of Energy Watchdog v. CERC, (2017) 14 SCC 80, which clearly holds that Section 32 of the Indian Contract Act applies when a contract contains a force majeure clause, whereas Section 56 applies when there is no such provision.
42. Learned SG submitted that the fact that DIAL’s revenues are said to have dropped during the relevant period is not sufficient to avail the benefit of Chapter XVI. To avail the benefit of Chapter XVI, all conditions of Article 16.1.2 have to be satisfied. This is evident from the plain language of Article 16.1.2 as has also been held in the impugned arbitral award. This is also in accord with Article 16.1.3 which specifies that a physical event only constitutes “Force Majeure” if it also satisfies the requirements of Articles 16.1.1 and 16.1.2. Learned SG submitted that the alleged temporary negative cash flow of DIAL only satisfies the requirement of Article 16.1.2(a) but not the requirement of Article 16.1.2(e) and Article 16.1.1, i.e., the requirement to prove inability. It has been submitted notwithstanding above and assuming that DIAL suffered a temporary negative cash flow and that such temporary negative cashflow ‘materially and adversely affects the performance of an obligation’, even in that case this in itself is not sufficient to claim the benefit of Chapter XVI without DIAL also proving that it was “unable to render such performance by an event of Force Majeure”. In view of the decision of Supreme Court in Energy Watchdog v. CERC, (2017) 14 SCC 80, it has been submitted that a party is not discharged from its contractual obligations even if performance of the same has become more onerous.
43. Learned SG submitted that it is not sufficient for DIAL to say that if its revenues drop, the provisions of Chapter XVI automatically trigger. The test is inability or impossibility to perform the obligation, i.e., inability to pay AAI its share of the Revenue and, it has been submitted that this test is not satisfied. On the contrary, DIAL has in fact discharged its obligation by paying over AAI’s share of Revenue while continuing to operate and maintain the Delhi Airport. Thus, it has been submitted that the impugned arbitral award has substituted the contract between the parties with one of its own making inter alia by writing Clauses 16.1.1 and 16.1.2(e) out of existence, in an attempt to provide some basis for the grant of relief to DIAL.
44. Learned SG submitted that the grant of relief until 28.02.2022 is unreasoned. It has been submitted that DIAL’s reliance on Article 16.1.5(c) of the OMDA is misplaced and contrary to the meaning of the said provision. It has been submitted that a bare peruse of Article 16.1.5(c) makes it clear that the provision allows for the “the time for performance” to be “extended by the period during which such Force Majeure continues and by such additional period thereafter as is necessary to enable the affected Party to achieve the level of activity prevailing before the event of Force Majeure.” Therefore, Article 16.1.5(c) only provides for the period that a suspension could operate. Such a stipulation, it has been submitted, is not relevant to a whatsoever to “excusal”, which is the relief that has been granted. If an obligation has been excused, there is no question of extending the time for performance of the same. Further, learned SG submitted that without prejudice to the above, and assuming without conceding that the said Article has any relevance in this context, it has been submitted that Article 16.1.5(c) only allows for a time extension to perform those obligations that were affected during force majeure. It does not wipe out contractual obligations that arose for the very first time after the period of force majeure ceased to exist. It has been submitted that even according to DIAL itself, the force majeure event ceased to exist on 17.03.2021, thus, no obligation that arose after 17.03.2021 could have been suspended by having recourse to Article 16.1.5(c). Be that as it may, it has been submitted that the learned AT has erred in not determining what is the “additional period thereafter as is necessary to enable the affected Party to achieve the level of activity prevailing before the event of Force Majeure”. It has been submitted that the sole basis on which DIAL has been granted relief till 28.02.2022 is the Supreme Court’s Order extending limitation. However, it has been submitted that DIAL did not even attempt to justify this reasoning or even suggest that the Order of the Supreme Court extending the statutory period of limitation under several laws has any relevance to the purely contractual issue of relief being claimed under a Force Majeure clause.
45. Learned SG submitted that the Supreme Court’s Order extending limitation has nothing to do with contractual force majeure generally or specifically under OMDA. It has submitted that the same has no relevance to the conditions stipulated in Chapter XVI which an affected party must satisfy in order to claim relief under the said Chapter. Therefore, it has been submitted that the impugned arbitral award is clearly based on guesswork and irrelevant considerations, which contradict the clear and unambiguous terms of the contract.
