Supreme Court of India
CONSUMER ONLINE FOUNDATIONversusUNION OF INDIA & ORS.
- Citation
- 2011 INSC 336
- Decided
- 26 April 2011
- Disposal
- Appeal(s) allowed
- Bench
- R V RAVEENDRAN
Holding
Development fees cannot be levied or collected by the lessees of major airports without a rate prescribed by the Airports Economic Regulatory Authority, rendering the Central Government's letters ultra vires.
Summary
The Supreme Court examined whether Delhi International Airport Ltd (DIAL) and Mumbai International Airport Ltd (MIAL) could levy development fees on embarking passengers under Section 22A of the Airports Authority of India Act, 1994, based on letters of approval from the Central Government. The petitioners argued that only the Airports Authority could levy such fees and that the rates must be prescribed by rules or determined by the Airports Economic Regulatory Authority (AERA) under the 2008 Act. The Court held that the lessees could not exercise the statutory power to levy development fees because the function of establishing or assisting new airports cannot be assigned under a lease, and the fees are a cess subject to Article 265, requiring a prescribed rate. Since the rates were not prescribed by rules and the Central Government letters did not have legal authority, the levy was ultra vires. Consequently, the Court declared that no development fee could be levied at major airports without AERA's determination, directed MIAL to cease collection, and ordered DIAL and MIAL to account the fees collected to the Airports Authority for use only under clause (a) of Section 22A.
Issues considered
- The statutory authority of DIAL and MIAL, as lessees, to levy and collect development fees under Section 22A of the Airports Authority of India Act, 1994.
- Whether the Central Government letters fixing rates of development fees are valid under the Act and saved by Section 6 of the General Clauses Act, 1897.
- The nature of development fees under Section 22A – whether they are a tax/cess requiring a prescribed rate under Article 265 of the Constitution.
- The effect of the Airports Economic Regulatory Authority Act, 2008 on the determination of development fee rates at major airports.
Legislation cited
- Airports Authority of India Act, 1994s. 12, s. 12A, s. 22, s. 22A
- Airports Authority of India (Amendment) Act, 2003s. 12A, s. 22A
- Airports Economic Regulatory Authority of India Act, 2008s. 13(1)(b)
- General Clauses Act, 1897s. 6
Subjects
development feeairportstaxcessArticle 265ultra viresleaseregulatory authoritypublic interest litigationstatutory interpretationAirports Authority of IndiaAirports Economic Regulatory AuthoritySection 22ASection 12A
Judgment
[2011] 5 S.C.R. 911
CONSUMER ONLINE FOUNDATION A
v.
UNION OF INDIA & ORS.
(Civil Appeal No. 3611 of 2011 etc.)
APRIL 26, 2011
B
[R.V. RAVEENDRAN AND A.K. PATNAIK, JJ.]
AIRPORTS AUTHORITY OF /NOIA ACT, 1994:
s.22A read with ss. 12(3)(aa) and 12A - Levy of c
development fees at airports - Letters dated 9.2.2009 and
27.2.2009 sent by Government of India approving levy of
development fees by Delhi International Airport (P) Ltd. (DIAL)
and Mumbai International Airport (P) Ltd. (MIAL) from
embarking domestic and international passengers - HELD: 0
Since the lessee of an airport cannot be assigned the
statutory function of the Airports Authority to establish airports
or assist in establishing private airports in lieu of the existing
airports at which the development fees is being collected, the
lessee cannot under sub-s. (4) of s. 12A have the power of E
the Airports Authority to levy and collect development fees u/
s. 22A of the 1994 Act - Thus, levy and collection of
development fees by DAIL and MIAL as fixed by Central
Government in the letters dated 9.2.2009 and 27.2.2009 is
ultra virus the 1994 Act and, as such, the said two letters are
not save d by s. 6 of the General Clauses Act, 1897 - F
Interpretation of Statutes - General Clauses Act, 1897 - s. 6.
s.22-A (as amended by 2003 Act) - Levy of development
fee - Nature of - HELD: Levy of development fee is not ..
charges or any other consideration for services for the G
facilities provided by the Airports Authority - The levy uls 22-
A though described as fee is really in the nature of cess or a
tax for generating revenue for the specific purposes
mentioned in clauses (a), (b) and (c) of s.22-A - Article 265
911 H
912 SUPREME COURT REPORTS [2011] 5 S.C.R.
A of the Constitution of India is, therefore, attracted which
provides that no tax can be levied or collected except by the
authority of Jaw - Section 22-A before its amendment by the
Amendment Act, 2008 stipulated that the development fees
were to be levied on and collected from the embarking
B passengers "at the rate as may be prescribed" - Therefore,
until the rate of development fees was prescribed by the rules,
levy and collection thereof was without the authority of Jaw -
Constitution of India, 1950 - Article 265.
s.22A (as amended by Amendment Act, 2008) and
C s.13(1) of Airports Econo11Jic Regulatory Authority Act, 2008
- Levy and collection of development fee to be determined
by Regulatory Authority - HELD: After the amendment of s.
22A with effect from 01.01.2009, the rate of development fees
to be levied and collected at the major airports such as Delhi
D and Mumbai is to be determined by the Regulatory Authority
under clause (b} of sub-s. (1) of s. 13 of the 2008 Act and not
by the Central Government - The Regulatory Authority has
already issued a public notice dated 23.04.2010 permitting
DIAL to continue to levy the development fees from
E embarking domestic and international passengers with effect
from 01.03.2009 on an ad hoc basis pending final
determination uls. 13 of the 2008 Act - But no such public
notice has been issued by the Regulatory Authority pertaining
to levy and collection of development fees by MIAL -
F Therefore, MIAL could not continue to levy and collect
development fees at the major airport at Mumbai and cannot
do so in future until the Regulatory Authority passes an
appropriate order u/s 22A of the 1994 Act as amended by the
Amendment Act, 2008 - Airports Economic Regulatory
G Authority Act, 2008 - s.13(1).
' --- .
s.22A - Levy and collection of development fee at
airports - Appropriation of - It is directed that DIAL and MIAL
wi/I account to the Airports Authority the development fee
H
CONSUMER ONLINE FOUNDATION v. UNION OF 913
JNDIA & ORS.
collected pursuant to the letters dated 9.2.2009 and 27.2.2009 A
-Central Government and the Airports Authority will ensure
that the amount so collected has been utilized for the purposes
mentioned in clause (a) of s.22A - It is further directed that
any development fees that may be levied and collected by
DIAL and MIAL under the authority of the orders passed by B
the Airports Economic Regulatory Authority u/s 22A of the
1994 Act as amended by the Amendment Act, 2008 shall be
credited to the Airports Authority and will be utilized for the
purposes mentioned in clauses (a), (b) or (c) of s. 22A in the
manner to be prescribed by the rules which may be made as c
early as possible.
Ministry of Civil Aviation, Government of India, sent
a letter dated 9.2.2009, to the Delhi International Airport
(Pvt.) Limited (DIAL), the lessee of the Indira Gandhi
International Airport, New Delhi conveying the approval D
of the Central Government uls. 22A of the Airports
Authority of India Act, 1994 for levy of development fees
by DIAL at the Delhi Airport at the Rate of Rs. 200/- per
embarking domestic passenger and Rs. 1300/- per
embarking International passenger purely on ad-hoc E
basis, for a period of 36 months from 1.3.2009. A similar
letter dated 27.2.2009 was sent to the Mumbai
International Airport (Pvt.) Limited (MIAL) conveying the
approval of the Central Government for levy of
development fees by MIAL at the Mumbai Airport at the F
rate of Rs. 100/- per embarking domestic passenger and
Rs. 600/- per embarking international passenger purely on
ad-hoc basis for a period of 48 months w.e.f. 1.4.2009. Writ
petitions challenging the levy of development fees at the
two Airports were dismissed by the High court. The G
instant appeals were filed challenging the judgment of the
High Court.
Allowing the appeals, the Court
H
914 SUPREME COURT REPORTS [2011] 5 S.C.R.
A HELD: 1.1 The conclusion of the High Court that the
lessee of the airport has the power of the Airports
Authority u/s. 22A of the Airports Authority of India Act,
1994 to levy and collect development fees from th·e
embarking passengers by virtue of sub-s. (4) of s. 12A of
B the Act is contrary to the legislative intent of the
Amendment Act of 2003. A perusal of s. 22A of the 1994
Act inserted by the Amendment Act of 2003, indicates that
the purposes for which the development fees are to be·
levied and collected from the embarking passengers at
C an airport are: (a) funding or financing the costs of up-
gradation, expansion or development of the airports at
which the fees 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 Airports Authority in
0
companies engaged in establishing, owning, developing,
operating or maintaining a private airport in lieu of the
airport referred to in clause (a) or advancement of loans
to such companies or other persons engaged in such
activities. Though Airports Authority can utilize the fees
E levied by it, for all or any of these purposes mentioned
in clauses (a), (b) and (c) of s. 22A, what can be assigned
by the Airports Authority to a lessee under a lease
entered into u/s. 12A of the 1994 Act is the power to levy
fees for the purposes mentioned in clause (a) of s. 22 A
F of the 1994 Act. [Para 11] [946-C-H; 947-A-B]
1.2 The functions of the Airports Authority under
clause (aa) of sub-s. (3) of s. 12 also inserted by the
Amendment Act of 2003 to establish airports, or assist in
G the establishment of private airports by rendering such
technical, financial or other assistance which the Central
Government may consider necessary for such purposes,
cannot be assigned to the lessee u/s. 12A of the 1994 Act.
The Amendment Act of 2003 which also inserted s. 12A,
H
CONSUMER ONLINE FOUNDATION v. UNION OF 915
INDIA & ORS.
therefore, provides in sub-s. (1) of s. 12A that the Airports A
Authority can make a lease of the premises of an airport
(including buildings and structures thereon and
appertaining thereto) to carry out "some" of its functions
u/s. 12 as the Airports Authority may, in the public interest
or in the interest of better management of airports, deem B
fit. Obviously, "a lease of premises of an airport" as
contemplated in sub-s. (1) of s.12A cannot inc_lude
establishing an airport or assisting in establishment of
private airports as contemplated in clause (aa) of sub-s.
(3) of s.12 of the Act. [Para 12] [947·C-E] c
1.3 To enable the Airports Authority to perform its
statutory function of establishing a new airport or to
assist in the establishment of private airports, the
legislature has thought it fit to empower the Airports
Authority to levy and collect development fees as will be D
clear from clauses (b) and (c) of s. 22A of the 1994 Act.
