MIAL loses Sahara lease appeal as Delhi HC holds a judgment that copies the award is not non-speaking

A division bench of Justices Anil Kshetarpal and Bharat Parashar upheld a 2023 award rejecting the Mumbai airport operator claim to the lessor interest in a 30,047 square metre Sahara lease, holding that reproducing an award is not proof of non-application of mind, even as it flagged gaps in the reasoning below.

Mumbai International Airport Limited has lost its final round in a long effort to be recognised as landlord of a 30,047 square metre parcel at Chhatrapati Shivaji Maharaj International Airport that the Airports Authority of India leased to Sahara (Batra) Hospitality Private Limited in 2002. On 16 October 2026 a division bench of the Delhi High Court dismissed MIAL’s appeal under Section 37 of the Arbitration and Conciliation Act, 1996 against a single judge’s refusal to set aside a 2023 award by a three-member tribunal of retired judges. Justice Anil Kshetarpal, writing for himself and Justice Bharat Parashar, rejected the argument that the single judge’s decision was non-speaking because it reproduced large portions of the award. The bench did so while saying, more than once, that both the award and the judgment under appeal could have engaged more directly with a 2006 AAI letter and with ten years of rent that AAI passed on to MIAL.

A lease carved out of the airport that MIAL took over

AAI executed the lease in favour of Sahara on 5 June 2002, over land measuring about 30,047.12 square metres at the Mumbai airport, for 29 years ending 4 June 2031. Four years later, under the Government of India’s policy of privatising scheduled airports, MIAL was incorporated as a joint venture company. It signed the Operation, Management and Development Agreement with AAI on 4 April 2006, took over the airport on 3 May 2006, and executed a separate lease deed for the airport premises on 26 April 2006.

The OMDA defined Existing Leases as subsisting leases between AAI and third parties over portions of the airport, listed in Schedule 28. The Sahara lease was on that list. Article 2.6.1 of the OMDA excluded land under Existing Leases, along with Carved Out Assets, from the land demised to MIAL. Article 2.1.1 of the MIAL lease deed excluded the same land from the Demised Premises, and Article 2.1.2 provided that when an Existing Lease expired or was terminated early, the land would fold into the Demised Premises for the rest of the term.

MIAL’s case rested on a different provision. Article 5.2(b)(i) of the OMDA said that during the Transition Phase MIAL would use its best efforts, and AAI would render reasonable assistance, to transfer or novate existing contracts and agreements between AAI and third parties relating to the airport. Where a contract could not be specifically novated, MIAL would perform it at its own risk and cost, and the benefits arising from it would vest in MIAL. Article 20.3.2 added that if the OMDA conflicted with a project agreement, the OMDA would prevail.

Read together, MIAL said, these clauses obliged AAI to transfer or novate the Sahara lease, including its interest as lessor. It pointed to the minutes of an Inter-Ministerial Group meeting of 18 October 2004, which recorded a recommendation that the Sahara lease be assigned to the joint venture company; to a letter from AAI dated 9 June 2006; to communications from the Ministry of Civil Aviation dated 14 May 2012, 17 June 2013, 27 December 2013 and 6 January 2017; and to the fact that AAI had, as an interim arrangement, paid MIAL the lease amounts for roughly ten years before stopping on 1 April 2019.

The Sahara lease was never novated. Sahara did not accept MIAL as its lessor and objected to MIAL’s invoices. MIAL invoked arbitration, seeking a declaration and direction requiring AAI to transfer or assign the lease, a money claim for land rent, a claim relating to the minimum guaranteed annual payment and turnover levy, and costs. The tribunal of Justice Deepak Gupta (Retd), Justice C.K. Thakker (Retd) and Justice (Dr) Arijit Pasayat (Retd) rejected every claim by a unanimous award dated 23 March 2023. A single judge dismissed MIAL’s Section 34 petition, OMP (COMM) 268/2023, on 10 April 2024, and MIAL appealed under Section 37 read with Section 13 of the Commercial Courts Act, 2015.

What MIAL and AAI argued

Mr Rajiv Nayar, Senior Advocate, appearing for MIAL with Ms Kanika Singh, Ms Ishanee Kapoor, Ms Janhavi Negi, Mr Pratham Vir Agarwal and Mr Naman Maheshwari, made five submissions. The single judge’s judgment did not meaningfully consider the Section 34 grounds and substantially reproduced the award, contrary to Ajay Singh v. Kal Airways and Spicejet v. Kal Airways. The tribunal had misconstrued Article 5.2(b)(i) and rewritten the contract: the demise provisions in Article 2.6 of the OMDA and Articles 2.1.1 and 2.1.2 of the lease deed dealt with land, while Article 5.2(b)(i) dealt with transferring AAI’s rights as lessor under third-party contracts, so the two operated in different fields. Article 5.2(b)(i) covered all existing contracts and agreements with no carve-out for Existing Leases, except Legacy Matters, and the tribunal had read one in; Article 20.3.2 and Section 109 of the Transfer of Property Act, 1882 supported MIAL. The tribunal ignored vital evidence, above all AAI’s letter of 9 June 2006 stating that existing commercial and land licence or lease agreements had to be assigned or novated to the joint venture during the Transition Phase, and the single judge noticed the point but returned no finding on it, which Ssangyong Engineering v. NHAI treats as a ground for interference. And AAI’s decade of passing on the rent, with the ministry’s letters, showed AAI’s own understanding that the benefits of the Sahara lease vested in MIAL; the tribunal was wrong to hold the letters were not policy directions under Section 40 of the Airports Authority of India Act, 1994.

