Resources Of Aviation Redressal ... vs Uoi & Ors.
2009 Latest Caselaw 3367 Del

*   IN THE HIGH COURT OF DELHI AT NEW DELHI
#53

+                        W.P.(C) 8918/2009

%                                       Date of decision: 26th August, 2009

       RESOURCES OF AVIATION REDRESSAL ASSN. ..... Petitioner
                     Through: Mr. Vinod Bobde, Sr. Adv. with
                     Mr. Arunabh Chouwdhury, Mr. A.L. Das,
                     Mr. Kashi Vishvesar, Advs.

                      versus


       UOI & ORS.                                         ..... Respondents

Through: Mr. Gopal Subramanyam, Solicitor General, Mr. A.S. Chandhiok, Addl. Solicitor General with Ms. Sweta Kakkad, Advs.

for Respondent No.1/UOI Ms. Anjana Gosain, Ms. S. Fatima, Adv. for Respondent No.2/AAI Dr. A.M. Singhvi, Sr. Adv. with Mr. Atul Sharma, Mr. Milanka Choudhary, Mr. Abhishek Sharma, Advs. for R-3/DIAL

CORAM:

HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE MANMOHAN

1. Whether reporters of the local papers be allowed to see the judg- ment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in the Digest ?

AJIT PRAKASH SHAH, CHIEF JUSTICE (oral)

This petition is filed in public interest assailing the levy of airport

development fee from outgoing passengers travelling from Indira

Gandhi International Airport, New Delhi at the rate of Rs.200/- from

domestic passengers and Rs.1300/- from international passengers for a

period of three years. The development fee is being levied by the

respondent No.3 - Delhi International Airport Pvt. Ltd. ('DIAL' for short)

with the prior approval of the Central Government under Section 22-A

of The Airports Authority of India Act, 1994 ("the Act" for short). The

petitioner is a society espousing the cause of air passengers embarking

from Indira Gandhi International Airport, New Delhi. The Union of India

is impleaded as respondent No.1. The respondent No.2 is the Airports

Authority of India, a statutory authority constituted under section 3 of

the Act. The respondent No.3 - DIAL is the lessee under section 12-A of

the Act to whom the functions of operation, management,

development, design, construction, upgradation, modernization,

finance and management of Indira Gandhi International Airport, New

Delhi have been granted exclusively by the respondent Nos. 1 and 2.

The principal contention of the petitioner is that the impost is sans any

authority of law and the respondent No.3 has no power or jurisdiction

to levy or collect the airport development fee from outgoing

passengers at both domestic and international airport. The levy and

collection of airport development fee is thus ex-facie illegal and

unconstitutional, being ultra vires Article 265 of the Constitution of

India.

2. The challenge to the levy of airport development fee is based on

the following three grounds:

i) That the law authorizes only the Airports Authority of India

to levy development fee at a rate prescribed by the Central

Government and the said power cannot be sub-delegated

to any person including respondent No.3;

ii) That the development fee is being levied although no

additional service is being provided to the travelling public.

The development fee is being appropriated by the

respondent No.3 for the purposes which have no nexus

with any service, much less any additional service being

provided to the travelling public; and

iii) That section 22-A empowers the Airports Authority of India

to levy and collect a development fee "at the rate as may

be prescribed". The term "prescribed" is defined by

section 2(n) of the Act as to mean "prescribed by rules

made under this Act". The rule making power is contained

in section 41. Rules have not been notified by the Central

Government and in the absence of such rules, the levy and

collection of development fee is illegal.

3. Counter affidavits have been filed on behalf of the Union of India

and Airports Authority of India as well as respondent No.3-DIAL

contending, inter alia, that the grounds raised by the petitioner for

impugning the levy of development fee are misconceived and

unsustainable in law. The levy of airport development fee by the

respondent No.3 with prior permission of the Central Government is

expressly permitted by the provisions of section 12-A read with section

22-A of the Act. The permission was granted upon a careful

consideration of the matter and upon being satisfied that the

respondent No.3, for performance of the requisite functions under the

Operation, Management and Development Agreement (OMDA), must

have viable resources. Upon the materials furnished by the

respondent No.3 and after consultation with the Airports Authority of

India, the Union of India was satisfied that adequate factual basis

existed to grant permission to the respondent No.3 to levy a

development fee in order to discharge the primary functions of

upgradation, expansion, development as well as management which

integral obligations were covenanted, both in the lease deed between

the Airports Authority of India and respondent No.3, as well as in the

OMDA. Furthermore, the approval has been granted subject to

compliance by the respondent No.3 with the terms and conditions

stated therein. The approval is time bound and has been granted for a

limited period of 36 months with effect from 01.03.2009. The letter of

permission also places an upper limit on the amount that may be

collected by respondent No.3 as development fee. The petitioner has

not challenged the approval granted by the Central Government vide

its letter dated 9.2.2009. The element of quid pro quo is not essential

for the levy under section 22-A as on a plain reading of section 22-A

itself, it becomes clear that the levy is for the specific purposes

mentioned in clauses (a), (b) and (c) thereof and the provision of

services is not a prerequisite for exercise of power under section 22-A.