Such development fees levied and collected u/s. 22A can
also be utilized for funding or financing the costs of up-
gradation, expansion and development of an existing
airport at which the fees is collected as provided in clause E
(a) of s. 22A of the Act and in case the lease of the
premises of an existing airport (including buildings and
structures thereon and appertaining thereto) has been
made to a lessee u/s. 12A of the Act, the Airports
Authority may meet the costs of up-gradation, expansion r=
and development of such leased out airport to a lessee,
but this can be done only if the rules provide for such
payment to the lessee of an airport because s. 22A says
that the development fees are to be regulated and utilized
in the manner prescribed by the Rules. [Para 13] [947-F- G
H; 948-A-B]
1.4 Since the lessee of an airport cannot be assign~d
the statutory function of the Airports Authority to establish
airports or assist
. in establishing
, private airports
. in. lieu
. H
916 SUPREME COURT REPORTS [2011] 5 S.C.R.
A of the existing airports at which the development fees is
· being .collected, the lessee cannot under sub-s. (4) of s.
12A have the power of the Airports Authority to levy and
collect development fees u/s. 22A of the 1994 Act. [Para
13) [948-B-C]
B
2.1 The High Court was not correct in coming to the
conclusion that the development fees to be levied and
collected u/s. 22A of the 1994 Act is in the nature of tariff
or charges collected by the Airports Authority for the
facilities provided to the passengers and the airlines. It
C will be clear from a bare reading of ss. 22 and 22A that
there is a distinction between the charges, fees and rent
collected u/s. 22 and the development fees levied and
collected u/s. 22A of the 1994 Act. The charges, fees and
rent collected by the Airports Authority u/s. 22 are for the
D services and facilities provided by the Airports Authority
to the airlines, passengers, visitors and traders doing
business at the airport. Therefore, when the Airports
Authority makes a lease of the premises of an airport
(including buildings and structures thereon and
E appertaining thereto) in favour of a lessee to carry out
some of its functions u/s. 12, the lessee, who has been
assigned such functions, will have the powers of the
Airports Authority u/s. 22 of the Act to collect charges,
fees or rent from the third parties for the different facilities
F and services provided to them in terms of the lease
agreement. [Para 14) [948-H; 949-A-D]
2.2 The legal basis of such charges, fees or rent
enumerated in s. 22 of the 1994 Act is the contract
G between the Airports Authority or the lessee to whom the
airport has been leased out and the third party, such as
the airlines, passengers, visitors and traders doing
business at the airport. But there can be no such
contractual relationship between the passengers
embarking at an airport and the Airports Authority with
H
CONSUMER ONLINE FOUNDATION v. UNION OF 917
..
INDIA & ORS.
regard to the up-gradation, expansion or development of A
the airport which is to be funded or .financed by
development fees as provided in clause (a) of s. 22A.
Those passengers who embark at the airport after the
airport is upgraded, expanded or developed will only.
avail the facilities and services of the upgraded, expanded , B
and developed airport. Similarly, there can be no
contractual relationship between the Airports Authority
and passengers embarking at an airport for.
establishment of a new airport in lieu of the existing, i
airport or establishment of a private airport in lieu of the·~ c
existing airport as mentioned in Clauses (b) and (c) ~f s. ·.
22A of the 1994 Act. In the absence of such contractual
relationship, the liability of the embarking passengers to
pay development fees has to be based on a statutory
provision and for this reason s. 22A has been enacted 0
empowering the Airports Authority to levy and collect
from the embarking passengers the development fees for
the purposes mentioned in clauses (a), (b) and (c) of s.
22A of the Act. [Para 14] [949-D-H; 950-A-B]
2.3 The object of Parliament in inserting s. 22A in the E.
1994 Act by the Amendment Act of 2003 is to authorize
by law the levy and collection of development fees from
every embarking passenger de hors the facilities that the
embarking passengers get at the existing airports. The
nature of the levy u/s. 22A is not charges or any other F
consideration for services for the facilities provided by
the Airports Authority. The levy u/s. 22A though
described as fees is really in the nature of a cess or a tax
for generating revenue for the specific purposes
mentioned in clauses (a), (b) and (c) of s. 22A. [Para 14] G
[950-B-D]
Vijayalashmi Rice Mills & Ors. v. Commercial Tax
=
Officers, Palakot & Ors. 2006 (4) Suppl. SCR 279 (2006)
6 sec 763 - relied on.
H
918 SUPREME COURT REPORTS [2011] 5 S.C.R.
A The Trustees of the Port of Madras v. Mis Aminchand
Pyarelal & Ors. 1976 (1) SCR 721 = (1976) 3 SCC 167 - held
inapplicable.
. 2.4 Once it is held that the development fees levied
B u/s. 22A is really a cess or a tax for a special purpose,
Article 265 of the Constitution which provides that no tax
can be levied or collected except by authority of law gets
attracted. It is a settled principle of statutory interpretation
that any compulsory exaction of money by the
C Government such as a tax or a cess has to be strictly in
accordance with law and for these reasons a taxing
statute has to be strictly construed. (Para 15] (950-F-G]
3.1 Looking strictly at the plain language of s. 22A of
1994 Act before its amendment by the Amendment Act,
D 2008, the development fees were to be levied on and
collected from the embarking passengers "at the rate as
may be prescribed". Since the rules have not prescribed
the rate at which the development fees could be levied
and collected from the embarking passengers, levy and
E collection of development fees from the embarking
passengers was without the authority of law. [Para 15]
(951-B-C] .
Ahmedabad Urban Development Authority v.
F Sharadkumar Jayantikumar Pasawa/la & Ors. 1992 (3)
=
SC!i 328 (1.992) 3 SCC 285; Mohammad Hussain Gu/am
Mohammad & Anr. v. The State of Bombay & Anr. 1962 (2)
SCR 659; and Dhrangadhra Chemical Works Ltd. v. State
of Gujarat & Ors. (1973) 2 sec 345 - relied on
G Principles of Staturory Interpretation (12th Edn. P.813)
by G.P. Singh - referred to.
3.2 The rate at which the tax is to be levied is an
essential component of a taxing provision and no tax can
H be levied until the rate is fixed in accordance with the
CONSUMER ONLINE.FOUNDATION v. UNION OF 919
INDIA & ORS.
taxing provision. Therefore, until the rate of development A
fees was prescribed by the Rules, as provided in s. 22A
of the 1994 Act, development fees could not be levied on
the embarking passengers at the two major airports.
[Para 15) [951-H; 951-A-B]
B
3.3 The High Court was not correct in holding that
the exercise of the power to levy and collect development
fees u/s. 22A was not dependent on the existence of the
rules and, therefore, this power could be exercised even
if the rules have not been framed prescribing the rate of C
development fees u/s. 22A of the 1994 Act. From the
language of s. 22A, there is no room whatsoever for the
Airports Authority to levy and collect any development
fees except at the rate prescribed by the Rules. Therefore,
the power u/s. 22A of the 1994 Act to levy development
fees could not be exercised without the rules prescribing D
the rate at which development fees was to be levied. [Para
16-18) (952-C; 953-0-H; 954-A]
U. P. State Electricity Board, Lucknow v. City Board,
Mussorie & Ors 1985 (2) SCR 815 = (1985) 2 SCC 16; and E
Mysore Road Transport Corporation v. Gopinath Gundachar
=
Char 1968 SCR 767 AIR 1968 SC 464; Sudhir Chandra
Nawn v. Wealth-Tax Officer, Calcutta & Ors.1969 (1) SCR
108; T. Cajee v. U. Jormanik Siem & Anr. 1961 SCR 750 =
Al~ 1961 SC 276; The Madras and Southern Maharatta F
Railway Company Limited v. The Municipal Council Bezwada
(1941) 2 MLJ 189; Jantia Hill Truck Owners Association, etc.
v. Shailang Area Coal Dealer and Truck Owner Association
=
& Ors. 2009 (10) SCR 536 (2009) 8 SCC 492; Meghalaya
State Electricity Board & Anr. v. Jagadindra Arjun 2001 (1) G
Suppl. SCR 233 (2001) 6 SCC 446 - held inapplicable.
Madras and Southern Maharatta Ry. Co. vs. Bezwada
Municipality AIR 1944 Penal Code, 71 - referred to.
3.4 Therefore, the rate of development fees could not H ,
920 SUPREME COURT REPORTS [2011] 5 S.C.R.
A be determined by the Central Government in the two
lett~rs dated 09.02.2009 and 27.02.2009 communicated to
DIAL and MIAL respectively. Under s. 22A of the 1994 Act,
the Central Government has only the power to grant its
previous approval to the levy a!ld collection of the
B' development fees but has no power to fix the rate at
which the development fees is to be levied and collected
from the embarking passengers. Therefore, the levy and
collection of development fees by DIAL and MIAL at the
rates fixed by the Central Government in the two letters
c dated 09.02.2009 and 27.02.2009 is ultra vires the 1994 Act
and the two letters being ultra vires the 1994 Act are not
saved bys. 6 of the General Clauses Act, 1897. [Para 19]
[954-B-D]
4.1 After the amendment of s. 22A by the Amendment
D Act, 2008 with effect from 01.01.2009, the rate of
development fees to be levied and collected at the major
airports such as Delhi and Mumbai is to be determined
by the Regulatory Authority under clause (b) of sub-s. (1)
of s. 13 of the Airports Economic Regulatory Authority
E Act, 2008 and not by the Central Government. The
Regulatory Authority constituted under the 2008 Act has
already issued a public notice dated 23.04.2010
permitting DIAL to continue to levy the development fees
at the rate of Rs.200/- per embarking domestic passenger
F and at the rate of Rs.1,300/- per embarking international
passenger with effect from 01.03.2009 on an ad hoc basis
pending final determination u/s. 13 of the 2008 Act. This
public notice dated 23.04.2010 has been issued by the
Regulatory Authority under the 2008 Act long after the
G impugned decision of the High Court upholding the levy
and it has not been challenged by the appellants.
