Mumbai airport delays salary and vendor dues, says no access to funds

MIAL cites court's status quo order on escrow account for situation

Mumbai airport, which is set for change in ownership, has delayed employee salaries and vendor payments since July due to a court-ordered status quo on the use of funds in an escrow account. Vendors have complained of receiving paltry sums for their services.

All receivables of the airport are deposited in an escrow account. Mumbai International Airport (MIAL) has had no access to funds in the escrow account since mid-July, the airport operator disclosed in an affidavit last week.

The affidavit was filed in response to a petition by the Indian Airports Employees’ Union. The union represents trolley service workers (not direct employees of MIAL) who moved the Bombay High Court (HC) over non-payment of wages by the airport-appointed private contractor.

In its affidavit, MIAL said the status quo was ordered by Delhi HC while hearing its force majeure dispute with the Airports Authority of India (AAI) and denied that its bank account was frozen by the Central Bureau of Investigation and the Enforcement Directorate.

“The earned wages of workers are not being paid and they are facing difficulties due to Covid-19. We will be seeking a clarification from the Delhi HC to allow the operation of the escrow account for payment of wages,” said advocate Jane Cox, representing the workers’ union.

"There was never a delay in employee salary. Infact it would be paid before month end but now due to Covid-19 we first experienced a salary cut and now the delay," remarked an airport employee. Vendors too have complained of receiving paltry sums for their services.

 

Mumbai airport has been facing stress due to delay in real estate development and rating downgrades, but Covid-19, too, has put paid to its plans.

Mumbai airport invoked the force majeure clause in March to suspend the revenue-share arrangement with AAI. Under a 2006 agreement, MIAL pays 38.7 per cent of its revenue to AAI.

But AAI only agreed to a three-month payment deferral till July and appropriated revenue share due for July. Aggrieved, MIAL moved Delhi HC seeking an injunction against AAI.
 

On July 15, the Delhi HC ordered status quo regarding funds in the escrow account. On July 24, the court said interim directions shall continue to operate till pronouncement of the judgment.

“We have sought a direction restraining transfer of funds to AAI due to the force majeure events and other interim relief. The judgment in the matter is expected soon,” said advocate Kartik Nayar, representing MIAL.