INDOTHAI AIRPORT MANAGEMENT SERVICES PRIVATE LIMITED v AIRPORT AUTHORITY OF INDIA & AIRPORT DIRECTOR, CALICUT INTERNATIONAL AIRPORT

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE V.G.ARUN** **FRIDAY, THE 24[TH] DAY OF MARCH 2023 / 3RD CHAITHRA, 1945** ## **WP(C) NO. 34051 OF 2022** ## **PETITIONER/S:** INDOTHAI AIRPORT MANAGEMENT SERVICES PRIVATE LIMITED REPRESENTED BY VIKAS LADIA, DIRECTOR , 29/709,714 STAR BUILDING, MAVOOR ROAD, PARAYANCHERI, CALICUT-673004. BY ADV O.A.NURIYA ## **RESPONDENT/S:** - 1 AIRPORT AUTHORITY OF INDIA REPRESENTED BY ITS VIKAS LADIA, DIRECTOR, 29/709, 714 STAR BUILDING, MAVOOR ROAD, PARAYANCHERI, CALICUT-673004. - 2 AIRPORT DIRECTOR, AIRPORT AUTHORITY OF INDIA, CALICUT INTERNATIONAL AIRPORT, CALICUT AIRPORT, MALAPPURAM DISTRICT, CALICUT-673647. BY ADV V.SANTHARAM **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16.01.2023, THE COURT ON 24.03.2023 DELIVERED THE FOLLOWING:** W.P.(C) No.34051 of 2022 -2- ## **JUDGMENT** Dated this the 24[th] day of March, 2023 The Airport Authority of India/first respondent invited tenders for ground handling services for ten years at the Calicut International Airport, as per Ext.P1 Notice Inviting Tender dated 19.02.2020. Due to the rampant spread of Corona Virus, national lockdown was imposed within 15 days of the Notice Inviting Tender. Consequently, there was delay in finalising the tender proceedings. The first petitioner, a Private Limited Company rendering services in the aviation sector, submitted its bid on 07.08.2020. After assessing the technical and financial bids, the first petitioner was declared as the selected bidder and issued with Ext.P2 letter Of Intent of Award (LOIA) dated 19.02.2021. In terms of the LOIA, the first petitioner furnished bank guarantee for ## W.P.(C) No.34051 of 2022 -3- Rs.26,89,20,000/-, being 83% of the Minimum Annual Guarantee (MAG). A special purpose vehicle was formed on 14.06.2021 and Ext.P8 concession agreement was executed on 19.07.2021. Thereupon, the site was handed over to the petitioners on 23.07.2021. As per Clause 3.6.1 of Ext.P8, the petitioner was bound to achieve the Commercial Operation Date (COD) within 60 days of obtaining security clearance. As such, the petitioners ought to have achieved COD by 10.09.2021. 2. The petitioners submitted series of letters to the first respondent seeking extension of COD, pointing out the suspension of international flight services to Calicut Airport, negligible operation of domestic services due to the Pandemic, as also the lockdown, as reasons for the delay. In its communications, the petitioners also projected the _force majeure_ Clause in the agreement as a ground for granting extension. The respondents not only refused to W.P.(C) No.34051 of 2022 -4- grant extension by invoking the _force majeure_ Clause, but issued Ext.P23 notice requiring the petitioners to show cause why action should not be taken for non-compliance of the agreement condition. Faced with such a situation, the petitioners approached this Court in W.P.(C) No.2611 of 2022. That writ petition was disposed as per Ext.P31 judgment, permitting the petitioners to submit the explanation to Ext.P23 within three weeks and directing the respondents to consider the explanation and take appropriate decision, untrammeled by the observations in the earlier communications/notices. 3. As directed in Ext.P31 judgment, respondents considered the explanation and issued Ext.P33, rejecting the request for extension of COD in view of the DGCA Circular No.4/1/2020-IR dated 08.03.2022, conveying its decision to revive scheduled international operations to/from India from 27.03.2022 onwards. In spite of ## W.P.