The Court upheld that disputes arising from a concession agreement must follow mediation and arbitration protocols as stipulated, and any judicial intervention before exhaustion of these remedies is unwarranted.

JUDGMENT :

Manoj Kumar Gupta, C.J.

1. These writ petitions are between the same parties and arise out of a Concession Agreement executed by the respondent in favour of petitioner No. 1 (proprietorship concern of petitioner No. 2), and are, therefore, being decided by this common order.

2. In WPMB No. 381 of 2025, the petitioners have approached for quashing of the termination notice / order dated 31.05.2025, issued by the respondent, i.e. Airports Authority of India (for short hereinafter referred to as ‘AAI’) terminating the Concession Agreement dated 07.11.2023 for default on part of the petitioners in fulfilling their obligations regarding payment of license fee and maintaining a specified amount of bank guarantee and for restraining AAI from interfering in the functioning of the petitioners in pursuance of the Concession Agreement dated 07.11.2023.

3. In WPMB No. 383 of 2025, the petitioners have challenged the Notice Inviting Tender (NIT) dated 01.05.2025 for grant of short term license for operating snack bar at Dehradun Airport and allotment, if any, made in pursuance thereof, and also for restraining AAI from interfering in the functioning of the petitioners as a concessionaire on basis of Concession Agreement dated 07.11.2023.

4. The facts, necessary for disposal of the writ petitions, are as follows:

(a) On 25.01.2023, respondent-AAI issued an e-tender notice inviting request for proposal (RFP) for Concession to Design, Fit out, finance, develop, market, operate, maintain and manage the Food and Beverage outlets at Dehradun Airport for a period of seven years. Thereunder, 10 F&B outlet sites having gross floor area 429.61 square meters was earmarked for the purpose. The term of concession was seven years. Six bidders participated in the tender process. The petitioner firm was declared L-1 during the financial round Stage-II, as it quoted highest price at the rate of Rs. 51.70 per passenger. On 24.05.2023, a letter of intent was issued in favour of the petitioner firm.

(b) According to Clause-9 of LOI, the petitioner firm was required to deposit security in shape of bank guarantee under phase-1 in a sum of Rs. 7,46,67,208/- with validity of four years from the date of commencement of the Concession Agreement with the respondent-AAI. The petitioners deposited the said amount in three parts, (a) BG of Rs. 1 crore issued by HDFC Bank Dehradun dated 03.07.2023 (b) BG of Rs. 6 crores issued by HDFC Bank Dehradun dated 09.10.2023 and (c) BG of Rs. 46.68 lakhs issued by HDFC Bank Dehradun dated 07.11.2023.

(c) On 07.11.2023, Concession Agreement was executed between the petitioner firm and the respondent-AAI.

5. According to the petitioners, after expiry of gestation period of 90 days from the date of LOI, the AAI was obliged to hand-over the entire area measuring 429.61 square meters and whereafter only liability to make payment would accrue, but the AAI delivered possession in phases starting from 29.11.2023 till September, 2024. On the other hand, according to AAI, the gestation period was 60 days from Access Date of each location (site) and not 60 days from the date of issuance of LOI. Accordingly, it raised bills on pro-rata basis from the date access was provided to any particular site and this was in accordance with the contract. But the petitioners defaulted in payment of the same. There is also dispute between the parties regarding demand of 5% increased lease-rent upon expiry of one year of the execution of the Concession Agreement.

6. The AAI issued several notices of demand for payment of the license fee, but when the demand was not met, it issued Show Cause Notice dated 02.04.2025 to the petitioners alleging non-compliance of Clause 10.4.2 of the