2. The Airport Authority of India (second respondent herein, AAI for short) established under the Airports Authority of India Act, 1994 (‘Act’ for short) to be responsible for the development, operation and maintenance of airports in India. The Government of India took a policy decision to amend the Act by Amendment Act 43 of 2003 enabling the AAI to lease the airport premises, to private operators with prior approval of the Central Government and assign its functions to its lessees except air traffic services and watch and ward. In pursuance of the policy of the government in this behalf, the AAI decided to entrust the work of modernisation and upgradation of the Mumbai Airport to a private operator, to serve the sharply increasing volume of passengers and for better utilisation of the Airport. AAI initiated a competitive bidding process in that behalf. In the information memorandum that was issued to the prospective bidders it was represented that the entire airport premises will be included in the transaction including all encroached land but excluding only the following areas : (i) New ATC tower; (ii) AAI staff colony; (iii) Hotel Leela Venture, and (iv) All retail fuel outlets outside the airport operational boundary.

3. Pursuant to the competitive bidding process, the Chhtrapati Shivaji International Airport, Mumbai was handed over to the appellant for operation, maintenance, development and expansion into a world class airport under an agreement dated 4.4.2006. In pursuance of it, AAI entered into a lease deed dated 26.4.2006 leasing the Mumbai airport to the appellant on “as is where is” basis for a period of 30 years. The subject matter of the lease was described as “all the land (along with any buildings, constructions or immovable assets, if any, thereon) which is described, delineated and shown in Schedule I hereto, other than (i) any lands (along with any buildings, constructions or immovable assets, if any, thereon) granted to any third party under any existing lease(s), constituting the Airport on the date hereof; and (ii) any and all of the carved out assets”. Schedule I to the lease deed, instead of giving a detailed description of the demised property, referred to the map demarcating the demised premises annexed to the lease deed by way of description of the demised premises. The map annexed as Schedule I was the “plan showing the demised premises, indicating carved out assets and lands vested with IAF and Navy”. The carved out assets were : (1) new ATC tower; (2) & (2A) the NAD staff colony of AAI; (3) land leased to Hotel Leela Venture; (4) all retail fuel outlets which were outside the airport operational boundary; and (5) convention centre. The map also contains a note below the list of carved out assets, reading as under: “A : The parcel of land measuring 31,000 sq.mts. is currently not made a part of the lease deed but may become part of the demised premises subject to the court verdict”.

4. According to the appellant the said parcel measuring 31,000 sq.m. was also part of the airport that was to be handed over by AAI to appellant but it could not be included in view of a pending case (Suit No.6846 of 1999 on the file of the Bombay High Court) filed by the first respondent wherein the High Court had made an interim order dated 2.5.2001, relevant portion of which is extracted below :

“The Defendant Airport Authority should also separately demarcate an area of 31000 sq. meters for which the plaintiff is making a claim in this suit. After the land is so demarcated, a copy of the plan would be handed over to the Plaintiff through their advocate. The learned Counsel further states that the land admeasuring 31000 sq. meters, which would be separately demarcated will not be alienated, sold and transferred and no third party interest in that land would be created by the Defendants Airport Authority without seeking leave of this Court. He further state