Supreme Court Upholds AERA’s Right to Appeal Tariff Orders: Airports Economic Regulatory Authority of India vs. Delhi International Airport Ltd. (2024)

Introduction

Date of the Judgment: 18 October 2024

Citation: 2024 INSC 791

Judges: Dr Dhananjaya Y Chandrachud, CJI, J B Pardiwala, J, and Manoj Misra, J.

Can a regulatory body like the Airports Economic Regulatory Authority of India (AERA) appeal a decision that impacts its regulatory functions? The Supreme Court of India recently addressed this critical question in a case concerning the AERA’s ability to challenge orders from the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) regarding tariff determinations. This judgment clarifies the extent of AERA’s powers and its role in ensuring fair and economically viable airport operations.

The core issue revolves around whether AERA, as a quasi-judicial body, can contest decisions made by TDSAT, especially when those decisions pertain to the tariffs AERA sets for aeronautical services. The Supreme Court’s ruling has significant implications for the regulatory landscape of the aviation sector in India.

Case Background

The Airports Economic Regulatory Authority of India (AERA) initiated proceedings under Section 31 of the Airports Economic Regulatory Authority of India Act, 2008, challenging judgments made by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT). TDSAT, the appellate body for AERA, had previously ruled on matters related to tariff determinations for aeronautical services. The respondents raised a preliminary objection, arguing that AERA, being a quasi-judicial body, could not appeal the TDSAT’s judgments. This objection led to the Supreme Court addressing the fundamental question of whether AERA has the right to contest such appeals.

The case involves multiple appeals, all consolidated to address the common legal question. The primary contention is whether AERA, as a regulatory body, can be considered an aggrieved party with the right to appeal decisions that impact its regulatory functions.

Timeline

Legal Framework

The Airports Economic Regulatory Authority of India Act, 2008 (AERA Act) is the primary legislation governing this case. Key provisions include:

• Section 1(3): Defines the applicability of the Act to various airports, including private, leased, civil enclaves, and major airports.
• Section 3: Mandates the establishment of AERA by the Central Government.
• Section 13: Specifies the functions of AERA, including:
  • Section 13(1)(a): Determination of tariffs for aeronautical services, considering factors such as capital expenditure, service quality, and economic viability.
    
    “The Authority shall, in respect of major airports, determine the tariff for aeronautical services taking into consideration— (i) the capital expenditure incurred and timely investment in improvement of airport facilities; (ii) the service provided, its quality and other relevant factors; (iii) the cost of improving efficiency; (iv) economic and viable operation of major airports; (v) revenue received from services other than aeronautical services; (vi) the concession offered by the Central Government in any agreement or memorandum of understanding or otherwise; and (vii) any other factor which may be relevant for the purposes of this Act.”
  • Section 13(1)(b): Determination of the amount of development fees.
  • Section 13(1)(c): Determination of passenger service fees.
  • Section 13(1)(d): Monitoring of performance standards.
  • Section 13(1)(e): Calling for information necessary to determine the tariff.
  • Section 13(1)(f): Performing other functions related to tariff.
• Section 13(2): Requires AERA to determine tariffs every five years, with the possibility of amendments in public interest.
  
  “The Authority shall determine the tariff once in every five years and may if so considered appropriate and in public interest, amend, from time to time during the said period of five years, the tariff so determined.”
• Section 13(1A): Restricts AERA from determining tariffs if they are included in the bidding document.
  
  “Notwithstanding anything contained in sub-sections (1) and (2), the Authority shall not determine the tariff or the structure of tariff or the development fees in respect of an airport if such tariff or structure of tariff or the development fees is incorporated in the bidding document on the basis of which the operator of the airport has been selected.”
• Section 13(3): Mandates AERA to act in the interest of sovereignty, security, and public order.
  
  “The Authority shall, while discharging its functions under this Act, act in the interest of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality.”
• Section 13(4): Requires AERA to ensure transparency through consultations with stakeholders.
  
  “The Authority shall, while discharging its functions under this Act, ensure transparency by— (a) holding due consultations with all stake-holders with the airport; (b) allowing all stake-holders to make submissions before it; and (c) making all decisions of the Authority fully documented and explained.”
• Section 17: Establishes TDSAT as the Appellate Tribunal for the AERA Act, with both original and appellate jurisdiction.
  
