People's Democracy

AMENDMENTS TO MAJOR AIRPORTS DEVELOPMENT FEE RULES 2011

UPA Subverting

Role of Parliament

K N Balagopal

THE recent decision of the Airports Economic Regulatory Authority (AERA) allowing for a huge hike in Airport Fees in favour of  Delhi International Airport Ltd (DIAL) evoked much criticism about the callous attitude of the government in regulating Public-Private Partnership (PPP) projects. The increase of charges, which is around 364 per cent, will be transferred to the passengers directly and indirectly. The domestic passengers will have to now shell out an extra Rs 290 while international passengers have to pay Rs 590 more as user fee alone. Reports say this is in addition to the existing Rs 200 and Rs 1300 these passengers respectively pay. In addition to this, landing charges and all other airport service charges are set to increase sharply, impacting the passengers indirectly.

Overall, through this hike an additional burden of  Rs 1000 to Rs 1500 would fall on the shoulders of every passenger! Per annum the amount thus collected would exceed Rs 3000 crore in Delhi Airport alone! ‘Delhi will be the world’s costliest airport’, most newspapers reported a day after the hike. But, astonishingly, DIAL says that they will ask for another hike in user fee. Even Mumbai International Airport has asked for a 500 per cent hike. This kind of loot, which is a clear example of ‘primitive accumulation of capital’, is happening with the strong support of the government.

In their eagerness to support the corporate houses and big business, the government is violating all accepted principles of democracy and parliamentary procedures! It is misinterpreting the Acts and making Rules that go against the intention of legislature. Even as the Airports Authority of India (Major Airport Development Fee) Rules, 2011 was pending scrutiny of parliament, the AERA went ahead and permitted increase of user development fee. Actually, the Rules were framed because the Supreme Court in a judgement banned collection of this fee without proper rules and regulations. This development fee was being collected from 01.03.2009 up to 01.06.2011. As per monthly Audit Report, the total collection of development fee during this period was Rs 1481.72 crore. Unfortunately, the Supreme Court only examined the technicalities of rule making and the administrative competence of the government to collect the fee rather than going into whether there was any genuine necessity of charging development fee or whether the contractual obligations and undertakings of the Airport developer permitted such collection. It may be noted here that when the contract was finalised, there was no provision of collection of development fee. The bidder put his papers without considering the income from development fee and there was no commitment from the part of the government to facilitate collection of such huge sums of money every year.  So it is very clear that the permission to collect development fee is an illegal administrative decision on the part of the government and this was upheld by the Supreme Court. Now, these Rules have been framed to overcome the ‘technicality’ and allow the private firm to reap in huge sums of money.

RULES MUST BE WITHIN

THE MANDATE OF THE ACT

It is a well established law that without proper Rules, no Act can be effectively implemented. The role of the Executive in framing the 'Rules' has come under public scrutiny with controversies erupting over framing of Rules pertaining to the Civil Nuclear Liability Act, the Information Technology Act, 2000 and the present Airports Authority of India (Major Airport Development Fee) Rules, 2011, etc. In such cases, the Rules were either not in tune with the Acts that were passed by parliament or against the basic premises of the Constitution of India.

Adopting a rarely used parliamentary tool of amending Rules, the opposition parties moved amendments to many such rules. The power with the Executive to make Rules, regulations, by-laws, schemes or other statutory instruments is delegated by parliament. The Committee on Subordinate Legislation, of both the Houses, examines whether the Rules are in pursuance with the Constitution or Acts passed by parliament. These committees also see whether the Rules contain matters which should be dealt within an Act of parliament or it contains imposition of any tax. The committee also checks whether the rules directly or indirectly bars the jurisdiction of the courts and whether it involves expenditure from the Consolidated Fund of India or the Public Revenues.

Even though the concepts of Administrative Law provides for enough safeguards against the arbitrariness by the Executive in running the administration, the practical experience is far from satisfactory. The power to make legislation is always vested with the representatives of the people in all modern democratic systems. But, due to the complexities of modern day administration and because of the growing areas of public life, the law making bodies cannot go into the minute details of law making. Generally, primary law will be made by parliament through Acts and the Rules, the most important instrument in transmitting the intention of the legislature, will be made by the administration i.e. Executive. While drafting the Rules, the Executive has to look into the intention of the parliament and to analyse the practical field realities. They should make the Rules only in consonance with the parent Act. But, unfortunately, the 'Executive made Law' in many cases deceives the real intention of the parliament. If the authorities concerned are not properly making the Rules in time or making provisions that run contrary to the Act, the basic intention of the enactment will not succeed.

