The Supreme Court on Thursday ruled that the benefits of a liberalised land development policy should also be given to existing developers of airports. The directive comes as a relief to the GMR group-led Delhi International Airport (DIAL) and the GVK-led Mumbai International Airport (MIAL). The apex court upheld an April decision by the Delhi High Court that allowed DIAL to commercially utilise airport land for non-aeronautical purposes while dismissing an appeal by the government. The bench was headed by justice J Chelameswar.
The Centre had challenged the HC order which held the National Civil Aviation Policy 2016 to be discriminatory and ‘violative of Article 14 (equality before law) of the Constitution’ for existing airport operators.
The 2016 policy, which came into effect on June 15 last year, saw the government increase options for non-aeronautical use of airport land by allowing more commercial exploitation for new developers but not for existing PPP players such as DIAL and MIAL. The list of activities included golf courses, business parks, high-tech parks, commercial office buildings, leisure facilities, amusement arcade, sports complex and shopping centres.
“MoCA will explore ways to unlock the potential of the same by liberalising the end-use restrictions for existing (excluding PPP) and future greenfield and brownfield airports of AAI and future greenfield and brownfield airport projects under PPP,” the NCAP noted.
The tripartite OMDA — operation management and development agreement — signed between GMR Infra, AAI and the government, allows the developer to use 5% of the total land for commercial purposes but only for a specific set of activities mentioned under Schedule 6.
Thursday’s ruling by the SC will enable DIAL and MIAL to monetise land for other purposes too. “This will help us generate more revenues since there will be no restriction on the end use of the land for commercial purposes,” an official of GMR said.
The GMR Infra and GVK stocks rose sharply on Thursday; the GMR stock closed 13.41% higher at Rs 18.60 while the GVK stock gained3.76% to end the session at Rs 13.24. The GMR-led consortium holds a 74% stake in DIAL while Airports Authority of India (AAI) owns the remaining 26%. DIAL was given 250 acres to build Aero City.
In 2015-16, DIAL reported a profit of Rs 508.86 crore on revenues from operations of Rs 486. 63 crore. With 50 million passengers, DIAL is the tenth busiest airport in Asia.
Appearing for the Ministry of Civil Aviation, Solicitor General Ranjit Kumar, argued that existing airport developers like DIAL were not entitled to benefits of subsequent changes in the law since they had won contracts, to develop and manage the airports, before the scope of the non-aeronautical use was widened.
The government further said existing developers do not have a legal right to be included in future policy decisions and therefore, DIAL was rightly excluded from the benefit of liberalization under Clause 12(d) of NCAP, 2016.
The Delhi airport developer, it contended, had participated in a global tender and derived a benefit under the earlier arrangement that restricted its entitlement to undertake aeronautical services subject to the overall limit of 5% of the leased land. Hence, the developer could not claim hostile discrimination nor have any legitimate expectations to be included in the beneficial regime of future aviation policies in respect of their concluded agreements.
Senior counsel Dushyant Dave, appearing for DIAL, contended all airports – whether AAI Airports or PPP Airports – are entitled to equal opportunity to develop airport land for commercial use to maximise the revenue in public interest. The exclusion of existing PPPs denied them an equal opportunity and was thus violative of Article 14 of the Constitution of India, he argued.