Cancel DFS India`s duty-free ops contract: Bombay HC

DFS India is a wholly-owned subsidiary of DFS Venture Singapore Pte, one of the major duty-free operators at the Changi International Airport, Singapore.

The judgement was passed on an appeal of one of the bidders, Flemingo Duty Free Shop. Flemingo had challenged MIAL's decision to award the contract to DFS India in February 2007. In its petition, Flemingo had challenged the very process adopted by MIAL for awarding the contract. The company had found faults in every step of the process, starting from the expression of interest to issuance of request for proposal to award of the contract to ITDC-Aldeasa first and later to DFS India, when the contract with the former was cancelled. ITDC-Aldeasa is a consortium between Spanish company Aldeasa SA and Indian Tourism Development Corporation.

"We had called the process arbitrary and the High Court has accepted that," said Atul Ahuja, director, Flemingo.

The company had entered into a consortium arrangement with Aer Rianta International, a dedicated international division of the Dublin Airport Authority, to bid for the duty-free contract. "The contract awarded to Respondent No. 5 (DFS Venture Singapore Pte) on November 29, 2007 and its subsequent novation in favour of Respondent No. 6 (DFS India) is set aside," the judgement said.

"The Respondent No. 3 (MIAL) is directed to reconsider the question of grant of duty-free shop pursuant to the public advertisement afresh, in accordance with law and in the light of the observations made above... The Respondent No. 3 shall do so as expeditiously as possible, in any case, within a period of eight weeks from today," it added.

When contacted, MIAL said they would move the Supreme Court against the Bombay High Court order. "We can only say that we will appeal to the Supreme Court against the Bombay High Court's judgement," said an MIAL spokesperson.

ITDC-Aldeasa had won the contract on February 26, 2007. However, in November 2007, ITDC-Aldeasa, which had bagged the contract for Rs 571 crore, asked MIAL to reduce the contract value to Rs 250 crore, saying that at the current contract value, they would not be able to break even before the next two years. After a spate of arguments, MIAL cancelled ITDC-Aldeasa's contract and then awarded it to DFS India on November 29.