The court confirmed that COVID-19 constituted a Force Majeure event impacting the financial obligations under the OMDA, allowing for necessary contractual reliefs and interpreting the agreement in a manner consistent with business efficacy.

JUDGMENT :

DINESH KUMAR SHARMA, J.

(A) PREFACE:

1. The present petition has been filed under Section 34 of the Arbitration and Conciliation Act, 1996, (hereinafter referred to as 'Act') challenging the impugned arbitral award dated 21.12.2023 as corrected under Section 33 of the Act vide order dated 16.01.2024.

2. Airport Authority of India (hereinafter referred to as 'AAI' or 'Petitioner') is a statutory authority established under the Airports Authority of India Act, 1994, responsible for maintaining and managing civil aviation infrastructure in India.

3. Mumbai International Airport Limited (hereinafter referred to as 'MIAL' or 'Respondent No.1') is a joint venture entity entrusted with the operation, management, and development of Chhatrapati Shivaji Maharaj International Airport, Mumbai ('CSMIA') under an Operation Management and Development Agreement (hereinafter referred to as 'OMDA') dated 04.04.2006 executed between AAI and MIAL.

4. State Bank of India, (hereinafter referred to as 'SBI' or 'Respondent No.2') a public sector bank and the designated escrow agent under the Escrow Agreement executed as part of the financial arrangement governing the OMDA.

(B) FACTUAL MATRIX:

5. Briefly stated the factual matrix of the case as stated in the present petition is that in March 2020, upon the outbreak of the COVID-19 pandemic and subsequent governmental restrictions aviation operations were severely disrupted. Consequently, MIAL issued a Force Majeure notice on 17.03.2020 under Article 16 of the OMDA, claiming that the pandemic constituted a Force Majeure event from 13.03.2020. MIAL sought suspension of its Annual Fee ('AF') obligations, citing an adverse financial impact. The said notice was responded by AAI on 24.03.2020, requesting MIAL to provide a Business Plan reflecting the financial impact of the pandemic. On the same day, MIAL requested AAI to instruct SBI within 24 hours to halt transfers from the Proceeds Account to the AAI Fee Account and instead transfer funds to the Surplus Account for operational expenses. AAI, in its reply dated 25.03.2020, pointed out that MIAL's request for a 24-hour response was inconsistent with the 15-day response period stipulated in the OMDA and sought financial records to substantiate MIAL's force majeure claims.

6. On 26.03.2020, MIAL submitted financial statements showing its fund position and urgent pending payments but failed to provide supporting audited records. AAI, upon review, noted that INR 65 crores a