KIC 1286 COM 2007 KARNATAKA INFORMATION COMMISSION

Transcription

1 KIC 1286 COM 2007 KARNATAKA INFORMATION COMMISSION (Sri Benson Issac vs. (i) Bangalore International Airport Ltd. (ii) PIO, KSSIDC, Bangalore) O R D E R 1. In his undated letter, Complainant has sought a copy of suo-moto disclosure about Bangalore International Airport Limited (hereinafter referred to as BIAL or R-1) required to be published under section 4(1)(b) of Right To Information Act, 2005 (hereinafter referred to as the Act). He further states that BIAL is substantially financed by the Government of India and Government of Karnataka and therefore can be considered as a Public Authority under Right to Information Act, BIAL have replied on to the Complainant stating that the provisions of Right to Information Act, 2005 or Karnataka Transparency in Public Procurement Act 1999 etc. are not applicable to BIAL and it is not a Public Authority. Further, BIAL is a Company with equity participation by private sector to the extent of 74%. In the circumstance the question of furnishing any declaration / information suo-moto or otherwise did not arise. 3. Aggrieved by this reply, the Complainant has filed this complaint before the Commission on 14 th of March In his complaint the Complainant has stated that according to BIAL website, the private promoters hold 74% of the equity while Government promoters hold the remaining 26%. Further, the State support agreement states that Karnataka State Industrial Investment and Development Corporation (the agency appointed by Government of Karnataka, hereinafter referred to as KSIIDC or R- 2), has provided the Airport site to BIAL free from all encumbrances under the lease agreement. Under the same agreement a sum of Rs crores would be made available by the Government of Karnataka to BIAL for financing this project. He has therefore argued that there is substantial Government participation in BIAL and they have to provide him with a copy of the suo-moto disclosure. 4. Commission examined the complaint. Although Complainant had stated that BIAL is substantially financed by the Government of India and Government of Karnataka and therefore it has to be considered as a Public Authority, initially, it appeared to the Commission that BIAL may not be covered under RTI Act. The Commission therefore decided to first hear KSIIDC, through which the State Government has channelized its support to BIAL. 5. The complaint came up for hearing before Sri K. A. Thippeswamy, State Information Commissioner (SIC) on The representative of KSIIDC informed that they (KSIIDC) have consulted BIAL, who have informed that some information which was furnished to Commissioner for Welfare of Disabled was available. However, BIAL did not state that they were providing the information in response to the request for information filed under Right to Information Act. 6. After hearing KSIIDC, Sri K. A. Thippeswamy, SIC considered it necessary to hear BIAL and directed issue of notice to the Chief Executive Officer (CEO) of BIAL. Sri K. A. Thippeswamy also felt that the complaint involved question of substantial law and therefore it should be heard by the full bench of the Commission. However since under Rule 3 of Karnataka Right to Information (Constitution of Benches) Rules, 2006, the power to transfer a case to a full bench or another bench is exercised by the State Chief Information Commissioner (SCIC), Sri K. A. Thippeswamy referred the complaint to SCIC. SCIC, instead of referring the complaint to the full bench decided to transfer this complaint to himself