The absence of rules under section 41 does not prevent the exercise of

power under section 22A and the contention that the power under

section 22-A cannot be exercised until rules are notified in terms of

section 41 is misplaced.

4. On behalf of the petitioner Mr. Vinod Bobde, learned senior

counsel strenuously contended that a bare reading of the provisions of

the Act makes it clear that no person or body other than the Airports

Authority of India has the authority of law within the meaning of Article

265 of the Constitution to levy and collect the development fee. There

is no provision in the Act empowering the Airports Authority of India to

further delegate the power to levy and collect the fee to any other

person or authority. There is no provision specifically authorizing

exercise of the 'taxing power' by a private person or company in-

charge of an airport as lessee under section 12-A of the Act. There are

clear limitations to the powers that the lessee may exercise under

section 12-A(4) of the Act and those are that the power must be

necessary, not merely useful or convenient for performing the

functions assigned and the power must not be a taxing or fiscal power.

Relying upon the decisions in The Commissioner, Hindu Religious

Endowments, Madras v. Sri Lakshmindra T. Swamiar, AIR 1954

SC 282 and Hingir-Rampur Coal Co. v. State of Orissa, AIR 1961

SC 459, learned senior counsel contended that there is no generic

difference between a tax and a fee as both are compulsory exactions

of money by public authorities and in the absence of an express

provision, a delegated authority cannot impose a tax or fee. In this

connection, he relied upon a decision of the Supreme Court in

Ahmedabad Urban Development Authority v. Sharadkumar

Jayantikumar Pasawalla, (1992) 3 SCC 285. Mr. Bobde further

contended that the fact that the monies are to be exacted from

passengers leads to the inescapable interpretation that framing of

rules by Central Government under section 41(2)(ee) as contemplated

by section 22-A itself is a sine qua non or condition precedent for

levying a fee. Therefore, in the absence of the rules the development

fee cannot be recovered from the passengers. Mr. Bobde lastly

contended that the development fee under section 22-A has no nexus

with any service, much less any additional service being provided to

the passengers. The essential characteristic of a fee is, therefore,

absent and on this ground also, the levy and collection of the

impugned development fee is liable to be struck down.

5. In reply, learned Solicitor General appearing for respondent Nos.

1 and 2 and Dr. A.M. Singhvi, learned senior counsel appearing for

respondent No.3 submitted that a combined reading of Statement of

Objects and Reasons of the Amendment Act 43 of 2003 as well as the

Amendment Act itself indicates that the twin objective of the

Legislature was to empower the Airports Authority of India to levy

development fee at airports for funding or financing the cost of

upgradation, expansion or development of airports for which the fee is

collected and also to empower the lessee of an airport who has been

entrusted with the function of funding or financing the cost of

upgradation, expansion or development of the airport to have all the

powers of the Airports Authority of India under section 22-A. The power

to collect a development fee under section 22-A is necessary for the

lessee for performing its function in terms of the lease granted to the

lessee under section 12-A(1). Thus, the respondent No.3, as the lessee

of the Indira Gandhi International Airport by operation of section 12-

A(4) read with section 22, has the authority by law to collect

development fee from the embarking passengers. There is, thus, no

question of any delegation of power by the Airports Authority of India

as the authorization is by the statute itself. It was further contended

that it has been laid down time and again by the Supreme Court that it

is not obligatory for framing of rules if the substantive provision itself

empowers the levy. It was contended that the airport development fee

is levied and collected at the airport for the purpose of funding or

financing the costs of upgradation, expansion or development of the

airport. It is not a fee for services rendered thereof as in the nature of

charges under section 22 of the Act. Though termed as a 'fee', it is

really in the nature of a cess and there need not be any direct

correlation between the levy of fee and the services rendered.