  “The Telecom Disputes Settlement and Appellate Tribunal established under section 14 of the Telecom Regulatory Authority of India Act, 1997 (24 of 1997) shall, on and from the commencement of Part XIV of Chapter VI of the Finance Act, 2017 (7 of 2017), be the Appellate Tribunal for the purposes of this Act and the said Appellate Tribunal shall exercise the jurisdiction, powers and authority conferred on it by or under this Act] to— (a) adjudicate any dispute— (i) between two or more service providers; (ii) between a service provider and a group of consumer: Provided that the Appellate Tribunal may, if considers appropriate, obtain the opinion of the Authority on any matter relating to such dispute: Provided further that nothing in this clause shall apply in respect of matters — (i) relating to the monopolistic trade practice, restrictive trade practice and unfair trade practice which are subject to the jurisdiction of the Monopolies and Restrictive Trade Practices Commission established under sub- section (1) of section 5 of the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969); (ii) relating to the complaint of an individual consumer maintainable before a Consumer Disputes Redressal Forum or a Consumer Disputes Redressal Commission or the National Consumer Redressal Commission established under section 9 of the Consumer Protection Act, 1986 (68 of 1986); (iii) Which are within the purview of the Competition Act, 2002 (12 of 2003); (iv) relating to an order of eviction which is appealable under section 28K of the Airports Authority of India Act, 1994 (55 of 1994). (b) hear and dispose of appeal against any direction, decision or order of the Authority under this Act.”
• Section 18: Outlines the procedure for settlement of disputes and appeals to TDSAT.
  
  “18. Application for settlement of disputes and appeals to Appellate Tribunal. —(1) The Central Government or a State Government or a local authority or any person may make an application to the Appellate Tribunal for adjudication of any dispute as referred to in clause (a) of section 17. (2) The Central Government or a State Government or a local authority or any person aggrieved by any direction, decision or order made by the Authority may prefer an appeal to the Appellate Tribunal. (3) Every appeal under sub- section (2) shall be preferred within a period of thirty days from the date on which a copy of the direction or order or decision made by the Authority is received by the Central Government or the State Government or the local authority or the aggrieved person and it shall be in such form, verified in such manner and be accompanied by such fee as may be prescribed: Provided that the Appellate Tribunal may entertain any appeal after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing it within that period. (4) On receipt of an application under sub- section (1) or an appeal under sub- section (2), the Appellate Tribunal may, after giving the parties to the dispute or the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. (5) The Appellate Tribunal shall send a copy of every order made by it to the parties to the dispute or the appeal and to the Authority, as the case may be. (6) The application made under sub- section (1) or the appeal preferred under sub- section (2) shall be dealt with by it as expeditiously as possible and endeavour shall be made by it to dispose of the application or appeal finally within ninety days from the date of receipt of application or appeal, as the case may be: Provided that where any such application or appeal could not be disposed of within the said period of ninety days, the Appellate Tribunal shall record its reasons in writing for not disposing of the application or appeal within that period. (7) The Appellate Tribunal may, for the purpose of examining the legality or propriety or correctness, of any dispute made in any application under sub- section (1), or of any direction or order or decision of the Authority referred to in the appeal preferred under sub- section (2), on its own motion or otherwise, call for the records relevant to disposing of such application or appeal and make such orders as it thinks fit.”
• Section 31: Provides for an appeal to the Supreme Court against orders of TDSAT.
  
  “31. Appeal to Supreme Court. —(1) Notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908) or in any other law, an appeal shall lie against any order, not being an interlocutory order, of the Appellate Tribunal to the Supreme Court on one or more of the grounds specified in section 100 of that Code.”

Arguments

Respondents’ Submissions:

• AERA, as a tariff-fixing authority, cannot be an “aggrieved party” and therefore cannot appeal TDSAT’s orders.
• Tariff determination is a quasi-judicial function, and AERA cannot defend its own actions in appeal. They relied on cases such as PTC India v. Central Electricity Regulatory Commission [(2010) 4 SCC 603], BSES Rajdhani Power Limited v. Delhi Electricity Regulatory Commission [(2023) 4 SCC 788], Sitaram Sugar Co. Ltd v. Union of India [(1990) 3 SCC 223], and GRIDCO v. Western Electricity Supply Company of Orissa Limited [2023 SCC Online 1249].
• The AERA Act does not explicitly state that AERA must be a respondent in appeals against its orders.
• Affected parties’ interests are protected even without AERA appealing, as other aggrieved parties can appeal.
• Section 31 of the AERA Act does not expressly empower AERA to appeal, unlike Section 53T of the Competition Act, 2002.
• Section 18(5) of the AERA Act distinguishes the “Authority” from “parties to the dispute or appeal,” indicating AERA cannot be a party to the appeal.
• AERA cannot both contest an appeal and redetermine the tariff, as this could lead to bias.

