BS READS: How Kerala shot itself in foot in battle with Adani for Trivandrum airport

The battle for the Thiruvananthapuram airport between the Communist-led Kerala government, the Adani group and the Modi government over the past year hasn’t had a dull moment since the proceedings began
Eight cases over the last year. A battery of more than 30 lawyers. A former minister, two ‘frequent fliers’, a labour union, the Kerala government and its commercial arm, the Adani group, the Modi government, Airports Authority of India (AAI), the Airports Economic Regulatory Authority (AERA), a self-proclaimed social activist claiming to be the inventor of the abbreviation ‘PPP’ and a business lobby engaged in a litany of suits and counter-suits against each other. Claims of a smoking gun that turned out to be a damp squib. Hickey horsing between the country’s highest court and the Kerala High Court. And eventually, Kerala ending up killing its own case in court.  

The battle for the Thiruvananthapuram airport between the Communist-led Kerala government, the Adani group and the Modi government over the past year hasn’t had a dull moment since the proceedings began. On October 19, the Kerala High Court passed its judgment in favour of the Adani group. The Kerala government’s petition seeking cancellation of the contract given to Adani for running the airport was quashed by the court. The court called Kerala’s case against Adani an instance of “sour grapes” where, after losing the bids, the state turned against the very tender process in which it had participated. The state government will challenge the judgment in the Supreme Court – the very court that had turned it away last year asking it to approach the High Court first. But a look at the manner in which Kerala argued its case in the High Court indicates that the state would find it hard to stop Adani from running the airport for the next 50 years. The state’s arguments and contentions while fighting the case indicate that in many ways, it ended up killing its own case in court. How did Kerala end up losing a battle it had hoped to portray as an ideological victory before the state elections in the summer of 2021? Or was there no case against Adani to begin with?

Court documents show that the Kerala government, whose case was treated as the ‘lead case’ among all the petitions filed against Adani, made four allegations to convince the court to cancel the contract for the Thiruvanathapuram airport.

Firstly, it alleged that Adani had no prior experience in running airports and the award of the tender to the group was illegal and arbitrary. Secondly, it alleged that the entire bidding process was tailor-made for Adani, given the minimum financial requirements prescribed to be eligible to bid for the airport contract. Thirdly, it alleged that AAI could not legally use the revenue generated from leasing the Thiruvananthapuram airport to Adani to develop other airports across India. Lastly, it alleged that the Modi government had gone back on its unwritten promise to allow the state to run the airport. Additionally, it accused the Modi government of taking unfair administrative decisions that proved to be detrimental to Kerala’s interests in the airport contract.

The state’s legal team couldn’t substantiate most of these allegations with documentary proof and its self-defeating arguments in court failed to convince the judges to cancel the contract given to Adani.

Kerala’s allegations of Adani’s lack of experience in running airports was based primarily on the fact that the Delhi and Mumbai airport contracts given to GMR and GVK, respectively, by the erstwhile Manmohan Singh government, required bidders to have experience in running airports. The request for proposal (RFP) for the Thiruvananthapuram airport issued by the government in December 2018 clearly mentions that anyone who has experience in implementing projects in sectors specified in the Harmonised Master List of Infrastructure Sub-sectors issued by the Ministry of Finance was eligible to bid for the project. Airport experience wasn’t required to be eligible for bidding. The Kerala government couldn’t substantiate its contentions after AAI in its counter-affidavit made a compelling argument against restricting the bidding to those with airport experience. AAI told the court that while there were many players in the infrastructure sector in India, there were only a handful of airport operators. If airport experience were to have been made mandatory, the few airport operators in India would be in a dominating position to dictate terms by forming consortiums to bid for all projects. This would leave the entire airport privatisation initiative open to competition to just a handful of airport operators in the country. AAI produced documents pertaining to the Ahmedabad airport to buttress its arguments. The request for qualification (RFQ) for the Ahmedabad airport issued by the Manmohan Singh government in September 2013 also eliminated the need of prior experience in running airports to be eligible for bidding for the projects. Surprisingly, the Kerala government made Adani’s lack of experience as a central point in its arguments even though it itself had no prior experience in running airports. It was pointed out that the state was just a shareholder in the Cochin airport, which did not amount to having any experience running the airport. In fact, Kerala’s abysmal record at managing its state transport was pointed out as a sign of the state’s ineptitude in running road transport services which cast serious doubts over its ability to run more complex airport operations. The Kerala State Transport Corporation (KSRTC) is the state’s top loss-making public sector unit (PSU) and there have been doubts over its financial record keeping over the last few years. The court found that Kerala’s arguments of the bidding process being tailor-made for Adani was an “allegation without substantiation.”

Kerala’s allegations of the entire process being rigged to favour Adani was also based on the fact that the minimum financial capacity set at Rs 3,500 crore was designed to exclude smaller players from the bidding process. In court, the state failed to either challenge the sanctity of the bidding process, including any irregularities in opening the bid, or its final acceptance by the central government. The court itself observed that Kerala’s arguments even while raising allegations of the bidding process being retrofitted to benefit Adani was centred around the policy of privatisation. The state it seemed was against the policy of privatisation and could not produce any document to prove that the entire bidding process was rigged to favour Adani. The state-owned Kerala State Industrial Corporation (KSIDC) and Cochin International Airport Limited (CIAL) participated in the bidding for Thiruvananthapuram airport and others, along with Adani, outbid them and nine others to bag the contracts. The court found it rather unexplainable that the state was challenging the very bidding process in which it itself had participated. It found it rather odd that allegations of subterfuge arose only when Adani bagged the contracts.

Kerala’s major contention in court was that the central government had failed to honour its unwritten promises to ensure a stake for the state in the capital’s airport when its development was meant to be undertaken. Kerala produced a letter written in 2003 by then civil aviation minister in the Atal Bihari Vajpayee government, Shahnawaz Hussain to the state’s chief secretary. Hussain seems to have mentioned in the letter that if a special purpose vehicle (SPV) were to be formed in the near future for development of the Thiruvananthapuram airport, the state and its financial institutions would get a stake in it. Later that year, the state’s chief secretary N Chandrashekharan Nair wrote to the new civil aviation minister Rajiv Pratap Rudy offering an additional 120 acres of land for the development of the airport – a promise the court observed hasn’t materialised till date. Rudy wrote back saying that in the event of Thiruvananthapuram airport being privatised, the state would be ‘consulted’ on the process. The state failed to convince the court that any of these communications amounted to dishonouring of a promise or for that matter didn’t constitute even any proof of a promise having being ever made. The court noted, “There was no promise expressly made in the aforementioned documents to either hand over management of Thiruvananthapuram International Airport to the State Government or permit their participation in such management”

Kerala also produced letters written in 2018 by chief minister Pinarayi Vijayan to the then civil aviation Suresh Prabhu, asking for “seamless transfer” of the airport to the state government or allowing a first right of refusal without any limit. Prabhu insisted that the state could participate in the selection process as a special invitee or could participate in the bidding with the first right of refusal if its bid was within 10 per cent of the winning bid. Kerala’s arguments that it deserved the first right of refusal without any limits failed to convince the court. The judges observed that if Kerala had the right of refusal without any limit, then nobody would have participated in the tender. If Kerala could match anyone’s quote and walk away with the tender, “the entire process wouldn’t have been conducive to competitive bidding on a level playing field.”

It is to be noted that Adani had won the Thiruvananthapuram airport contract by quoting Rs 168 per domestic passenger while Kerala had quoted Rs 135 per passenger – almost 20 per cent less than Adani. An email sent to Adani did not elicit a response till the time of publication.

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