6. In order to appreciate the controversy raised in this petition, it is

necessary to consider the object and scheme of The Airports Authority

of India Act, 1994. As can be seen from the Preamble of the Act, it has

been enacted with a view to provide for the constitution of the Airports

Authority of India for the better administration and cohesive

management of the airports and civil enclaves and for matters

connected therewith or incidental thereto. Section 3 of the Act

provides for the constitution and incorporation of the Airports Authority

of India. Section 12 lays down the functions of the Airports Authority of

India. Section 12(1) provides that it shall be the function of the

Airports Authority of India to efficiently manage the airports, the civil

enclaves and the aeronautical communication stations. Section 12(2)

provides that it shall be the duty of the Airports Authority of India to

provide air traffic service and air transport service at any airport and

civil enclaves. Section 12(3) provides that without prejudice to the

generality of the provisions contained in sub-sections (1) and (2), the

Airports Authority of India may perform various functions stated

thereunder including that prescribed under clause (a), namely, plan,

develop, construct and maintain runways, taxiways, aprons and

terminals and ancillary buildings at the airports and civil enclaves.

Section 22 of the Act confers power on the Airports Authority of India to

charge fees, rent etc. with the previous approval of the Central

Government for various services and amenities provided by the

Airports Authority of India. Amongst others, clause (c) of section 22

provides for the charge of fees for the amenities given to the

passengers and visitors at any airport, civil enclave, heliport or airstrip.

It appears that sometime in 2003, there was felt a need to improve the

standard of services and facilities at the airports and to bring them at

par with the international standards. To facilitate the process for such

improvement, it was felt necessary to bring in the infusion of private

sector investments as also for restructuring of airports. It was thought

that this would speed up airport infrastructure development, improve

managerial efficiency, increase local responsiveness and improve

service levels as well as, in turn, generally stimulate the economy by

boosting tourism and trade. To achieve this purpose, the Airports

Authority of India (Amendment) Act, 2003 (Act 43 of 2003) was

enacted. It brought about the amendment to section 2 by insertion of

clause (nn), insertion of new clause (aa) in section 12(3) and new

sections 12-A and 22-A in the Act. These amendments were brought in

to enable the Airports Authority of India to establish airports or assist in

the establishment of private airports and also to lease the airport

premises to private operators with the prior approval of the Central

Government. By virtue of these amendments, some of the functions of

the Airports Authority of India can also be assigned to lessees subject

to the exception that air traffic services and watch and ward functions

will continue to be provided by the Airports Authority of India.

7. The Statement of Objects and Reasons to the Amendment Act

throws light on the Parliamentary intention and it reads as follows:

"Statement of Objects and Reasons:- At present, the Airports Authority of India is a statutory organization under the administrative control of the Government of India, Ministry of Civil Aviation. It manages 94 civil airports and 28 civil enclaves at defence airports in the country.

2. There is need to improve the standard of services and facilities at the airports to bring them at par with international standards. To facilitate the process for such improvement, there is need, both for the infusion of private sector investments as also for restructuring of airports. This will speed up airport infrastructure development, improve managerial efficiency, increase local responsiveness and improve service levels. It will, in turn, generally stimulate the economy by boosting tourism and trade. It has been

decided to undertake the task of restructuring the airports under the Airports Authority of India as well as to encourage private participation for the greenfield airports in the country. Since the Airports Authority of India Act, 1994 is applicable to all airports whereat air transport services are operated or are intended to be operated, significant private sector investments in such project require an effective legal framework within which the investors would feel safe and secure about their operational and managerial independence. To achieve these purposes, the Bill proposes to amend the various provisions of the said Act. The salient features of the Bill are as under:-

(i) It amends section 1 as well as section 2 of the Act to exclude the private airports from the purview of the Act except for certain limited purposes and to provide for definition of a private airport. The proposed amendment would also provide adequate comfort levels to enhance investors' confidence and to ensure a level playing field to private sector greenfield airports by lifting control of the Airports Authority of India except in certain respects.

(ii) It inserts new clause (aa) in sub-section (3) of section 12 and a new section 12-A in the Act. This amendment will enable the Airports Authority of India to establish airport or assist in the establishment of private airports and also to lease the airport premises to private operators with the prior approval of the Central Government. By this amendment, some of the functions of the Airports Authority of India can be assigned to lessees subject to the exception that air traffic services and watch and ward functions will continue to be provided by the Airports Authority of India.