46. Learned SG submitted that the submission of DIAL that Article 16.1.5(c) also provides for extension of the term of the OMDA is incorrect and contrary to the plain language of the contract. It has been submitted that Article 16.1.5(c) only allows for the time for performance of an obligation affected by force majeure to be extended for a specified period within the term. It does not allow a party to extend the term of the Contract itself. It has been submitted that Article 16.1.5(c) only entails the “Procedure for Force Majeure” and only defines the period of suspension of performance of an obligation affected by Force Majeure under Article 16.1.1 and has no application to the enjoyment of rights granted to DIAL under the OMDA. If it were the intention of the parties that the force majeure clause would operate to extend the Term of the OMDA, the contract would have said as much. It conspicuously does not do so. It has been submitted that Article 16.1.5(c) does not provide a basis for claiming a relief over and above those contemplated under Article 16.1.1, namely suspension or excuse of DIAL’s obligations under the OMDA. In any case, it has submitted that DIAL’s submission that Article 16.1.5(c) permits the extension of “any right affected” by Force Majeure and therefore the grant itself is to be extended cannot be accepted for the simple reason that no such reasoning exists in the Award. It has been submitted that the fact that DIAL is relying on reasoning that forms no part of the impugned arbitral award to support the conclusions arrived at therein is sufficient proof that the impugned arbitral award is incapable of being defended. Therefore, it has been submitted that the Tribunal has granted reliefs that find no mention in Chapter XVI or anywhere else in the contract, thereby impermissibly rewriting the very Term of the OMDA under Article 18.1(e).
47. Learned SG submitted that DIAL’s reliance on the letter dated 04.04.2020 to contend that occurrence of force majeure was an admitted position between the parties is misplaced. It has been submitted that in the letter dated 04.04.2020 sent by AAI , AAI has never admitted to the occurrence of force majeure. However, on a without prejudice basis, AAI had offered a three month deferral to DIAL as requested by it. Further, it has been submitted that DIAL has failed to explain how this ‘without prejudice’ communication which is issued specifically under Article 16.1.5(d) constitute admission of force majeure.
D. SUBMISSION ON BEHALF OF THE DIAL
48. Per Contra, Mr. Parag Tripathi and Mr. Raj Shekhar Rao, learned senior counsels submitted that the impugned award is unanimous, well-reasoned, and based on a correct interpretation of OMDA, as well as the pleadings, documents, and evidence presented during the arbitral proceedings. It has been submitted that the findings of learned AT are supported by a detailed evaluation of material evidence, legal precedents, and established contractual principles, thereby leaving no room for judicial interference under Section 34 of the Act.
49. Learned senior counsels submitted that it is trite that an arbitral tribunal’s decision cannot be interfered with by the Court exercising its jurisdiction under Section 34 of the Act if its interpretation of a contract represents a plausible view of the matter. It was submitted that the arbitrator is the final Arbiter of facts, and courts while exercising their power under Section 34 must defer to their findings unless they are perverse or contravene fundamental policy. Reliance has been placed on UHL Power Company Ltd. v. State of Himachal Pradesh (2022) 4 SCC 116, Parsa Kente Collieries Ltd. v. Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (2019) 7 SCC 236 and Hindustan Construction Co. Ltd. v. NHAI (2024) 2 SCC 613, to submit that the courts should not act as appellate forums over arbitration awards. Further, learned senior counsels also submitted that the grounds for challenge of an award under Section 34 are well settled and well defined and in the present case, none of the grounds of challenge are available.
50. Learned senior counsels submitted that the interpretation rendered by the learned AT regarding Chapter XVI of OMDA—the primary clause under scrutiny—is the only possible and legally sound interpretation. This is particularly true as critical facts, events, and material evidence are undisputed. It was submitted that the findings of fact have not even been challenged in the present petition. Learned senior counsels submitted that the testimony of DIAL’s witness (CW-2) on crucial facts stood unrebutted throughout the proceedings, further strengthening DIAL’s position. It was submitted that in fact it is the AAI that is seeking to read words into the clause and rewrite the said clause, which would render the word ‘excuse’ otiose. It was submitted that the learned AT’s interpretation is based purely on the clause’s wording and is both reasonable and prudent. Moreover, it was submitted that even if an alternative interpretation were possible, the settled principle of arbitration law dictates that so long as the tribunal’s view is plausible, it cannot be interfered with under Section 34 and the award cannot be set aside merely on the ground that there is another possible interpretation.
