{"id":369894,"date":"2025-12-16T09:30:20","date_gmt":"2025-12-16T04:00:20","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=369894"},"modified":"2025-12-17T17:50:07","modified_gmt":"2025-12-17T12:20:07","slug":"mad-hc-center-policy-review-airport-multiplex-scc-times","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2025\/12\/16\/mad-hc-center-policy-review-airport-multiplex-scc-times\/","title":{"rendered":"AAI cannot unilaterally shut Airport multiplex; Madras HC orders National Policy Review by Centre"},"content":{"rendered":"
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Disclaimer: This has been reported after the availability of the order of the Court and not on media reports so as to give an accurate report to our readers.<\/p>\n

Madras High Court:<\/span> In the writ petitions seeking certiorarified mandamus to quash the impugned letter and direct Airport Authority of India (AAI) to permit continuation of multiplex operations under the Development Agreement and the Sub-License Deed, a single-Judge bench of M. Dhandapani, J.<\/span>, held that there is no prohibition under Airports Authority of India Act, 1994<\/a> (AAI) for establishment of multiplexes in the airport premises. The Court directed the AAI to refer the multiplex closure issue to the Centre and continued status quo pending policy.<\/p>\n

Factual Matrix<\/h3>\n

In the instant matter, the AAI issued an RFP\/NIT for development of a Multi-Level Car Parking Complex (MLCP) with “integrated commercial infrastructure” on a Design, Build, Operate and Maintain (DBOM) basis, explicitly listing permissible commercial activities and not treating cinema halls as a prohibited activity. The project was designed to elevate the overall passenger experience to international standards.<\/p>\n

Following Respondent 2’s successful bid, a Development Agreement dated 20-06-2018 was executed, granting the concessionaire rights to “design, construct, operate and maintain” the MLCP with integrated commercial components, and also permitting sub-licensing.<\/p>\n

AAI itself took proactive steps facilitating establishment of a cinema multiplex, including obtaining Environmental Clearance dated 21-12-2018 for a Cinema Multiplex within MLCP, approving architectural drawings in 2019 and 2021 that explicitly provided for the establishment of a cinema hall and sending a letter on 20-07-2021 to the Commissioner of Police requesting Location NOC for a 5-screen multiplex, noting that the cinema was “an integral element of the development of the Chennai Airport in line with world class standards.”<\/span><\/p>\n

The independent engineer of AAI approved the draft sub-license agreement between Respondent 2 and the petitioners. The Sub-License Deed dated 15-11-2022 granted exclusive rights to operate a 5-screen multiplex for 13.5 years, co-terminus with the Development Agreement. The petitioners began commercial operations on 01-02-2023 after receiving requisite Form ‘C’ licences under the Tamil Nadu Cinemas (Regulation) Rules.<\/p>\n

On 21-07-2023, AAI directed closure of the multiplex “with immediate effect,” stating that “running of Cinema Hall is not permissible under the AAI Act,” without citing any specific statutory provision.<\/p>\n

Subsequently, Respondent 2 terminated the Development Agreement on 15-05-2025, informing petitioners that AAI would take over the MLCP from 30-05-2025. The petitioners protested, stating that their rights under the Sub-License must continue in an unfettered and unhindered manner.<\/p>\n

The petitioners challenged the AAI’s letter dated 20-06-2025, by which AAI directed cessation of operations of the multiplex housed in the Multi-Level Car Parking Complex (MLCP) at Chennai Airport. The petitioners had earlier secured an interim order of status quo on 16-06-2025, however, after the Arbitral Tribunal vacated interim protection on 10-06-2025, AAI issued the impugned communication rejecting the petitioners’ plea for continuation.<\/p>\n

Despite the Court’s interim status quo, AAI issued the impugned letter dated 20-06-2025, reiterating that cinema operations are impermissible under the AAI Act. The petitioners termed it “manifestly arbitrary, discriminatory and perverse,” extinguishing a lawful business without due process.<\/p>\n

Moot Points<\/h3>\n
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  1. \n

    Whether the cinema multiplex is situated within the ‘Airport’ as defined under Section 2(b)<\/a> of the AAI Act<\/a>?<\/p>\n<\/li>\n

  2. \n

    Whether Section 12<\/a> of the AAI Act<\/a> expressly prohibits running a cinema multiplex within airport premises?<\/p>\n<\/li>\n

  3. \n

    Whether AAI’s impugned action violates Articles 14 and 19(1)(g) and the doctrines of promissory estoppel\/legitimate expectation?<\/p>\n<\/li>\n

  4. \n

    What is the effect of the termination of the Development Agreement on the petitioner’s Sub-License rights?<\/p>\n<\/li>\n

  5. \n

    What directions should be issued balancing contractual rights with public law considerations?<\/p>\n<\/li>\n<\/ol>\n

    Court’s Analysis<\/h3>\n

    The Court examined the long chain of affirmative acts undertaken by AAI and noted that the record “would be evident” that AAI had, all along, been inclined to permit the establishment of a cinema multiplex within the MLCP. The Court observed that AAI not only approved architectural drawings and aided in obtaining environmental clearance, but also “addressed communication dated 20-07-2021 to the Commissioner of Police requesting the issuance of a location No Objection Certificate” for a five-screen multiplex and emphasised that the facility was “an integral element of the development of the Chennai Airport in line with world class standards.”<\/span><\/p>\n