(iii) It inserts section 22-A in the Act empowering the Authority, after the previous approval of the Central Government to levy on the embarking passengers at an airport the development fees to be credited to the Authority which shall be regulated and utilized in the prescribed manner for funding and financing the costs of upgradation, expansion or development of airports and for the establishment or development of new airports in lieu of existing airports and for the investment in the equity in respect of shares to be subscribed by the authority in

companies engaged in establishing, owning, developing, operating or maintaining private airports or advancement of loans to such companies or other persons engaged in such activities. This amendment will make the projects, relating to construction of greenfield airports, economically viable by such fee collection.

(iv) It also inserts a new Chapter V-A relating to eviction of unauthorized occupants, etc., of airport premises. It provides for the appointment of eviction officers and a Tribunal to obviate the menace of large scale encroachment and unlawful occupation of airport premises and to decide the cases relating thereto.

8. By the amendment, clause (nn) was inserted in section 2 which

defines 'private airport' to mean an airport owned, developed or

managed by -

(i) any person or agency other than the Authority or any State

Government, or

(ii) any person or agency jointly with the Authority or any

State Government or both where the share of such person

or agency, as the case may be, in the assets of the private

airport is more than fifty per cent.

9. In section 12, clause (aa) was inserted which reads as follows:

"(aa) establish airports, or assist in the establishment of private airports, by rendering such technical, financial or other assistance which the Central Government may consider necessary for such purpose."

10. Section 12-A makes provision for lease by the Airports Authority

of India and reads as follows:

"12-A. Lease by the Authority. - (1) Notwithstanding anything contained in this Act, the Authority may, in the public interest or in the interest of better management of airports, make a lease of the premises of an airport (including buildings and structures thereon and appertaining thereto) to carry out some of its functions under section 12 as the Authority may deem fit.

Provided that such lease shall not affect the functions of the Authority under section 12 which relates to air traffic service or watch and ward at airports and civil enclaves.

(2) No lease under sub-section (1) shall be made without the previous approval of the Central Government.

(3) Any money, payable by the lessee in terms of the lease made under sub-section (1), shall form part of the fund of the Authority and shall be credited thereto as if such money is the receipt of the Authority for all purposes of section 24.

(4) The lessee, who has been assigned any function of the Authority under sub-section (1), shall have all the powers of the Authority necessary for the performance of such functions in terms of the lease."

11. Section 22A of the Act empowers the Airports Authority of India

to levy development fee and reads as follows :

"22A. Power of Authority to levy development fees at airports. - The Authority may, after the pre- vious approval of the Central Government in this be- half, levy on, and collect from, the embarking pas- sengers at an airport, the development fees at the rate as may be prescribed and such fees shall be credited to the Authority and shall be regulated and utilized in the prescribed manner, for the purposes of-

(a) funding or financing the costs of upgradation, ex- pansion or development of the airport at which the fee is collected; or

(b) establishment or development of a new airport in lieu of the airport referred to in clause (a); or

(c) investment in the equity in respect of shares to be subscribed by the Authority in companies engaged in establishing, owning, developing, operating or main- taining a private airport in lieu of the airport referred to in clause (a) or advancement of loans to such com- panies or other persons engaged in such activities.

12. The purpose of the 2003 amendment was thus to have a new

framework for the administration and management of airports in the

country, wherein the Airports Authority of India would either assist a

private initiative in re-developing existing airports or encourage and

facilitate private initiative in establishment and development of

greenfield airports. The various provisions of the Act will have to be

interpreted in the above context.

13. In furtherance of the amended Act, as a part of public-private

partnership initiative, the Union of India was considering involving of

private sector as a partner in development and/or modernization and

restructuring of Indian airports and for setting up world class

international airports. The respondent No.3 - DIAL was established

pursuant to such initiative for the development and/or modernization

and restructuring of the Indira Gandhi International Airport, New Delhi.

The respondent No.3 is a joint venture company, of which Airports

Authority of India is a 26% shareholder. Pursuant to the execution of

various transaction documents including OMDA dated 04.04.2006, the

respondent No.3 has been granted exclusive right and authority for

performing the functions of operating, maintaining, developing,

designing, constructing, upgrading, modernizing, financing and

managing of the Indira Gandhi International Airport and to perform

services and activities constituting the aeronautical services and non-

aeronautical services. A State Support Agreement has also been

executed between the Union of India and the respondent No.3,

whereby the respondent No.3 has been authorized to recover certain

fees including passenger services fees. Clause 2.1.2 of the OMDA

spells out the rights of the respondent No. 3:

"2.1.2 Without prejudice to the aforesaid, AAI recognizes the exclusive right of the JVC during the Term, in accordance with the terms and conditions of this Agreement to:

(i) develop, finance, design, construct, modernize, operate, maintain, use and regulate the use by third parties of the Airport;

(ii) enjoy complete and uninterrupted possession and control of the Airport Site and the Existing Assets for the purpose of providing Aeronautical Services and Non-Aeronautical Services;

(iii) determine, demand, collect, retain and appropriate charges from the users of the Airport in accordance with Article 12 hereto; and

(iv) Contract and/or sub-contract with third parties to undertake functions on behalf of the JVC, and sub-lease and/or license the Demised Premises in accordance with Article 8.5.7."