Therefore, the question of examining the validity of the
said public notice dated 23.04.2010 issued by the
Regulatory Authority pertaining to levy and collection of
H development fees by DIAL does not arise. But no such
CONSUMER ONLINE FOUNDATION v. UNION OF 921
INDIA & ORS.
public notice has been issued by the Regulatory A
Authority under the 2008 Act pertaining to levy and
collection of development fees by MIAL. Therefore, MIAL
could not continue to levy and collect development fees
at the major airport at Mumbai and cannot do so in future
until the Regulatory Authority passes an appropriate B
order u/s. 22A of the 1994 Act as amended by the
Amendment Act, 2008. [Para 20] [954-E-H; 955-A-B]
5.1. In the facts of the case, th·e development fees
have been collected by DIAL and MIAL on the basis of
the two letters dated 09.02.2009 and 27.02.2009 of the C
Central Government from the embarking passengers at
Delhi and Mumbai and these embarking passengers, from
whom the development fees have been collected, cannot
now be identified nor can they be traced for making the
refund to them. Further there is significantly no prayer for D .
refund in any of the three writ petitions. However, it is
necessary to ensure that the development fees levied
and collected are utilized, only for the specific purposes
mentioned in s. 22A of the 1994 Act. Interests of justice
would be met if DIAL and MIAL are directed to account E
to the Airports Authority the development fees so far
levied and collected by them and utilized for the purposes
mentioned in clause (a) of s. 22A of the 1994 Act. [Para
22] [9~5-G-H; 956-A-B]
F
Mis Orissa Cement Ltd. Vs. State of Orissa AIR 1991 SC
1676 • relied on.
5.2 (i) It is, therefore held that development fees could
not be levied and collected by the lessees of the two
major airports, namely, DIAL and MIAL, on the authority G
of the two letters dated 09.02.2009 and 27.02.2009 of the
Central Government from the embarking passengers
under the provisions of s. 22A of the 1994 Act.
(ii) It is declared that with effect from 01.01.2009, no H
922 SUPREME COURT REPORTS [2011) 5 S.C.R.
A development fee could be levied or collected from the
embarking passengers at major airports u/s. 22A of the
1994 Act, unless the Airports Economic Regulatory
Authority determines the rates of such development fee.
(iii) It is directed that MIAL will not levy and collect any
8
development fee at the major airport at Mumbai until an
appropriate order is passed by the Airports Economic
Regulatory Authority u/s. 22A of the 1994 Act as amended
by the Amendment Act, 2008.
C (iv) It is directed that DIAL and MIAL will account to
the Airports Authority the development fees collected
pursuant to the two letters dated 09.02.2009 and
27 .02.2009 of the Central Government and the Airports
Authority will ensure that the development fees levied
D and collected by .DIAL and MIAL have been utilized for the
purposes mentioned in clause (a) of s. 22A of the 1994
Act.
(v) It is further directed that any development fees
E that may be levied and collected by DIAL and MIAL under
the authority of the orders passed by the Airports
Economic Regulatory Authority u/s. 22A of the 1994 Act
as amended by the Amendment Act, 2008 shall be
credited to the Airports Authority and will be utilized for
F the purposes mentioned in clauses (a), (b) or (c) of s. 22A
of the 1994 Act in the manner to be prescribed by the
rules which may be made as early as possible. [Para 23]
[956-C-H; 957-A-D]
Orissa State (Prevention & Control of Pollution) Board v.
G Orient Paperdd Mills & Anr. (2003) 10 SCC 421, Kera/a State
Electricity Board v. Mis S.N. Govinda Prabhu & Bros. & Ors.
(1986) 4 SCC 198, Surinder Singh v. Central Government &
=
Ors. 1986 (3) SCR 946 1986 (1986) 4 SCC 667; Jayantilal
Amrath/al v. Union of India [(1972) 4 SCC 174; S.L. Srinivasa
H Jute Twine Mills (P) Ltd. v. Union of India & Anr. 1991 (2)
CONSUMER ONLINE FOUNDATION v. UNION OF 923
INDIA & ORS.
Suppl. SCR 305 = (2006) 2 SCC 740; Mumbai Agricultural A
Produce ·Market Committee & Anr. v. Hindustan Lever
Limited & Ors. 2008 (4) SCR 471; (2008) 5 SCC 575; Union
of India v. S. Narayana Iyer (1970) 1 MLJ 19; and Union of
India & Ors. v. Motion Picture Association & Ors. (1999) 6
SCC 150; Commissioner of Income Tax, Udaipur, Rajasthan B
v. Mcdowell and Company Ltd. 2009 (8) SCR 983 = (2009)10
SCC 755; State of West Bengal v. Kesoram Industries Ltd.
& Ors. (2004) 10 SCC 201; and Bangalore Water Supply &
Sewerage Board v. A. Rajappa & Ors. 1979 (3) SCR 545 =
(1978) 2 sec 213 - cited. c
Case Law Reference:
1985 (2) SCR 815 held inapplicable para 5
1968 SCR 767 held inapplicable para 5
-D
1969 (1) SCR 108 . held inapplicable para 5
(2003) 10 sec 421 cited para 7
(1986) 4 sec 198 cited para 7
1986 (3) SCR 946
E
cited para 7
(1972) 4 sec 114 cited para 7
1991 (2) Suppl. SCR 305 cited para 7
1976 (1) SCR 721 held inapplicable para 8 F
1961 SCR 750 held inapplicable para 8
2008 (4) SCR 471 cited para 8
(1970) 1 MLJ 19 cited para 8
G
(1999) s sec 150 cited para 8
(1941) 2 MLJ 189 held inapplicable para 8
2009 (10) SCR 536 _held inapplicable para 8
H
924 SUPREME COURT REPORTS [2011] 5 S.C.R.
A 2001 (1) Suppl. SCR 233 held inapplicable para 8
2006 (4) Suppl. SCR 279 relied on para 8
2009 (8) SCR 983 cited para 8
B
(2004) 1o sec 201 cited para 8
1979 (3) SCR 545 cited para 8
1962 (2) SCR 659 relied on para 8
(1973) 2 sec 345 relied on para 8
c
AIR 1991 SC 1676 relied on para 22
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
3611 of 2011 etc.
D From the Judgment & Order dated 26.08.2009 of the High
Court of Delhi at New Delhi in Writ Petition (D) No. 9316 of
2009.
WITH
E C.A. Nos. 3612, 3613 & 3614 of 2011.
F.S. Nariman, Arunabh Chodhury, Anurag Sharma,
Prashant Kumar, Raktim Gogoi, Anupam Lal Das (for AP & J
Chambers), Meenakshi Arora, Joseph Pookkatt, Sanjib Sen
F (for AP & J Chambers), Sumita Hazarika, Partha Sil for the
Appellant.
Indira Jaisingh, ASG, Dr. AM. Singvi, Harish N. Salve,
Milanka Chaudhary, Sarojanand Jha, Abhishek Sharma, Rook
Ray, Dharmendra Kumar Sinha, Prateek Jain, Balaji
G Subramanian, Sushma Suri, Atul Nanda, Rameeza Hakeem
(for Law Associates & Co.), Amar Dave, Ashish Jha, Farid
Karachiwala, Meenakshi Chatterjee (for "Coac", Harish Beeran,
R.S. Jena for the Respodents.
H The Judgment of the Court was delivered by
CONSUMER ONLINE FOUNDATION v. UNION OF 925
INDIA & ORS.
A. K. PATNAIK, J. 1. Application for permission to file A
SLP in SLP[C] No.1.1799/2011 [CC No.1066/2010] is allowed
and delay condoned.
2. Leave granted.
B
3. These are appeals against the judgment and order
dated 26.08.2009 of the Division Bench of the Delhi High Court
in public interest litigations upholding the validity of lev.y of
development fees on the embarking passengers by the lessees
of the Airports Authority of India at the Indira Gandhi International C
Airport, New Delhi and the Chhatrapati Shivaji International
Airport, Mumbai.
Relevant Facts:
4. The Airports Authority of India Act, 1994 (for short 'the D
1994 Act') came into force on 01.04.1995 and under Section
3 of the 1994 Act, the Central Government constituted the
Airports Authority of India (for short 'the Airports Authority').
Section 12 of the 1994 Act enumerates the various functions
of the Airports Authority. By the Airports Authority of India E
(Amendment) Act, 2003 (for short 'the Amendment Act of
2003'), Sections 12A and 22A were inserted in the 1994 Act
with effect from 01.07 .2004. The newly inserted Section 12A
provides that the Airports Authority may make a lease of the
premises of an airport to carry out some of its functions under
Section 12 as the Airports Authority may deem fit. The newly F
inserted Section 22A of the 1994 Act provides that with the
approval of the Central Government, the Airports Authority may
levy on, and collect from, the embarking passengers at an
airport, the development fees at the rate as may be prescribed.
On 04.04.2006, the Airports Authority leased out the Indira G
Gandhi International Airport, New Delhi (for short 'the Delhi
Airport') to the Delhi International Airport Private Limited (for
short 'DIAL') and also leased out the Chhatrapati Shivaji
International Airport, Mumbai (for short 'the Mumbai Airport'} to
Mumbai International Airport Private Limited (for short 'MIAL'}. H
926 SUPREME COURT REPORTS [2011] 5 S.C.R.
A Section 22A of the 1994 Act was amended by the Airports
Economic Regulatory Authority of India Act, 2008 (for short 'the
2008 Act') and the amended Section 22A provided for
determination of the rate of development fees for the major
airports under clause (b) of sub-section (1) of Section 13 of the
B 2008 Act by the Airports Economic Regulatory Authority (for
short 'the Regulatory Authority'). The amended Section 22A was
to take effect on and from the date of the establishment of the
Regulatory Authority. The Government of India, Ministry of Civil
Aviation, sent a letter dated 09.02.2009 to DIAL conveying the
c approval of the Central Government under Section 22A of the
1994 Act for levy of development fees by DIAL at the Delhi
Airport at the rate of Rs.200/- per departing domestic
passenger and at the rate of Rs.1300/- per departing
international passenger inclusive of all applicable taxes, purely
on ad hoc basis, for a period of 36 months with effect from
D 01.03.2009. Similarly, the Government of India, Ministry of Civil
Aviation, sent another letter dated 27.02.2009 to MIAL
conveying the approval of the Central Government under
Section 22A of the 1994 Act for levy of development fees by
MIAL at the Mumbai Airport at the rate of Rs.100/- per departing
E domestic passenger and at the rate of Rs.600/- per departing
international passenger inclusive of all applicable taxes, purely
on ad hoc basis, for a period of 48 months with effect from
01.04.2009. The levy of development fees by DIAL as the
lessee of the Delhi Airport was challenged in Writ Petition No.
F 8918/2009 by Resources of Aviation Redressal Association.
The levy of development fees by DIAL and MIAL as lessees of
the Delhi and Mumbai Airports were challenged in Writ Petition
No. 9316 of 2009 and Writ Petition No. 9307 of 2009 by
Consumer Online Foundation. The Writ petitioners contended
G inter alia that such levy of development fees under Section 22A
of the 1994 Act can only be made by the Airports Authority and
not by the lessee and that until the rate of such levy is either
prescribed by the Rules made under the 1994 Act or
determined by the Regulatory Authority under the 2008 Act as
H provided in Section 22A of the Act before and after its
I
CONSUMER ONLINE FOUNDATION v. UNION OF 927
INDIA & ORS. [A.K. PATNAIK, J.]
amendment by the 2008 Act, the levy and collection of A
development fees are ultra vires the 1994 Act. The Division
Bench of the High Court, after hearing, held that there was no
illegality attached to the imposition of development fees by the
two lessees with the prior approval of the Central Government
and dismissed the writ petitions by the impugned judgment and B
order.
