Celebi Termination: Madras High Court Directs AAI to Proceed with Tender for Chennai Airport Ground Handling

The Madras High Court on Monday ruled that the Airports Authority of India (AAI) cannot appoint a new ground handling contractor at Chennai airport in place of Celebi Ground Services Chennai Pvt. Ltd. unless it does so through a public tender. Crucially, the court said the tender must make it clear that the appointment would be subject to the final outcome of legal proceedings pending before both the Madras High Court and the Delhi High Court concerning the cancellation of Celebi’s security clearance.

The bench of Justice Abdul Quddhose passed the interim order while hearing a batch of applications filed by Celebi under Section 9 of the Arbitration and Conciliation Act, 1996. The Turkish firm had been appointed in April 2023 as the ground handler for Chennai Airport, but its contract was later terminated after the Bureau of Civil Aviation Security (BCAS) cancelled its security clearance.

Celebi has contested the legality and basis of the cancellation of its security clearance in both high courts.

Celebi contended that the cancellation violated the terms of the Concession Agreement and had caused it substantial losses. The company sought urgent interim relief and protection pending arbitration, arguing that the termination was neither justified nor lawful.

Representing the AAI, Solicitor General Tushar Mehta and Additional Solicitor General ARL Sundaresan submitted that the appointment of a new ground handler was imperative for ensuring uninterrupted airport operations. However, they assured the court that the replacement would be selected only through a public tender process.

Crucially, the AAI undertook not to use Celebi’s ground handling equipment currently stationed at the airport, either by itself or through any third party. The court recorded this undertaking, also noting that Celebi is allowed to take an inventory of its equipment after prior approval from AAI.

Further, AAI agreed that any new tender would contain a clear stipulation that its finalisation will depend on the outcome of the present proceedings in the Madras High Court and a related case before the Delhi High Court, where Celebi is challenging the cancellation of its security clearance.

The high court, while refraining from passing any orders on Celebi’s broader claims at this stage, has permitted the company to seek further directions if the AAI violates the undertakings recorded.

The matter is now scheduled for further hearing on July 7, 2025, when the AAI is expected to file its counter affidavit in response to Celebi’s claims.

Case Title: CELEBI GROUND SERVICES CHENNAI PRIVATE LIMITED Vs. AIRPORTS AUTHORITY OF INDIA