Supreme Court Revisits Airport Tariff Calculation: Delhi International Airport Ltd. vs. Airports Economic Regulatory Authority (2023)

Date of the Judgment: 04 December 2023
Citation: 2023 INSC 1046
Judges: Sanjay Kishan Kaul, J. and M. M. Sundresh, J.
Can a previous Supreme Court judgment be revisited based on new evidence? The Supreme Court of India recently addressed this question in a case concerning the calculation of airport tariffs. The core issue revolves around the method used to determine the Hypothetical Regulatory Asset Base (HRAB), which significantly impacts the tariffs charged at airports. This judgment reviews the matter based on a newly discovered document, directing the Telecom Disputes Settlement Appellate Tribunal (TDSAT) to re-examine the issue. The bench comprised Justices Sanjay Kishan Kaul and M.M. Sundresh.

Case Background

The case involves a dispute over the calculation of airport tariffs, specifically the Hypothetical Regulatory Asset Base (HRAB). The Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL) filed applications seeking a review of a previous Supreme Court judgment. Both DIAL and MIAL claimed to have discovered a new and important piece of evidence, a letter dated 24.05.2011, which was an internal communication between the Ministry of Civil Aviation (MoCA) and the Airport Economic Regulatory Authority (AERA). This letter discussed the method for calculating the Asset Base for the first regulatory period.

The applicants argued that the letter revealed an error in the previous judgment, specifically in paragraphs 50 and 63, which dealt with the calculation of HRAB. They contended that the HRAB should have been calculated using a ‘single till’ mechanism, which considers all revenues (aeronautical and non-aeronautical) instead of just aeronautical revenues. The applicants sought either a modification of the judgment or a remittal of the matter to the TDSAT for a fresh consideration of the HRAB calculation. The respondents argued that the letter was merely a clarification and that the issue of fuel throughput charge (FTC) had already been settled by the Supreme Court.

Timeline:

Course of Proceedings

The applicants, DIAL and MIAL, filed miscellaneous applications seeking a review of the Supreme Court’s previous judgment. They argued that a newly discovered letter from MoCA to AERA, dated 24.05.2011, revealed a flaw in the HRAB calculation methodology adopted by the Court in its earlier judgment. The applicants contended that the HRAB should be calculated based on a ‘single till’ mechanism, which includes both aeronautical and non-aeronautical revenues. The Supreme Court had previously upheld the view of the AERA and TDSAT regarding the calculation of HRAB. The current applications sought either a modification of the judgment or a referral back to the TDSAT for reconsideration.

Legal Framework

The core of the dispute revolves around the interpretation of the State Support Agreement (SSA) dated 24.06.2006, and the method for calculating the Hypothetical Regulatory Asset Base (HRAB). The SSA provided for the HRAB to be derived by working backwards, which would have a cascading effect for successive years. The key issue is whether the HRAB calculation should consider only aeronautical revenues or both aeronautical and non-aeronautical revenues, as per the ‘single till’ mechanism. The letter dated 24.05.2011 from MoCA to AERA, which is the basis of the review application, discusses this method of back-solving the initial aeronautical asset base. The applicants also referred to a letter dated 18.06.2018 from the Airports Authority of India, which stated that airport charges were fixed on a cost recovery principle, allowing for all aeronautical revenue plus contributions from non-aeronautical revenues.

Arguments

Applicants (DIAL and MIAL) Arguments:

• Core Issue of HRAB Calculation: The applicants argued that the letter dated 24.05.2011 from MoCA to AERA highlights the core issue of calculating HRAB by back-solving. This method, they contend, was not properly considered in the previous judgment.

• Single Till Mechanism: The applicants submitted that the ‘single till’ mechanism was prevalent in the year 2008-09, where no distinction was made between aeronautical and non-aeronautical revenue. Therefore, the entire revenue from 2008-09 should have been considered for determining the opening HRAB for FY 2009-10.

• SSA and Revenue Consideration: They argued that Schedule 1 of the SSA requires the hypothetical regulatory base to be computed on the entire revenue (both aeronautical and non-aeronautical) for the period between 01.04.2008 and 31.03.2009.

• Error in Previous Judgment: The applicants pointed out that the previous judgment confined its finding to the expression “pertaining to aeronautical services” without addressing the ‘single till’ aspect. They stated that the TDSAT also did not deal with this aspect.

• Alternative Prayer: The applicants sought either a modification of the judgment or a remittal of the matter to the TDSAT for the limited issue of considering the computation of HRAB afresh.

Respondents (AERA and Others) Arguments:

• FTC Issue Settled: The respondents argued that the issue relating to Fuel Throughput Charge (FTC) is no longer res integra, as it has been settled by the Supreme Court in paras 41 to 45 of the previous judgment.

