Madras High Court Asks Union Govt To Take Policy Decision On Allowing Movie Theatres Within Airport Premises

In doing so, Justice M Dhandapani also gave relief to PVR INOX, which was asked to close down its cinema hall functioning in the Multi-Level Car Parking Complex near the Chennai Airport. The court ordered that till a policy decision was taken by the Union Government, the Airport Authority of India could not ask PVR to shut down its theatre.

“Till such time a policy decision is taken with regard to operation of cinema multiplex within the secured/unsecured zone of the airport/airport premises by the Ministry of Civil Aviation, Government of India, as directed above, the order of status quo granted by this Court in favour of the petitioners shall continue,” the court said.

The court made the orders on a plea moved by PVR INOX challenging an order of the Airports Authority of India, asking PVR to shut down its operations in the complex near the Chennai Airport.

Background

The Airport Authority had invited tenders for developing a Multi-Level Car Parking Complex to develop a commercial complex near the Chennai airport. In the request for proposal, the list of permissible activities was expansively given, and the prohibited activities list did not include cinema halls.

Meenambakkam Realty Private Ltd emerged as the successful bidder, who then entered into a sub-license with PVR INOX, giving it exclusive right to establish, manage, operate and maintain a multiplex with 5 screens within the demarcated area of the complex.

Meanwhile, on July 21, 2023, the Airport Authority issued a letter, directing Meenambakkam Realty to close the cinema hall with immediate effect, as the operation of the cinema hall within the airport premises was not permissible under the Airport Authority of India Act. After a litigation in the Delhi High Court, Meenambakkam Realty terminated the contract with the Authority. PVR filed a petition in the court, which ordered a status quo and asked the authority to take a decision of PVR's representation. The authority rejected PVR's representation against which the present plea was filed.

PVR argued that the writ petition was maintainable since it involved a larger challenge to the conduct of the authority in passing the arbitrary, unreasonable order, which was violative of Article 14 and 19(1)(g) of the Constitution. PVR also argued that the Act did not prohibit the operation of multiplex in the airport. PVR also argued that the Authority had cited prohibition only against the multiplex and had allowed other commercial activities in the complex.

The Airport Authority, on the other hand, argued that there was no privity of contract between the authority and PVR and any litigation by PVR should be initiated against Meenambakkam Realty, with which it had entered into contract. It was also argued that the commercial contract entered into by the authority was not a State function and thus the petition was not maintainable. The authority also submitted that PVR had an alternative remedy to invoke the arbitration clause and when such alternative relief was available, the present plea was not maintainable.

The court noted that the cinema multiplex, though situated within the airport premises, would not come within the definition of “airport” under the Airport Authority of India Act as it was not situated within the restricted area of the airport. The court further noted that under Section 12(3) of the Act, there was no express prohibition for running a cinema multiplex within the airport premises.

“It could very well be concluded that the cinema multiplex, which is run by the petitioner, though is situated within the airport premises, but definitely it is not within the definition of 'airport' as defined u/s 2 (b), but would only fall u/s 28-A (a) of the AAI Act. Therefore, necessarily, the cinema multiplex cannot be held to be situated within the restricted area of an 'Airport' as defined u/s 2 (b) and further, there is no express prohibition u/s 12 (3) of the AAI Act for running of a cinema multiplex within the airport premises, as the said cinema multiplex is not situated within the confines of 'Airport' as defined u/s 2 (b) of the AAI Act,” the court said.

However, the court noted that the agreement between PVR and Meenambakkam Realty was co-terminus with the contract between the Authority and Meenambakkam Realty. Thus, after the termination of the original contract, the Authority stepped into the shoes of Meenambakkam Realty and any continuation of the subcontract would be as per the opinion of the Authority.

The court thus observed that PVR could have a reasonable expectation only against Meenambakkam realty and not against the Authority. However, the court also noted that while negating the claim of PVR, the authority had not provided any worthwhile reason except the prohibition (which the court had already negated) and thus, was against Article 14.

At the same time, emphasising that cinema halls were not barred in the airports, the court remarked that in many major international airports, cinema multiplexes were functioning even inside the secured are of the airports. The court observed that such commercial activities in the airport would offset the travel cost imposed on the passenger. Thus, the court suggested that a policy decision had to be taken in this regard, and directed accordingly.

Counsel for Petitioner: Mr. P. S. Raman, SC, for M/s. Arva Merchant, Mr. Sathish Parasaran, SC, for M/s.Arva Merchant

Counsel for Respondents: Mr. AR. L. Sundaresan, ASG Assisted by Mr. Ramaswamy Meyyappan, Mr. Abhishek Jenasenan

Case Title: PVR Inox Ltd and Another v. Airports Authority of India and Others

Citation: 2025 LiveLaw (Mad) 477

Case No: W.P. Nos.22968-23060/2025

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