14. Clause 8.3 of the OMDA provides that the JVC shall prepare a

master plan for the airport setting out the proposed development for

the entire airport, planned over a 20 year time horizon and Clause

8.3.7 provides that the JVC shall develop the airport in accordance with

the then applicable master plan. The proposal of the respondent No.3

to levy the development fee at Indira Gandhi International Airport on

the embarking passengers to be utilized for the purpose of funding and

financing the cost of upgradation, expansion or development of the

airport has been approved by the Central Government vide approval

letter dated 9.2.2009 and the respondent No.3 has been authorized to

levy and collect the airport development fee impugned in the writ

petition.

15. Having considered the rival contentions of the parties, the

principal question that falls for our consideration is whether the Act

contains an express grant of power to a lessee to impose a

development fee under section 22-A of the Act. In terms of section 12,

the Airports Authority of India has been entrusted with the function of

inter alia managing the airports and civil enclaves. In terms of section

12(3)(aa), the Airports Authority of India has, inter alia, the function of

developing and establishing airports. Section 22-A empowers the

Airports Authority of India to levy development fee for the purposes

mentioned under clauses (a), (b) and (c) to section 22-A. The levy

imposed by section 22-A is undoubtedly a fee. However, the question

of quid pro quo is irrelevant to the levy under section 22-A since the

section embodies a statutory fee, the manner of utilization of which is

directed by the Act itself. The levy is for the specific purposes

mentioned in clauses (a), (b) and (c) of section 22-A and the provision

of services is not a prerequisite for exercise of power under the

provision. Further, though described as fee it is more akin to a charge

or a tariff for the facilities provided by the Airports Authority of India.

In order to carry out the functions enjoined upon it by the Legislature,

the Airports Authority of India would require to establish facilities and

those facilities would be used by airlines and airline passengers. The

consideration from persons who use the facilities would flow from the

ownership of the authority of the facilities. Where facilities are

established in discharge of a statute, the authority is entitled to charge

for such facilities as per contractual arrangements with those who use

the facilities. The legal position is succinctly explained by a Division

Bench of Madras High Court in Union of India v. S. Narayana Iyer,

(1970) 1 MLJ 19. In that case, a learned single Judge struck down the

enhanced telephone tariff by holding that the tariff is a 'fee' and not a

'tax' governed by the principle of levy of 'fee' and applying the

principle in Commissioner, Hindu Religious Endowments, Madras

v. Sri Lakshmindra T. Swamiar (supra) and Hingir-Rampur Coal

Co. v. State of Orissa (supra). M.Anantanarayanan, CJ speaking for

the Bench pointed out that a rate or tariff of rates, imposed by a State-

owned public utility corporation is not a fee in the restricted sense, for

the element of quid pro quo cannot exhaust its content. Such a

corporation, according to the judicial pronouncements, is entitled to

charge a tariff which would include a reasonable return on the 'Rate

base', or the Mid-term Capital Investment. Such a corporation is

equally entitled to make provision for expansion of capital or self-

financing as it has been termed in the treatises, it is entitled to

appropriate sums towards dividends for subsidies by Government, from

General Revenues, if made, before the return is determined. After an

extensive examination of the American and English cases, the Bench

deduced various propositions in paragraph 25 of the judgment and

propositions (3) and (4) which are material for our purpose are

reproduced:

"Proposition--(3) The charge made by such Public Utilities, in respect of the service or the supply con- cerned, is essentially a rate or a tariff of rates. It is important to notice that, as the State of Monopoly Characterising such Public utilities excludes competi- tive, fixation of prices, whether these Utilities are owned by Government or are private, the tariff is al- most always determined by a process of delegated Legislation. The very concept of a rate brings in sev- eral distinctive features. It is not merely a 'fee' what- ever the nomenclature, may be for it is not exhaust- ed by the quid pro quo element though that is essen- tial. On the other hand, the Department is entitled to a reasonable return on the ratebase, applying all re- finements of the economic theory to the determina- tion of this rate. The organization may be entitled to a reasonable return on investment, to part-appropria- tion of the surplus for capital expansion, and to the employment of all modern accounting techniques with regard to depreciation, reserve, sinking fund, etc. The quid pro quo element is also essential, if there is a monopoly, and the consumer is being de- prived of the benefits of competition.