2 7. The complaint came up for hearing before SCIC on Advocate for BIAL appeared before the Commission and sought some time to file his reply. The complaint was therefore adjourned to On Commission decided that since the request for information was addressed to BIAL, they should be treated as the first Respondent (R-1) and KSIIDC, through whom the State Government investment has been made, be treated as the second Respondent (R-2). Advocate for R-1 filed his statement of objections along with a Memo stating that a copy of statement of objections has been sent to the Complainant by courier on Commission heard the advocate for R-1 as well as Smt. Vathsala Joseph who appeared on behalf of R From the documents filed, Commission noted that apart from the two Governments holding 26% shares of BIAL, the State Government is also supporting the project through a State Support Agreement (SSA), which provides for a loan upto Rs. 350 crores to BIAL. Commission explained that it has been following the definition of substantially financed as contained in Section 14 of the Comptroller and Auditor General (Duties, Powers and Conditions of Services) Act 1971 (Also referred to as CAG Act for brevity). 10. Commission noted that under the said section, the Comptroller and Auditor General (CAG) can audit the accounts of a body or authority, if the said body or authority is substantially financed by the Government. According to the provisions of section 14 of the said Act, the CAG can audit the accounts of a body or authority under the following two circumstances: a. If the grant or loan to a body or authority from the Consolidate Fund of India or of any State is not less than Rs. 25 lakhs and the amount of such grant or loan is not less than 75% of the total expenditure of that body or authority. b. With the previous approval of the President or the Governor, if the grant or loan to such body or authority from the Consolidated Fund of India or of any State in a financial year is not less than Rs.1.00 crore. 11. Commission observed that in view of the State Support Agreement dated 20th January 2005 between Government of Karnataka and BIAL, the State Government has provided land for BIAL free from all encumbrances under the land lease agreement and has also agreed to pay up to Rs. 350 crores as loan to BIAL for this project. It therefore appears that BIAL has been substantially financed by the State Government for the purposes of section 14 of the CAG Act. Commission however agreed to consider any other interpretation of the term substantially financed if suggested by the parties. 12. Thereafter arguments of Advocate for R-1 were heard on He undertook to file his written arguments with a copy to the Complainant on the next day of hearing. 13. Complaint was thereafter heard on , when the Complainant was present. Complainant filed his written submissions. Advocate for BIAL sought some time to file a reply. The complaint was reserved for judgment to be pronounced on R-1 has filed his reply to Complainant s written submissions on

3 14. The main issue to be decided in this complaint is whether the BIAL is a Public Authority as defined in section 2(h) of the Act. Section 2(h) reads as follows: public authority means any authority or body or institution of self-government established or constituted - a) by or under the constitution; b) by any other law made by the Parliament; c) by any other law made by the State Legislature; d) by notification issued or order made by the appropriate Government, and includes anyi. body owned, controlled or substantially financed; ii. non-government organization substantially financed, directly or indirectly by funds provided by the appropriate Government. 15. Since BIAL does not fall under items (a), (b) or (c) of section 2(h), it has to be decided whether it is a body owned, controlled or substantially financed or non-government organization substantially financed, directly or indirectly by funds provided by the appropriate Government. Accordingly the Commission framed the following four issues for decision: I. Is BIAL controlled by the Government? II. Is BIAL substantially financed by the Government? III. Is BIAL a public authority? IV. Is the Complainant entitled to information sought by him? 16. As regards control, the Commission noted that the Government promoters together hold 26 % of the equity of BIAL. Holding of 26% of the equity gives certain powers to them to block any decisions in a shareholders meeting, which are required to be passed by 75% majority. 17. Sri Benson Isaac, the Complainant, has also stated in his written submission dated 20th March 2007 that according to clause 9.4 of the share holder agreement (SHA), for purposes of quorum and major decisions the powers of the State promoters ( also referred to as Government promoters) are decisive and equal. Clause 9.4 provides that the Company shall not take any decision in respect of certain matters without the written consent of the Private promoters and the State promoters. 18. BIAL has however stated that according to clause 9.1 of SHA, out of the 12 initial Directors, 8 Directors are to be appointed by the Private Promoters, 2 by Airport Authority at India and 2 by the KSIIDC. If the number of directors is increases to 14, both Private Promoters as well as KSIIDC may appoint 1 more director each. It is also seen that the quorum for the board meetings would include at least 3 directors from private promoters and 2 directors from State promoters and the decisions of the board will be on the basis of simple majority. 19. BIAL has advanced following arguments as regards control: a. BIAL is not a Government company. b. Management of the BIAL is vested in board of directors, where directors representing private promoters constitute majority. c. The CEO incharge of day to day affairs of the company is nominated by private promoters