Mr Raghavendra P. Shankar, Additional Solicitor General, appearing for AAI with Mr Karan Lahiri, Mr Prateek Arora, Ms Pallavi Mishra and Ms Kanishka Singh, answered on four fronts. The award considered the contractual provisions in detail and the single judge rightly declined to substitute another possible view; the demise provisions specifically excluded Existing Leases and let the land pass to MIAL only on expiry or early termination. The 9 June 2006 letter was noticed and reproduced in the award, and MIAL’s reliance on one portion of it was an invitation to re-appreciate evidence. The payments were an interim arrangement that did not establish transfer or novation, and no plea of acquiescence, waiver or estoppel had been taken before the tribunal. The ministry’s communications could not amend a bilateral contract and were not policy directions under Section 40. The award was reasoned and unanimous, and no Section 34 ground, still less a Section 37 ground, was made out.

The narrow lane of Section 37

The bench began with the limits of its own jurisdiction. Section 34 does not allow a court to sit in appeal over an award, and an award cannot be set aside because the court prefers another reading of the contract or the evidence. Patent illegality under Section 34(2A) must go to the root of the matter. An award becomes vulnerable only where the tribunal disregards vital evidence in a way that vitiates its conclusion, or adopts an interpretation no fair-minded or reasonable person could reach on the contract’s terms. Section 37 is narrower still: the appellate court does not independently assess the merits, but asks only whether the Section 34 court stayed within its bounds.

The bench drew those propositions from MMTC v. Vedanta, which calls for extreme caution before disturbing concurrent findings under Sections 34 and 37; from Punjab State Civil Supplies Corporation v. Sanman Rice Mills, which likens the Section 37 power to civil revisional superintendence; from the three-judge decision in UHL Power v. State of Himachal Pradesh; and from McDermott International v. Burn Standard, which describes the court’s role as supervisory and treats the construction of a contract, including the parties’ conduct and correspondence, as a matter for the arbitrator. Ssangyong, Western Geco and NHAI v. M. Hakeem were cited as following the same line.

Copying an award is not the same as failing to decide

The first question was whether reproducing portions of the award made the single judge’s decision liable to be set aside. The bench distinguished between an order that does not furnish elaborate reasons and one that fails to disclose any meaningful adjudication. The two, it said, cannot be treated as interchangeable. A court that examines a challenge and finds the reasoning of the decision under attack to be legally sustainable may adopt that reasoning as the basis of its own conclusion, whether by reproducing it, referring to it or expressly agreeing with it. What matters is whether the judgment, read as a whole, shows the court considered the controversy in the light of the applicable principles.

Reproduction of reasons must therefore be separated from mechanical reproduction without adjudication of the objections raised. The distinction, the bench said, lies not in the extent of textual reproduction but in “the existence or absence of judicial engagement with the controversy”. In Section 34 and 37 proceedings, where the court decides only whether a statutory ground is made out, it may adopt the tribunal’s reasoning without restating the analysis in different words. A non-speaking challenge must be assessed in substance: whether any material ground remains unanswered, whether the statutory test was applied, and whether the reasons adopted support the result. The principle does not license mechanical endorsement. If the Section 34 court reproduces the award without examining a material objection, or the adopted reasoning fails to answer the challenge or rests on an untenable premise, the judgment remains vulnerable. The bench put the line as one between “the legitimate adoption of reasoning and the abdication of the duty to adjudicate”.

The approach, it said, matched a coordinate bench’s 2026 ruling in Proto Developers and Technologies v. Antriksh Realtech and the Karnataka High Court’s decision in Strategic Infra Services v. Mphasis, relied on by AAI, both of which direct attention to the substance of the adjudication rather than its form. MIAL’s authorities, Ajay Singh and Spicejet, confirm that a bare recital of the award with the objections unexamined will not do, but independent application of mind is not a requirement that every reason be independently formulated. Kalanithi Maran v. Ajay Singh and National Project Constructions Corporation v. S.S. Sharma turned on the deficiencies in those cases and do not make reproduction conclusive proof of non-application of mind.

Tested against that standard, the single judge’s judgment survived. It recorded MIAL’s submissions, considered the relevant provisions of the OMDA and the lease deed, addressed the Article 20.3.2 contention and examined the tribunal’s interpretation; the reproduced passages were part of that discussion. The bench added that the single judge could have dealt more expressly with the evidentiary significance MIAL attached to the 9 June 2006 letter and the rent payments, but that was a question about the adequacy of reasoning on specific points, not about the form of the judgment. The non-speaking objection was rejected, and the bench turned to the specific objections on their own merits.

