Case: DELHI INTERNATIONAL AIRPORT LTD Vs. AIRPORT ECONOMIC REGULATORY AUTHORITY OF INDIA &amp; ORS

and which would consequently lead to higher tariff. Thus, AERA had performed the role of merely approving the books of accounts on the basis of cost incurred. 138. Qua the CSIA, Project Cost increased from Rs. 6130 crores in July 2006 to Rs. 12,380 in 2011. It was contended by FIA that this gap was sought to be met by levying DF. Thus, DF amounted to 3.9 times of promoters equity contribution and the end users are ultimately bearing the burden. MIAL had acted contrary to Article 13.1 of OMDA, which explicitly provided that the airport operator was solely responsible for financing of the airport. Reliance was also placed on audit reports indicating that escalation in the project cost was attributable to the casual approach of MIAL towards management and monitoring of the project. 139. In the aforesaid context, arguments were also advanced on the aspect of role of AERA as a regulator in determining Project Cost. Section 14(1)(a) and (b) of the said Act provide for engaging professionals or AERAs own staff to enquire and assess the performance of service providers, which included the Airport Operators. No independent study was conducted by AERA even though the same is a statutory obligation under the said Act. Escalated Project Costs had been allowed without conducting thorough prudence checks as mandated under the aforesaid provisions. Similarly, it was urged that the TDSAT failed to appreciate that AERA had derelicted from its duty as a regulator, and private concessionaires were being rewarded at the cost of the common man. 140. On the other hand, the Airport Operators contended that Section 13(1)(a)(i) of the said Act deals with capital expenditure while Section 13(1)(a)(iii) deals with the cost of improving efficiency. The said provisions read as under: 13 Functions of Authority. — (1) The Authority shall perform the following functions in respect of major airports, namely:— (a) to determine the tariff for the aeronautical services taking into consideration— (i) the capital expenditure incurred and timely investment in improvement of airport facilities; xxxx xxxx xxxx xxxx xxxx (iii) the cost for improving efficiency; The cost for improving efficiency as used in sub-clause (iii) was submitted to be very different from efficient cost in respect of capital expenditure and, thus, elements of (iii) could be read into (i). There is no test of efficiency laid out in the said Act in terms of capital expenditure and thus AERA only had a limited role qua determining the Project Costs. 141. It was sought to be emphasized that this was a pioneering effort and the Commonwealth Games 2010 were round the corner. The initial timeline of 48 months to develop the IGIA was reduced to 37 months due to pending litigation. This in return played a critical role in cost escalation and into what has been flagged by auditors as process issues. Our Rationale: 142. On examination of rival submissions, we believe that what has to be kept in mind is that we are the third tier of scrutiny. The concerned authority and the appellate authority were also dealing with a scenario which was the introduction of public-private partnership mechanism for operation of airports for the first time. Any pioneering effort thus require multiple creases to be ironed out. There was no past experience in that sense. Everyone puts their best foot forward. It would thus not be fair to examine these aspects under the microscope. 143. Different aspects towards determination of Project Cost have been examined by AERA, and AERA has carried out its responsibility while granting a little leeway for the pioneering effort in an untested field in the country. The auditors too had not been able to quantify or identify the losses due to increased Project Cost in monetary terms. How can one expect AERA to take on such a task in light of the functions ascribed to it under the said Act. 144. There is also substance in the contention that the whole project was running against strict timelines on account of litigations relating to projects, a common phenomenon in our country. This was more so in the context of the Commonwealth Games being around the corner. Additionally, there is also some substance in what is contended by the Airport Operators that the terminology in Sections 13(1)(a)(i) and 13(1) (a)(iii) of the said Act cannot be read into each other. The manner of reading of the provision by FIA is to combine sub-para (iii) with sub-para (i) while determining tariff. 145. In our view, the provisions have been separately made because the concept of Section 13(1)(a)(i) requires AERA to determine the tariff by including capital expenditure incurred and timely investment in improvement of airport facilities. One of the other distinct factors to be considered is the cost of improving efficiency as under Section 13(1)(a) (iii). These aspects have no doubt been examined by the authority concerned, although not necessarily in the manner FIA seeks them to. Does it really lie with us to superimpose a view which has not been found feasible in the given conspectus of the large number of reports and documents before the AERA as well as the TDSAT. We thus reject the contention. 146. In the end, we do believe that the matter having traversed from the AERA to the appellate authority to this Court, the parties and the counsel may have become fully aware of the nitty-gritties of the various matters and thus sought to embark on canvassing the case almost as we are some kind of first authority on these aspects. We are unwilling to do so. We have analysed all the contentions in a broad perspective, keeping in mind that the authority has performed its task and so has the appellate authority. Despite the course of action followed by counsel, we have still analysed the matter in such depth as was required to be done by this Court in rejecting all aspects in these appeals and cross-appeals except one aspect which arose from terminology and its definition. Conclusion:

