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An interim relief order for suspending the payments made by the Delhi International Airport Ltd. (hereafter DIAL) to the Airports Authority of India (hereafter AAI) was allowed by the bench of Justice C Hari Shankar of the Delhi High Court on the 5th of January, 2021.
The present case stems from a 2006 agreement between the parties with a focus on developing and managing the Indira Gandhi International Airport, New Delhi. Courtesy of the agreement, DIAL had to pay AAI an annual fee which was divided into monthly installments. For this payment arrangement, DIAL opened an escrow account with ICICI Bank and deposited its receivables which ICICI would transfer into a proceeds account. This proceeds account would be then classified as statutory dues, annual fees, and management fees that are to be paid to AAI, and hence, would be transferred to their account.
Due to the outbreak of Corona Virus, however, DIAL invoked the force majeure clause in March 2020 and requested AAI to defer the monthly payments during the pandemic period, claiming that its ability to carry out its obligations according to the agreement were affected. The AAI only allowed only three months of deferral of fees and hence, DIAL had to approach the court. Solicitor General, Tushar Mehta on behalf of AAI raised arguments against the deferral by claiming that DIAL was capable of performing its obligations as its balance sheet showed a reserve of more than Rs. 1800 crore. He, therefore, claimed that the precedential value of the case of the Mumbai International Airport who went through the same ordeal with the AAI, cannot be reproduced in this case, as DIAL is in a better financial position. Senior Counsel Abhishek Manu Singhvi, representing DIAL countered by depicting how the facts of both the cases were the same, and hence, relief must be given based on the force majeure clause. Furthermore, he clarified that the reserve amount in the balance sheet goes into the development of the airport.
rt rtThe court persuaded by DIAL successfully invoked the force majeure clause and directed ICICI to return amounts that were transferred to the AAI fee account after Dec 9th and restrict any new transfers henceforth. The court, however, acknowledged that the outcome of the case, which involves a larger set of disputes will not be affected by this relief.
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