51. Learned senior counsels submitted that Article 16.1.2 of OMDA enumerates five specific conditions that must be satisfied for an event to be constituted as a Force Majeure Event. It was submitted that the learned AT meticulously examined the record and determined that in the present facts and circumstances all the five conditions were satisfied. It was submitted that the said finding of the learned AT is based on an exhaustive analysis of the unrequited evidence. Learned Senior Counsels pointed out that AAI’s primary contention revolves around learned AT’s supposed failure to consider conditions under Article 16.1.2(a) and (e), particularly regarding DIAL’s purported ‘inability’ to pay AF. However, it was submitted that the learned AT, upon careful evaluation, held that Covid-19 had materially impaired DIAL’s ability to perform and discharge its obligations under OMDA. Firstly, it was submitted that there cannot be any doubt that the Covid-19 pandemic was a force majeure event, and its ramifications on contractual performance had to be assessed accordingly. It was submitted that DIAL invoked Article 16 through a series of letters and emails addressed to AAI, outlining the severe impact of the pandemic, including an unprecedented revenue shortfall and its direct consequence was the inability to meet even mandatory obligations. It was submitted that in view of various notifications and circulars issued by the Government of India, even though the aircraft and passenger movement had reduced drastically, DIAL was incurring significant operational and maintenance costs, rendering its financial position untenable. It was submitted that the entirety of these correspondences were presented before learned AT and duly proved by DIAL’s witnesses including CW-2, that deposed to the effect that the pandemic had severely affected DIAL’s financial performance, compelling the company to withdraw a working capital facility of Rs. 307.52 crores. Additionally, it was submitted that the financial statements of DIAL were also presented as evidence before the learned AT which conclusively demonstrated that airport revenues were insufficient to cover operational expenses and substantiated DIAL’s inability to meet its financial obligations under OMDA. Learned senior counsels submitted that the AAI neither challenged nor questioned these financial statements during cross-examination. Furthermore, learned senior counsels submitted that the DIAL’s revenue generation is directly tied to aeronautical and non-aeronautical services, which in turn rely on ATM and PTM. It was submitted that the government-mandated restrictions and suspensions of air travel resulted in a drastic reduction in both ATM and PTM and the data sourced from AAI’s official website and its annual reports corroborated this decline, both of which were presented and thoroughly analyzed before learned AT. It was submitted that the learned AT, upon reviewing this evidence, rightly concluded that DIAL’s ability to generate revenue was severely and acutely affected from the last week of March 2020 onward. The learned AT further observed that Covid-19’s impact on airport operations was such that operational expenses exceeded total revenue. Consequently, learned senior counsels submitted that that the finding qua ‘inability’ is a finding of fact based on the relevant and uncontested material before the learned AT making judicial interference unwarranted under Section 34 of the Act. It was submitted that the learned AT had painstakingly examined the entire contractual framework and the factual matrix. In fact, the view taken by the learned AT was not only plausible but the only correct view.
52. Learned senior counsels submitted that Article 16.1.1 explicitly entitles parties to either ‘suspend’ or ‘excuse’ performance of their obligations and the learned AT correctly held that these terms could be interpreted synonymously, as once force majeure conditions ceased to exist, the status quo ante would be restored. It was submitted that AAI’s interpretation attempted to impose a restrictive reading that disregarded the word ‘excuse’ and the same was not supported by the contractual text. It was submitted that learned AT rightly rejected such an approach. Further, DIAL had no option to suspend airport operations during the pandemic, as it was legally bound to maintain the airport’s functioning. Consequently, requiring payment of the AF despite DIAL incurring substantial losses would have been commercially unreasonable. It was submitted that force majeure principles dictate that no party should be unduly burdened with losses beyond its control. The learned AT, upon examining the evidence, found that Covid-19 had materially and adversely impacted DIAL’s ability to operate the airport, creating a situation where expenses exceeded revenue. It was submitted that the learned AT, rather than disregarding the phrase ‘to the extent,’ correctly applied it by considering financial evidence demonstrating DIAL’s negative cash flow, which impaired its ability to perform its obligations under OMDA. It was submitted that recognizing the available reliefs—namely, ‘suspend’ or ‘excuse’—learned AT rightly concluded that, since DIAL was mandated to continue operating the airport and was compelled by law to incur all associated costs, it was entitled to excusal from the AF payment. It was submitted that as Article 16.1.1 itself envisages the relief of excusal, and the learned AT has rendered a reasoned finding based on evidence and interpretation, no interference is warranted. Any other interpretation would undermine the objective of OMDA by placing DIAL in a position where it could not fulfill its primary obligation to operate the airport, leading to a failure of the contract’s fundamental purpose.
53. Learned senior counsels submitted that the financial impact of the pandemic resulted in DIAL’s expenses exceeding its revenue, making the payment of the Annual Fee infeasible. The assertion that DIAL could pay simply because some revenue was being generated is both misleading and legally untenable. It was submitted that learned AT correctly observed that it would be too simplistic to require DIAL to pay 45.99% of its earnings without considering its obligation to ensure the smooth functioning of the airport. Learned senior counsel submitted that accepting AAI’s argument would effectively nullify the Force Majeure clause and undermine the fundamental structure of OMDA as the said interpretation suggests that contractual obligations must remain unchanged even during a force majeure event. It was submitted that such a position is flawed, as it would render Article XVI of OMDA meaningless. Learned senior counsel submits that, given DIAL’s legal obligation to keep the airport operational despite significant financial distress, excusal from the AF payment was the only reasonable outcome under Article 16.1.1 and the learned AT’s interpretation upholds the principle of business efficacy, ensuring that contractual provisions remain commercially viable even in extraordinary circumstances such as a global pandemic.