4 20. BIAL has quoted two judgments of Supreme Court, which lay down that the control should be total. In Bhuri Nath vs. State of J & K (1997) 2 SCC 745 the Supreme Court has held as follows: 31. To appreciate the contention, it is necessary to deal with clauses (2) and (2A) of Article 31 together. If so read, the expression Corporation owned or controlled by the State clearly indicates that the control should be total control which is as good as ownership of the Corporation by the State. The Corporation is only a cloak. The State should be able to deal with the property transferred to the Corporation. 21. Based on above, the Commission is of the view that although the State promoters do exercise a very large degree of control over BIAL, the Private promoters exercise the decisive control except in certain matters. This Commission has held that all cooperative societies are public authorities, because under certain circumstances, Government can take over their management. Although section 2(h) does not offer any guidance to deal with such a situation where Governmental control over an organization is partial, in view of the decisions of the Supreme Court quoted by BIAL, Commission decides that Government does not exercise decisive control over BIAL. The first issue is therefore replied in the negative. 22. The second issue is, whether the BIAL has been substantially financed by the Government. Complaina advanced following arguments in support of his contention that BIAL is substantially financ Government: i. BIAL falls within the definition of substantially financed under CAG Act. ii. Substantially financed does not mean that a major part of the outlay is contributed by the Government. iii. The term substantially financed needs to be understood in the spirit and not a mere interpretation of law, where it is about State support to projects and the accountability of both the promoters of projects and the state to general public. iv. BIAL has been provided land and Rs. 350 crores loan as State support. v. BIAL is also receiving significant amounts of indirect financing and other support from the Government like exemptions from registration charges, stamp duty, road cess, property tax etc. vi. In case of Anil Heble vs. AAI, Delhi International Airport Limited has been summoned by the Central Information Commission. 23. Arguments of BIAL on this issue are summarized below: i. AAI and KSIIDC have only 26% participation in the equity of BIAL. ii. Debt of Rs. 350 crores from Government of Karnataka under the State Support Agreement is a loan which is to be repaid in accordance with provisions of schedule 10 of SSA. iii. The outlay for the entire project is to the tune of Rs crores and contribution by Government promoters by way of equity and loan is only Rs. 450 crores. iv. The reference to CAG Act is misconceived. v. The loan of Rs. 350 crores is not given from the consolidated fund of the State as envisaged under CAG Act. vi. CAG Act states that the loan or grant should be in excess of 75% of the total expenditure. vii. The indirect financing and support by way of exemptions from registration charges and stamp duty etc. cannot be taken into consideration. viii. BIAL is liable to pay lease rent for the land leased to it. 24. The case relating to Delhi International Airport Limited is pending before Central Information Commission and no final order has yet been passed

5 25. BIAL has provided following information as regards the means of financing of the project: Means of Finance for the New Bangalore International Airport Project I. EQUITY Sl. No. INR Cr. 1 Airports Authority of India (A) 2 Karnataka State Industrial Investment and Development Corporation Li (B) Sub Total C= (A+B) (C) 3 Siemens Project Ventures GmbH (D) 4 Flughafen Zuerich AG (E) 5 L & T IDPL (F) Equity Sub Total G = (C+D+E +F) (G) II. DEBT & Others 6 Debt from Government of Karnataka as per the State Support Agreement (H) 7 Debt from Banks / Financial Institutions (J) 8 Internal Accruals / Deposits (K) Debt & Others Sub Total (L) = (H+J+K) (L) 9 Total Means of Finance for the Project M = (G+L) (M) 10 Total Funds by State Promoters & Government of Karnataka (N)=(C+H) (N) 11 Percentage of above (P %) 22.53% (P % *Funds from the Government of Karnataka under the State Support Agreement are repayable over 20 years. 25. The total cost of the project as indicated here is approximately Rs crores, of which 23.1% or Rs crores is met by equity, Rs crores by State Support, Rs crores by debt from Banks / Financial Institutions and Rs crores by Internal Accruals / Deposits. In the above statement BIAL have indicated that State promoters have contributed only 22.53% of the project cost (which is less than 50% of the cost of the project) and therefore they cannot be said to have financed the project substantially. 26. After taking all relevant arguments into account, Commission is of the view that the Project does come under the definition of substantially financed under CAG Act. The argument that the loan of Rs. 350 crores is not given from the consolidated fund of the State is factually incorrect. State Government funds under SSA have only been channelized through KSSIDC, which is owned by the State Government. 27. As regards an alternative criteria for determining whether the project is substantially financed by the Government promoters, R-1 appears to have suggested that substantially financed should mean that a major part of the outlay is contributed by the Government. Data above shows that the major part of the financing comes as debt from banks / financial institutions and internal accruals / deposits. It should be obvious that this part of financing is not to be taken into account for determining the financing by promoters. It cannot be argued that since private promoters are bearing the risk, debt from banks / financial institutions and internal accruals / deposits should be considered as their part of financing, because a higher risk is being borne by Government promoters. Government risk involves not only their share contribution but also the debt under SSA, because payment of this debt has been made subordinate to the repayment of debts from Banks / Financial Institutions