(C) No.34051 of 2022 -5- issuance of Ext.P33, the correspondence between the parties continued. In the meanwhile the petitioners achieved COD with effect from 09.06.2022. Later, _vide_ Ext.P38 notice dated 06.09.2022, the respondents claimed Rs.7,31,46,240/- towards damages, calculated at the rate of 0.1% of the security deposit, for the alleged delay of 272 days, from 10.09.2021 to 09.06.2021, in achieving COD. In spite of the strenuous efforts of the petitioners, the respondents refused to relent from their stand and proceeded to issue Ext.P42 notice reiterating the claim for damages. Hence, this writ petition seeking the following reliefs; _“(a) Issue a Writ of Mandamus or any_ _other appropriate Writ, Orders or Direction, directing the 1[st] Respondent Airport Authority of India to set aside and quash Exhibit P33, P35 and the Exhibit P38 Impugned Notice dated 06.09.2022 issued by the Respondents._ _(b) Pass such other and further_ W.P.(C) No.34051 of 2022 -6- _order/orders as are deemed fit and proper in the facts and circumstances of the case._ _(c) Issue a Writ of Certorari or any other appropriate Writ, Order or Direction, quashing the Exb-P42 Notice dated 14.10.2022 issued by the Respondent.”_ 4. Adv.Haris Beeran, learned Counsel for the petitioners contended that the first respondent being an instrumentality of the State, is expected to act in a fair, reasonable and nonarbitrary manner. On the contrary, the first respondent had acted in a high handed, irrational and discriminatory manner, thereby violating the fundamental rights guaranteed to the petitioners under Article 19(1)(g) of the Constitution of India. In elaboration of the contention, the following submissions were made; 5. As per Clause 7.1.2 of the agreement, the Concessionaire has to pay premium which is the Minimum Annual Guarantee (MAG) or the revenue share calculated at the rate of 3% of ## W.P.(C) No.34051 of 2022 -7- the Actual Gross Revenue from Scheduled Domestic Passenger Flights and 15% of the other Actual Gross Revenue from users other than Scheduled Domestic Passengers Flights. In the first year, the Concessionaire has to pay maximum of revenue share or MAG quoted at the time of bid. From the second year onwards, MAG for the concessionaire will be 80%/90% of the previous years' premium. In view of suspension of air traffic due to Covid-19, which is a _force majeure_ situation, the petitioners could not raise the requisite amount for remitting MAG for the first year and being fully aware of the situation, the respondents ought to have extended the COD. Going by the definition and Clause 12 of Ext.P8 agreement, _force majeure_ event means occurrence in India of any or all of the events as defined in Clause 12.1.2, if it effects the performance of its obligations under the agreement by the W.P.(C) No.34051 of 2022 -8- party claiming the benefit of _force majeure._ As per Clause 12.1.2, _force majeure_ includes epidemics also. Hence, the demand for compensation by the respondents for alleged damages sustained, due to delay in achieving COD, is unconscionable, irrational, and arbitrary. Various circulars of the DGCA, statistics regarding the number of flights that had operated between international/domestic Airports and the Calicut Airport, articles pertaining to the worldwide impact of Covid etc are pressed into service, in support of the contention that the exceptional circumstances that prevailed then, demanded equitable consideration of the petitioners' request for extending the COD. 6. According to the learned Counsel, this is a fit case for invoking the extraordinary jurisdiction under Article 226, in spite of there being an arbitration Clause in the agreement. To buttress this contention, reliance is placed on W.P.(C) No.34051 of 2022 -9- the decisions in _**Harbanslal Sahnia and another v. Indian Oil Corpn. Ltd and others [(2003) 2 SCC 107]**_ , _**ABL International Ltd and another v. Export Credit Guarantee Corporation of India and others [(2004) 3 SCC 553], Unitech Limited and others v. Telangana State Industrial Infrastructure Corporation (TSIIC) and others [2021 SCC OnLine SC 99], Uttar Pradesh Power Transmission Corporation Ltd and another v. CG Power and Industrial Solutions Ltd and another [(2021) 6 SCC 15].