The court upheld the arbitral tribunal's ruling that COVID-19 constituted a force majeure event, excusing the obligation to pay the Annual Fee under the OMDA due to significant revenue loss.

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

3. Delhi International Airport Ltd. (hereinafter referred to as "Respondent No. 1" and/or "DIAL") is a joint venture entity entrusted with the operation, management, and development of Indira Gandhi International Airport, Mumbai ('IGIA') under an Operation, Management and Development Agreement (hereinafter referred to as "OMDA") dated 04.04.2006 executed between AAI and DIAL.

4. ICICI Bank limited (hereinafter referred to as 'ICICI' or 'Respondent No.2') is a private sector bank and the designated escrow agent under the Escrow Agreement executed as part of the financial arrangement governing the OMDA. ICICI has been arrayed as a pro forma party in these proceedings.

B. FACTUAL MATRIX

5. Briefly stated the facts of the case as mentioned in the petition are that in March 2020, upon the outbreak of the COVID-19 pandemic and subsequent governmental restrictions aviation operations were severely disrupted. Consequently, DIAL sought relief under Article 16 of the OMDA, citing Force Majeure vide email dated March 19, 2020 and requested AAI to refrain from instructing the escrow bank regarding the Monthly Annual Fee ("MAF") for April 2020, contending that the existing business plan was no longer applicable. DIAL committed to submitting a provisional business plan for FY 2020-21 by March 31, 2020, taking into account the economic impact of the pandemic. The said request was acknowledged by AAI on March 23, 2020. Consequently, DIAL submitted an interim business plan for April 2020 on March 27, 2020, and sought a three-month waiver upto June, 2020 on MAF payments due to the nationwide lockdown.

6. Thereafter, on March 31, 2020, DIAL formally invoked Force Majeure, asserting that the outbreak of COVID-19 constituted an unforeseeable event under Article 16 of the OMDA, significantly impacting business operations and revenue. DIAL sought a waiver of MAF for April to June 2020 and indicated that its Business Plan for FY 2020-21 would only be finalized after obtaining Board approval by June or mid-July 2020. In response, AAI, through an email dated April 2, 2020, requested a board resolution confirming the invocation of Force Majeure. DIAL, on April 3, 2020, informed AAI that it was in the process of securing Board approval and requested permission for the Escrow Bank to retain funds equivalent to MAF for April in the AAI Fee Account until approval was obtained.

7. Despite disputing DIAL‘s entitlement to invoke Force Majeure under Article 16.1.1, AAI, acting in good faith, accepted DIAL‘s request and granted a three-month deferral of MAF payments from April to June 2020 on a "without prejudice" basis. Under this arrangement, DIAL was required to pay the cumulative MAF for April, May, and June 2020, computed on actual revenues, by July 15, 2020, without incurring interest under Article 11.1.2.2. Additionally, AAI extended the submission deadline for the business plan for FY 2020-21 from March 31, 2020 to June 30, 2020. However, DIAL did not provide the required board resolution confirming the invocation of Force Majeure and continued to pay the MAF for April, May, and June 2020.

8. Through a letter dated April 16, 2020, DIAL sought adjustments for an alleged excess Annual Fee payment from the previous financial year. In a response dated April 28, 2020, AAI informed th