Wednesday, June 29, 2011

Citizen's struggle brings private airports under RTI Act

A citizen’s successful struggle that has finally brought private airports under the RTI Act
June 08, 2011 01:19 PM Bookmark and Share
Vinita Deshmukh
sanjay-shirodhar

Citizen activist Sanjay Shirodkar single-handedly took on Mumbai International Airport (MIAL) which refused to provide information, saying that it cannot come under the RTI Act. On 30th May, Central Information Commissioner Sushma Singh ordered that privately-managed airports come under the purview of the RTI Act. It’s an important decision that will impact all public-private partnerships that tend to be secretive in their functioning 

On 18th May, I had described in a report on MoneyLife how RTI activist Sanjay Shirodkar has since 2008 relentlessly pursued the matter of bringing Mumbai International Airport (MIAL) under the purview of the Right to Information Act. His contention, on the basis of documents which he procured, was that the Airports Authority of India (AAI) has a 26% stake in the public-private partnership; that AAI has leased out 2,000 acres of government land to the private operator; and that it has also waived Rs250 crore stamp duty, which made it a case of "substantial funding" by a government body. Mr Shirodkar also cited two other decisions of the Central Information Commission (CIC) wherein the Delhi International Airport (DIAL) and the Bangalore International Airport (BIAL) were ordered to be brought under the purview of the RTI Act.
(Read, "Airport operators sit on valuable public property, avail of concessions, but will not be accountable".)

In the case of DIAL, the CIC said that "the Commission is of the opinion that a holding of 26% is quite substantial for any company, and therefore, Section 2(1), which states that any body owned, controlled or substantially financed is a public authority, is applicable to DIAL, and hence it is bound by the directions of the RTI Act. The Commission, therefore, directs DIAL to provide for the directions of the RTI. This must be done within 15 days of the issue of the order."

On 11 June 2008, Mr Shirodkar got a similar order from the CIC with respect to MIAL, but MIAL decided to file a petition in the Delhi High Court. The High Court re-directed the CIC order back to the CIC. On 13 May 2011, central information commissioner Sushma Singh sent copies of theGeneral Administration Department (GAD), Mantralaya, letter procured by Mr Shirodkar which stated that MIAL has been given a stamp duty concession of Rs250 crore and that it operates on 2,000 acres of government land. Now, is this not sufficient premise for MIAL to come under the RTI Act, with such substantial funding from the government.

Finally on 30 May 2011, Sushma Singh gave an order, citing reasons why MIAL is a public authority, and asked MIAL to appoint a public informationofficer (PIO) within 30 days of the receipt order. Ms Singh concluded by stating: "We find no hesitancy in declaring MIAL as a public authority under clauses (d) and (i) respectively of Section 2(h) of the RTI Act. MIAL shall appoint a CPIO and FAA within 30 days of the receipt of this order and shall also fulfill the mandate of Section 4(1) disclosure as mandated under the RTI Act within two months of the receipt of the order."

This landmark order by the CIC on 30th May, bringing private airports under the purview of the RTI Act, has larger ramifications for every public-private partnership venture in India that tends to indulge in secrecy. 

It is interesting to note the sequel of issues that led Ms Singh to give the order.
Singh addressed three issues.
1. Whether MIAL was established, or constituted, by an order of an appropriate government body.
2. Whether MIAL is a body controlled by the appropriate government body.
3. Whether MIAL is substantially financed either directly, or indirectly, by funds provided by the appropriate government body.

Let's examine the arguments.

Whether MIAL was established, or constituted, by an order of an appropriate government body 

The argument: As part of the Government of India's avowed policy of privatisation of strategic national assets, the first step appears to be privatisation of the two airports in Mumbai and Delhi on a joint venture basis. Thus,
> In March 2003, AAI initiated the process to consider modernisation of the Delhi and Mumbai airports, on the basis of an earlier decision taken by the Union Cabinet relating to restructuring of airports of the AAI on a long-term lease basis.
> On 11 September 2003, the central government approved restructuring of Mumbai and Delhi airports through joint ventures.
> On 4 February 2006, the central government announced the names of the successful bidders, that is GVK for Mumbai airport and GMR for Delhi airport.
> On 3 February 2006, a special purpose vehicle (SPV) was formed for Mumbai airport.
> On 4 February 2006, an Operations Management and Development Agreement (OMDA) was signed by both parties. Thus, 26% shares in the SPV were with AAI and 74% was allotted to GVK.
> MIAL is a company registered under the Companies Act 1956 and is a joint venture company that was incorporated on 2 March 2006. It is a consortium of GVK Airport Holdings Pvt Ltd, ACSA Global Ltd, Bid Services Division (Mauritius) Ltd and AAI.
> MIAL has been set up with the objective of operating, maintaining, developing, designing, constructing, upgrading, modernising, financing and managing airports.