**_ In support of the contention that, Covid-19 pandemic is a _force majeure_ event and _force majeure_ event can be taken into account by the writ court, the decisions in _**R.Narayanan v. Government of Tamil Nadu [Madras HC] [(2021 SCC OnLine Mad 5644], Geeta Jeena v. Government of NCT of Delhi and others [High Court of Delhi] [2021 SCC OnLine Del 4871]**_ are pressed into -10- ## W.P.(C) No.34051 of 2022 service. 7. Learned Standing Counsel for the first respondent contended that the attempt is to make it appear that the respondents were under a legal obligation to extend the COD. The attempt is liable to be rejected outright, Ext.P8 not being a statutory contract and there being no public element involved. Moreover, Clause 15 of the agreement provides for alternate dispute resolution by a Dispute Resolution Committee and if the dispute is not resolved, that has to be referred to an Arbitral Tribunal for proceedings in accordance with the Arbitration and Conciliation Act, 1996. As the agreement provides an alternative dispute resolution mechanism, including arbitration, the writ petition is not maintainable and should have been dismissed _in limine_ . In support of the challenge as to maintainability, reliance is placed on the following decisions; W.P.(C) No.34051 of 2022 -11- _**Kanaiyalal Lalchand Sachdev and others v. State of Maharashtra and others [(2011) 2 SCC 782], State of Madhya Pradesh and others v. Sanjay Nagayach and others [(2013) 7 SCC 25], General Manager, Sri Siddeshwara Cooperative Bank Limited and another v. Ikbal and others [(2013) 10 SCC 83], Commissioner of Income Tax and others v. Chhabil Dass Agarwal [(2014) 1 SCC 603], Zamorin Raja of Calicut v. State of Kerala [2022 SCC OnLine Ker 2515]**_ 8. Retorting to the contention that the respondents had acted in an arbitrary and irrational manner, it is submitted that the first petitioner is not a novice to aviation industry and had responded to the Notice Inviting Tender during the peak period of Covid and a complete lockdown. By the time the agreement was entered, the situation had improved and flights, both domestic and international, had started services. ## W.P.(C) No.34051 of 2022 -12- As such, petitioners were not justified in requesting to extend the COD. The contention that Covid pandemic is a _force majeure event_ will not help the petitioners to get over the inordinate delay of 272 days in commercial operation. The decisions relied on by the petitioners with respect to _force majeure_ events have no application, since the _force majeure_ event had occurred in those cases, after the contract was entered into. On the other hand, in the petitioners' case, the agreement was executed in the midst of the calamity. Moreover, the happening of a _force majeure_ event and its impact has to be proved by letting in evidence and cannot therefore be decided in writ proceedings. 9. The proposition that the power to issue prerogative writs under Article 226 is plenary in nature and is not limited by any other provisions -13- ## W.P.(C) No.34051 of 2022 of the Constitution is too well settled to be deviated from. As held in _**Whirlpool Corporation v. Registrar of Trademarks, Mumbai [(1998) 8 SCC 1],**_ it is for the High Court to exercise its discretion and decide whether to entertain or not to entertain a writ petition, having regard to the facts of that case. There being disputed questions of facts involved, as also the existence of an Arbitration Clause are relevant considerations. The exercise of writ jurisdiction, though not completely ousted in contractual matters, writ courts should not venture to exercise jurisdiction, oblivious of the time tested restrictions. This Court is of the opinion that for the reason that the first respondent is an instrumentality of the State, Ext.P8 cannot be held to be a statutory contract. There is no public element involved in the contract between the petitioners and the first ## W.P.