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]14. One may observe at this stage that in effect this Court has been made a court of second appeal in similar matters arising out of many such tribunals. This has resulted in a number of contentious matters requiring consideration by this Court. The scenario is different from the SLP jurisdiction where no re-appreciation of evidence is really required unless extraordinary circumstances exist, while an appeal of this nature stands on a different footing and is a continuation of the original proceedings (Rajendra Diwan v. Pradeep Kumar Ranibala & Anr., (2019) 20 SCC 143  (Constitution Bench)).15. This Court in Modern Dental College and Research Centre v. State of M.P. (2016) 7 SCC 353  has eloquently summarised the onset of the modern regulatory era:87. Regulatory mechanism, or what is called regulatory economics, is the order of the day. In the last 60-70 years, economic policy of this country has travelled from laissez faire to mixed economy to the present era of liberal economy with regulatory regime. With the advent of mixed economy, there was mushrooming of public sector and some of the key industries like aviation, insurance, railways, electricity/power, telecommunication, etc. were monopolized by the State. License/permit raj prevailed during this period with strict control of the Government even in respect of those industries where private sectors were allowed to operate. However, Indian economy experienced major policy changes in early 90s on LPG Model, i.e. liberalization, privatization and globalization. With the onset of reforms to liberalize the Indian economy, in July 1991, a new chapter has dawned for India. This period of economic transition has had a tremendous impact on the overall economic development of almost all major sectors of the economy..... .... .... .... .... ....89. With the advent of globalization and liberalization, though the market economy is restored, at the same time, it is also felt that market economies should not exist in pure form. Some regulation of the various industries is required rather than allowing self-regulation by market forces. This intervention through regulatory bodies, particularly in pricing, is considered necessary for the welfare of the society and the economists point out that such regulatory economy does not rob the character of a market economy which still remains a market economy. Justification for regulatory bodies even in such industries managed by private sector lies in the welfare of people. Regulatory measures are felt necessary to promote basic wellbeing for individuals in need. It is because of this reason that we find regulatory bodies in all vital industries like, insurance, electricity and power, telecommunications, etc.17. The liberalised era from 1990s has seen enunciation of limits of judicial intervention in such appeals from decision of regulators. A Constitution Bench of this Court in Shri Sitaram Sugar Company & Anr. v. Union of India & Ors. (1990) 3 SCC 223  made some relevant observations to emphasise that what is required to be seen by this Court is that the readings are reasonably supported by evidence as judicial review is really not concerned with matters of economic policy and the endeavour certainly cannot be to substitute its view for that of the legislature or to supplant the view of the expert body. The relevant observations are reproduced hereunder:56. The court has neither the means nor the knowledge to re- evaluate the factual basis of the impugned orders. The court, in exercise of judicial review, is not concerned with the correctness of the findings of fact on the basis of which the orders are made so long as those findings are reasonably supported by evidence. In the words of Justice Frankfurter of the U.S. Supreme Court in Railroad Commission of Texas v. Rowan & Nichols Oil Company [311 US 570, 575 : 85 L ed 358, 362] :Nothing in the Constitution warrants a rejection of these expert conclusions. Nor, on the basis of intrinsic skills and equipment, are the federal courts qualified to set their independent judgment on such matters against that of the chosen State authorities.... When we consider the limiting conditions of litigation — the adaptability of the judicial process only to issues definitely circumscribed and susceptible of being judged by the techniques and criteria within the special competence of lawyers — it is clear that the Due Process Clause does not require the feel of the expert to the supplanted by an independent view of judges on the conflicting testimony and prophecies and impressions of expert witnesses.This observation is of even greater significance in the absence of a Due Process Clause.57. Judicial review is not concerned with matters of economic policy. The court does not substitute its judgment for that of the legislature or its agents as to matters within the province of either. The court does not supplant the feel of the expert by its own views. When the legislature acts within the sphere of its authority and delegates