Union Government and AERA’s Submissions:

• AERA is concerned with the outcome of TDSAT’s decisions and has a right to appeal in the interest of the general public.
• AERA is a contesting respondent in appeals against its orders and is covered by “parties to the appeal” in Section 18(5).
• AERA is not a quasi-judicial authority but a regulator with multiple functions.
• Even if AERA is quasi-judicial, the embargo on judicial authorities contesting appeals does not always apply to quasi-judicial authorities.
• Section 31 of the AERA Act does not specify who can file an appeal, unlike Section 53T of the Competition Act.
• Institutional bias is not recognized in Indian jurisprudence, and an institution is independent of its officers.

Sub-Submissions Categorized by Main Submissions:

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for consideration:

1. Whether AERA has a right to contest an appeal against its order determining tariff for aeronautical services before TDSAT, and then consequently prefer an appeal against the order of TDSAT before this Court under Section 31 of the AERA Act.
2. Even if AERA does not have a right to contest an appeal against its order determining tariff for aeronautical services before TDSAT, does it have a right to prefer an appeal against the order of TDSAT before this Court in terms of Section 31 of the AERA Act.

Treatment of the Issue by the Court

The following table demonstrates how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Cases:

• Savitri Devi v. District Judge, Gorakhpur [(1999) 2 SCC 577] – Held that judicial officers should not be impleaded in appeals against their orders.
• Md. Omer v. S Noorudin [AIR 1952 Bom 165] – Observed that a judge of first instance should not appear before the appellate court to defend their judgment.
• Jindal Thermal Power Company Ltd. v. Karnataka Power Transmission Corporation Ltd. [2004 SCC OnLine Kar 204] – Held that a regulatory commission should not take sides in appeals against its orders.
• Hari Vishnu Kamath v. Syed Ahmad Ishaque [(1954) 2 SCC 881] – Held that a tribunal is not required to be impleaded in an appeal against its order.
• Udit Narain Singh Malpaharia v. Additional Member Board of Revenue [AIR 1963 SC 786] – Distinguished between appeals and writs of certiorari, stating that tribunals are necessary parties in the latter.
• Jogendrasinhji Vijaysinghji v. State of Gujarat [(2015) 9 SCC 1] – Culled out principles on impleadment of tribunals and courts in appeals, stating that tribunals must be impleaded if entitled to defend their orders.
• Syed Yakoob v. K.S. Radhakrishnan [1963 SCC OnLine SC 24] – Observed that transport authorities are not interested in the merits of the dispute.
• Bar Council of Maharashtra v. M.V. Dabholkar [(1975) 2 SCC 702] – Held that a State Bar Council is an aggrieved party in disciplinary proceedings.
• Competition Commission of India v. Steel Authority of India [(2010) 10 SCC 744] – Held that the Competition Commission is a necessary party in suo moto proceedings and a proper party in other proceedings.
• Express Newspaper Pvt. Ltd. v. Union of India [1959 SCR 12] – Laid down tests to determine if an administrative body is exercising a quasi-judicial function.
• Province of Bombay v. Khushaldas S. Advani [1950 SCR 621] – Discussed the test to determine if a decision is quasi-judicial.
• A.K. Kraipak v. Union of India [(1969) 2 SCC 262] – Renounced the distinction between quasi-judicial and administrative functions for the purpose of compliance with natural justice.
• Sitaram Sugar Co. Ltd. v. Union of India [(1990) 3 SCC 223] – Distinguished between legislative and adjudicatory functions, noting that price fixation can be legislative or adjudicatory depending on the context.
• PTC India v. Central Electricity Regulatory Commission [(2010) 4 SCC 603] – Discussed the nature of tariff fixation under the Electricity Act, 2003, and the dual nature of functions performed by regulatory commissions.
• GRIDCO v. Western Electricity Supply Company of Orissa Limited [2023 SCC Online 1249] – Held that tariff determination is a quasi-judicial function and the Commission could not have preferred an appeal.
• Union of India v. Cynamide India Ltd. [(1987) 2 SCC 729] – Discussed that price fixation is usually a legislative measure.
• Saraswati Industrial Syndicate Ltd. v. Union of India [(1974) 2 SCC 630] – Discussed that a legislative action can also be based on an objective criteria.

