Madras High Court Upholds Cinema Multiplex Operations at Chennai Airport MLCP, Directs Policy Review by Ministry of Civil Aviation

Court rules no statutory prohibition under Airports Authority of India Act, 1994 on multiplex operations outside restricted airport zone; stays closure order pending government policy decision

In a landmark judgment delivered on December 9, 2025, the Madras High Court adjudicated the dispute between PVR INOX Ltd. and the Airports Authority of India (AAI) concerning the operation of a cinema multiplex inside the Multi-Level Car Parking Complex (MLCP) at Chennai Airport. The petitioner, PVR INOX Ltd., challenged the Airports Authority’s unilateral directive to cease multiplex operations, contending that such a ban lacked legal basis under the Airports Authority of India Act, 1994 (AAI Act), and violated their legitimate rights and contractual expectations.

The Court comprehensively examined the facts - the MLCP project was developed under a Development Agreement dated June 20, 2018, between AAI and the 2nd respondent, Meenambakkam Realty Pvt. Ltd. (MRPL), which included the establishment of a multiplex cinema as an integral component. The petitioner had entered into a sub-license agreement with MRPL, with full knowledge and tacit approval from the AAI. Environmental clearances and police No Objection Certificates had also been obtained with AAI’s active involvement. The multiplex commenced operations in February 2023, generating revenue and enhancing passenger amenities.

However, in July 2023, AAI issued a letter directing immediate closure of the multiplex, citing that operation of cinema halls was impermissible under the AAI Act. The petitioner contended this was arbitrary, discriminatory, and against the principles of fairness enshrined in Articles 14 and 19(1)(g) of the Indian Constitution. They argued that AAI’s prior conduct created a legitimate expectation and estoppel preventing such a sudden prohibition.

AAI defended its position by asserting that the MLCP complex falls within the definition of “airport” under Section 2(b) of the AAI Act, and multiplex operations are not among the functions permitted to the authority under Section 12(3). Further, the termination of the Development Agreement between AAI and MRPL extinguished the sub-license granted to the petitioner, who had no contractual privity with AAI, rendering the writ petition non-maintainable.

After analyzing the statutory provisions and contractual clauses, the Court ruled in favour of the petitioner on the core legal issues. It held that the MLCP complex, where the multiplex is situated, is part of the “airport premises” under Section 28-A but not within the “airport” as defined in Section 2(b) of the AAI Act, which primarily covers restricted and secured zones for aeronautical activities. Consequently, multiplex operations in the unrestricted airport premises are not expressly prohibited under Section 12 of the AAI Act.

Further, the Court clarified that the sub-license agreement is co-terminus with the Development Agreement and that upon termination, AAI acquires the discretion to decide whether to continue such sub-licenses. However, this discretion must be exercised reasonably with due regard to the commercial interests of the authority and passengers. The Court rejected the claim of promissory estoppel against AAI due to lack of direct contractual relationship but underscored the need for transparency and fairness.

Critically, the Court observed that many other commercial activities not explicitly mentioned in Section 12, such as retail outlets and restaurants, are permitted within the airport premises, and singling out the multiplex for prohibition was arbitrary and lacking reasoned justification. It highlighted that cinema multiplexes are common in international airports and contribute to passenger comfort and revenue generation.

Recognizing the absence of a clear policy on such commercial activities within airport premises, the Court directed AAI to place the matter before the Ministry of Civil Aviation for an expeditious policy decision on permitting cinema multiplexes within secured and unsecured airport zones. Pending such decision, the Court ordered maintenance of status quo, allowing the multiplex to continue operations.

The judgment balances statutory interpretation, contractual principles, administrative law doctrines of legitimate expectation and promissory estoppel, and public interest considerations, marking an important precedent for commercial developments in airport premises.

Bottom Line:

Airport premises include unrestricted zones adjoining the airport used for passenger and visitor facilities; the cinema multiplex operated by petitioner falls within such unrestricted zone and is not within the restricted 'airport' as defined under Section 2(b) of Airports Authority of India Act, 1994 (AAI Act).

Statutory provision(s):

Section 2(b) of Airports Authority of India Act, 1994, Section 12(3) of Airports Authority of India Act, 1994, Section 28-A of Airports Authority of India Act, 1994, Article 14 and Article 19(1)(g) of the Constitution of India, Indian Contract Act provisions related to co-terminus contracts, Arbitration and Conciliation Act, 1996 (Section 9 and Section 17)

PVR INOX Ltd. v. Airports Authority of India, (Madras) : Law Finder Doc Id # 2820150