The Bombay high court has held that Mumbai International Airport Ltd performs a public function and is a “state” as defined by the Constitution.
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 Constitution.
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 tender process.
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 government body.)
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.
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