Bangalore International Airport Limited Vs Union of India

¶1

1 -

¶2

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶3

DATED THIS THE 25^TH DAY OF JANUARY, 2025

¶4

BEFORE

¶5

THE HON'BLE MR. JUSTICE K. V. ARAVIND

¶6

WRIT PETITION No.12799/2014 (GM-RES)

¶7

BETWEEN:

¶8

1 . BANGALORE INTERNATIONAL AIRPORT LIMITED, A COMPANY INCORPORATED UNDER THE INDIAN COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT ADMINISTRATION BLOCK, KEMPEGOWDA INTERNATIONAL AIRPORT, BANGALORE, BANGALORE-560 300. REPRESENTED BY ITS SENIOR MANAGER-LEGAL MR. AKSHAY RAM APTE,

¶9

...PETITIONER

¶10

(BY SRI MANU PRABHAKAR KULKARNI, ADVOCATE)

¶11

AND:

¶12

1 . UNION OF INDIA, MINISTRY OF CIVIL AVIATION, 'B' BLOCK, RAJIV GANDHI BHAVAN, SAFDARJUNG AIRPORT, NEW DELHI-110003, REP. BY ITS SECRETARY.

¶13

2 . UNDER SECRETARY TO THE GOVT. OF INDIA, MINISTRY OF CIVIL AVIATION, B-BLOCK, RAJIV GANDHI BHAVAN, SAFDARJUNG AIRPORT, NEW DELHI-110003.

¶14

…RESPONDENTS

¶15

(BY SRI SHANTHI BHUSHAN, DSGI FOR R1 & R2)

¶16

2 -

¶17

THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ORDER DATED 18.2.2014, ISSUED BY R-1 AS ILLEGAL, ARBITRARY & UNCONSTITUTIONAL & SET ASIDE THE SAME (ANNEXURE-K).

¶18

THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT PRONOUNCED THE FOLLOWING:

¶19

CORAM: HON'BLE MR. JUSTICE K. V. ARAVIND

¶20

C.A.V. ORDER

¶21

Heard learned counsel Sri. Manu Prabhakar Kulkarni

¶22

for the petitioner and Sri. Shanthi Bhushan, learned Deputy Solicitor General of India for respondents.

¶23

The present petition is filed seeking to quash the order dated February 18, 2014, passed by Respondent No.1, which directs that the Passenger Service Fee (Security Component) (PSF(SC)) collected by the petitioner for the purpose of providing security equipment and services, after being debited for such expenses, be reimbursed into the respective Escrow account.

¶24

The brief facts leading to this petition are that, the petitioner is a Company incorporated under the Companies

¶25

3 -

¶26

Act, 1956 engaged in the business of development, design, financing, construction, commissioning, maintenance, operation and Management of Kempegowda International Airport, Bengaluru (KIAB). The petitioner and respondent No.1 entered into a Concession Agreement dated 05.07.2004. As per the Concession Agreement, certain services are to be provided by respondent No.1 and remaining by the petitioner. The Concession Agreement also stipulates security equipment and personnel for the security and operation of the Airport.

¶27

The petitioner is authorized to collect a Passenger Service Fee of Rs.200/- per passenger, of which Rs.70/shall be retained by the petitioner for passenger facilitation and Rs.130/- shall be deposited into an Escrow account to be utilized for payments to the Central Industrial Security Force (hereinafter referred to as 'CISF'). The Concession Agreement stipulates the obligations of the Government of India and the petitioner relating to providing and maintaining security equipment.

¶28

4 -

¶29

The petitioner has utilized the amount deposited in the Escrow account for the purchase of security equipment, which constitutes capital expenditure.

¶30

However, the respondents, as per the impugned order, contend that the Passenger Service Fee (Security Component) [PSF(SC)] is intended solely for revenue expenditure, including the deployment of CISF and other security forces at the Airport. The order further asserts that Airport Operators hold and maintain the Escrow account in a fiduciary capacity and must utilize the funds as directed by respondent No. 1. It concludes that the use of PSF(SC) for capital expenditure is improper and directs that such amounts be reimbursed.

¶31

The impugned order applied to all private operators and Joint Venture Companies (JVCs) managing Airports. In response, the companies operating Airports filed writ petitions before the respective High Courts. A transfer petition was subsequently filed before the Hon'ble Supreme Court, seeking the transfer of these cases. The Hon'ble Supreme Court, on various dates, allowed the

¶32

5 -

¶33

pending writ petitions before the different High Courts to proceed. A similar order has also been passed concerning this petition.

¶34

Sri. Manu Prabhakar Kulkarni, learned counsel appearing for the petitioner, submits that the petitioner was awarded the contract for the development, design, financing, construction, commissioning, maintenance, operation and management of KIAB. The Concession Agreement and various orders provide collection of Passenger Service Fee by the Airport Operator. The Passenger Service Fee is to be collected at Rs.200/- per passenger out of which, Rs.70/- is to be retained by the Airport Operator and the balance Rs.30/- shall be deposited in an Escrow Account.

