Setback for infrastructure privatisation

WITHOUT CONTEMPT

Consequently, various business decisions and actions of similarly placed private Indian companies would now be subject to the writ jurisdiction of Indian High Courts.

The court was hearing a writ petition challenging the award by the Mumbai International Airports Pvt. Ltd of a contract for running duty-free shopping outlets in the Mumbai airport (Disclosure: In the proceedings, another partner of this author's firm represented the party to whom the contract had been awarded.)

The private operator of the Mumbai airport chose not to shortlist one of the parties that expressed interest in managing duty-free shopping outlets. The ignored party filed a writ petition arguing that the private operator too was an instrumentality of the state and, therefore, was bound by the rules of public law and procedure in selection of the licensee to run the duty-free shopping area in the airport.

The grievances, among others, were that the private operator ought not to have taken a short-listing approach, ought to have invited bids from all interested parties, and ought to have given written reasons for not taking cognisance of its interest in the contract.

The court upheld the challenge to the awarded contract and exercised its writ jurisdiction to rule on the merits of the case. The court ruled that the private limited company was not truly private, and ought to have conducted itself in the same manner as the government would have, in award of the contract.

The view of the court has opened up a range of possibilities that would dampen the process of privatisation and private implementation of what was once a public preserve. Such business enterprises now abound in India