54. Learned senior counsels submitted that AAI has objected that that learned AT ignored its evidence regarding ‘inability’. However, it was submitted that AAI did not produce any factual witnesses, instead relied solely on an expert witness (RW-1), whose testimony was fundamentally flawed. It was submitted that RW-1 failed to adhere to forensic accounting principles and did not consider the utilization of DIAL’s funds, and overlooked key financial indicators.
55. Learned senior counsels submitted that AAI contended that learned AT ignored Article 16.1.5(a). However, it was submitted that the Government of India had itself recognized Covid-19 as a Force Majeure Event through its office memorandum dated 19.02.2020, thereby rendering the requirement of notice under Article 16.1.5 redundant. Additionally, it was submitted that AAI’s letter dated 04.04.2020 implicitly acknowledged the occurrence of a Force Majeure event. Learned AT concurred with this view and held that AAI’s argument—that DIAL had not validly invoked Force Majeure under Article 16.1.5(a)—was misconceived. It has been submitted that AAI’s assertion that the letter dated 04.04.2020 did not amount to an admission of force majeure is both incorrect and an afterthought. The letter clearly recorded AAI’s acknowledgment of the Force Majeure Event and confirmed that the Monthly Annual Fee payment was deferred on that basis. It was submitted that AAI, in the letter dated 04.04.2020 specifically noted DIAL’s invocation of force majeure under OMDA and proceeded in accordance with the procedural framework outlined in the agreement. AAI had also indicated its willingness to extend the time for payment of the MAF for a specified period, thereby recognizing the impact of the pandemic. It was submitted that the Learned AT, after considering this letter, concluded that AAI had made a tacit admission of force majeure and had, in view of the prevailing circumstances, deferred certain obligations. The Learned AT further observed that AAI’s subsequent denial of the force majeure event was disingenuous, particularly given the governmental directives, Supreme Court rulings, and AAI’s own actions in granting relief to other concessionaires.
56. Learned senior counsels submitted that regarding the Pre-Force Majeure level of activity and the duration of the relief, Learned AT justifiably determined 28.02.2022 as the appropriate date until which relief could be granted, based on material on record. This inter alia included the financial statement of DIAL for FY 2021-22, which reflected a loss of INR 293.22 crores, the order dated 30.07.2021 suspending international commercial flights until 31.08.2021, and the widely known impact of the Second Covid Wave. It was submitted that learned AT was fully conscious that the precise date for the resumption of Pre-Force Majeure activity levels could not be definitively ascertained. Accordingly, it left this issue open for determination in a separate proceeding. However, until 28.02.2022, it was submitted that learned AT had sufficient evidence available particularly the financial statement of DIAL which demonstrated that pre-COVID activity levels had not been restored. This finding, based on evidence on record and a correct interpretation of Article 16.1.1 read with Article 16.1.5(c), is not open to challenge under Section 34 of the Act. Consequently, it was submitted that the argument advanced by AAI—that relief could not have been granted beyond 17.03.2021 or that the end date of 28.02.2022 was speculative and arbitrary. Thus, untenable and liable to be rejected.
57. Learned senior counsels further submitted that AAI contends that the obligation to pay the Annual Fee always remains capable of performance since it is calculated as a percentage of revenue. According to AAI, the relief of ‘excuse’ effectively rewrites the terms of the OMDA. However, it was submitted that this argument is misplaced. In fact, the same argument was raised before learned AT, which held that it was an oversimplification to assert that DIAL must pay 45.99% of its earnings without considering its obligation to ensure the smooth functioning of the airport. Learned AT’s interpretation of Article 16.1.1 and the consequent relief of ‘excuse’ were based on a sound understanding of Force Majeure and aligned with the business efficacy of the contract. It was submitted that it is a well-established principle that commercial contracts should be interpreted in a manner that upholds business efficacy and commercial prudence. Therefore, the learned senior counsels submit that learned AT, in holding that DIAL was ‘excused’ from paying the AF, merely interpreted the terms of the agreement in a way that preserved business efficacy. This does not constitute a rewriting of the contract. On the contrary, it was submitted that it is AAI that seeks to rewrite the contract by introducing the term ‘deferral’ into Article 16.1.1, a term that is not present in the said Article. Furthermore, when viewed in context, AAI’s argument—that learned AT altered the OMDA from a revenue-sharing to a profit-sharing model—fails, as learned AT simply applied Chapter XVI and excused DIAL’s obligation to pay the Annual Fee under Chapter XI.
58. Learned senior counsels submitted that AAI has also argued that the learned AT’s finding that revenue receipts were to be utilized first for operating the airport, and any surplus thereafter was to be shared between DIAL and AAI in the agreed contractual ratio amounts to a rewriting of the waterfall mechanism under the Escrow Agre