• Letter as Clarification: They contended that the letter dated 24.05.2011 is merely a clarificatory communication and not a new piece of evidence. They also stated that MoCA has clarified that it has no role in providing any mechanism and has merely quoted what was provided in the SSA and the ABN AMRO report.

• Interpretation of Agreements: The respondents’ reply primarily focused on the details and interpretation of the clauses of the agreements.

Submissions Table

Issues Framed by the Supreme Court

The Supreme Court did not explicitly frame issues in this judgment. However, the core issue that the court addressed was:

1. Whether the letter dated 24.05.2011 from MoCA to AERA constitutes a new and important piece of evidence that warrants a review of the previous judgment concerning the calculation of HRAB.
2. Whether the TDSAT should re-examine the computation of HRAB based on the ‘single till’ mechanism, considering the letter dated 24.05.2011.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court did not rely on any specific case laws or books in this judgment. The primary authorities considered were:

• Letter dated 24.05.2011: Internal correspondence between the Ministry of Civil Aviation (MoCA) and the Airport Economic Regulatory Authority (AERA) regarding the method for calculating the Asset Base for the first regulatory period. This was the central piece of new evidence presented by the applicants.
• State Support Agreement (SSA) dated 24.06.2006: The agreement between the parties that provided for the calculation of HRAB.
• Letter dated 18.06.2018: Letter from the Airports Authority of India regarding airport charges fixed on a cost recovery principle.

Authorities Considered by the Court

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

The Court directed the TDSAT to examine the effect of the letter dated 24.05.2011. The Court noted that the HRAB calculation was based on the State Support Agreement (SSA). The Court considered the letter dated 18.06.2018 in the context of the SSA.

The Court stated, “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.”

The Court further noted, “We leave it to the TDSAT to take a view on the same, uninfluenced by the fact that the earlier opinion of the TDSAT has received our imprimatur.”

The Court also stated, “Thus, the TDSAT may for the limited issue qua computation of HRAB examine the effect of the letter now produced before us, i.e., the letter dated 24.05.2011 by the MoCA to the AERA, and take its own independent view on the impact of the same in computing HRAB and whether ‘single till’ mechanism should be the basis of the computation.”

What weighed in the mind of the Court?

The Supreme Court was primarily influenced by the fact that a potentially significant piece of evidence, the letter dated 24.05.2011, was not considered in the previous proceedings. The court recognized that this letter, being an internal communication, should have been presented before the concerned authorities. The court also acknowledged that the TDSAT had not previously opined on the ‘single till’ mechanism, which was a central argument of the applicants. Given the specialized nature of the matter and the fact that two specialist authorities/tribunals had applied their mind to it, the court deemed it inappropriate to re-appreciate the evidence itself. Instead, it chose to direct the TDSAT to examine the new evidence and take an independent view, ensuring that the issue is thoroughly addressed by the appropriate authority.

Fact:Law Ratio

The Court’s decision was more influenced by the factual aspect of the new evidence (the letter) and the procedural aspect of ensuring the TDSAT’s review. The legal interpretation took a secondary role in this particular judgment.

Key Takeaways

• New Evidence Matters: The Supreme Court is willing to revisit its judgments if significant new evidence comes to light.
• Importance of Specialized Tribunals: The Court prefers that specialized tribunals like TDSAT handle complex technical issues.
• ‘Single Till’ Mechanism: The ‘single till’ mechanism for calculating airport tariffs remains a contentious issue that needs further examination.
• HRAB Calculation: The method for calculating HRAB is crucial for determining airport tariffs and requires careful consideration.

Directions

The Supreme Court directed the TDSAT to examine the effect of the letter dated 24.05.2011 and to take an independent view on the impact of the same in computing HRAB, including whether the ‘single till’ mechanism should be the basis of the computation. The TDSAT was instructed to not be influenced by its earlier opinion, which had received the Supreme Court’s imprimatur.

Development of Law

The ratio decidendi of this case is that the Supreme Court can direct a re-examination of a matter by a lower tribunal when new and significant evidence is presented, especially when the tribunal has not previously considered the specific issue. This judgment does not change the existing law, but it emphasizes the importance of considering all relevant evidence and the role of specialized tribunals in complex technical matters. It also highlights that the Supreme Court is willing to revisit its previous judgments if there is a good reason to do so.

Conclusion

In conclusion, the Supreme Court, in this judgment, has directed the TDSAT to re-examine the calculation of the Hypothetical Regulatory Asset Base (HRAB) for airport tariffs, based on a newly discovered letter. This decision underscores the importance of considering all relevant evidence and the role of specialized tribunals in handling complex technical matters. The court’s decision to remit the matter to the TDSAT highlights its commitment to ensuring a thorough and fair examination of the issues at hand.