Proposition--(4) For this reason, while the rate can be reasonable, it can never be extortionate or oppressive. The Department is not entitled to speculative profits, or to rates of return

disproportionately high, as compared with returns on investments in other fields of economic activities then prevalent. The monopoly cannot be misused to fleece the consumer, served by the Utility; nor can the statistics be juggled with, in order to mask an undue profits-return in thin guises of reduction of return-percentage by artificial heads of appropriation or expenses."

16. The judgment of Madras High Court was confirmed by the

Supreme Court in S. Narayan Iyer v. The Union of India and

Another, (1976) 3 SCC 428. The Court concluded as follows:

"6. There are three principal reasons why the writ petition is incompetent and not maintainable and the appeal should fail. First, when any subscriber to a telephone enters into a contract with the State, the subscriber has the option to enter into a contract or not. If he does so, he has to pay the rates which are charged by the State for installation. A subscriber cannot say that the rates are not fair. No one is compelling one to subscribe. Second, telephone tariff is subordinate legislation and a legislative process. Under Indian Telegraph Act, Section 7 empowers the Central Government to make rules inter alia for rates. These rules are laid before each House of Parliament. The rules take effect when they are passed by the Parliament. Third, the question of rates is first gone into by the Tariff Enquiry Committee. The Committee is headed by non- officials. The tariff rates are placed before the House in the shape of budget proposals. The Parliament goes into all the budget proposals. The rates are sanctioned by the Parliament. The rates, therefore, become a legislative policy as well as a legislative process."

17. In a later judgment in The Trustees of the Port Trust of

Madras v. Aminchand Pyarelal and Others, AIR 1975 SC 1935, the

Supreme Court considered the validity of the demurrage charges

imposed by the trustees of the port of Madras. Two questions arose for

consideration before the Supreme Court. First, whether the scale of

fees under which the appellants charge demurrage is void as being

unreasonable and as being beyond their powers; and, if the answer to

the first question is in the negative, whether the first respondent is

liable to pay the demurrage claimed by the appellants. Reversing the

judgment of the High Court, the Supreme Court held that the Board's

power to frame the scale of rates and statement of conditions is not a

regulatory power to order that something must be done or something

may not be done. The rates and conditions govern the basis on which

the Board performs the services mentioned in sections 42, 43 and 43-

A. Those who desire to avail of the services of the Board are liable to

pay for those services at prescribed rates and to perform the

conditions framed in that behalf by the Board. Some of the services

which the Board may perform are optional and if the importer desires

to have the benefit of those services, he has to pay the charges

prescribed therefor in the scale of rates. In such matters, where

services are offered by a public authority on payment of a price,

conditions governing the offer and acceptance of services are not in

the nature of bye-laws. They reflect or represent an agreement

between the parties, one offering its services at prescribed rates and

the other accepting the services at those rates. As, generally, in the

case of bye-laws framed by a local Authority, there is in such cases no

penal sanction for the observance of the conditions on which the

services are offered and accepted. If the services are not paid for, the

Board can exercise its statutory lien on the goods under section 51 and

enforce that lien under section 56 of the Act; or else, the Board may

take recourse to the alternative remedy of a suit provided for by

section 62. Similar is the view expressed by their Lordships in

Mumbai Agricultural Produce Market Committee and Another

v. Hindustan Lever Limited and Others, (2008) 5 SCC 575 and

Union of India and Others v. The Motion Picture Association

and Others, (1999) 6 SCC 150.