power to an agent, it may empower the agent to make findings of fact which are conclusive provided such findings satisfy the test of reasonableness. In all such cases, judicial inquiry is confined to the question whether the findings of fact are reasonably based on evidence and whether such findings are consistent with the laws of the land. As stated by Jagannatha Shetty, J. in Gupta Sugar Works [1987 Supp SCC 476, 481] :... the court does not act like a chartered accountant nor acts like an income tax officer. The court is not concerned with any individual case or any particular problem. The court only examines whether the price determined was with due regard to considerations provided by the statute. And whether extraneous matters have been excluded from determination.58. Price fixation is not within the province of the courts. Judicial function in respect of such matters is exhausted when there is found to be a rational basis for the conclusions reached by the concerned authority. As stated by Justice Cardozo in Mississippi Valley Barge Line Company v. United States of America [292 US 282, 286-87 : 78 L ed 1260, 1265] :The structure of a rate schedule calls in peculiar measure for the use of that enlightened judgment which the Commission by training and experience is qualified to form.... It is not the province of a court to absorb this function to itself.... The judicial function is exhausted when there is found to be a rational basis for the conclusions approved by the administrative body.18. We may, however, add that in the given factual scenario in the dispute before us there is something more which is required to be addressed. Before the complete legislative structure was set in place, operations were proceeded on the understanding of the agreement between the parties and the legislative intent is also apparent. This provides for due honour and consideration being given to the aforesaid intent as per the provisions of Section 13 of the said Act. The objective is that all parties who have operated in what may be called a pioneering effort in the field of civil aviation in India should not be taken by surprise affecting their commercial viability as it would discourage private participation in such economic activities which have been perceived to be essential by the Government. To that extent, we are inclined to consider that some aspects of the agreements have pre-legislative features and, thus, there is a requirement to look into them.25. The aforesaid determination, not being favourable at all to DIAL or MIAL, was assailed before the TDSAT. Insofar as the DIAL tariff order dated 22.04.2018 is concerned, submissions of both DIAL and MIAL were appreciated. MIAL submitted that revenue from aeronautical services like cargo, ground handling and FTC must always be treated as non-aeronautical revenue. It was further submitted that if the service provider is DIAL, the revenue will be a fee for services but once it outsources an aeronautical service, the fee for such outsourcing should be treated as non-aeronautical revenue because in such a case, DIAL is not rendering any service. This plea did not find favour with the TDSAT, which held that even when the airport operator engages in providing an aeronautical service through its servants or agents, the service must be deemed to be one provided by the airport operator. The colour of revenue from aeronautical service cannot get changed to that of revenue from non-aeronautical service by an act of delegation or leasing out by the concessionaire. The TDSAT also dealt with the MIAL tariff order dated 15.11.2018. One may say that there appears to be some conflict limited to the extent that while dealing with the MIAL order it was observed by the TDSAT that while they are alive to the contention made on behalf of MIAL, they had not taken a view or rendered a finding on the aspect of FTC in the DIAL order. We say this as the MIAL tariff order while observing so had recorded in para 4 that only four aspects were required to be examined. FTC was mentioned as one of the four aspects and, thus, did survive before the TDSAT despite its earlier opinion dated 12.04.2018, which had dealt with the aspect of FTC.41. We have examined this controversy carefully and find no reason to interfere with the concurrent views taken by the AERA and the appellate tribunal. The principles we have enunciated at the threshold qua the contours of judicial review towards the decision of regulatory bodies squarely come into play [Modern Dental College and Research Centre (supra); Akshay N. Patel (supra); Shri Sitaram Sugar Company & Anr (supra)].42. The mere fact that the FTC has been discontinued subsequently from 2020 would not give rise to an interpretation that it was a non- essential service and was thus also a non-aeronautical service. The AERA is right in its submissions that all that has been done is that the Airport Operators are delegating the service to provide fuel to the OMCs and are taking a concession fee and pocketing the same. The significance of supply of fuel to be provided to the aircraft on tarmac cannot be lost sight of. Obviously, the aircraft does not work without fuel. It is being provided through a common hydrant. There is no mention of FTC in Schedule 6 of OMDA and thus, there is a complete lack of connection between FTC and services mentioned therein as non-aeronautical services. Once we accept this proposition then it is easy to find connect between some of the aspects mentioned as aeronautical services with the aspect of FTC.43. We are not