Kerala HC Dismisses Kerala Govt's Plea against Lease of Airport to Adani Group

Kerala HC Dismisses Kerala Govt's Plea against Lease of Airport to Adani Group

The Kerala High Court bench comprising of Justice K. Vinod Chandran and Justice C.S. Dias rejected all the petitions, including one filed by the State of Kerala against the Centre's decision to hand over to Adani Enterprises Ltd. the working and operations of the International Airport at Thiruvananthapuram.

Earlier the State government had filed an application on 21st August against the Centre's decision to lease out the airport to Adani Enterprises. The plea moved an all-party meeting in the state to demand that decision of the Union Cabinet must be withdrawn.

The Kerala State Industrial Development Corporation (KSIDC), participated in the bid, but it had lost out to Adani Enterprises' winning bid for the airport's lease and maintenance by a relatively narrow margin of Rs. 16 per passenger. The GMR Group was the third bidder.

According to the State of Kerala, currently the airport is located in prime land owned by it, which makes a state government-floated Special Purpose Vehicle (SPV) for airport management entitled to a preferential consideration over Adani Enterprises as per Section 12A of Airports Authority of India (AAI) Act, 1994. Section 21 of the AAI Act was pointed out to urge that despite the statute having provided a lease of thirty years, the present proposal intended a lease of fifty years.

The learned Additional Solicitor General (ASG) appearing for the Union of India and their Ministries, raised three preliminary objections. Firstly, the State having participated in the tender cannot turn around and challenge the conditions of the Request For Proposal (RFP). Secondly, the petitioners other than the State and the Union of Employees in Thiruvananthapuram International Airport (TIA), had not challenged the earlier judgment of this Court. The last of the preliminary objections were on Article 131 of the Constitution.

The government claimed that it had transferred 23.57 acres, estimated to be worth Rs. 250 crores now, to AAI, which was operating the airport until now. It claimed that the land was transferred free of cost for construction of the airport's international terminal, subject to the condition that the value of the land would be reflected as its share capital in a state-run company, when the airport is privatised. The government asserted that it is still in the process of taking over another 300 acres of prime land for the airport, and threatened to not co-operate with the AAI if the airport operations were given to a private company.

According to the Kerala High Court, the challenge made was against the tender floated by the AAI, a statutory authority to bring in private participation for the operation and management of an airport; in services not involving air traffic service and watch and ward at airports. The lease of the Airport for such purposes is permitted statutorily by Section 12A of the AAI Act, with the previous approval of the Central Government.

"There is no question arising as to the relationship between the Union Government and the State in the federal set up, as envisaged in the Constitution of India. There is no question arising which involves overlapping of the power, authority or right of the Central Government and that of the State Government", the Court added.

The Court also noted that the Private Public Participation which is a policy of the Union Government, statutorily recognized with respect to the Airports; is not questioned in the writ petitions. The question raised is only whether the AAI acting within the confines of Section 12A, is able to satisfy the mandate of public interest or the interest of better management, in leasing out the Airports. The State had bid under the RFP an attempt to participate in a commercial venture.

The Court added that the challenge in the writ petitions is against privatization which is the declared policy of the Union Government. With respect to Airports it is Public-Private Participation, which has been statutorily declared by incorporation of Section 12A to the AAI Act.

The Court was of the opinion that there is no challenge to the statutory provision. Interference to a policy framed by the elected Government is trite, it is difficult, and the feeble challenge raised herein against the policy is devoid of merit.The State had also raised a ground of legitimate expectation, which stood rejected.

The Court concluded that the policy of the Central Government is not under challenge and even the State's bid for the lease under the RFP, could be maintained only under Section 12A of the AAI Act. The dispute essentially is between the State and the AAI which cannot be said to be a dispute wherein only the Hon'ble Supreme Court can be moved under Article 131 of the Constitution.