The Comptroller and Auditor General termed a request from the Bangalore airport operator to the government to waive more than Rs 9 crore owed by the now-defunct Kingfisher Airlines as "untenable" and an "undue favour", reported PTI.
The CAG also censured the government for failing to ensure that the airport operator recovered over Rs 17 crore from various airlines.
According to a concession agreement between the ministry of civil aviation (MoCA) and Bangalore International Airport Limited (BIAL), the latter collects a security fee or passenger service fee through various airlines. This fee is deposited in an escrow account.
BIAL also has to ensure realisation of dues from airlines regularly and furnish copies of audited accounts to MoCA.
However, as per the CAG report submitted today, as of March 2014, the amount outstanding from various airlines was at Rs 16.77 crore, which increased to Rs 17.44 crore by March, 2016.
Of the Rs 17.44 crore, Kingfisher Airlines owed more than half the amount at Rs 9.19 crore.
The CAG report also says that BIAL's request in 2014 for writing off the dues recoverable from Kingfisher is "not tenable" and would be an "undue favour" to the defaulter and would be a "condonation" of BIAL's failure.
It added that as there was no provision for imposing a penalty on an airline for non-payment, inability to recover dues constituted an "interest-free loan" to Kingfisher Airlines.
"The ministry failed to ensure that BIAL fulfilled its fiduciary duty to promptly realise the security fees from the airlines and deposit the same in escrow account. As a result, outstanding dues against airlines accumulated and recovery of Rs 9.19 crore from Kingfisher was rendered doubtful," said the report.