confronted with a situation where there is conflict between the OMDA/SSA and the said Act, requiring recourse to Section 13(1)(a)(vi). A reading of the OMDA/SSA does not give rise to any view that the FTC is a non-aeronautical service. It is clearly mentioned in Entry 17 of Schedule 5 of OMDA.44. There is also substance in the contention of AERA that the methodology of Airport Operators would amount to a manner of subterfuge to somehow pass on the FTC to the airlines with only 30 percent of it being covered in the TR. Forget the aspect of advantage to the Airport Operators, the issue is one also of a number of other stakeholders being adversely affected. The airlines are bound to pass this charge on to the passengers. It would thus have a cascading effect.. If one may say, the Australian Competition and Consumer Commission also looks into this aspect as has been noted by the AERA in the MIAL Tariff Order and, in fact, categorises it with stronger words as abuse of market power. One cannot use the ICAO documents selectively in different contexts to derive the conclusion as was sought to be done on behalf of the Airport Operators.45. We thus have no hesitation in upholding the view taken by the AERA and the TDSAT opining that the FTC was a part of the Aeronautical Service.46. The two airports were not set up de novo. Existing airports were taken over. The IGIA was a brownfield airport before it had been taken over by DIAL and, thus, assets as reflected in the books of accounts would record depreciation. This created its own difficulties in arriving at a value of the regulatory base for the first year of the first control period. Another problem faced by the AAI was that it had a common book of assets for several airports across India. Thus, SSA provided a hypothetical regulatory asset base to be derived by working backwards. The calculations to be made would have a cascading effect for successive years and, thus, base calculation for RB0 would have an impact on the calculation of RB1 and for further years.56. If we analyse the aforesaid aspect, it is an issue of plain construction of the contract as it reads. There is no reason why explicit grammatical connotation should not be applied to a contract unless it results in some absurdity. The contract was negotiated by experts and they are expected to know all the ramifications of the language they use.Thus, the three expressions have been used whereafter it is added that it pertains to aeronautical services at the airport. To our mind, it is quite clear that all the three phrases are qualified by them pertaining to aeronautical services at the airport. An alternative plea was raised (a lesser one at that) to distinguish prevailing tariff and revenue as two different terms. This was to make aeronautical services not applicable, at least, to prevailing tariffs and revenue by seeking to bifurcate these two expressions. The result sought to be achieved was that as an alternative, the aeronautical services would apply to operations and maintenance on one hand and corporate tax on the other while seeking to exclude tariff and revenue. If one may say, in order to achieve a particular result, a reverse engineering process was sought to be applied to contend that the term revenue would include both aeronautical and non-aeronautical services.58. We are unable to appreciate how the principle of interpretation of Reddendo Singula Singulis principle as discussed in Nabha Power Ltd. (NPL) (supra) case would be applicable in the present case. The principle is clear in its terms. It is when a complex sentence has more than one subject and more than one object that a construction may be required to render each to each by reading the provision distributively. Firstly, we do not find it a complex sentence. Secondly, there is no requirement to read one part with one particular aspect by excluding the other part of the sentence. The sentence reads clearly where the three concepts are qualified by aeronautical services.59. The endeavour should not be to somehow achieve an objective of increasing the financial inflow of the Airport Operators by one method or the other. It is not a contract drawn by laymen but by specialists. To somehow strain the aspect of construction to achieve a particular objective cannot be a method of constructing this clause. We do find that the argument is specious, innovative as it may be.60. We have, thus, no hesitation in agreeing with the view adopted by AERA and the TDSAT.65. We find little merit in this contention. The principle of economic efficiency incorporated in SSA only means that there should be no extra cost included which does not affect the efficiency of the system. It can hardly be said that the system could have worked in the relevant year without the AAI manpower. No doubt it was a transition phase which required both sets of manpower to work in tandem towards the efficiency levels. The relevant aspect is that as and when AAI started pulling out their manpower, DIAL supplemented the manpower. That manpower supplemented may be less or more is not relevant. In the year in question, the presence of both sets of manpower was necessary for the efficient functioning and the manpower of DIAL was in the learning process. This learning curve cannot be excluded on the ground of not being relatable to economic efficiency. It can hardly be called duplication of work even though it may in some sense add to the value of HRAB but that is a natural corollary. The parties to the contract were quite conscious of this ramification as