(C) No.34051 of 2022 -14- respondent. The legal position is laid down by the Apex Court through its decisions in _**Tata Cellular v. Union of India [(1994) 6 SCC 651** and_ _**Silpi Constructions Contractors v. Union of India**_ _**and another [(2020) 16 SCC 489].**_ 10. As contended by the Counsel for the petitioner, Clause 12 of the agreement deals with _force majeure_ events and epidemic are also included within the meaning of _force majeure._ Clause 12.4.1 of Ext.P8 stipulates that, if the _force majeure_ event occurs before COD is achieved, the time for COD shall be extended by a period equivalent in length to the duration of the _force majeure_ event _._ Here, the important fact is that, the petitioners had submitted its bid while the National Lockdown and grounding of flights by reason of Covid pandemic, was already in force. Thus, the petitioners participated in the tender fully aware about the _force majeure_ ## W.P.(C) No.34051 of 2022 -15- event and its implications. Therefore, the dispute as to whether Clause 12 would apply, thereby entitling the petitioners to get the COD extended and consequently, compelling the respondents to withdraw the claim for damages, are matters that are to be decided by the dispute resolution mechanism specified in the agreement. In this context, it is only appropriate to extract Clause 15.3 of Ext.P8; _“15.3 However, any dispute which remains unresolved amicably, the same shall be referred to Dispute Resolution Committee (DRC) set up by Authority. The DRC will give its recommendation within 45 days of the reference of the case._ _Further, in case, the dispute remains unresolved, the same shall be referred to an arbitral tribunal comprising three arbitrators, of whom each Party shall select one, and the third arbitrator shall be appointed by the two arbitrators so selected, and in the event of disagreement between the two arbitrators, the appointment shall be made in accordance with the Arbitration and Conciliation Act, 1996._ _The Arbitration proceedings shall be subject to the provision of Arbitration and_ W.P.(C) No.34051 of 2022 -16- _Conciliation Act 1996 (Arbitration Act") duly amended from time to time.”_ In view of the above provision, I have no hesitation to hold that the remedy of the petitioners is to invoke the arbitration clause and not to seek relief under Article 226. For the aforementioned reasons, the writ petition is dismissed and leaving it open for the parties to raise all contentions before the appropriate court/forum. Sd/- **V.G.ARUN JUDGE** Scl/ W.P.(C) No.34051 of 2022 -17- ## **APPENDIX OF WP(C) 34051/2022** |PETITIONER EXHIBITS|PETITIONER EXHIBITS| |---|---| |Exhibit P1|TRUE COPY OF RELEVANT PAGES OF REQUEST| ||FOR PROPOSAL (RFP).| |Exhibit P2|TRUE COPY OF LETTER OF INTENT DATED| ||19.2.2021| |Exhibit P3|RUE COPY OF LETTER DATED 23.02.2021| ||SENT BY 1ST PETITIONER TO 2ND| ||RESPONDENT| |Exhibit P4|TRUE COPY OF LETTER DATED 16.03.2021| ||SENT BY 1ST PETITIONER TO 2ND| ||RESPONDENT| |Exhibit P4(A)|TRUE COPY OF COMPANY MASTER DATA OF| ||2ND PETITIONER| |Exhibit P4(B)|TRUE COPY OF COMPANY PROFILE OF 2ND| ||PETITIONER| |Exhibit P5|TRUE COPY OF BANK GUARANTEE FURNISHED| ||DATED 05.04.2021 SENT BY 1ST| ||PETITIONER TO 2ND RESPONDENT| |Exhibit P6|TRUE COPY OF LETTER DATED 03.06.2021| |Exhibit P7|TRUE COPY OF LETTER DATED 21.06.2021| |Exhibit P8|TRUE COPY OF CONCESSION AGREEMENT| ||DATED 19.7.2021| |Exhibit P9|TRUE COPY OF LETTER DATED. 28.07.2021| |Exhibit P10|TRUE COPY OF LETTER DATED 10.9.2021| |Exhibit P11|TRUE COPY OF LETTER DATED 15.9.2021| |Exhibit P12|TRUE COPY OF THE REPLY DATED| ||18.10.2021 ISSUED RESPONDENT TO THE| ||PETITIONER.| |Exhibit P13|TRUE COPY OF CHART WHICH RECORDS THE| ||INTERNATIONAL AIRCRAFT MOVEMENTS.| |Exhibit P14|TRUE COPY OF RECOMMENDATION LETTER| ||ISSUED BY AIRPORT DIRECTOR TO BCAS| ||DATED 20.04.2021.| |Exhibit P15|RUE COPY OF SECURITY CLEARANCE ISSUED| ||BY BCAS TO 1ST PETITIONER.| |Exhibit P16|RUE COPY OF SECURITY PROGRAM OF 2ND| ||PETITIONER SCRUTINISED BY CHIEF| ||SECURITY OFFICER TO BCAS, TRIVANDRUM| -18- ## W.P.