International Airport Ltd) is a part of 'state', says HC
Reported by Anshika Misra June 06, 2008 in DNA
MUMBAI: In a landmark judgment with far-reaching consequences for
private entities, the Bombay high court has held that Mumbai
International Airport Ltd (MIAL), though registered as a private
company, performs a public function and is a "state" as defined by the
The ruling on Thursday came in a case relating to a contract for the
new duty-free shopping arcade at the international airport.
The HC set aside the Rs571-crore retail contract handed by MIAL to
Hong Kong-based DFS Group to design and manage the arcade.
"Even though it (MIAL) is registered under the Companies Act, its
functions in operating, managing and developing the Mumbai
international airport cannot be characterised as 'purely private',"
Justice DK Deshmukh and Justice ND Deshpande held.
The HC has given the MIAL eight weeks to complete the procedure of
inviting fresh tenders for awarding the contract.
The order was passed in a petition filed by Dubai-based Flemingo Duty
Free, which challenged MIAL's action to deny it participation in the
With the court holding MIAL to be a "state", actions by MIAL can now
be challenged in court, it comes under the purview of the Right to
Information (RTI) Act, and it will be subject to the courts' writ
jurisdiction. (Writs are judicial orders issued to a state or
MIAL, a consortium led by GVK, is supported by the government in
operating, managing and developing the Chhatrapati Shivaji
International Airport (CSIA). Airports Authority of India (AAI) has
leased out the international airport to MIAL for 30 years. The court
held that MIAL performs statutory functions and exercises statutory
powers under the AAI Act, 1994. "It (MIAL) is not a simple lessee of
property," the judgment stated.
MIAL had issued a public announcement in October 2006 inviting
expressions of interest (EOI) for the duty-free retail contract.
Located in the international terminal 2C at CSIA, the duty-free
shopping area will be spread across 24,541 square feet.
MIAL got nine EOIs including one from Flemingo, which was invited to
make a presentation in November 2006. Eventually, Flamingo was not
shortlisted. Flemingo challenged MIAL's action in court.
The HC held MIAL's action to be "arbitrary". "Total absence of any
reasons in any formal document or evaluation, admitted
non-communication of any reasons to the petitioner (Flemingo) and
contradictory untenable stands taken in different affidavits by MIAL
clearly shows that it has acted in an arbitrary manner in
short-listing entities," the court held.
The first of the several Second Appeals has reached CIC and CIC has quoted the High Court decision as well as its own decision on DIAL (Delhi International Airport P Ltd.) in accepting that MIAL is also a Public Authority.
Members should note the two arguments used bi IC Ansari to arrive at this conclusion:
- The Mumbai High Court Order
- The decision of CIC in the DIAL matter where even a shareholding of only 26% was held to be "substantial"