Supreme Court Remands HRAB Calculation for Delhi & Mumbai Airports to TDSAT

Supreme Court Remands HRAB Calculation for Delhi & Mumbai Airports to TDSAT

The Supreme Court has instructed the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) to reassess the methodology used to determine the Hypothetical Regulatory Asset Base (HRAB) for Delhi International Airport Limited (DIAL) and Mumbai International Airport Limited (MIAL).

Following the discovery of crucial new evidence, both DIAL and MIAL filed applications seeking review. This evidence, a letter dated May 24, 2011, revealed internal communication between the Ministry of Civil Aviation (MoCA) and the Airport Economic Regulatory Authority (AERA) outlining a potential approach for retrospectively calculating the initial aeronautical asset base based on aeronautical charges. The applicants argued that this previously unknown information, even after due diligence, constituted an error evident within the record.

Recognising the intricate nature of both Hypothetical Regulatory Asset Base (HRAB) calculations and State Support Agreement (SSA) interpretations within the context of airport operations, the division bench composed of Justices Sanjay Kishan Kaul and M. M. Sundresh acknowledged the challenges presented by the case.

The applicants argued that the "single till" mechanism was in operation during the year 2008-09. This mechanism did not distinguish between aeronautical and non-aeronautical revenue, treating all revenue as a single source. Tariffs were set on a cost-plus basis during this time. They contended that the entirety of the revenue from 2008-09 should have been considered when determining the opening HRAB for the fiscal year 2009-10.

The proceedings also included arguments regarding the classification of the fuel throughput charge (FTC) as an aeronautical service.

Additionally, the applicants put forward a backup request. They sought either the modification of the judgment or the return of the case to the TDSAT for further consideration.

After considering the arguments presented by counsel for both parties, the Bench determined that the Court's jurisdiction in this matter is contingent upon two specialised authorities/tribunals having already considered the issue. Given the absence of an opinion from the TDSAT, the Bench expressed concerns regarding the feasibility of re-evaluating evidence and facts.

While the Court deemed it inappropriate to further explore this particular aspect, it noted that the letter, constituting internal communication accessible only to the non-applicants, should have been presented before the appropriate authorities.

“We are, thus, inclined to adopt the alternative prayer of the applicants by directing that the effect of this document ought to be examined by the TDSAT,” the Bench stated.

Based on these observations, the Court instructed the TDSAT to reassess the HRAB calculation, factoring in the newly produced letter and the "single till" mechanism.

The Court underscored the importance of the TDSAT forming its own independent view on the matter, free from any influence of its earlier opinion.

The Court issued its ruling on the applications, in accordance with the findings and disposed of the case.