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Supreme Court allows GMR Group to operate Nagpur airport

The apex court upheld the Bombay High Court’s decision to quash the state-owned MIHAN India’s order cancelling a contract awarded to the airport developer to operate the Nagpur airport.

The HC had also quashed the March 19, 2020 letter issued by MIHAN India annulling the bidding process for the airport and further directed the state-owned entity to take all steps in terms of the Request for Proposal (RFP) conditions, including the signing of a Concession Agreement for the Nagpur Airport, within six weeks. (Representative image)
The HC had also quashed the March 19, 2020 letter issued by MIHAN India annulling the bidding process for the airport and further directed the state-owned entity to take all steps in terms of the Request for Proposal (RFP) conditions, including the signing of a Concession Agreement for the Nagpur Airport, within six weeks. (Representative image)

GMR Group on Monday received a shot in the arm with the Supreme Court clearing the decks for it to operate the Babasaheb Ambedkar International Airport in Nagpur.

The apex court upheld the Bombay High Court’s decision to quash the state-owned MIHAN India’s order cancelling a contract awarded to the airport developer to operate the Nagpur airport.

While GMR, which operates the Indira Gandhi International Airport in Delhi, had emerged as the highest bidder in the tender process for the Nagpur airport in 2019, a year later the Maharashtra government had decided to cancel the tender process and issued a letter annulling the bid process. GMR had moved the Bombay High Court seeking quashing of the annulment letter.

A Bench led by Justice Vineet Saran dismissed four appeals filed by the Central government, the Maharashtra government, the Airports Authority of India (AAI) and others against the HC’s August 18, last year’s order that asked MIHAN (the Multi-modal International Cargo Hub and Airport at Nagpur) to execute the agreement signed with the infrastructure company for the upgradation and operation of the airport.

The HC had also quashed the March 19, 2020 letter issued by MIHAN India annulling the bidding process for the airport and further directed the state-owned entity to take all steps in terms of the Request for Proposal (RFP) conditions, including the signing of a Concession Agreement for the Nagpur Airport, within six weeks.

Challenging the setting aside of its decision to cancel the tender process and retender the project, Mihan had argued that all the four government authorities were not in favour of continuing with the five-year-old tender process as the offers were financially low and a lot had changed in the interregnum, thus requiring fresh tendering with a new financial model.

The acceptance of the bid was conditional and required approval from the Union Civil Aviation Ministry, MIHAN India, a government JV between Maharashtra Airport Development Company and AAI, it stated, adding that the HC had interfered in the tender process, without there being a concluded contract with GMR and despite the facts on record clearly showing loss to the government exchequer, the appeal stated.

GMR while opposing the appeal said that the action of the government in cancelling the annulment process was arbitrary, unreasonable and smacks of legal malice. It argued that the letter of acceptance of March 2019 was a letter of award and if one goes by its tenor and terms and conditions of the request for proposal (RFP).

According to the company, it had accepted the letter of the award following the bidding document and therefore, it was a concluded contract and must lead to the execution of the concession agreement. GMR also argued that the conditions were not part of the letter of award and posted bid conditions, which were only a formality as the transfer of the airport and its assets together with the land to it had already taken place with the approval of GoI.

However, MIHAN argued that the HC was not right in holding that the Government of Maharashtra had no business with the tender process even though the state government through its company, Maharashtra Airport Development Company, is a majority shareholder of MIHAN India company holding 51% shares. It needs to be considered that the role of the state government was never in dispute and the project monitoring and implementation committee constituted by the state government was overseeing the entire tender process, it added.

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