¶35

It is submitted that the amount retained and deposited in the Escrow account was to be utilized by the petitioner to meet security-related expenses at the Airport. It is further submitted that as per the Concession Agreement, the security equipments were to be provided by the respondents. Having not provided by letter dated

¶36

6 -

¶37

11.10.2007, a communication was made to provide security equipments as per the Concession Agreement out of the PSF(SC). The respondents were permitted to debit the expenditure on purchasing security equipment and facilities as required by the Bureau of Civil Aviation Security from the security component of PSF. The expenditure incurred towards purchasing the security equipment is related to the security equipment required to be provided by the respondent authorities.

¶38

It is submitted further that the impugned Circular without taking into count the above aspects and the obligations of the respondents under the Concession Agreement have issued a general order holding that the PSF(SC) funds are meant only for meeting revenue expenditure and deployment of CISF and the expenditure incurred to meet capital expenditure out of PSF(SC) are directed to be reversed or reimbursed to the Escrow account. The said order has directed for reimbursement of the amounts spent towards procurement and

¶39

7 -

¶40

maintenance of security systems/equipments and on creation of fixed assets.

¶41

Learned counsel further submits that the PSF(SC) was collected to provide airport security. Fee collected is utilized for the purpose for which it was collected. The respondents were required to provide security equipment as per the Concession Agreement. Having not fulfilled the obligation under the Concession Agreement, a communication was made to make the Airport functional and secure to purchase the security equipment out of PSF(SC) available in the account or to be collected in future. The said permission has been accorded and security equipment has been purchased and utilized in the functioning of the Airport. The amount spent out of PSF(SC) is only to discharge the obligation of the respondents, in other words, the amount is utilized for the purchase of the security equipment that ought to have been provided by the respondent authorities.

¶42

Learned counsel further submits that the impugned order was subject matter before the Telangana High Court

¶43

8 -

¶44

in GMR Hyderabad International Airport Limited Vs. Government of India and Others reported in 2024 SCC Online TS 1942 . The Telangana High Court has set aside the impugned order dated 18.02.2014. For the reasons assigned by the Telangana High Court, learned counsel prays to allow the writ petition.

¶45

Sri. Shanthi Bhushan, learned Deputy Solicitor General of India appearing for the respondents would submit that PSF was collected to provide security services. The expenditure required to be incurred towards security was considered and Rs.70/- was allowed to be utilized by the petitioner, out of Rs.200/- as collected and the remaining Rs.130/- was required to be maintained by the petitioner in an Escrow account and to be utilized only for security purposes as per the requirement and further instructions of the respondents.

¶46

Learned Deputy Solicitor General further submits that the petitioner being the operator of the Airport is required to provide all security equipment and the PSF(SC) is meant only for revenue expenses for maintaining security.

¶47

9 -

¶48

The PSF(SC) maintained in the Escrow account has been utilized to purchase security equipment, which is like capital investment required to be made by the petitioner.

¶49

Learned Deputy Solicitor General further submits that as per the Concession Agreement, the petitioner was responsible for providing and maintaining all security equipment, and the requirement of the respondents to provide the security equipment was limited. The nature of security equipments to be provided by the respondents are listed in the Concession Agreement. The expenditure incurred towards security equipment by the petitioner is not stated as related to the security equipment to be provided by the respondents.

¶50

Learned Deputy Solicitor General further submits that the PSF(SC) was to be made to CISF deployed for security purposes at the Airport. The direction under the impugned order to reimburse the entire expenses utilized from PSF(SC) for other purposes is in conformity with the Concession Agreement.

¶51

10 -

¶52

Having considered the submissions of learned counsel for the parties, it is to be observed that the petitioner and the respondents have entered into a Concession Agreement as per Annexure-A. The petitioner was granted the exclusive right and privilege to undertake the development, design, financing, construction, commissioning, maintenance, operation, and management of the Airport. The Concession Agreement stipulates obligations of the parties. One such obligation is on security. The same reads as:

¶53

"8.5 Security

¶54

8.5.1 Gol confirms that unless otherwise agreed under this Agreement it shall, on the same terms as it provides such security at all other Major Airports, provide all aviation security at the Airport. Provided that Gol and BIAL may, following mutual discussions, if it is considered appropriate, enter into arrangements to jointly provide aviation security services at the Airport. The Parties recognise that as at the date of this Agreement the fee levied for security is Rs.130 per departing passenger as such fee may be revised uniformly for all Major Airports.

