SC agrees to hear AAI’s plea against GMR for Nagpur airport operation

NEW DELHI : The Supreme Court on Friday agreed to hear a petition filed by the Airports Authority of India (AAI) against GMR Group regarding the operation of Nagpur Babasaheb Ambedkar International Airport. The court will hear the case after two weeks.

A four-judge special bench, led by Chief Justice D.Y. Chandrachud, said the case required a detailed hearing and consideration before the court reached any conclusion.

This curative petition by AAI comes after the Supreme Court in May 2022 upheld the Bombay high court’s decision to allow GMR to operate the airport and its subsequent rejection of the review petition in May 2023. A curative petition is the final step one can take if a review petition has been dismissed or is no longer an option.

The plea challenging the high court order was filed by the Multi-modal International Cargo Hub and Airport at Nagpur (MIHAN), a joint venture between the Maharashtra Airport Development Company and the Airports Authority.

The case pertains to the development of the Dr. Babasaheb Ambedkar International Airport as part of the Nagpur Multimodal International Hub Airport (MIHAN) project, which envisages developing an international air cargo and passenger hub at Nagpur. 

GMR emerged as the highest bidder with an initial bid of 5.76% of the gross revenue for the operation of the Nagpur airport. However, during post-bid negotiations, this was increased to 14.49%. 

Despite financial challenges in the fiscal year 2016-17, the airport managed to achieve a ‘profit before tax’ of 49 crore in the following year. Subsequently, the civil aviation ministry raised concerns regarding the contract offer made by GMR in relation to the revenue-sharing arrangement.

The main contention was regarding the low realization of revenue by MIHAN despite the hike in its revenue to the level of 49 crore. The ministry also pointed out that there would be a projected passenger volume growth of about 15-20%, and as such, MIHAN was expected to register further increases in its revenue. A similar opinion was also expressed by the then project monitoring and implementation committee (PMIC) of the state government, headed by the chief secretary.

GMR, however, argued that the subsequent hike in the airport’s profit was due to an increase in the user development fee for augmenting passenger facilities at the airport.

With no progress by MIHAN in executing the “concession agreement (contract)” with GMR, the latter moved the high court, seeking implementation of the contract. Before the court could decide the case, on 16 March, 2020, the state government informed MIHAN that it was annulling the contract based on the opinion of the PMIC. MIHAN informed GMR about the same in a letter issued on 19 March, 2020.

GMR then moved another writ petition, seeking the quashing of the annulment of the contract.

During the hearing on Friday, the Union government argued that they were not included as a party in previous proceedings, despite its crucial role in airport matters falling under the Union’s jurisdiction.

According to solicitor general Tushar Mehta, no case related to the contract to operate the airport can be heard without making the Union government a party in the case. The government also informed the court that the annulment of the bidding process with GMR was a result of issues arising out of revenue sharing to operate the airport.

Senior lawyer Abhishek Manu Singhavi, representing GMR, argued that the government has a significant stake in MIHAN and had been adequately represented in previous legal proceedings.

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Published: 09 Feb 2024, 01:52 PM IST

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