Conclusions of the High Court:
5. In the impugned judgment and order, the High Court held
that under sub-section ( 1) of Section 12A of the 1994 Act, the C
Airports Authority is empowered to lease an airport for the
· performance of its functions under Section 12 and such a lease
is a statutory lease which enables the lessee to perform the
functions of the Airports Authority enumerated in Section 12.
The High Court further held that sub-section (4) of Section 12A D
provides that the lessee who has been assigned some
functions of the Airports Authority under sub-section (1) shall
have "all" the powers of the Airports Authority necessary for the
performance of such functions in terms of the lease and use of
the word "all" indicates that the lessee would have each and E
every power of the Airports Authority for the purpose of
discharging such functions including the power under Section
22A to levy and collect development fees from the embarking
passengers. The High Court took the view that development
fee though described as fee in Section 22A is more akin to a F
charge or tariff for the facilities provided by the Airports
Authority to the airlines and passengers. The High Court came
to the conclusion that the exercise of the power to levy and
collect development fees under Section 22A was not
dependent on the existence of the rules and, therefore, this G
power can be exercised even if "the rules have not framed
prescribing the rate of development fees under Section 22A
(before its amendment by the 2008 Act). In coming to this
conclusion, the High Court relied on the decisions of this Court
in U.P. State Electricity Board, Lucknow v. City Board, H
'~
928 SUPREME COURT REPORTS [2011) 5 S.C.R.
A Mussorie & Ors. [(1985) 2 SCC 16), Mysore Road Transport
Corporation v. Gopinath Gundachar Char [AIR 1968 SC 464)
and Sudhir Chandra Nawn v. Wealth- Tax Officer, Calcutta &
Ors. [1969 (1) SCR 108).
Contentions on behalf of the appellants:
8
6. Mr. Fali S. Nariman, learned senior counsel, leading the
arguments on behalf of the appellants, made these
submissions:
c (i) The conclusion of the High Court that the power under
Section 22A to levy and collect the development fees from the
embarking passengers can be exercised without the rules is
erroneous because the language of Section 22A of the 1994
Act prior to its amendment by the 2008 Act makes it clear that
0 development fees could be levied and collected from the
embarking passengers at the airport "at the rate as may be
prescribed" and the fees so collected are to be credited to the
Airports Authority and are to be regulated and utilized "in the
prescribed manner". Unless, therefore, the statutory rules are
E made prescribing the rate at which such fees are to be collected
and prescribing the regulation and manner of the utilization of
development fees, the power under Section 22A cannot be
exercised. After the amendment by the 2008 Act, Section
22A(ii) provides that the development fee to be levied on and
collected from the embarking passengers at major airports,
F such as the Delhi Airport and the Mumbai Airport, would be at
the rate as may be determined under Clause (b} of sub-section
(1) of Section 13 of the 2008 Act. The .Regulatory Authority has
been established by notification dated 12.05.2009 and unless
the rate of development fees is determined by the Regulatory
G Authority under Clause (b) of sub-section (1) of Section 13 of
the 2008 Act, the same cannot be levied and collected from
the embarking passengers at the two major airports. The
determination of the rate of development fees to be levied at
the two major airports under Clause (b) of sub-section (1) of
H Section 13 of the 2008 Act by the Regulatory Authority of India
CONSUMER ONLINE FOUNDATION v. UNION OF 929
INDIA & ORS. [A.K. PATNAIK, J.]
is still pending and the impugned levy of development fees by A
DIAL and MIAL are, therefore, ultra vires.
{ii) The purposes for which the development fees are to
be levied and collected are indicated in clauses {a), (b) and
{c) of Section 22A of ttie 1994 Act and these are: 8
{a) funding or financing the costs of upgradation,
expansion or development of the airports at which
the fees is collected, or
(b) establishment or development of a new airport in C
lieu of the existing airport, or
(c) investment in the equity in respect of shares to be
subscribed by the Airports Authority in companies
engaged in establishing, owning, developing,
operating or maintaining a private airport in lieu of D
the existing airport or advancement of loans to such
companies or other persons engaged in such
activities.
Under the 1994 Act, it is only the Airports Authority which can "E
carry out these three purposes and not the lessee of the
Airports Authority under Section 12A of the 1994 Act and,
therefore, 'the lessee can have no power to levy and collect the
development fees from the embarking passengers. He argued
that the conclusion of the High Court in the impugned judgment F
and order, that under sub-section (4) of Section 12A of the 1994
Act, the lessee having been assigned some of the functions of
the Airports Authority has all the powers of the Airports Authority
necessary for the performance of such functions in terms of the
lease including the power to levy development fees under G
Section 22A of the 1994 Act, is therefore not correct. He
referred to the various provisions of the Operation,
Management and Development Agreement (for short 'OMDA')
and the State Support Agreement execut~.d between the
Airports Authority and DIAUM IAL to show that th~ power to levy H
930 SUPREME COURT REPORTS [2011) 5 S.C.R.
A development fees from the embarking passengers have in fact
not been assigned by the Airports Authority to DIAUMIAL.
Replv on behalf of the Union of India:
7. Mr. Gopal Subramanium, learned Solicitor General
B appearing for the Union of India, made these submissions:
(i) Section 12A of the 1994 Act begins with a non-obstante
clause and it empowers the Airports Authority to lease the
premises of an airport to a third party to carry out some of its
c functions under Section 12 of the 1994 Act and in exercise of
this power the Airports Authority and the DIAL and the Airports
Authority and MIAL have entered into agreements in respect
of the leases and the Airports Authority has delegated some
of its functions to DIAL and MIAL in respect of the Delhi Airport
D and Mumbai Airport respectively. A reading of the lease
agreements (OMDA) would show that the functions of
operation, maintenance, development, design, construction, up-
gradation; modernization, finance and managemenfof the
airports are to be carried out by the two· lessees. If DIAL, and
E MIAL have to carry out these functions under the lease
agreement to develop, finance, design, construct, modernize,
operate, maintain, use and regulate the use of the airports by
the third party, they must have power to determine, demand,
collect and retain appropriate charges from the users of the
F airports.
· (ii) Section 22A of the 1994 Act permits the Airports
Authority after previous approval of the Central Government to
levy on and collect from embarking passengers at an airport
development fees. Accordingly, after the lease of the two
G airports by the Airports Authority to DIAL and MIAL, the Central
Government has conveyed its approval in the two letters dated
09.02.2009 and 27.02.2009 to DIAL and MIAL for levy of
development fees by DIAL and MIAL respectively from the tWo
airports. Such approval conveyed by the Central Government
H is entirely in accordance with Section 12A of the 1994 Act. In
CONSUMER ONLINE FOUNDATION v. UNION OF 931
INDIA & ORS. [A.K. PATNAIK, J.]
view of sub-section (4) of Section 12A of the 1994 Act providing A
that a lessee who has been assigned any of the functions of
the AirportsAuthority would have all the powers of the Airports
Authority necessary for the performance of such function in
terms of the lease, the power of the Airports Authority to levy
the development fees has also been rightly assigned td DIAL B
and MIAL. A reading of the two approval letters would show that
various conditions and safeguards have been incorporated in
the approval letters to protect the interest of the public and to
provide rigorous checks with regard to the manner in which
DIAL and MIAL can deal with the fees collected by them and it c
will be clear from the approval letters that the fees can be
utilized only for the purpose mentioned in Section 22A of the
1994 Act.
(iii) The purposes mentioned in clauses (b) and (c), namely,
"development of a new airport" and "a private airport" D
respectively relate to the very airport in respect of which the
lease is executed and fees are collected, as it ~ould be clear
from the expression "in lieu of the airport referred to in clause
(a)". It is significant that Section 12A and Section 22A of the
1994 Act were both introduced by the same Amendment Act E
of 2003.
(iv) Though Section 22A of the 1994 Act, before its
amendment by the 2008 Act provided that for levy of
development fees "at the rate as may be prescribed" and for F
regulation and utilization of the development fees "in the
prescribed manner", the absence of the rules prescribing the
rate of development fees or the manner of regulation and
utilization of development fees will not render Section 22A
ineffective. The legal proposition that absence of rules and G
regulations cannot negate the power conferred on an authority
by the legislature is settled by decisions of this Court in Orissa
State (Prevention & Control of Pollution) Board v. Orient
Paperdd Mills & Anr. [(2003) 10 SCC 421], U.P. State
Electricity Board, Lucknow v. City Board, Mussorie & Ors.
H
932 SUPREME COURT REPORTS [2011] 5 S.C.R.
A (supra). Kera/a State Electricity Board v. Mis S.N. Govinda
Prabhu & Bros. & Ors. [(1986) 4 SCC 198], Surinder Singh
v. Central Government & Ors. [(1986) 4 SCC 667] and Mysore
Road Transport Corporation v. Gopinath Gundachar Char
(supra).
B
(v) The arguments advanced by Mr. Nariman on behalf of
the appellant regarding the amendment of Section 22A of the
1994 Act by the 2008 Act were not raised before the High Court
and the foundation for such a plea has also not been laid in
C the special leave petition. In any case the approval granted by
the Central Government to DIAL and MIAL to levy the
development fees for a period of three years would not be
rendered automatically inoperative on the enactment· of the
2008 Act amending Section 22A of the 1994 Act and therefore
DIAL and MIAL continue to have the right to collect the
D development fees by virtue of the approvals granted by the
Central :Government which are saved by ~ection 6 (c) of the
General Clauses Act, 1897 despite the amendment of Section
22A by the 2008 Act. The decisions of this Court in Jayantilal
Amrathlal v. Union of India [(1972) 4 SCC 174], S.L. Srinivasa
E Jute Twine Mills (P) Ltd. v. Ul"Jion of India & Anr. [(2006) 2 SCC
740] and Mis. Gurcharan Singh Ba/dev Singh v. Yashwant
Singh & Ors. [(1992) 1 SCC 428] support this contention.
(vi) Section 2 (n) of the 2008 Act defines "service provider''
F as any person who provides aeronautical services "and is
eligible to levy and charge user development fees from the
embarking passengers at any airport and includes the authority
which manages the airport". This provision expressly indicates
that under the 2008 Act also the entity managing the airport is
G eligible to levy and collect the development fees. The 1994 Act
and the 2008 Act provide a statutory framework for the
modernization and improvement of the aviation infrastructure
of the country and should be interpreted in a harmonious
manner so that they complement each other rather tha6 conflict
H with each other. The Regulatory Authority constituted ynder the
CONSUMER ONLINE FOUNDATION v. UNION OF 933 '.