THE CASE OF AIRPORTS

DEVELOPMENT FEE RULES

The Airport Authority of India (Major Airport Development Fee) Rules, 2011 enables private operators to levy user development charges from all passengers travelling through a particular airport. The Rules, laid in Rajya Sabha, help private airport operators like DIAL and Mumbai International Airport Ltd (MIAL) to collect the development fee from the passengers. These Rules help the private airports to overcome the legal laxities pointed out by the Supreme Court, while hearing a case questioning the illegal collection of user development fee.

The Delhi and Mumbai Airports were developed through PPP model by the government. The developers were selected through a process of competitive bidding. After some years of operation, the government has accorded sanction to the airport developers to collect huge amount of user development fee from the passengers using both airports. While tendering the projects and inking the contract, there was neither any provision for the collection of user development fee nor any rules empowering them for it. Later, after many years, the private developers demanded for the introduction of user development fee. The government accepted their demand and allowed a fee collection of Rs1300 per international passenger and Rs 200 per domestic passenger from Delhi airport. Similar amount was allowed to be collected from Mumbai Airport users also. Aggrieved by the decision of the government, some consumer organisations approached the Delhi High Court.

Initially, it upheld the decision of the government.  But, while hearing the appeal, the Supreme Court held the user fee collection as illegal. Without going into the technicalities of the contract and fee collection, the Supreme Court held that the collection itself is ab-initio void because there is no enabling 'Rules' to empower fee collection.

Further, the court stated that even if such fee is to be collected, it must be decided by the regulator, Airport Economic Regulatory Authority. So, it was very clear that the government's arbitrary decision to support the private developer by imposing this fee was patently illegal. During the time of initial order by the government and the judgement delivered by the Supreme Court, the DIAL had collected more than Rs 1481crore. A strong demand was made before the government that this money, which was illegally collected by the airport developers, should be taken back from them. But, instead of rectifying the mistakes done by the administration, the government immediately came out with Rules enabling the collection of user fee. The government tabled the Rules in the parliament.

PROPOSED

AMENDMENTS

Generally, the use of parliamentary tool of giving amendments to Rules is rare. Such amendments to Rules were discussed in Rajya Sabha 11 years ago in May, 2000. After such a long period, a statutory motion to amend the biased Rules relating to Major Airports Development Fee came up before the House recently. But, instead of supporting and promoting the parliamentary procedure, the concerned ministry has tried to avoid the discussion on this statutory motion.

The amendments brought mainly four points before the House. Firstly, they do not accept user fee collection in airports built on PPP model, as there was no such provision to collect user fee at the time of bidding and awarding of contract for upgrading these airports. The lowest bidder would have been finalised without considering this income. If the government allows collection of user fee, it would amount to a major scam involving thousands of crores of rupees.

Secondly, the amendments called for bringing PPP airports and user development fee collection and its spending under the C&AG's scanner.

Thirdly, they propose to hand over the money illegally collected by two Private Airport Developers to the Airport Authority of India. This money comes around to around Rs 2500 crore from the two airports.

Fourthly, the amendments seek to entrust the Airports Authority of India with the task of collecting and managing the user development fee rather than the private agencies.

Members would have accepted these amendments, if they are placed before the House, because of their legality. But the government is manoeuvring to scuttle this process.

This amount, collected illegally by private airports, is to be considered as Bona-vacantia (ownerless goods) and should be the property of the government. The question about the right of levying tax and its collection raises issues of wider ramification which will deeply affect our system. Article 265 of our Constitution clearly says that private parties are ineligible to collect and levy taxes.

In the case of the Rules notified under the Civil Nuclear Liability Act, the Act was diluted for the benefit of foreign suppliers. It has been pointed out by the opposition parties that the right to recourse for the operator to claim damages from the foreign supplier has been limited to the duration of the initial licence period or the product liability period, whichever is longer. The initial duration of the licence is normally five years and the product liability period will also be limited. Such Rules did not cover a reasonable period of the functioning of the reactor and its equipment. So, the interests of private, foreign manufacturers of nuclear equipment were put above the interests of our people. Once again, the UPA government is displaying the same attitude.

A provision to tax the public cannot be implemented through a Rule made by the Executive without the approval of parliament. The present government seems to be very eager to allow its PPP partners and corporates to levy tax bypassing parliament. The sovereign function of the Legislature has been put under question.