18. Coming then to the question as to whether the lessee can

exercise the power of the Airports Authority of India under section 12-

A, at the outset, it is necessary to consider the implication of sub-

section (1) of section 12 read with sub-section (4) of section 12. Sub-

section (1) of section 12 begins with a non-obstante clause. It seeks to

override the general scheme of the Act prior to its amendment. In

terms of section 12-A(1), the Airports Authority of India is empowered

to lease an airport for the performance of its functions under section

12. The lease under section 12-A(1) is thus a statutory lease which

enables the lessee to perform the functions of the Airports Authority of

India enumerated in section 12. In other words, there is a statutory

assignment of the functions under section 12 to the lessee. Section

12-A(4) then provides that the lessee who has been assigned any

function of the Airports Authority of India under sub-section (1) shall

have all the powers of the said Authority necessary for the

performance of such functions in terms of the lease. The use of the

word "all" indicates that Parliament intended that the lessee would

have each and every power of the Airports Authority of India for the

purpose of discharging such functions. The lessee steps into the shoes

of the Airports Authority of India and is entitled to exercise "all powers

of the Authority" as provided under the Act. Sub-section (4) thus

clearly covers all the powers of the Airports Authority of India. There is

no warrant to read down the words "all the powers" to exclude powers

available to the Airports Authority of India under section 22 or section

22-A of the Act. It was not required to specifically include an express

reference to the power to levy development fee under section 12-A(4)

as it covers all the powers of the Airports Authority of India. Therefore,

the argument of Mr. Bobde that there is no express grant of power by

the Legislature has to be rejected. The argument of Mr.Bobde that

there are inherent limitations on the exercise of power under section

12-A(4) of the Act is also without any merit. The lessee, who is

required to discharge the requisite functions assigned to it by the

Authority, has all the powers of the Authority "necessary for the

performance of such functions". The section authorizes exercise of all

powers of the Airports Authority of India which include the power to

collect development fee, by a private person or company in charge of

an airport as the lessee under section 12-A(1) of the Act. Therefore,

there is no question of exercise of any implied power. A statute, as is

well known, must be construed having regard to the legislative intent.

The legislative intent in amending the Act was to facilitate the process

of improvement of standard of services and facilities at the airports by

bringing in infusion of private sector investments as also for

restructuring of airports. The Statement of Objects and Reasons

specifically says that ".... significant private sector investments in such

project require an effective legal framework within which the investors

would feel safe and secure about their operational and managerial

independence." If Mr. Bobde's contention is accepted, it would

frustrate the whole governmental policy of promoting private initiative.

Such an interpretation which would defeat the very object and purpose

of the amendme0nt has to be avoided.

19. The decision relied upon by Mr. Bobde in Ahmedabad Urban

Development Authority v. Sharadkumar Jayantikumar

Pasawalla and Others (supra) has no application to the facts of the

present case. In that case, the imposition of development fee by

regulation was struck down since the parent statute did not have any

provision authorizing the levy of a fee. It was in that context that the

Supreme Court held that there is no implied power to levy a fee. In

contrast, in the present case, section 22-A of the Act contains an

express provision for the levying of a development fee and in terms of

section 12 and 12-A, the same must be read as being available to a

lessee who steps into the shoes of the Airports Authority of India and

has all the powers of the said Authority. As has been explained in the

counter affidavit of the Union of India, it is entirely for the discharge of

the functions cast upon the lessee that the development fee has been

imposed. Thus, the power to impose the development fee for these

purposes was necessarily passed on to the lessee under section 12-

A(4) of the Act. We may also mention that in a subsequent decision in

State of U.P. v. Malti Kaul (Smt.) and Others, (1996) 10 SCC 425,

the Supreme Court has in para 14 distinguished its earlier decision in

Ahmedabad Urban Development Authority v. Sharadkumar

Jayantikumar Pasawalla (supra) as follows:

14. The High Court has relied upon the judgment of this Court in Ahmedabad Urban Development Authority v. Sharadkumar Jayantikumar Pasawalla. The said ratio has no application to the facts in this case. In that case, it was found as a fact that there was no express provision for levy and demand of the developmental charges. They sought to rely on the doctrine of ejusdem generis as a source to levy the development fee. The High Court has noticed that the authority under Section 19 has the heads enumerated in Sub-section (1) of Section 91 as the source of funds. This Court found that the doctrine of ejusdem generis cannot be applied to levy and charge of development fee."

The Supreme Court then proceeded to hold in para 16 as follows:

"16. It is sought to be contended for the respondents by the learned counsel that there is no express provision and that neither Section 33 or Section 41 can be fallen back upon to levy development fee. It is true that express mention is not made either in Section 33 or Section 41; but when Section 14 and Section 56(2) are read together, it gives right and power to the sanctioning authority to impose a condition to the grant of sanction for execution of the plan in a development area by imposing the condition of either payment in advance towards the cost of the amenities or means of access etc. or give bank guarantee or mortgage the plot which is to be developed etc. as enumerated hereinabove. Therefore, the learned counsel is not right in contending that there is no provision under the Act to demand payment or bank guarantee towards the development charges of the amenities."