¶55

11 -

¶56

8.5.2 Without prejudice to the other provisions of this Agreement, BIAL shall comply with such rules and regulations established by BCAS in connection with the security of the Airport provided that BIAL shall not be so obliged if such rules and regulations are not generally and consistently applied to airports having the same or similar sensitivity classification.

¶57

8.5.3 BIAL shall be responsible for providing and maintaining all such security equipment as required by BCAS or any other Relevant Authority from time to time (excepting Door Frame Metal Detector (DFMD), Hand Held Metal Detector (HHMD), X-Ray Scan Machines for screening carry on passenger baggage and Walki-Talkies which shall be procured, installed, operated, maintained and replaced by AAI insofar these equipments relate to Anti Hijacking and Anti-Sabotage functions) provided that the same obligations are imposed on airports having the same or similar sensitivity classification.

¶58

8.5.4 The procedures to be adopted for the security of the Airport building. passengers, persons working at the Airport and other visitors to the Airport, and aircraft, freight and other property at the Airport shall also be prescribed by BCAS. BIAL shall be obliged to comply with all such procedures and directions as issued by BCAS from time to time provided that such procedures and directions are consistently applied to airports having the same or similar sensitivity classification.

¶59

12 -

¶60

8.5.5 The personnel for undertaking security duty shall be provided by the security agency designated by BCAS, Gol or GoK.

¶61

8.5.6 BIAL shall co-operate fully with the officers of the designated security agencies and other security agencies at all times

¶62

3.5.7 BIAL shall provide the designated security agency with (i) such access and facilities at the Airport and (ii) the space requirements set out in Schedule 8 to this Agreement, so as to enable the designated security agency to perform its functions under this Agreement, on terms and conditions that are generally consistent with the terms and conditions applicable to airports having the same or similar sensitivity classification.

¶63

3.5.8 BIAL shall not be entitled to reduce the space and facilities provided to the designated security agency at the Airport without the consent of the designated security agency.

¶64

3.5.9 In the event of any expansion modernisation or redevelopment at the Airport which involves the movement or reconfiguration of any space or facilities used by the designated security agency for any of the purposes referred to above, BIAL shall duly inform the designated security agency and BIAL and the designated security agency shall discuss and agree any amendments to the space requirements of the designated security agency that may be required as a result of such expansion, modernisation or redevelopment at the Airport."

¶65

13 -

¶66

The order dated 09.05.2006 issued by the

¶67

respondents authorizes Airport Operators to collect the Passenger Service Fee (PSF). This order further allows the Airport Operator to retain Rs.70 for passenger facilitation and mandates the deposit of the remaining Rs.130 into an Escrow account. Additionally, the Government Order dated 20.06.2007, which amends the earlier order, specifies that the PSF(SC) (Passenger Service Fee for Security) is to be utilized for covering security-related expenses at the Airport. Moreover, the pool of PSF(SC) funds collected from various airports may be utilized to cover securityrelated expenses at any of the airports from which the funds were collected.

¶68

A plain reading of Clause 8.5 of the Concession Agreement reveals the method for the collection of the Passenger Service Fee (PSF) and its utilization by the Government of India and Bangalore International Airport Limited (hereinafter referred to as 'BIAL'). Clause 8.5.3 of the Concession Agreement specifically places the responsibility on BIAL to provide and maintain security

¶69

14 -

¶70

equipment, except for certain specific items, which are to be provided by the respondents.

¶71

The correspondence exchanged between the

¶72

petitioner and the respondents is annexed at Annexure-D, dated 11.10.2007. In the said communication, the petitioner sought approval to purchase security equipment, which is required to be provided by the respondent-authorities, using the funds collected or to be collected from the Passenger Service Fee (PSF)(SC). A detailed list of the equipment and other related purposes was also provided in the request. The respondents, by their communication dated 14.11.2007, granted approval to the petitioner’s request.

¶73

A bare perusal of Clause 8.5.3 of the Concession Agreement, along with the correspondence at Annexures-D and E, indicates that the funds in the Escrow account have been utilized for the purchase of security equipment. This fact remains undisputed. However, the issue that requires consideration is whether the expenditure incurred from the PSF(SC) Escrow account

¶74

15 -

¶75

pertains to the purchase of security equipment that are to be provided by the respondent-authorities, or whether it concerns the security equipment that the petitioner is obligated to provide. This factual inquiry cannot be undertaken in the absence of the relevant documents/evidence before the Court.

¶76

Be that as it may, the same impugned order has been examined by the Telangana High Court wherein, the Court set aside the impugned order dated 10.02.2014. The issues raised in this writ petition are addressed by Telangana High Court.

¶77

The learned Deputy Solicitor General of India is unable to dispute that the order passed by the Telangana High Court is equally applicable to the petitioner.

¶78

The Impugned Order is substantially addressable by Telangana High Court in the judgment referred ( supra ). There are no other grounds raised requiring further considerations. Accordingly, the following,

¶79