Whether MIAL is a body controlled by the appropriate government body 

The argument: The AAI has leased out Chhatrapati Shivaji International Airport to MIAL for 30 years and renewable for a further 30 years.
> MIAL is a joint venture company in which 26% shareholding is held by AAI and this gives control to AAI over vital matters which require 3/4th majority.
> MIAL is the lessee of the AAI under Section 12A of the AAI Act which provides that some of the functions of the AAI may be transferred to MIAL. Thus, MIAL is a special purpose joint venture company formed only because of Section 12A of the AAI Act.
> The restructuring of Mumbai and Delhi international airports was to take place only through the joint venture route and the bidders were thus under obligation to create a special purpose vehicle…Clause (d) of Section 2(h) of the RTI Act contemplates exactly such a situation by using the words "body established or constituted by an order made by the appropriate government".
> Section 28A to Section 28R of the AAI Act provide the procedure foreviction of unuathorised occupants of airports. The provisions are on the lines of the Public Premises (Eviction) Act. Thus, this section is a strong and powerful indicator that airports are public premises and the company running them is backed by the control of the appropriate government.
> 26% of share capital of MIAL is held by AAI, which can therefore block any special resolution that is to be passed under the Companies Act. Therefore, no change in the MoU or articles of association of the company can be made unless AAI gives its consent.

Whether MIAL is substantially financed either directly, or indirectly, by funds provided by the appropriate government body 


The argument: The central government has a large financial stake in MIAL. Not only does AAI own 26% of the paid-up share capital of MIAL (which can never be reduced, but can only be increased) MIAL also has to give 38.7% of its gross revenue (quite apart from the down payment made by way of consideration for the grant of the lease) to the Act.
> According to a letter sent by the state government to Mr Shirodkar, it is categorically agreed that the state government has waived stamp duty worth Rs200 crore-Rs250 crore with respect to MIAL. The complainant (Mr Shirodkar) had submitted to us (CIC) that MIAL is using 2,000 acres of AAI leased land at concessional rates, the actual market value of which is otherwise close to Rs50,000 crore.
> As per the lease deed executed between AAI and MIAL on 26 April 2006, article IV, titled 'Lease Rent', states that MIAL shall pay an annual lease of Rs100 payable in advance on 1st April. (My comment: Would you believe the joke that 2,000 acres of prime land is given at Rs100 annual rent?) MIAL clearly reaps the benefits of the substantial amounts received by way of waiver, equity, concessional land use… Such contributions are crystal clear in themselves to affirm that MIAL has received "substantial funding" indirectly.

Hence, MIAL is clearly a case of being substantially funded. Will it now abide by the order and come under the purview of the RTI Act?

Indeed, it is a great citizens' victory!

THE STORY SO FAR 

On 1 January 2008: Sanjay Shirodkar files a complaint.

2 February 2008: Mumbai International Airport (MIAL) says it is not a public authority under the RTI Act.

17 January 2007: In another appeal filed by Delhi RTI activist Anil Heble before the CIC, Delhi, against the AAI, Delhi International Airport (DIAL) declared as public authority by the CIC.

20 February 2008: Shirodkar files another complaint with the CIC.

11 June 2008: CIC issued an order stating that MIAL is a public authority under the RTI Act.

16 July 2008:
 Mr Shirodkar sends complaint to CIC stating that MIAL is not following CIC order. Instead, MIAL files a case in the Delhi High Court.

22 November 2010:
 The CIC's decision of 11 June 2008 is set aside on the ground that "no opportunity provided to MIAL to present its case". High court also directs CCI to restore Mr Shirodkar's appeal and hear both sides.

CIC postpones first two hearings due to Mr Shirodkar's absence. The next hearing took place on 13 May 2011, at which the CIC sent a letter from the GAD which stated that MIAL was exempted from paying Rs250 crore stamp duty; it asked MIAL to explain this concession.

30 March 2011: CIC gives an order stating that MIAL comes under the purview of the RTI Act and that MIAL should appoint a public information officer within 30 days of receiving the order.

(Vinita Deshmukh is a senior editor, author and convener of Pune Metro Jagruti Abhiyaan. She can be reached at vinitapune@gmail.com.)

1 comment:

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