20. The next argument of Mr. Bobde that the absence of rules under

Section 41(1)(ee) will preclude the exercise of powers under section

22-A is also without any merit. It has been held in a catena of

decisions that where a statute confers power on an authority to do

certain acts or exercise power in respect of certain matters, subject to

rules, the exercise of power conferred by the statute does not depend

on the existence of rules unless the statute expressly provides for the

same. In other words, framing of the rules is not a condition precedent

to the exercise of the power expressly and unconditionally conferred

by the statute. In this regard, a reference has been made to the

decision of the Supreme Court in U.P. State Electricity Board,

Lucknow v. City Board, Mussorie and Others, (1985) 2 SCC 16,

where the Supreme Court held as follows:

"7. The first contention urged before us by the City Board is that in the absence of any regulations framed by the Electricity Board under Section 79 of the Act regarding the principles governing the fixing of Grid Tariffs, it was not open to the Electricity Board to issue the impugned notifications. This contention is based on sub-section (1) of Section 46 of the Act which provides that a tariff to be known as the Grid Tariff shall in accordance with any regulations made in this behalf, be fixed from time to time by the Electricity Board. It is urged that in the absence of any regulations laying down the principles for fixing the tariff, the impugned notifications were void as they had been issued without any guidelines and were, therefore, arbitrary. It is admitted that no such regulations had been made by the Electricity Board by the time the impugned notifications were issued. The Division Bench has negatived the above plea and according to us, rightly. It is true that Section 79(h) of the Act authorises the Electricity Board to make regulations laying down the principles governing the fixing of Grid Tariffs. But Section 46(1) of the Act does not say that no Grid Tariff can be fixed until such regulations are made. It only provides that the Grid Tariff shall be in accordance with any regulations made in this behalf. That means that if there were any regulations, the Grid Tariff should be

fixed in accordance with such regulations and nothing more. We are of the view that the framing of regulations under Section 79(h) of the Act cannot be a condition precedent for fixing the Grid Tariff."

21. A similar contention was rejected by the Supreme Court in

Mysore Road Transport Corporation v. Gopinath Gundachar

Char, AIR 1968 SC 464, which was a case arising under the Road

Transport Corporation Act, 1950. Under section 14 of that Act, a Road

Transport Corporation was entitled to appoint officers and servants as

it considered necessary for the efficient performance of its functions.

Under section 34(1) of the Road Transport Corporation Act, 1950, the

State Government had been empowered inter alia to issue directions to

the Road Transport Corporation regarding recruitment, conditions of

service and training of its employees. Under section 45(2)(c) of that

Act, the Road Transport Corporation was empowered to make

regulations regarding the conditions of appointment and service and

the scales of pay of officers and servants of the Corporation other than

the Chief Executive Officer, General Manager and the Chief Accounts

Officer. Admittedly, no regulations had been framed under section

45(2)(c) of that Act. It was contended that the Corporation cannot

appoint officers and servants referred to therein or make any provision

regarding their conditions of service until such regulations were made.

The Court rejected the said plea with the following observations:

"The conjoint effect of Sections 14(3)(b), 34 and 45(2)(c) is that the appointment of officers and servants and their conditions of service must

conform to the directions, if any, given by the State Government under Section 34 and the regulations, if any, framed under Section 45(2)(c). But until such regulations are framed or directions are given, the Corporation may appoint such officers or servants as may be necessary for the efficient performance of its duties on such terms and conditions as it thinks fit."

22. Specifically in the context of tax legislation, in Sudhir Chandra

Nawn v. WTO, (1969) 1 SCR 108, the Supreme Court was concerned

with Section 7(1) of the Wealth Tax Act and held as follows:

"The plea that Section 7(1) of the Wealth Tax Act is ultra vires the Parliament is also wholly without substance. That clause provides:

'Subject to any rules made in this behalf, the value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth-Tax Officer it would fetch if sold in the open market on the valuation date.'

It was urged that no rules were framed in respect of the valuation of lands and buildings. But Section 7 only directs that the valuation of any asset other than cash has to be made subject to the rules. It does not contemplate that there shall be rules before an asset can be valued. Failure to make rules for valuation of a type of asset cannot therefore affect the vires of Section 7."

23. In the result, in view of the foregoing discussion, we find that no

illegality is attached to the imposition of development fee by the

respondent No.3-DIAL with the prior permission/approval of the Central

Government vide letter No. F.No. AV.24011/002/2008-AD dated

9.2.2009. The petition is dismissed without any order as to costs.

CHIEF JUSTICE

MANMOHAN, J AUGUST 26, 2009 pk