they knew the methodology which would be adopted for the takeover of the airport. Now to contend that this should be excluded to somehow increase the profit margins of DIAL is, in our view, completely unsustainable and, thus, we reject this contention.66. A mathematical controversy has arisen with respect to the algebraic formulation arising from the methodology adopted by AERA. AERA calculated tariff by applying Consumer Price Index (for short CPI) and then determining the X factor, which would be subtracted out of CPI. This X factor has to be calculated as per the SSA. We will have to appreciate the background scenario to determine the issue. The operation of the airports is monopolistic in character. The endeavour is that this monopolistic character should not be misused and, thus, in a way revenue returns are sought to be controlled. The CPI is determined by the Government from a basket of pricing factors. From this CPI, the X factor is to be subtracted. This is how AERA seeks to apply the formula. The view of DIAL is that step one is calculation of TR and thereafter at the second stage the CPI should be subtracted. Finally, X factor in applied. On the other hand, as far as AERA is concerned they have made it a two-stage process by which target revenue is calculated first and CPI and X factor are calculated together at the second stage.67. We now come to the issue of X factor as per Schedule 1 of the SSA. The X factor is calculated by determining what equates the present value over the regulatory period of the target revenue with the present value that results from applying the forecast traffic volume with a price path based on the initial average aeronautical charge, increased by CPI minus X for each year.81. On the consideration of the plea it is obvious to us that the endeavour of DIAL was to lower the X-factor, which in turn will result in a higher tariff. The objective is, thus, how the tariff can be made higher rather than staying true to how the agreement reads. A reverse engineering process again!82. We must keep in mind that a specialised authority has gone into this aspect and also the Tribunal. The controversy revolves around a formula. This formula in turn would have been determined after due deliberations. It is an algebraic formula and has to be solved by the principles of algebra. We can only remind ourselves that the BODMAS principle would have to apply to the formula in the SSA, which is what the AERA has done. What DIAL wants to do is to re-write the formula and then apply BODMAS. This, in fact, causes complete violence to the formula itself. If the manner of calculation of DIAL was to be the basis, then the SSA would have provided that formula. Now DIAL seeks to re- write/remodel the formula based on the so-called expert opinion, which is self-serving in character.In our view, all that the sentence states is that the maximum average aeronautical charge (price cap) in a particular year i for a particular category of aeronautical revenue j is then calculated according to the formula. The fact that these have to be worked within the formula is emphasised and the earlier three aspects are factors which have to be included in the formula in the manner so provided.84. We cannot accept such a self-serving argument by DIAL to somehow enhance their revenue and that possibly is the reason that MIAL did not even consider worth its while to emphasise it before the Tribunal or come up in appeal on that aspect before us. We have, thus, no hesitation in rejecting this plea of DIAL and affirming the manner of calculation as per formula by the AERA.85. In the determination of development fee, while approving the project cost, AERA disallowed an area of 8652 sq. mtrs. of Food and Beverages area. The said area consisted of non-aeronautical assets built within IGIAs terminal area. AERA determined the same to be excessive construction and not required.86. AERA in the DIAL Tariff Order opined that the mere fact of disallowance does not impact the real asset allocation on the ground. In paras 7.8 to 7.11 of the DIAL Tariff Order, AERA observed that in its Development Fee Order, assets for which the costs were disallowed were not required to be built and were over and above the requirement in respect of the airport project. However, even though AERA had disallowed costs incurred in creation/construction of such assets from the allowable project cost, these assets had been created, were being used by the airport operator, and were also accounted for in the final asset allocation mix. AERA had neither prohibited the airport operator from utilizing such assets nor was the airport operator asked to decommission them.87. The question of whether the cost of construction of a particular area providing non-aeronautical services was to be considered as part of the total project cost in determining the development fee was not relevant to the present consideration. In para 21.4.5 of the DIAL Tariff Order, AERA observed that it had taken the decision while determining the development fee under Section 13(1)(b) of the said Act, read with Section 22A of the AAI Act. However, the present exercise pertained only to fixation of aeronautical tariff in terms of Section 13(1)(a) of the said Act, which only required determination of aeronautical RAB. It was decided that though an area of 8652 sq.mtrs. was disallowed in the Development Fee Order, the total non-aeronautical revenue would be reckoned towards the determination of aeronautical tariff without the exclusion proposed by DIAL.88. Interestingly MIAL