Two readings of Article 5.2(b)(i), and why the tribunal’s survived

On the contract, the bench accepted that Article 2.6.1 of the OMDA and Articles 2.1.1 and 2.1.2 of the lease deed established that the Sahara land was not demised to MIAL while the lease subsisted. But whether AAI was separately obliged to transfer or novate its interest as lessor had to be examined under Article 5.2(b)(i), and could not be answered by the demise provisions alone. It said MIAL’s submission that the two sets of provisions operate in different fields was not without force, and noted that the tribunal itself had acknowledged that Article 5.2(b)(i), read in isolation, could bear MIAL’s interpretation.

The question, however, was not whether MIAL’s construction was arguable but whether the tribunal’s contrary construction was so unreasonable as to attract Section 34. The tribunal had read Article 5.2(b)(i) together with the provisions on Existing Leases and the Demised Premises, treating the specific arrangement that excluded leased land from the demise as informing the general provision on transferring contracts. That approach was not in itself impermissible, though the bench cautioned that excluding the land could not automatically be treated as excluding the lessor’s contractual interest from Article 5.2(b)(i). The definition of Existing Leases, their listing in Schedule 28 and their exclusion from the demise gave contextual support to the tribunal’s reading. The absence of an express exception was not conclusive, since contractual provisions are read together; equally, a court cannot introduce an exclusion the contract does not support. The test was whether the tribunal’s reading was a plausible reconciliation of the general provision with the specific ones, not whether another reading was possible.

Article 20.3.2 did not resolve the dispute, because it governs a conflict between the OMDA and a project agreement, while the controversy here was between provisions of the OMDA itself; the single judge was right not to treat it as determinative. The bench did qualify one observation below. The single judge had said there was no clause dealing with the benefits of Existing Leases. Article 5.2(b)(i) expressly provides that the benefits of the contracts it covers vest in MIAL, so the real dispute was whether the Sahara lease fell within that expression, and the decision to uphold the award had to rest on the tribunal’s construction of which contracts the clause covers. The award’s treatment of MIAL’s argument that the demise of land and the transfer of the lessor’s interest are distinct was, the bench said, not elaborate, but the absence of a separate answer to every step of an argument is not patent illegality.

Section 109 of the Transfer of Property Act did not establish the obligation MIAL asserted. It governs the rights and liabilities that follow a transfer of the lessor’s interest; the question here was anterior, whether the OMDA obliged AAI to make such a transfer at all. The bench also separated novation of a contract from transfer of the lessor’s interest: that the Sahara lease was not novated did not decide whether the lessor’s interest could have been transferred independently, but the issue remained whether the OMDA required that transfer.

The ministry letters, the 2006 letter and ten years of rent

On the Ministry of Civil Aviation communications, the bench said AAI’s point that the OMDA is a bilateral contract did not by itself answer a contention that a binding direction had been issued under Section 40 of the AAI Act. But the tribunal had considered the communications and found that they expressed views on how the contractual arrangements should be interpreted and implemented, not policy directions. The ministry’s role in the privatisation did not make every later letter or legal opinion a binding direction, and the conclusion was not perverse. The bench confined this finding to the arbitral challenge and left open any independent public-law question about a direction validly issued under Section 40.

The 9 June 2006 letter received closer attention. The tribunal had referred to it and reproduced part of it, but had not separately analysed the statement MIAL relied on, and the single judge could have dealt with the objection more expressly. The letter recorded AAI’s understanding that existing commercial and land licence or lease agreements were to be assigned or novated to the joint venture during the Transition Phase, and was therefore relevant to MIAL’s reading of Article 5.2(b)(i). But it was a post-contractual communication that could not amend the OMDA, and the absence of an automatic transfer was a different question from whether AAI was obliged to take steps to effect one. Failing to discuss every sentence of a document separately is not patent illegality, the bench said, though the materiality of what was omitted “must be assessed rather than presumed away”.

The payments were treated the same way. The award noticed that AAI had passed on the lease amounts until 2019, but considered that conduct only on limitation and did not ask whether it supported MIAL’s interpretation. The payments were relevant to how the parties implemented or understood the arrangement, but did not by themselves establish that the lessor’s interest had passed or that Article 5.2(b)(i) required it to; their weight depended on the circumstances in which they were made. Since no plea of acquiescence, waiver or estoppel had been adjudicated by the tribunal, the bench declined to decide the case on those grounds. The Inter-Ministerial Group minutes of 2004 predated the OMDA and could inform the commercial background, but the enforceable obligations had to be found in the agreements the parties signed, and the minutes did not show that the recommendation had been written into a binding term.

Order

The bench found no ground to interfere with the single judge’s judgment merely because it reproduced portions of the award. The tribunal’s interpretation of the contract had to be assessed within the limited scope of Section 34, and MIAL’s evidentiary objections by reference to their materiality and their effect on the conclusions reached. Subject to that examination, it held, no ground for interference under Section 34 had been established. The appeal was dismissed. Judgment had been reserved on 9 October 2026 and was pronounced on 16 October 2026.