INDIA & ORS. [A.K. PATNAIK, J.]
2008 Act has already issued a public notice dated 23.04.2010 · A
· which would show that it has permitted DIAL to continue to levy
the development fees at the rate of Rs.200/- per departing
domestic passenger and at the rate of Rs.1,300/- per departing
international passenger with effect from 01.03.2009 on an ad
hoc basis pending final determination. The Court should not B
therefore interfere with the levy and collection of the
development fees by DIAL and MIAL at this stage.
Reply on behalf of MIAL and DIAL:
8. Mr. Harish N. Salve, learned senior counsel, and Dr. C
Abhishek Singhvi, learned senior counsel, appeared for M!AL
and DIAL and made these submissions:
(i) The challenge ofthe appellant to the levy and collection
of airport development fees by the lessees of the two airports · D
is based on a misconception that development fees is in the
nature of a tax and can be levied strictly in accordance with
Section 22A of the 1994 Act, only by the Airports Authority and
not by the lessee. Development fees is not really a tax but
charges levied and collected by the lessee for development of E
facilities for the use of the airport. The lessees, which are non-
government companies, have established the utility in a public-
private partnership, and do not require a statutory authorization
or permission to recover such charges by way of development
fee, from the passengers using the airport and the lessees do
F
not require the support of the statutory provision of Section 22A
for levy and collection of developrnent fees. Section 11 of the
1994 Act mandates that the Airports Authority would discharge
its functions on business principles and Section 12 of the 1994
Act enumerates the functions of the Airports Authority and as
the Airports Authority in the discharge of its functions provides G
different facilities, it is entitled to collect charges for such
facilities as per contractual arrangements with those who use ..
the facilities. These charges are really in the nature of .
consideration from persons using the facilities provided by the
Airports Authority. The nature of these charges for the facilities
934 SUPREME COURT REPORTS [2011) 5 S.C.R.
A provided by an authority has been clarified by this Court in The
Trustees of the Port of Madras v. Mis Aminchand Pyarelal &
Ors. [(1976) 3 SCC 167), Mumbai Agricultural Produce Market
Committee & Anr. v. Hindustan Lever Limited & Ors. [(2008) 5
SCC 575], Union of India v. S. Narayana Iyer [(1970) 1 MLJ
B 19] and Union of India & Ors. v. Motion Picture Association &
Ors. [(1999) 6 SCC 150]. As the facilities are in the nature of
monopolies, the statute imposes regulations for the charges to
prevent an abuse of monopolistic position and Sections 22 and
22A of the 1994 Act reflect such statutory curtailments of the
c rights of the owners of the facilities to recover sums from airlines
and passengers. Hence, the right to recover charges is not
based on Sections 22 and 22A but flows from the ownership
of the facilities. What is determined, therefore, is the charges
that would be contractually recovered from the users of the
facilities as was held in Mis Aminchand Pyarelal & Ors. (supra).
0
(ii) Section 22 of the 1994 Act identified the heads on
which charges could be recovered. Section 22A, therefore,
merely adds three more heads for which funds could be raised
and this is akin to adding components of a tariff. Section 22A
E does not change the quality and character of the recovery of
charges by the owners of the facilities from the users thereof.
Section 22A does not also change the nature and character of
what is recovered by an airport operator from its customers.
The High Court was, therefore, right in coming to the conclusion
F in the impugned judgment that development fees under Section
22A of the 1994 Act was in the nature of a tariff.
(iii) Section 12A of the 1994 Act (a) recognizes statutorily
the power of the Airports Authority to make a lease of the
G premises of an airport for the purpose of carrying out some of
its functions under Section 12 and (b) transfers as it were to
the lessee all the powers of the Authority. As will be clear from
sub-section (4) of Section 12A of the Act, the lessee who has
been assigned some functions of the Airports Authority under
Section 12 of the 1994 Act has the power of the Airports
H
CONSUMER ONLINE FOUNDATION v. UNION OF 935
INDIA & ORS. [A.K. PATNAIK, J.)
Authority "necessary for the performance of such functions". The A
power to recover charges for the facilities at the airport in
respect of which a lease is made, whether they be the charges ..
under Section 22 or the charges under Section 22A are
necessary for discharging of the functions of maintaining and
upgrading the airports. Since sub-section (4) of Section 12A B
itself states that the lessee shall have ·~all" the powers of the ,..
Airports Authority, there is no warrant to take the vjew that the.
lessee shall not have the power of the Airports Authority under .
Section 22A to levy and collect development fees ..... :.. .
(iv) The functions which have been entrusted t6· the two C
lessees, DIAL and MIAL, include the up-gradc:1tion and
modernization of the airport including construction of new
terminals and this will be clear from clause 2.1 titled "Grant of
Function" and clause 8.3 titled "Master plan" of the OMDA..The
relevant provisions of the State Support Agreement between D
the Airports Authority and the two lessees and i.n particular·.
clauses 3.1 and 3.1A also.deal with .the recovery of such ..
charges in the performance of the functions. It is for the ·
discharge of these functions that development fees is levied and
collected and the power to collect development fee has been E
passed on to the lessee under sub-section (4) of Section 12A
of the 1994 Act.
(v) Rules prescribing the rate of development fees and
regulation and the manner in which the development fees will F
be utilized as provided in Section 22A of the 1994 Act cannot
curtail the power to levy and collect development fees under
Section 22A of the 1994 Act. This· proposition is settled· by the
decisions of this Court in Orissa State (Prev~ntion & Control
of Pollution} Board v. Orient Paperdd Mills & Anr. (supra), T. G
Cajee v. U. Jormanik Siem & Anr. (AIR 1961. SC 276), The
Madras and Southern Maharatta Railway Company Limited v. ·
The Municipal Council Bezwada [(1941} 2 MLJ. 189) as
·approved by the Privy Council in its decision reported in AIR ...
1944 PC 71, Jantia Hill Truck Owners Association, etc. v. · ·H
936 SUPREME COURT REPORTS [2011] 5 S.C.R.
A Shailang Area Coal Dealer and Truck Owner Association & Ors.
[(2009) 8 SCC 492], Surinder Singh v. Central Government &
Ors. (supra), Meghalaya State Electricity Board & Anr. v.
Jagadindra Arjun [(2001) 6 SCC 446] and U.P. State Electricity
Board, Lucknow v. City Board, Mussorie & Ors. (supra). Since
B the power to collect the development fee is already available
to the Airports Authority or its lessees as part of its power to
collect charges for the facilities, absence of a rule does not
negate the power. The rule under Section 22A was to be made
not for purposes of conferring the power but to regulate the rate
C of development fees and manner of utilization of development
fee as a check on such power.
(vi) After the 2008 Act and after the notification dated
31.08.2009 bringing the provisions of 2008 Act in Chapters Ill
and VI into force w.e.f. 01.09.2009, the Regulatory Authority has
D jurisdiction under Section 13(1)(b) of the 2008 Act to determine
the amount of development fees in respect of major airports,
such as, Delhi and Mumbai Airports. The Regulatory Authority
has already commenced its functions and has undertaken the
process of final determination of development fee. Till the
E Regulatory Authority modifies the levy of development fees, the
two lessees are entitled to collect development fees as per the
two letters dated 09.02.2009 and 27.02.2009 of the Central
Government conveying the approval to the lessees of the two
airports. The contention of the appellant that the development
F fees cannot be recovered till such time as the Regulatory
Authority determines the rate of development fees is
misconceived. The contention of the appellant that the
development fees can be utilized only for the purposes
mentioned in Section 22A of the 1994 Act is also
G misconceived. The approval letters of the Central Government
show that the deve\opment fees can be utilized for the
development of Aeronautical Assets which are Transfer Assets
in terms of OMDA; and under the OMDA, these Transfer
Assets shall revert to the Airports Authority on the expiry or early
H termination of OMDA. On a perusal of the three clauses
CONSUMER ONLINE FOUNDATION v. UNION OF 937
INDIA & ORS. [A.K. PATNAIK, J.]
enumerated in Section 22A of the 1994 Act, it is clear that A
depending on the functions assigned to the lessee, the
corresponding powers to collect development fees for
discharging the function also is passed on to the lessee under
sub-section (4) of Section 12A of the 1994 Act. In other words,
there is a clear nexus established between the function so B
assigned and the power to collect the development fees.
Rejoinder on behalf of the appellants:
9. In rejoinder, Mr. Nariman made these submissions:
c
(i) Under Clause 13(i) of OMDA the lessee has undertaken
to arrange for financing and/or meeting of all financial
requirements through suitable debt and equity the contribution
in order to comply with its obligation including development of
the airport pursuant to the Master Plan and the Major o
Development Plans. Hence, there was no question of levy of
development fees by the lessee for the purposes of
development of the airport which has been leased out to the
lessee. The airports belong to the Central Government and the
Airports Authority has leased out the airport premises to the E
lessee to manage the airport. Section 38 of the 1994 Act
empowers the Central Government to temporarily divest the
Airports Authority of the management of the airport and Section
39 of the 1994 Act empowers the Central Government to
supersede the Airports Authority. The lessee, therefore, is not
the owner of the airport and is consequently not empowered
F
to charge development fess for the development of the airport.
Only a limited right has been conferred on the private lessee
under Section 12A of the 1994 Act to undertake some of the
functions of the Airports Authority enumerated in Cl~use 2.1.1
of the OMDA read with Schedule 5 and Schedule 6 which G
enumerate the aeronautical services and non-aeronautical
services respectively.
(ii) The levy under Section 22A of the 1994 Act is for the
specific purposes mentioned in Clauses (a), (b) or (c) thereof H
938 SUPREME COURT REPORTS [2011) 5 S.C.R.
A and though termed as fees, it is really in the nature of a cess
and therefore there need not be any direct co-relation between
the levy of fees and the services rendered as has been held
by the High Court in the impugned judgment. In Vijayalashmi
Rice Mills & Ors. v. Commercial Tax Officers, Palakot & Ors.
B [(2006) 6 SCC 763), this Court has also held that ordinarily a
cess means a tax which raises revenue which is applied to a
specific purpose. This Court has held in Commissioner of
Income Tax, Udaipur, Rajasthan v. Mcdowell and Company Ltd.
((2009)10 sec 755) that the power to levy tax, duty, cess or
c fee can be exercised only under law authorizing the levy. Thus,
cess is ultimately a compulsory exaction of money and must
satisfy the test of Article 265 of the Constitution which declares
that no tax shall be levied or collected without authority of law.
