Kerala Govt vs Adani : SC Asks Kerala HC To Decide The Challenge Against AAI Decision On Merits

The Supreme Court on Friday set aside the decision of the High Court of Kerala which held the writ petition filed by Kerala Government challenging the decision of Airport Authority of India to hand over the operation and management to Thiruvananthapuram International Airport to Adani Enterprises Ltd as non-maintainable.

A bench headed by Chief Justice of India S A Bobde sent back the matter to the High Court for taking a decision on the merits of the petition, after hearing the submissions of Senior Advocate Chander Uday Singh for the Kerala Government.

On December 18 last year, the High Court of Kerala had rejected the Kerala Government's writ petition against the decision holding that case came under the ambit of Article 131 of the Constitution, being a dispute against a functionary of the Central Government. Therefore, the High Court held, writ petition under Article 226 of the Constitution was not maintainable at the instance of the State Government.

The decision of AAI to prefer a private party ignoring the offer of the Kerala Government to operate and manage the Airport at the same commercial rates as quoted by Adani Enterprises was challenged by the state government as "arbitrary, motivated by mala fides, and devoid of public interest".

It was stated in the petition that the Kerala Government has experience in handling airports. The Cochin International Airport and Kannur International Airport are being operated and handled by companies in which the Government has the major shareholding. The petition asserted that the Kerala Government was ready and willing to form a Special Purpose Vehicle such as the Cochin International Airport Ltd (CIAL) or Kannur International Airport Ltd (KIAL) for Thiruvananthapuram Airport and the same was communicated to the Union Government and AAI.

Since Adani Enterprises has no previous experience in handling airports, the decision of AAI will not advance public interest, the petition stated.

The SLP stated :

"The attempt on the part of the Airport Authority to grant right of Operation, Management and Development of Thiruvananthapuram Airport, to a private party, Respondent No.9(Adani), who has no previous experience in managing airports, is not in public interest and is violative of the provisions of the Airport Authority of India Act, 1994 as well as the proprietary rights of the State Government as regards the land wherein the Thiruvananthapuram Airport is situated, especially when the Hon'ble Chief Minister of Kerala, has offered to take the project at the rate at par with what was quoted by Respondent No.9".

In the High Court, a division bench comprising Chief Justice S Manikumar and Justice A M Shaffique observed that since the AAI was only pursuing a policy decision of the Union Government, the case was in the nature of a dispute with the Central Government, which can be resolved only under a suit under Article 131 of the Constitution.

This reasoning is challenged by stating that a suit under Article 131 does not contemplate disputes with state instrumentalities and private parties.

"It is submitted that the High Court failed to appreciate that the word "State" in Article 131 of the Constitution cannot be a "State" under Article 12 of the Constitution of India. The Airports Authority may qualify to be a "State" in terms of Articles 12 and 36 of the Constitution. It is submitted that such wider definition of "State" in Articles 12 and 36 of the Constitution, as mandated in the said Articles itself, are intended for the purpose of Part III and IV of the Constitution and therefore the attributes of "State" in terms of Parts III and IV of the Constitution cannot be imported to "States" as provided for in Article 131, which takes in only a "State" which is the constituent unit of the Union of India".