Bombay High Court: In a case wherein the applicant, Airport Authority of India filed a suit for non-payment of airport charges and impleaded Respondent 1, Aer Lingus Ltd. as it leased aircrafts to Respondents 2 and 3, by the judgment dated 3-1-2025 (‘the impugned judgment’), the Trial Court had opined that the applicant was not entitled to claim the charges from Respondent 1 as it had leased its aircrafts to Respondents 2 and 3 and thus, they were liable for the charges. The Trial Court further opined that the applicant colluded with Respondents 2 and 3 to exercise its right to recover dues from Respondent 1, thus, exemplary costs of Rs 1 crore and litigation costs of Rs 50 lakhs were imposed on the applicant.
The Division Bench of Alok Aradhe, C.J., and M.S. Karnik*, J., while considering the applicant’s prayer seeking stay of the interim operation and effect of the impugned judgment till final disposal of appeal, opined that merely because Respondent 1 was made party to the suit and a claim was made against it was not sufficient to impose exemplary costs and the finding that there was collusion between the applicant’s officials and Respondents 2 and 3, was prima facie, misconceived. Thus, the Court directed that the impugned judgment against the applicant should be stayed.
Background
The applicant had detained two aircrafts of Respondent 1 for non-payment of charges for which a suit was filed and was later challenged by Respondent 1 before this Court. The order dated 27-12-1996 was passed wherein Respondent 1 was permitted to take possession of the aircrafts subject to furnishing a bank guarantee of Rs. 2 Crores. The Trial Court noted that Respondent 1 had leased its aircrafts to Respondents 2 and 3 and as per the Airports Authority of India Act, 1994 and Rules thereunder to claim recovery of charges for services and facilities rendered, it was Respondents 2 and 3 alone who were liable to pay the charges to the applicant.
The applicant prayed to stay the order dated 27-6-2024 (‘the impugned order’), whereby the Trial Court held that there was no privity of contract between the applicant and Respondent 1. In the impugned order, it was held that the applicant failed to show that it was entitled to claim charges for services and facilities rendered and lending charges from Respondent 1. The Trial Court held that the charges that were to be recovered for the use of the airport by the aircraft, were to be recovered from Respondents 2 and 3, if any, being in its possession as lessee at the relevant time.
The Trial Court by the impugned judgment opined that the applicant was not entitled to claim the charges for services and facilities rendered and lending charges from Respondent 1 as it had leased its aircrafts to Respondents 2 and 3. The Trial Court held that Respondents 2 and 3 were liable for the charges to the applicant. Further, the Trial Court regarding the issue whether the applicant colluded with Respondents 2 and 3 to claim the dues from Respondent 1, opined that the applicant purported to exercise its right to recover dues because of such collusion from Respondent 1. Thus, exemplary costs of Rs 1 crore and litigation costs of Rs 50 lakhs were imposed on the applicant that was to be paid Respondent 1 with interest thereon @9%p.a. from the date of decree till its realisation in full. Thus, the applicant prayed that till the final disposal of the appeal, interim operation and effect of the impugned order and impugned judgment be stayed.
Analysis, Law and Decision
The Court referred to Clause 3 of the operative portion of the impugned judgment and opined that it was inclined to stay the impugned judgment subject to the applicant depositing the amounts directed to be ordered in terms of Clause 3 in this Court within the period of eight weeks from the date of this order. The Court, after referring to Clause 4 of the impugned judgment opined that imposing exemplary costs and litigation costs on the applicant appeared to be unjustified.
The Court noted that Respondent 1 had leased out its aircrafts to Respondents 2 and 3 and they defaulted in payment of the relevant charges for which the suit for recovery was filed. The Court stated that the applicant’s officials might have been over cautious in protecting the applicant’s interest and hence impleaded Respondent 1 which was the owner of the aircrafts.
The Court opined that merely because Respondent 1 was made party to the suit and a claim was made against them was not sufficient to impose exemplary costs and the finding that there was collusion between the applicant’s officials and Respondents 2 and 3, was prima facie, misconceived. Further, there was no basis for allowing the claim of Rs. 50 lakhs which Respondent 1 made towards litigation expenses and costs. The Court stated that a money decree should not ordinarily be stayed unless the decretal amount was deposited, but in the facts and circumstances of the present case, it was inclined to stay the operation and effect of Clause 4 of the impugned judgment.
The Court rejected the applicant’s request to stay Clause 5 of the impugned judgment and directed the Prothonotary and Senior Master of this Court to expeditiously take steps to comply with Clause 5 of the impugned judgment of the Trial Court.
[Airport Authority of India v. Aer Lingus Ltd., 2025 SCC OnLine Bom 1738, decided on 25-4-2025]
*Judgment authored by: Justice M.S. Karnik
Advocates who appeared in this case:
For the Applicant: Aseem Naphade a/w Radha H. Bhandari and S. D. Shetty i/b M.V. Kini & Co. for the Applicant.
For the Respondents: Archana Deshmukh a/w Krishan Singhania, Srishti Singhania, Anjana Devi and Aayush Shah i/b Singhania & Co. for Respondents 1, 4, and 5.