This Court has also held in Ahmedabad Urban Development
0 Authority v. Sharadkumar Jayantikumar Pasawalla & Ors.
[(1992) 3 sec 285] that the power of imposition of tax and/or
fee must be very specific and there is no scope of implied
authority for imposition of such tax or fee. This position of law
has been reiterated by this Court in State of West Bengal v.
E Kesoram Industries Ltd. & Ors. [(2004) 10 SCC 201]. Section
22A of the 1994 Act was, therefore, enacted by the Amendment
Act of 2003 to specifically empower the Development Authority
to impose levy and collect development fees which is to be used
for the specific purposes indicated in clauses (a), (b) and (c)
of Section 22A of the 1994 Act and this power cannot be
F usurped by the lessee of the airport by treating it as charges
for facilities.
(iii) The judgments relied on by the respondents in support
of their contention that non-framing of rules do not negate the
G power to levy development fees under Section 22A of the 1994
Act have been rendered by this Court in the context of
enactments which are not pari materia with Section 22A of the
1994 Act. In Bangalore Water Supply & Sewerage Board v.
A. Rajappa & Ors. [(1978) 2 SCC 213), this Court has
H cautioned that the same words may mean one thing .in one
CONSUMER ONLINE FOUNDATION v. UNION OF 939
INDIA & ORS. [A.K. PATNAIK, J.]
context and another in.different context. This position of law has A
also been stated in Justice G.P. Singh's Treatise on
Interpretation of Statutes, 12th Edition 2010 at pages 298-299 .
.Hence, the judgments cited on behalf of the respondents are
of no aid to interpret Section 22A of the 1994 Act which clearly
provides that the development fees can be levied and collected B
at the rate prescribed by the rules and are to be regulated and
utilized in the manner prescribed by the rules. In Mohammad
Hussain Gu/am Mohammad & Anr. v. The State of Bombay
& Anr. (1962 (2) SCR 659], a Constitution Bench of this Court
has held that since Section 11 of the Bombay Agricultural c
Produce Markets Act, 1939 provides that rules will prescribe
the maxima and the fees fixed must be within the maxima, till
such maxima are fixed by the rules, it would not be possible
for the Market Committee to levy fees. Similarly, in
Dhrangadhra Chemical Works Ltd. v. State of Gujarat & Ors. D
[(1973) 2 SCC 345], this Court has held that the framing of rules
was a mandatory requirement enjoined by Section 60(a)(ii) of
the Bombay Municipalities Act, 1901 before imposing a tax by
a resolution passed at a general meeting.
(iv) The tWo letters dated 09.02.2009 and 27.02.2009 of E
the Government of India, Ministry of Civil Aviation, to DIAL and
MIAL respectively can convey only the approvals ot'the Central
Government under Section 22A of the 1994 Act for levy of
development fees by DIAL and MIAL respectively but cannot
authorize DIAL and MIAL to levy and collect development fees F
under Section 22A of the 1994 Act because under this
provision the Airports Authority only has the power to levy and
collect development fees and DIAL and MIAL have no such
authority. The two letters dated 09.02.2009 and 27.02.2009 are
not saved by Section 6 of the General Clauses Act, 1897 G
because this provision does not protect any action taken under
the authority of the letter.
(v) The public notice dated 23.04.2010 issued by the
Regulatory Authority pertaining to levy of development fees by H
940 SUPREME COURT REPORTS (2011] 5 S.C.R.
A DIAL regarding the fees of Rs.200/- per departing domestic
passenger and Rs.1300/- per departing international
passenger on ad hoc basis is without jurisdiction as under the
2008 Act, the Regulatory Authority alone has the power to
determine the rate of development fees in respect of major
B airports after following the procedure laid down in Section 13
of the 2008 Act. There is no public notice issued by the
Regulatory Authority so far in respect of the Mumbai Airport.
The levy and collection of development fees by DIAL and MIAL
at the two airports are, therefore ultra vires and may be
c restrained by the Court.
Relevant Provisions of Law:
10. Section 12 of the 1994 Act as a'Tlended by the
Amendment Act of 2003, Section 22 of the 1994 Act, Sections
D 12A and 22A inserted by the Amendment Act of 2003 with
effect from 01.07.2004 and Section 22A as amended by the
2008 Act, which are relevant for deciding the questions raised
before us by the parties, are extracted hereinbelow:-
"12. Functions of the Authority.- (1) Subject to the rules,
E
if ary, made by the Central Government in this behalf, it
shall be the function of the Authority to manage the airports,
the civil enclaves and the aeronautical communication
stations efficiently.
F (2) It shall be the duty of the Authority to provide air traffic
service and air transport service at any airport and civil
enclaves.
(3) Without prejudice to the generality of the provisions
G contained in sub-sections (1) and (2), the Authority may-
(a) plan, develop, construct and maintain runways,
taxiways, aprons and terminals and ancillary buildings at
the airports and civil enclaves;
H {aa) establish airports, or assist in the establishment of
CONSUMER ONLINE FOUNDATION v. UNION OF 941
INDIA & ORS. [A.K. PATNAIK, J.]
· . private airports by rendering such technical, financial or A
other assistance which the Central Government may
consider necessary for such purpose. (Inserted by the
Amendment Act of 2003)
(b) plan, procure, install and maintain navigational aids,
8
communication equipment, beacons and ground aids at
the airports and at such locations as may be considered
necessary for safe navigation and operation of aircrafts;
(c) provide air safety services and search and rescue,
facilities in co-ordination with other agencies; C
(d) establish schools or institutions or centers for the
training of its officers and employees in regard to any
matter connected with the purposes of this Act;
(e) construct residential buildings for its employees; D
(f) establish and maintain hotels, restaurants and restrooms
at or near the airports;
(g} establish warehouses and cargo complexes at the E
airports for the storage or processing of goods;
(h) arrange for postal, money exchange, insurance and
telephone facilities for the use of passengers and other
persons at the airports and civil enclaves;
F
(i) make appropriate arrangements for watch and ward at
the airports and civil enclaves;
Q) regulate and control the plying of vehicles, and the entry
and exit of passengers and visitors, in the airports and civil G
enclaves with due regard to the security and protocol
functions of the Government of India;
(k) develop and provide consultancy, construction or
management services, and undertake operations in India
and abroad in relation to airports, air-navigation services, H
942 SUPREME COURT REPORTS [2011) 5 S.C.R.
A ground aids and safety services or any facilities thereat;
(I) establish and manage heliports and airstrips;
(m) provide such transport facility as are, in the opinion of
the Authority, necessary to the passengers traveling by air;
B
(n) form one or more companies under the Companies Act,
1956 or under any other law relating to companies to
further the efficient discharge of the functions imposed on
it by this Act;
c (o) take all such steps as may be necessary or convenient
for, or may be incidental to, the exercise of any power or
the discharge of any function conferred or imposed on it
by this Act;
D (p) perform any other function considered necessary or
desirable by the Central Government for ensuring the safe
and efficient operation of aircraft to, from and across the
air space of India;
E (q) establish training institutes and workshops;
(r) any other activity at the airports and the civil enclaves
in the best commercial interests of the Authority including
cargo handling, setting up of joint ventures for the discharge
of any function assigned to the Authority.
F
(4) In the discharge of its functions under this section, the
Authority shall have due regard to the development of air
transport service and to the efficiency, economy and safety
of such service.
G
(5) Nothing contained in this section shall be construed as-
(a) authorizing the disregard by the Authority of any law for
the time being in force; or
H (b) authorizing any person to institute any proceeding in
CONSUMER ONLINE FOUNDATION v. UNION OF 943
INDIA & ORS. [A.K. PATNAIK, J.]
respect of duty or liability to which the Authority or its A
officers or other employees wou.ld not otherwise be
subject. .
22. Pbwer of the Authority to charge fees, rent, etc.-
The Authority may,- B
(i) With the previous approval of the Central Government,
' charge fees or rent - ·
(a) for the landing, housing or parking of aircraft or for any
other service. or facility offered in connection with aircraft C
operations at any airport, heliport or airstrip;
Explanation. - In this sub-clause "aircraft" does not include
an aircraft belonging to any armed force of the Union and
"aircraft operations" does not include operations of any D
aircraft belonging to the said force; .
(b) for providing air traffic services, ground safety services,
aeronautical communications and navigational aids and
meteorological services at any airports and at any
aeronautical communication station; E
(c) for the amenities given to the passengers and visitors
at any airport, civil enclave, heliport or airstrip;
(d) for the use and employment by persons of facilities and
other services provided by the Authority at any airport, civil F
enclave heliport or airstrip;
(ii) with due regard to the instructions that the Central
Government may give to the Authority, from time to time,
charge fees or rent from persons who are given by the G
Authority any facility for carrying on any trade or business
at any airport, heliport or airstrip.
Inserted by the Amendment Act of 2003 ·
12A. Lease by the authority.-(1 )· Notwithstanding H
944 SUPREME COURT REPORTS {2011] 5 S.C.R.
A anything contained in this Act, th·e 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
B 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.
c (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
D 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
E of the Authority necessary for the performance of such
function in terms of the lease.
Inserted by the Amendment Act of 2003
22A. Power of Authority to levy development fees at
F airports.-- The Authority may, after the previous approval
of the Central Government in this behalf, levy on, and collect
from, the embarking passengers 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
G regulated and utilized in the prescribed manner, for the
purposes of-
(a) funding or financing the costs of upgradation, expansion
or development of the airport at which the fees is
H collected; or
CONSUMER ONLINE FOUNDATION v. UNION OF 945
. INDIA & ORS. [A.K. PATNAIK, J.]
(b) establishment or development of a new airport in lieu A
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 maintaining 8
a private airport in lieu of the airport referred to in clause
(a) or advancement of loans to such companies or other
persons engaged in such activities.
As amended by the 2008 Act
c
22A. Power of Authority to levy development fees at
airports.-- The Authority may;--
(i) after the previous approval of the Central Government
in this behalf, levy on, and collect from, the embarking
0
passengers at an airport other than the major airports
referred to in clause (h) of section 2 of the Airports
Economic Regulatory:,Authority of India Act, 2008 the
development fees at the rate as may be prescribed;
8 ' .. -~.. •
(ii) levy on, and collect from, the embarking passengers E
at major airports referred to in clause (h) of section 2 of
the Airports Economic Regulatory Authority of India Act,
2008 the development fees at the rate as may be
determined under clause (b) ofsub~section (1) of Section
13 of the Airports Economic Regulatory Authority of India F
Act, 2008,
and such fees shall be credited to the Authority and shall
be regulated and utilized in the prescribed manner, for the
purposes of--
G
(a) funding or financing the costs ofupgradation, expansion
o_r development of the airport at which the fees is
collected; or
H
946 SUPREME COURT REPORTS [2011] 5 S.C.R.
A (b) establishment or development of a new airport in lieu
of the airport referr.ed 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 maintaining
B
a private airport in lieu of the airport referred to in clause
(a) or advancement of loans to such companies or other
persons engaged in such activities.