did not think it worth its while to raise such a plea either before the AERA or the TDSAT. The TDSATs order dated 23.11.2018 relating to the appeal by DIAL had also not modified the DIAL Tariff Order in any manner. DIAL still sought to contend that the view adopted by AERA was fallacious and sought to rely on the definition of non-aeronautical assets in the OMDA.92. It would suffice for us to say that the present controversy is limited to whether the revenue from disallowed area must be considered while fixing aeronautical tariff under the said Act. The airport operators were not asked to decommission the assets in the disallowed area. The said assets had already been created and were being used by the airport operator. Hence, the revenue from the disallowed area had to be included in the tariff.93. The aspect relating to disallowance of the project cost for the disallowed area was not urged by FIA and hence, we are not commenting on the same.94. The TR is to be calculated as per formula provided in Schedule 1 of the SSA. The T (tax) element in the formula contemplates the inclusion of corporate taxes on earnings pertaining to Aeronautical Services. AERA has opined qua both Airport Operators that the calculation of corporate taxes should be done after deducting all costs, which would include the revenue share or the Annual Fee paid by them to the AAI.110. Our thought process on the aforesaid plea has given rise to a conundrum – whether we should adopt the course taken in respect of the other issues where we lay emphasis on the view adopted by AERA and the Tribunal, or whether we should follow the principle enunciated in Nabha Power to read the contract strictly in its terms (supra).111. No doubt, it is a principle of taxation that it is the actual tax which is paid and which has to be taken into account. This is what the AERA and the TDSAT have done ostensibly on the premise that there should not be any undue enrichment of the Airport Operators. However, to our mind, the more important factor is to look at what the contract says and whether some other construction would be required to be given to the contract.112. If we turn to the express language of T in Schedule 1 of the SSA the wordings are clear and unequivocal. The determination has to be made of corporate taxes on earnings pertaining to Aeronautical Services (emphasis supplied). T is part of a formula. No doubt it refers to taxation, but how it would apply to the formula has to be determined from the definition of T and not from how generally tax is understood. These are complex formulas settled by experts and various factors weigh in arriving at them.113. In the overall scenario, it is the TR which is crucial where T is only a component. No one is saying that a different methodology and not the common practice has to be followed for payment of tax. It is for the component T to be calculated in the formula for TR that T has been defined. T has to be computed based solely on regulatory accounts prepared by AERA for the TR formula. If the Annual Fee is the component which is taken out of aeronautical services, the definition of T would have to be read completely differently.114. The focus of all stakeholders has resulted in a particular formula in with various components whereby aeronautical services are controlled. Non-aeronautical services are more revenue generating aspects. In order to balance the interest of the other stakeholders with the Airport Operators, 30 per cent of the non-aeronautical revenue is subtracted from the aeronautical revenue. In this larger philosophy, it would be imprudent and contrary to the express terms of the contract to seek to re- define any component other than the manner in which it is specifically mentioned. To that limited extent, Mr. Datar was right in invoking the principle of business efficacy as that was the result intended by the parties.115. Article 3.1.1 of the SSA mandates that Annual Fee shall not be considered as a cost in relation to provision of Aeronautical Services. The question thus arises is that if it is so, then how can tax be computed any differently. In our view, the clause has to be read as a whole. It forms part of a proviso, which reads as under:3.1.1 GOIs intention is to establish an independent airport economic regulatory authority (the Economic Regulatory Authority), which will be responsible for certain aspects of regulation (including regulation of Aeronautical Charges) of certain airports in India. GOI agrees to use reasonable efforts to have the Economic Regulatory Authority established and operating within two (2) years from the Effective Date. GOI further confirms that, subject to Applicable Law, it shall make reasonable endeavours to procure that the Economic Regulatory Authority shall regulate and set/ re-set Aeronautical Charges, in accordance with the broad principles set out in Schedule 1 appended hereto. Provided however, the Upfront Fee and the Annual Fee paid / payable by the JVC to AAI under the OMDA shall not be included as part of costs for provision of Aeronautical Services and no pass-through would be available in relation to the same. (emphasis supplied).116. The first part of the proviso is clear in its terms that upfront fee and the Annual Fee paid/payable by the Airport Operators to AAI under the OMDA shall not be included as part of costs for provision of Aeronautical Services. There is no doubt a second part to it which states that no pass-through would be available in relation to the same. It is the latter part which is sought to be emphasised