Legal Provisions:

• Section 13(1)(a) of the Airports Economic Regulatory Authority of India Act, 2008: Specifies the factors for determining tariffs for aeronautical services.
• Section 13(2) of the Airports Economic Regulatory Authority of India Act, 2008: Provides for tariff determination every five years with amendments in public interest.
• Section 13(4) of the Airports Economic Regulatory Authority of India Act, 2008: Mandates transparency through consultations with stakeholders.
• Section 17 of the Airports Economic Regulatory Authority of India Act, 2008: Establishes TDSAT as the Appellate Tribunal.
• Section 18 of the Airports Economic Regulatory Authority of India Act, 2008: Outlines the procedure for settlement of disputes and appeals to TDSAT.
• Section 31 of the Airports Economic Regulatory Authority of India Act, 2008: Provides for appeals to the Supreme Court.
• Section 3(3C) of the Essential Commodities Act 1955: Provides for the determination of price of sugar.
• Section 61 of the Electricity Act 2003: Specifies the terms and conditions for tariff determination.
• Section 62 of the Electricity Act 2003: Deals with the determination of tariff.
• Section 63 of the Electricity Act 2003: Deals with the determination of tariff by bidding process.
• Section 64 of the Electricity Act 2003: Prescribes the procedure to determine tariff under Section 62.
• Section 53T of the Competition Act 2002: Empowers the Competition Commission to appeal before the Supreme Court.
• Section 53- S(3) of the Competition Act 2002: Provides that the Commission may authorize representatives to present its case before the Appellate Tribunal.
• Order 1 Rule 10 of the Code of Civil Procedure 1908: Grants the Court the power to strike out or add parties.

Table of Authorities and Their Treatment by the Court:

Judgment

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

How the Authorities were viewed by the Court:

The Court distinguished cases that dealt with the impleadment of judicial officers from the present case, emphasizing that AERA is not merely a judicial body but also a regulator with a public interest mandate. The Court followed the principles laid down in cases like Bar Council of Maharashtra v. M.V. Dabholkar and Competition Commission of India v. Steel Authority of India, where regulatory bodies were recognized as aggrieved parties. The Court also noted that the price fixation cases were not directly applicable because the AERA Act has a specific scheme and functions.

Reasoning and Sentiment of the Court:

The Court emphasized that AERA’s role is not limited to merely determining tariffs; it also has a mandate to ensure fair and economically viable airport operations, which is in the public interest. The Court noted that AERA is an interested party in the outcome of the appeals and is therefore entitled to be a party in the proceedings. The Court also observed that the AERA Act does not explicitly bar AERA from appealing, and there is no reason to restrict AERA’s right to appeal. The Court’s sentiment was that AERA’s role as a regulator should be upheld and that it should have the necessary powers to carry out its functions effectively.

The Court also noted that AERA is not merely a quasi-judicial body but a regulator with multiple functions, including monitoring performance standards and ensuring transparency through consultations with stakeholders. The court observed that the AERA Act does not explicitly bar AERA from appealing, and there is no reason to restrict AERA’s right to appeal. The Court’s sentiment was that AERA’s role as a regulator should be upheld and that it should have the necessary powers to carry out its functions effectively. The court also held that institutional bias is not recognized in Indian jurisprudence and that an institution is independent of its officers.

Conclusion

The Supreme Court’s judgment in Airports Economic Regulatory Authority of India vs. Delhi International Airport Ltd. & Ors. is a landmark decision that clarifies the powers of regulatory bodies in India. By upholding AERA’s right to appeal tariff orders, the Court has reinforced the importance of regulatory independence and the need for such bodies to effectively safeguard public interest. This judgment ensures that regulatory bodies can actively participate in legal proceedings that affect their functions, thereby strengthening the regulatory framework of the aviation sector in India.

The Court’s ruling establishes that regulatory bodies like AERA are not merely adjudicatory bodies but also have a responsibility to protect the public interest. This judgment ensures that regulatory bodies can actively participate in legal proceedings that affect their functions, thereby strengthening the regulatory framework of the aviation sector in India. The judgment also clarifies that even if a regulatory body performs quasi-judicial functions, it can still be considered an aggrieved party with the right to appeal decisions that impact its regulatory functions.

Flowchart