Our conclusions with reasons:
c
11. The conclusion of the High Court in the impugned
judgment that the lessee of the airport has the power of the
Airports Authority under Section 22A to levy and collect
development fees from the embarking passengers by virtue of
0 sub~section (4) of Section 12A of the Act is contrary to the
legislative intent of the Amendment Act of 2003. On a perusal
of Section 22A of the 1994 Act inserted by the Amend.ment Act
of 2003, we find that the purposes for which.the development
fees are to be levied and collected from the embarking
E passengers at an airport are:
(a) funding or financing the costs of up-gradation,
expansion or development of the airports at which
the fees is collected, or
F (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 Airports Authority in companies
engaged in establishing, owning, developing,
G operating or maintaining a private airport in lieu of
the airport referred to in clause (a) or advancement
of loans to such companies or other persons
engaged in such activities.
H
CONSUMER ONLINE FOUNDATION v. UNION OF 947
INDIA & ORS. [A.K. PATNAIK, J.]
Though Airports Authority can utilize the fees levied by it, for A
all or any of these purposes mentioned in clauses (a), (b) and
(c) of Section 22A, what can be assigned by the Airports
Authority to a lessee under a lease entered into under Section
12A of the 1994 Act is the power to levy fees for the purposes
mentioned in clause (a) of Section 22 A of the 1994 Act. s
12. The functions of the Airports Authority under clause (aa}
of sub-section (3) of Section 12 also inserted by the
Amendment Act of 2003 to establish airports, or assist in the
establishment of private airports by rendering such technical,
financial or other assistance which the Central Government may C
consider necessary for such purposes cannot be assigned to
the lessee under Section 12A of the 1994 Act. The Amendment
Act of 2003 which also inserted Section 12A therefore provides
in sub-section (1) of Section 12A that the Airports Authority can
make a lease of the premises of an airport (including buildings D
and structures thereon and appertaining thereto) to carry out
"some" of its functions under section 12 as the Airports Authority
may, in the public interest or in the interest of better
management of airports, deem fit. Obviously, "a lease of
premises of an airport" as contemplated in sub-section (1) of E
Section 12A cannot include establishing an airport or assisting
in establishment of private airports as contemplated in clause
(aa} of sub-section (3) of Section 12 of the Act.
13. To enable the Airports Authority to perform its statutory F
function of establishing a new airport or to assist in the
establishment of private airports, the legislature has thought it
fit to empower the Airports Authority to levy and collect
development fees as will be clear from clauses (b) and (c) of
Section 22A of the 1994 Act. Such development fees levied G
and collected under Section 22A can also be utilized for funding
or financing the costs of up-gradation, expansion and
development of an existing airport at which the fees is collected
as provided in clause (a) of Section 22A of the Act and in case
the lease of the premises of an existing airport (including
H
948 SUPREME COURT REPORTS [2011] 5 S.C.R.
A buildings and structures thereon and appertaining thereto) has
been made to a lessee under Section 12A of the Act, the
Airports Authority may meet the costs of up-gradation,
expansion and development of such leased out airport to a
lessee, but this can be done only if the rules provide for such
19 payment to the lessee of an airport because Section 22A says
that the development fees are to be regulated and utilized in
the manner prescribed by the Rules. Since the lessee of an
airport cannot be assigned the function of the Airports Authority
to establish airports or assist in establishing private airports in
c lieu of the existing airports at which the development fees is
being collected, the lessee cannot under sub-section (4) of
Section 12A have the power of the Airports Authority under
Section 22A of the 1994 Act to levy and collect development
fees. This is because sub-section (4) of Section 12A provides
that the lessee can have all those powers of the Airports
0
Authority which are necessary br performance of such functions
as assigned to it under sub-section (1) of Section 12A in terms
of the lease. Moreover, since we have held that the function of
establishment and development of a new airport in lieu of an
existing airport and the function of establishing a private airport
E are exclusive functions of the Airports Authority under the 2004
Act, and these statutory functions cannot be assigned by the
Airports Authority under lease to a lessee under Section 12A
of the Act, the lease agreements, namely, the OMDA and the
State Support agreement could nQt make a provision conferring
F the right on the lessee to levy and collect development fees for
the purpose of discharging these statutory functions of the
Airports Authority. We, therefore, do not think it necessary to
refer to the clauses of the OMDA and "the State Support
Agreements executed in favour of the two lessees to find out
G whether the right of levying and collecting the development fees
has been assigned to the lessees or not.
14. The High Court was not correct in coming to the
conclusion in the impugned judgment that the development fees
H to be levied and collected under Section 22A of the 1994 Act
CONSUMER ONLINE FOUNDATION v. UNION OF 949
. INDIA & ORS. [A'.K. PATNAIK, J.]
is in the nature of tariff or charges collected by the Airports A
Authority for the facilities provided to the passengers. and the
airlines. It will be clear from a bare reading of Sections 22 and
22A that there is a distinction between the charges, fees and
rent collected under Section 22 and the development fees
levied and colleCted under Section22A of,~he 19~4 Act. ,The B
charges, fees and rent collected by the Airports Authority'under
Section 22 are for the services and facilities provided by the
Airports Authority to the airlines, passengers, visitors and
traders doing busine_ss at the airport. Therefore, when the
Airports Authority makes a_ lease of the premises of an airport C
(including buildings and structures thereon and appertaining
there~o) in favour of a lessee to carry out some of its functions
un~er Section 12, the lessee, who has been assigned such
functions, will have the powers 9f the Airports Aut_hority under
Section 22 of the Act to collect charges, fees or rent from the
third parties for the different facilities and services provided to D
them in terms of the lease agreement. The legal basis of such
charges: fees or rent enumerated in Section 22 of the 2008 Act
is the contract between the Airports. Authority or the lessee to
whom the airport ha~ been l~ased. out and thethird party/ such
as the airlines, passengers, visitors and traders doing business E
at the airport. But there can be no s~ch contract1Jal. relationship
between the passengers embarking at an airport and the
Airports Authority with regard to 'the up-gradation, expansion
. or development of the airport which is to be funded or financed
by development fees as provided in clause (a) of Section 22A. F
Those passengers who embark at the airport after the airport
is upgraded, expanded or developed will only avail the facilities
and services of the upgraded, expanded and developed airport.
Similarly, there can be no contractual r!=llationship between the
, Airports Authority and passengers embarking at a_n airport for G
. establishment of a new airport in lieu of the exis!illQ.C!irport or
establishment of a private airport in lieu of the existing airport
as mentioned in Clauses (b) and (c) of Section 22A of the 1994
Act. 111 the absence of such contractual relationship, the liability .
of the embarking passengers to.pay development fees has to H
950 SUPREME COURT REPORTS [2011] 5 S.C.R.
A be based on a statutory provision and for this reason Section
22A has been enacted empowering the Airports Authority to
levy and collect from the embarking passengers the
development fees for the purposes mentioned in clauses (a),
(b) and (c) of Section 22A of the Act. In other words, the object
8 of Parliament in inserting Section 22A in the 2004 Act by the
Amendment Act of 2003 is to authorize by law the levy and
collection of development fees from every embarking
passenger de hors the facilities that the embarking passengers
get at the existing airports. The nature of the levy under Section
22A of the 2004 Act, in our considered opinion, is not charges
C or any other consideration for services for the facilities provided
by the Airports Authority. This Court has held in Vijayalashmi
Rice Mills & Ors. v. Commercial Tax Officers, Palakot & Ors.
(supra) that a cess is a tax which generates revenue which is
utilized for a specific purpose. The levy under Section 22A
D though described as fees is really in the nature of a cess or a
tax for generating revenue for the specific purposes mentioned
in clauses (a), (b) and (c) of Section 22A.
15. Once we hold that the development fees levied under
E Section 22A is really a cess or a tax for a special purpose,
Article 265 of the Constitution which provides that no tax can
be levied or collected except by authority of law gets attracted
and the decisions of this Court starting from The Trustees of
the Port of Madras v. Mis Aminchand Pyarelal & Ors.(supra),
F cited on behalf of the Union of India and DIAL and MIAL on the
charges or tariff levied by a service or facility provided are of
no assistance in interpreting Section 22A. It is a settled
principle of statutory interpretation that any compulsory exaction
of money by the Government such as a tax or a cess has to be
G strictly in accordance with law and for these reasons a taxing
statute has to be strictly construed. As observed by this Court
in Ahmedabad Urban Development Authority v.
Sharadkumar Jayantikumar Pasawalla & Ors. (supra), it has
been consistently held by this Court that whenever there is
H compulsory exaction of money, there should be specific
CONSUMER ONLINE FOUNDATION v: UNION OF 9p1
INDIA & ORS. [A.K. PATNAIK, J.]
provision for the same and there is. no room for intendment and A
nothing is to. be read or nothing is to be implied and one should
look fairly to the language used. Looking strictly at the plain
language of Section 22A of 1994 Act before its amendment
by the 2008 Act, the development fees were to .be levied on
and collected from the embarking passengers "at the rate as B
may be prescribed". Since the rules have not prescribed the
rate at which the development fees could be levied and
collected from the embarking passengers, levy and collection
of development'fees from the embarking passengers was
without the authority of law. For this conclusion, we are c.
supported by the Constitution Bench judgment of. this Court in
Mohammad Hussain Gu/am Mohammad & Anr. v. The State
of Bombay & Anr. (supra). In that case,. the Court found that
Section 11 of the Bombay Agricultural, Produce Markets Act,
1939 provided that the market committee may levy market fees 0
subject to the maxima as prescribed and the Court held that
unless the State Government fixes the maxima by rule, it is not
open to the committee to fix any fees at all. We are also
supported by the decision of a three judges Bench ofthis Court
which held in Dhrangadhra Chemical Works Ltd. · v. State of
Gujarat & Ors. (supra) that the mandatory provision in Section E
60(a){ii) of the Bombay Municipalities Act, 1901 requiring
framing of rule for imposition of tax not having been complied
with, the imposition of tax was illegal. In Principles of Statutory
Interpretation, 12th Edition, at Page 813, Justice G.P. Singh
states: F
"There are three components of a taxing. statute, viz.,
subject of the tax, person liable to pay the tax and the rate.
at which the tax is levied. If there be any real ambiguity in
respect of any of these components which is not removable G
by reasonable construction, there would be no tax in law
till the .defect is removed by the legislature."