in the decision-making process of the AERA. This is because if the first part is implemented there will be an element of pass-through. However, if we were to accept the view of the AERA, it would be in a sense amount to nullifying the first part of the proviso. No construction should be given to a contract where the first part itself is nullified by a reading of the latter part. This clause is more general in its terms. Pass-through would not be permitted in normal circumstances as per the clause. However, insofar as the tax element is concerned, there appears to be an exception because of the manner in which the T in the formula itself has been derived. Qua the Annual Fee, the SSA does not contemplate a subtraction from the expenses. There is also no direct extraction from other stakeholders qua the annual fee and thus there is no pass-through. This would also be harmonious construction of the clauses of the contract so that one part of it does not do violence to the other.117. Thus, the aforesaid is the only aspect on which we are inclined to interfere with the impugned orders and find merit in the contention of the Airport Operators that the Annual Fee paid by them should not be deducted from expenses pertaining to aeronautical services before calculating the T element in the formula.119. The Development Fee (for short DF) concept does not form part of OMDA or SSA, neither did it form part of the Act initially. The cost of development of the airport overshot the estimated budgets. Vide its order dated 09.02.2009, the Central Government had permitted DIAL to collect DF at Rs. 200 per departing domestic passenger and Rs. 1300 per departing international passenger, inclusive of applicable taxes, in terms of Section 22A of the AAI Act. This was on an ad-hoc basis for a period of 36 months with effect from 01.03.2009. The aforesaid order mentioned two milestones upon which this approval was to be reviewed at a subsequent stage by AERA. A similar order of the Central Government was made with respect to MIAL on 27.02.2009 although with different amounts of DF.124. Mr. Buddy Ranganathan learned counsel for FIA, however, did not press this issue insofar as imposition of DF is concerned per se.125. FIA was aggrieved by the TDSATs treatment of Cargo and Ground Handling Services as non-aeronautical in nature. It was contended that the AERA in the DIAL Tariff Order had treated such revenue as aeronautical for the period from 01.04.2009 to 24.11.2009 as DIAL was performing these services by itself. For the remainder of the First Control Period, this was held to be non-aeronautical. The TDSAT vide impugned order dated 23.04.2018 had held that these revenues would be non-aeronautical in nature irrespective of whether such services were performed by DIAL itself or through its delegates. In the case of MIAL, the TDSAT vide order dated 15.11.2018 noted that the treatment of Cargo and Ground Handling Services had already been conclusively decided in its previous order dated 23.04.2018 and was not an issue that survived for determination.127. However, on the pointed query of the Court as to whether these contentions had been urged by the FIA before the TDSAT in the same manner, learned counsel for FIA candidly confessed that they were not. This particular line of argument had never been advanced before the AERA and the appellate authority and that closes this issue.128. AERA in the MIAL and DIAL Tariff Orders had allowed UDF to be charged on embarking as well as disembarking passengers. This finding was affirmed by the TDSAT in its order dated 23.04.2018. Lufthansa in the present appeal contended that such levy was not contemplated in the said Act. The AERA and the TDSAT had erroneously traced the source of this levy to Section 13(1)(b) of the said Act, which referred only to AERAs power to determine the DF. This was to be differentiated from the levy of the UDF, which was a separate fee. The plea was that the DF having been determined under the aforesaid provision, there could not be subsequent determination of another UDF.129. We may say that not a very serious argument was made in this behalf other than the aspect of two different nomenclatures. We agree with AERAs reasoning that the expression UDF is mentioned in the Aircraft Rules, 1937, and is different from Section 13(1)(b) of the said Act which contemplates DF only. Thus, the AERA had been mandated to determine the UDF. Nothing more is really required to be discussed on these aspects.131. We are unable to appreciate this contention for the reason that all stakeholders were heard. The orders of the AERA and the TDSAT are more than exhaustive on all aspects and the authorities had endeavored to perform their roles. We may say that the very aspect which we have not appreciated in favour of the Airport Operators, i.e., their attempt to somehow reduce their liability equally applies to Lufthansa which somehow wants to reduce their outflow on different aspects. AERA had recognized that their determination was in the nature of an initial pioneering flight based on the material available, and fine-tuning could always be done in the future. We do appreciate that the aviation industry is competitive in nature but that holds both for the airline and the Airport Operators. It is a delicate balancing role which has to be performed by the authorities. That role having been performed, the general grievances really do not survive.132. An aspect seriously debated before us was with respect to Project Cost, which kept on escalating from the original estimate. The