In Miscellaneous Application No. 1721/2023 -SC- Supreme Court directs TDSAT to reconsider the computation of ‘Hypothetical Regulatory Asset Base’ for Delhi & Mumbai Airports
Justice Sanjay Kishan Kaul & Justice M. M. Sundresh [04-12-2023]

Read Order: Delhi International Airport Ltd V. Airports Economic Regulatory Authority & Ors.

Chahat Varma

New Delhi, December 5, 2023: In a significant development, the Supreme Court has directed the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) to reconsider the computation of the Hypothetical Regulatory Asset Base (HRAB) for Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL).

In the case at hand, applications were filed by both DIAL and MIAL based on the discovery of a new and important piece of evidence, specifically a letter dated 24.05.2011, which was an internal correspondence between the Ministry of Civil Aviation (MoCA) and the Airport Economic Regulatory Authority (AERA). The letter indicated a proposed approach to back solve the initial aeronautical Asset Base given the aeronautical charges. The applicants argued that this information, not known to them even after due diligence, led to an error apparent on the face of the record.

The division bench of Justice Sanjay Kishan Kaul and Justice M. M. Sundresh acknowledged the complexity surrounding the calculation of HRAB and the interpretation of the State Support Agreement (SSA) in the context of airport operations.

The contention put forth on behalf of the applicants revolved around the assertion that the 'single till' mechanism was prevalent in the year 2008-09. During this period, there was no distinction between aeronautical and non-aeronautical revenue, and the entire revenue—comprising both aeronautical and non-aeronautical—was treated as composite revenue. Tariffs were fixed on a cost-plus basis under this mechanism. The applicants argued that, for determining the opening of the HRAB for the fiscal year 2009-10, the entirety of the revenue from the previous year, i.e., 2008-09, should have been considered.

The proceedings also involved grounds raised concerning the categorization of fuel throughput charge (FTC) as an aeronautical service.

Furthermore, the applicants made a prayer in the alternative. They requested either the modification of the judgment or the remittance of the matter before the TDSAT.

After hearing the arguments from the counsel for the parties, the division bench expressed the view that the nature of jurisdiction exercised by the court is dependent on two specialist authorities/tribunals having applied their minds to the matter. The bench considered it challenging to re-appreciate evidence and facts, especially given that the TDSAT had not provided an opinion on it.

The bench deemed it inappropriate to delve into this aspect further. However, it noted that the letter, being an internal communication privy to the non-applicants, should have been presented before the relevant authorities.

“We are, thus, inclined to adopt the alternative prayer of the applicants by directing that the effect of this document ought to be examined by the TDSAT,” held the bench.

In light of these observations, the Court directed the TDSAT to reconsider the computation of the HRAB, taking into account the newly produced letter and the 'single till' mechanism.

The Court emphasized that the TDSAT should form its independent view on the matter and not be influenced by its earlier opinion.

The applications were disposed of accordingly.