Thus, the rate at which the tax is to be levied is an essential
component of a taxing provision and no tax can be levied until H
952 SUPREME COURT REPORTS [2011] 5 S.C.R.
A the rate is fixed in accordance with the taxing provision. We
have, therefore, no doubt in our mind that until the rate of
development fees was prescribed by the Rules, as provided
in Section 22A of the 1994 Act, development fees could not
be levied on the embarking passengers at the two major
B airports.
16. The High Court, in our considered opinion, was not
correct in coming to the conclusion in the impugned judgment
that the exercise of the power to levy and collect development
fees under Section 22,!.. was not dependent on the existence
C of the rules and, therefore, this power could be exercised even
if the rules have not been framed prescribing the rate of
development fees under Section 22A of the 1994 Act. The High
Court has relied upon the decision of this Court in U.P. State
Electricity Board, Lucknow v. City Board, Mussorie & Ors.
D (supra). In that case, the High Court was called upon to interpret
Section 46(1) of the Electricity (Supply) Act, 1948, which
provided 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 Board. The High Court held that it only
E provides that the Grid Tariff shall be in accordance with any
· regulations made in this behalf and that means that if there were
any regulations, the Grid Tariff should be fixed in such
regulations and nothing more and, therefore, the framing of
regulations under Section 70(h) of the Act cannot be a condition
F precedent for fixing the Grid Tariff. The language of Section 22A
of the· 1994 Act is different. It clearly states that the Airports
Authority may levy on and collect from the embarking
passengers at the airport the development fees at the rate as
may be prescribed. Hence, unless the rate is prescribed by the
G rules, the Airports Authority cannot collect the development fees.
17. The High Court has also relied ori the decision of this
.Court in Mysore Road Transport Corporation v. Gopinath
Gundachar Char (supra). In that case, the Court was called
upon to interpret the provisions of the Road Transport
H
CONSUMER ONLINE FOUNDA"!:ION v. UNION OF 953
INDIA & ORS. [A.K. PATNAIK, J.] .
Corporations Act, 1950. Section 45(1) of that Act provided that A
a Corporation may, with the previous sanction of the State
Government, make regulations, not inconsistent with the Act and
the rules made thereunder, for the administration of the affairs
of the Corporation and in particular, providing for the conditions
of appointment and service. The Court has held that in the B
absence of regulations framed under Section 45 laying down
the conditions of service, the Corporation can still appoint
officers or servants as may be necessary for the efficient
performance of its duties on such terms and conditions as it
thinks fit and it cannot be held that unless such regulations are c
framed under Section 45, the Corporation would have no power
to appoint officers and servants and fix the conditions of service
of its officers and servants. From the language of Section 22A
of the 1994 Act, on the other hand, we find that there is no room
whatsoever for the Airports Authority to levy and collect any
0
development fees except at the rate prescribed by the Rules.
18. The High Court has also relied on the decision of this
Court in Sudhir Chandra Nawn v. Wealth-Tax Officer, Calcutta
& Ors. (supra). In that case, Section 7(1) of the Wealth Tax Act,
1957 was challenged as ultra vires the Parliament on inter alia E
the ground that no rules were framed in respect of the valuation
of lands and buildings and this Court repelled the challenge and
held that Section 7 only directs that the valuation of any asset
other than cash has to be made subject to the rules and does
not contemplate that there shall be rules before an asset can F
be valued and failure to make rules for valuation of a type of
asset cannot therefore affect the vires of Section 7. In Section
22A of the 1994 Act, on the other hand, the levy or development
fees was to be at the rate as prescribed by the Rules and hence
could not be made without the rules. All other decisions starting G
from T. Cajee v. U. Jormanik Siem & Anr. cited on behalf of
the Union of India, DIAL and MIAL on this point ar,9 cases where
the statutory power could be exercised without the rules or the
regulations, whereas the power under Section 22A of the 1994
Act to levy development fees could not be exercised without H
954 SUPREME COURT REPORTS [2011) 5 S.C.R.
A the rules prescribing the rate at which development fees· was
to be levied.
19. Section 22A of the 1994 Act before its amendment by
the 2008 Act specifically provided that the development fees
8 may be levied and collected at the rate as may be prescribed
by the rules. Hence, the rate of development fees could not be
determined by the Central Government in the two letters dated
09.02.2009 and 27.02.2009 communicated to DIAL and MIAL
respectively. Under section 22A of the 1994 Act, the Central
C Government has only the power to grant its previous approval
to the levy and collection of the development fees but has no
power to fix the rate at which the development fees is to be
levied and collected from the embarking passengers. Hence,
the levy and collection of development fees by DIAL and MIAL
at the rates fixed by the Central Government in the two letters
D dated 09.02.2009 and 27.02.2009 are ultra vires the 1994 Act
and the two letters being ultra vires the 1994 Act are not saved
by Section 6 of the General Clauses Act, 1897.
20. After the amendment of Section 22A by the 2008 Act
E with effect from 01.01.2009, the rate of development fees to
be levied and collected at the major airports such as Delhi and
Mumbai is to be determined by the Regulatory Authority under
clause (b) of sub-section (1) of Section 13 of the 2008 Act and
not by the Central Government. The Regulatory Authority
F constituted under the 2008 Act has already issued a public
notice dated 23.04.2010 permitting DIAL to continue to levy the
development fees at the rate of Rs.200/- per departing domestic
passenger and at the rate of Rs.1,300/- per departing
international passenger with effect from 01.03.2009 on an ad
G hoc basis pending final determination under Section 13 of the
2008 Act. This public notice dated 23.04.2010 has been issued
by the Regulatory Authority under the 2008 Act long after the
impugned decision of the High Court upholding the levy and it
has not been challenged by the appellants. Hence, the question
of examini.ng the validity of the said public notice dated
H
•
CONSUMER ONLINE FOUNDATION v. UNION OF 955
INDIA & ORS. [A.K. PATNAIK, J.]
23.04.201 O issued by the Regulatory Authority pertaining to levy . A
and collection of development fees by DIAL does not arise. But
no s4ch public notice has been issued by the Regulatory
Authority under the 2008 Act pertaining to levy.and collection
of development fees by MIAL. Hence, MIAL could not continue
to levy and collect development fees at the major airport at B
Mumbai and cannot do so in future until the Regulatory Authority
passes· an appropriate order under Section 22A of the 1994
Act as amended by the 2008 Act.
21. Having held that the levy and collection of development C
fees by DIAL and MIAL at the rates fixed by the Central
Government in the two letters dated 09.02.2009 and
27.02.2009 are ultra vires the 1994 Act and that MIAL could
not continue to levy and collect of development fees at the
major airport at Mumbai without an appropriate order passed
by the Regulatory Authority, the question is whether there is D
need to pass any .consequential direction for refund of the
development fees collected by DIAL and MIAL pursuant to the
two letters dated 09.02.2009 arid 27.02.2009 of the Central
Government and the development fees levied and collected by
MIAL after the amendment of Section 22A by the 2008 Act. E
22. This Court has held in M/s Orissa Cement Ltd. v. State
of Orissa (AIR 1991 SC 1676) that a finding regarding the
invalidity of a levy need not automatically result in a direction
for a refund of all collections thereof made earlier and that the F
Court has, and must be held to have, a certain amount of
discretion to grant, mould or restrict the relief in a manner most
appropriate to the situation before it in such a way as to advance
the interests of justice. In the facts of this case, the development
fees have been collected by DIAL and MIAL on the basis of
the two letters dated 09.02.2009 and 27.02.2009 of the Central G
Government from the embarking passengers at Delhi and
Mumbai and these embarking passengers, from whom the
development fees have been collected, cannot now be
identified nor can they be·traced for making the refund to them. H
956 SUPREME COURT REPORTS (2011) 5 S.C.R.
A Further there is significantly no prayer for refund in any of the
three writ petitions. However, it is necessary to ensure that the
development fees levied. and collected are utilized only for the
specific purposes mentioned in Section 22A of the 1994 Act.
In our considered opinion, interests of justice would be met if
B DIAL and MIAL are directed to account to the Airport Authority
that the development fees so far levied and collected by them
have been utilized for the purposes mentioned in clause (a) of
Section 22A of the 1994 Act.
Reliefs:
c
23. In view of the foregoing, we allow these appeals as
follows:
(i) We hold that development fees could not be levied
D and collected by the lessees of the two major
airports, namely, DIAL and MIAL, on the authority
of the two letters dated 09.02.2009 and 27.02.2009
of the Central Government from the embarking
passengers under the provisions of Section 22A of
the 1994 Act.
E
(ii) We declare that with effect from 01.01.2009, no
development fee could be levied or collected from
the embarking passengers at major airports under
Section 22A of the 1994 Act, unless the Airports
'F Economic Regulatory Authority determines the
rates of such development fee.
(iii) We direct that MIAL will henceforth not levy and
collect any development fee at the major airport at
Mumbai until an appropriate order is passed by the
G
Airports Economic Regulatory Authority under
Section 22A of the 1994 Act as amended by the
2008 Act.
(iv) We direct that DIAL and MIAL will account to the
H
CONSUMER ONLINE FOUNDATION v. UNION OF 957
INDIA & ORS. [A.K. PATNAIK, J.]
Airports Authority the development fees collected A
pursuant to the two letters dated 09.02.2009 and
27.02.2009 of the Central Government and the
Airports Authority will ensure that the development
fees levied and collected by DIAL and MIAL.have·
been utilized for the purposes mentioned in clause 8
(a) of Section 22A of the 1994 Act.
(v) We further direct that henceforth, any development
fees that may be levied and collected by DIAL and
MIAL under the authority of the orders passed by
the Airports Economic Regulatory Authority under
c
Section 22A of the 1994 Act as amended by the
2008 Act shall be credited to the Airports Authority
and will be utilized for the purposes mentioned in
clauses (a), (b) or (c) of Section 22A of the 1994
Act in the manner to be prescribed by the rules D
which may be made as early as possible.
(vi) Nothing stated herein shall come in the way of any
aggrieved person challenging the public notice
dated 23.04.201 O issued by the Airports Economic E
Regulatory Authority in accordance with law.
(vii) The impugned judgment of the High Court is set
aside and the Writ Petitions filed by the appellants ·.
are allowed with these directions.
F
(viii) There shall be no order as to costs.
(ix) I.A. No.3 in Civil Appeal arising out of S.L.P. (C)
No.23541 of 2009 for impleadment stands rejected.
~.P. Appeals allowed.
G
I
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