Project Cost is taken as the base figure for determination of the Regulatory Asset Base. Thus, an increase in the Project Cost leads to a higher tariff determination by AERA. FIA has raised the issue of Project Cost, which is a ground for challenge in CA Nos.10902/2018 and 6658-6659/2019 i.e., appeals qua the challenge to the DIAL and MIAL Tariff Orders, as well as in CA Nos.3675/2020 and 145/2021, i.e., appeals qua the challenge on DF and fixation of Project Cost. The findings sought to be assailed by FIA are primarily as contained in the TDSAT order dated 20.03.2020 at paragraph 88 in respect of the first set of appeals and the TDSAT order dated 23.04.2018 passed in DIALs appeal.133. On analysis of the AERA order dated 08.11.2011, what emerges is that the issue of DF was dealt with on account of the increase in costs, the proposal of DIAL to levy DF was accepted to bridge the gap. The upward revision of Project Cost was accepted by AERA to be Rs.12,502.66 crores. AERA relied upon the reports of KPMG and Engineers India Limited (EIL) and expressed its inability to explore the matter further on grounds of the auditors themselves having not been able to further identify losses in monetary terms. Thus, it is this figure of Rs.12,502.66 crore, which has been used for determination of aeronautical tariff at IGIA.136. If we turn to the TDSATs order dated 20.03.2020, this aspect has been dealt with in paras 22, 23 & 24. It was held that the AERA could not have had much latitude in dealing with rising Project Costs as it had little or no scope to do so within its limited statutory role under the said Act. The TDSAT found that AERA had referred to the reports of the two experts and had consulted with all stakeholders, who had been given sufficient opportunity to make their submissions. This would meet the requirement of Section 13(4) of the said Act which requires AERA to ensure transparency in exercising its powers and discharging its functions. The only caveat put by the TDSAT was that the exclusions mandated by AERA from DIALs project cost to the tune of Rs. 354.14 crores should be allowed. The TDSATs order dated 16.07.2020 with respect to MIALs Project Cost held that no new grounds had been raised and the issue stood settled in DIALs case.The initial timeline of 48 months to develop the IGIA was reduced to 37 months due to pending litigation. This in return played a critical role in cost escalation and into what has been flagged by auditors as process issues.142. On examination of rival submissions, we believe that what has to be kept in mind is that we are the third tier of scrutiny. The concerned authority and the appellate authority were also dealing with a scenario which was the introduction of public-private partnership mechanism for operation of airports for the first time. Any pioneering effort thus require multiple creases to be ironed out. There was no past experience in that sense. Everyone puts their best foot forward. It would thus not be fair to examine these aspects under the microscope.143. Different aspects towards determination of Project Cost have been examined by AERA, and AERA has carried out its responsibility while granting a little leeway for the pioneering effort in an untested field in the country. The auditors too had not been able to quantify or identify the losses due to increased Project Cost in monetary terms. How can one expect AERA to take on such a task in light of the functions ascribed to it under the said Act.144. There is also substance in the contention that the whole project was running against strict timelines on account of litigations relating to projects, a common phenomenon in our country. This was more so in the context of the Commonwealth Games being around the corner. Additionally, there is also some substance in what is contended by the Airport Operators that the terminology in Sections 13(1)(a)(i) and 13(1) (a)(iii) of the said Act cannot be read into each other. The manner of reading of the provision by FIA is to combine sub-para (iii) with sub-para (i) while determining tariff.145. In our view, the provisions have been separately made because the concept of Section 13(1)(a)(i) requires AERA to determine the tariff by including capital expenditure incurred and timely investment in improvement of airport facilities. One of the other distinct factors to be considered is the cost of improving efficiency as under Section 13(1)(a) (iii). These aspects have no doubt been examined by the authority concerned, although not necessarily in the manner FIA seeks them to. Does it really lie with us to superimpose a view which has not been found feasible in the given conspectus of the large number of reports and documents before the AERA as well as the TDSAT. We thus reject the contention.146. In the end, we do believe that the matter having traversed from the AERA to the appellate authority to this Court, the parties and the counsel may have become fully aware of the nitty-gritties of the various matters and thus sought to embark on canvassing the case almost as we are some kind of first authority on these aspects. We are unwilling to do so. We have analysed all the contentions in a broad perspective, keeping in mind that the authority has performed its task and so has the appellate authority. Despite the course of action followed by counsel, we have still analysed the matter in such depth as was required to be done by this Court in rejecting all aspects in these appeals and cross-appeals except one aspect which arose from terminology and its definition.