Karnataka High Court issues notice on privatization of Mangaluru Airport

Karnataka High Court issues notice on privatization of Mangaluru Airport

The Airports Authority of India had entered into a concession agreement the terms of which were beyond a contract of lease and virtually a complex agreement for development and expansion of the airport, the plea says

The Karnataka High Court on 2 February 2021 issued the notice on a writ petition which challenged the order of the Central Government and the Airports Authority of India (AAI) to hand over the contract for operation and management of Mangaluru International Airport to Adani Enterprise Limited.

A division bench of Chief Justice Abhay Oka and Justice Sachin Shankar Magadum issued the notice to be returned till 4 March, while hearing a petition filed by the Airports Authority Employees Union.

The present petition filed by the Airports Authority Employees Union challenges the Centre's decision to privatize of six airports in the country as "illegal, arbitrary and beyond the scope of the Airport Authority Act, 1994".

The petitioner submitted that the status of employees was being changed. "I request the court for the status quo for employees' conditions of service. Otherwise, employees at large scale are being affected and it goes contrary to the Airports Authority Act," argued the Advocate appearing on behalf of the petitioner as he pressed for an interim order.

The bench responded, "We agree with you that this needs to be looked into but the prayer is very wide for interim relief, you have to make a proper prayer."

The said petition sought for a declaration that the entire bidding process conforming to the decision of the Cabinet committee dated 8 November 2018 for the privatization of airports was illegal, arbitrary and beyond the scope of the Airport Authority Act, 1994. It further pleaded to quash the Cabinet Decision dated 3 July 2019 accepting the bid of the Adani Enterprises Limited.

The plea specified that Union Cabinet held on 8 November 2018 gave 'In-Principle Approval' for leasing out six Airports viz., Ahmedabad, Jaipur, Lucknow, Guwahati, Thiruvananthapuram and Mangaluru Airports under PPP through Public-Private Partnership.

Further, the petitioners claimed that after obtaining the approval, the AAI within no time finalized and uploaded the Request for Proposal (RFP) and Draft Concession Agreement on 14 December 2018. As per the RFP, the entity which was quoting the highest 'Per Passenger Fee' for domestic passengers will emerge as the highest bidder. Contrary to the international standards as well as the normal bidding process, there was no base price fixed and thus bid was beyond the analysis of profit and loss calculations. In total, nine bidders had participated in the bidding process. The M/s Adani Enterprises emerged as the highest bidder for all six airports.

"The Airports Authority of India Act does not provide for any type of transfer of property other than a lease. By virtue of the impugned document, the Respondents are trying to overreach and throw away the intent and object of the Airport Authority Act (AAA). None of the Respondents are empowered to enter into any type of contract parting with the possession and management of the Airports except a lease to a limited extent. The impugned decision and the request for proposal are beyond the scope of the Act and the Respondents have no authority of law to issue such proposals," read the petition.

The petitioner contended that Section 12 of the AAA does not contemplate handing over the entire airport in the name of the lease and assign all its functions to a private entity. Any other type of parting with the property of the Authority is not contemplated under the AAA. "In the name and style of leasing out the activities, the Airports Authority of India had entered into a concession agreement the terms of which were beyond a contract of lease and virtually a complex agreement for development and expansion of the airport," read the plea.

In 2020, the Kerala Government had challenged the handing over of Thiruvananthapuram airport to Adani Group, overlooking the bid submitted by a state instrumentality. However, the Kerala High Court had dismissed the challenge and upheld the acceptance of Adani's bid.

Subsequently, the Kerala Government filed a special leave petition in the Supreme Court against the verdict, which is still pending.