(C) No.34051 of 2022 ||DATED 20.09.2021| |---|---| |Exhibit P17|RUE COPY OF LETTER SENT BY 2ND| ||PETITIONER TO 2ND RESPONDENT REGARDING| ||STATUS REPORT DATED 17.06.2021.| |Exhibit P18|TRUE COPY OF LETTER ISSUED BY THE 2ND| ||RESPONDENT REGARDING LAND ALLOTMENT| ||DATED 30.07.2021.| |Exhibit P18(A)|TRUE COPY OF LETTER ISSUED BY THE 2ND| ||RESPONDENT REGARDING LAND ALLOTMENT| ||DATED 17.09.2021| |Exhibit P18(B)|TRUE COPY OF LETTER ISSUED BY THE 2ND| ||RESPONDENT REGARDING LAND ALLOTMENT| ||DATED 09.11.2021| |Exhibit P19|TRUE COPY OF LETTER ISSUED BY 2ND| ||RESPONDENT TO 2ND PETITIONER| ||REQUESTING USAGE OF EXISTING EQUIPMENT| ||DATED 25.10.2021.| |Exhibit P20|TRUE COPY OF LEGAL NOTICE DATED| ||5.11.2021 ISSUED BY THE PETITIONER TO| ||THE RESPONDENT.| |Exhibit P21|TRUE COPY OF LETTER ISSUED BY 2ND| ||RESPONDENT TO 2ND PETITION TO OPEN| ||ESCROW ACCOUNT DATED 23.11.2021| |Exhibit P22|TRUE COPY OF REPLY DATED 02.12.2021| ||ISSUED BY THE RESPONDENT TO THE| ||PETITIONER.| |Exhibit P23|TRUE COPY OF SHOW CAUSE NOTICE DATED| ||20.12.2021.| |Exhibit P24|TRUE COPY OF ORDER DATED 19.03.2020| |Exhibit P25|TRUE COPY OF ORDER DATED 26.03.2020| ||ISSUED BY THE MINISTRY OF CIVIL| ||AVIATION.| |Exhibit P26|RUE COPY OF ORDER DATED 24.3.2020| ||ISSUED BY UNION OF INDIA.| |Exhibit P27|TRUE COPY OF CIRCULAR DATED 09.12.2021| ||ISSUED BY THE DGCA.| |Exhibit P28|TRUE COPY OF CIRCULAR DATED 19.01.2022| ||ISSUED BY THE DGCA.| |Exhibit P29|RUE COPY OF RELEVANT PAGES FROM| ||WIKIPEDIA SHOWING THE TIMELINE OF| ||COVID WAVE IN INDIA| ## W.P.(C) No.34051 of 2022 -19- |Exhibit P30|RUE COPY OF WRIT PETITION (C) NO.| |---|---| ||2611/2022 WITHOUT ITS ANNEXURES| |Exhibit P31|RUE COPY OF JUDGMENT DATED 27.01.2022| ||IN WRIT PETITION (C) NO. 2611/2022 OF| ||THIS HON'BLE COURT.| |Exhibit P32|TRUE COPY OF LETTER DATED 17TH| ||FEBRUARY 2022| |Exhibit P33|-TRUE COPY OF LETTER DATED 18TH MARCH| ||2022| |Exhibit P34|TRUE COPY OF THE LETTER DATED 4TH| ||APRIL 2022| |Exhibit P35|TRUE COPY OF LETTER DATED 19TH APRIL| ||2022| |Exhibit P36|TRUE COPY OF LETTER DATED 29TH APRIL| ||2022| |Exhibit P37|RUE COPY OF LETTER DATED 6TH JUNE 2022| |Exhibit P38|TRUE COPY OF LETTER DATED 6TH| ||SEPTEMBER 2022| |Exhibit P39|TRUE COPY OF THE MINISTRY OF FINANCE| ||ORDER DATED 13.5.2020| |Exhibit P40|TRUE COPY OF THE OFFICE MEMORANDUM| ||DATED FEBRUARY 19, 2020 WITH RESPECT| ||TO 'MANUAL FOR PROCUREMENT OF GOODS,| ||2017| |Exhibit P41|TRUE COPY OF THE LETTER OF PETITIONERS| ||SENT TO THE RESPONDENT DATED| ||21/09/2022| |Exhibit P42|TRUE COPY OF THE OCTOBER NOTICE DATED| ||ON 14/10/2022| |Exhibit P43|TRUE COPY OF THE LETTER OF RESPONDENT| ||SENT TO THE PETITIONERS DATED| ||04/11/2022| |Exhibit P44|TRUE COPY OF THE RECORD OF DISCUSSION| ||OF MEETING HELD ON 02/07/2021| |Exhibit P45|TRUE COPY OF THE RESPONDENT NO. 2| ||COMMERCIAL CIRCULAR NO. 40 OF 2021| ||DATED 05/08/2021| |RESPONDENT EXHIBITS|| |Exhibit-R2(a)|True copy of the AERA order dated| ||10.05.2022| |Exhibit-R2(b)|True copy of the letter dated| -20- ## W.P.(C) No.34051 of 2022 ||24.05.2022 of the petitioners| |---|---| |Exhibit-R2(c)|True copy o the reply letter dated| ||27.05.2022 of the respondents| |Exhibit-R2(d)|True copy of the Certificate of| ||Operational Readiness dated 06.06.2022| |Exhibit-R2(e)|True copy of the communication dated| ||06.09.2022| |Exhibit-R2(f)|True copy of the letter dated| ||21.09.2022 of the petitioner| |Exhibit-R2(g)|True copy of the letter dated| ||14.10.2022| |Exhibit-R2(h)|True copy of the relevant pages of the| ||Notice Inviting e-bid containing| ||Clause III and V| |Exhibit-R2(i)|True copy of the Air Traffic/Passenger| ||data of Airports in India for the| ||period 2021-22 with comparison to| ||2020-21| |PETITIONER EXHIBITS|| |Exhibit P 46|TRUE COPY OF COMMERCIAL CIRCULAR NO.| ||26/2020 ISSUED BY THE AIRPORTS| ||AUTHORITY OF INDIA DATED 09.12.2020| |Exhibit P47|TRUE COPY OF COMMERCIAL CIRCULAR NO.| ||40/2021 ISSUED BY THE AIRPORTS| ||AUTHORITY OF INDIA DATED 05.08.2021|