6 28. Based on above, a comparison of financing by the private promoters and Government promoters has been attempted below: A. Financing by the private promoters (Rs. in crores): i. Equity SEIMEN S ii. Equity UNIQUE ZURICH iii. Equity L & T iv. TOTAL (private promoters) B. Financing (direct & indirect) by Government promoters (Rs. in crores): a. Equity KSIIDC b. Equity Airport Authority of India c. Debt under SSA d. Exemption from entry tax Not Quantified e. Exemption from property tax for five years Not Quantified f. Lease of land on concessional rent Not Quantified g. Waiver of stamp duty and registration charges Not Quantified h. Exemption from fee for change of land use Not Quantified i. Exemption from payment of road cess Not Quantified j. TOTAL (Government promoters - quantified) It has been argued by BIAL that the State Financial Support of Rs. 350 crores is a debt which is to be repaid. It is true that this amount is to be repaid but this whole amount is more of risk capital because it is a subordinate loan and in financial parlance is also referred to as quasi-equity. The note under para (h) of the direct agreement specifically states that the repayments under State Support Agreement shall be sub-ordinate to the secured obligations. 30. Schedule 10 to the SSA provides that the State financial support shall be repaid in 20 equal half yearly installments, the first installment becoming due and payable in the 11th financial year. This debt shall also not carry to any interest. Assuming an interest (discount) rate of 10%, the net present value of the stream of repayments works out to a mere 86 crores. Therefore this State Financial Support is more akin to a direct subsidy of Rs. 264 crores and quasi-equity of Rs. 86 crores. 31. From the foregoing it is evident that even the direct financing by the Government promoters to this project is higher than the financing by the private promoters. If the indirect support, which has not been quantified, is also taken into account, the Government support would be much higher. Thus, it is evident that the financing of the project by Government promoters is not only substantial, but also higher than the financing by the private promoters. The project therefore satisfies both the criteria, the one laid down in CAG Act and the one indirectly suggested by R-1. The Commission therefore has no hesitation in holding that the BIAL is a body substantially financed by the Government and is therefore a Public Authority as defined under section 2(h) of the Act. The second and the third issues are therefore replied in the affirmative. 32. As regards the fourth issue, Commission also noted that the project serves a public purpose and the public have a right to know about the proper management of the project. The initial clause of the share holders agreement specifically states that the State of Karnataka has undertaken a significant role in development of the project as the same is in the interest of the general public of the State and expects that the project will provide an impetus to the overall development and growth of industry, tourism and cargo movement in the region

7 33. Madras High Court in W. P. No of 2006 has quoted from a lecture by Mrs. Justice Prabha Sridevan in which she has stated that Ideally the new Act, Right To Information Act, should apply to all sections of the society and not only to Government sector. Non-governmental organizations like NGOs, charitable trusts or trade unions should be just as accountable and as transparent as Government in a developing economy. Commission fully agrees with this view. Although the Act does not provide for it, the right to information guaranteed by the Constitution has to extend to information held by private parties, if it is required in public interest. 34. In this case we have a public private partnership project, taken up in the interest of general public, where the financing by the Government promoters (directly and indirectly) is more than that by private promoters. The project is also subject to audit by the CAG. It will be a negation of fundamental rights of the citizens if information about the project is not provided to them. Commission therefore replies to the fourth and the last issue in the affirmative. 35. For removal of doubts, it is clarified that a citizen seeking a copy of suo-moto declaration need not pay the initial fee of Rs. ten. The request is therefore valid and R-1 is hereby directed to provide the necessary information to the Complainant, within a month, free of cost, through registered post, under intimation to the Commission. 36. In exercise of powers vested in it under section 19(8)(a)(ii) of the Act, Commission also direct R-1 to appoint Public Information Officer(s) and publicize them for benefit of citizens. 37. Signed and pronounced in the open court, this 14th day of May (K. K. MISRA) STATE CHIEF INFORMATION COMMISSIONER Addresses of parties: KIC 1286 COM 2007 KIC 1286 COM 2007 Sri Benson Issac, No. 427/2, 12 th Main, 7 th A Cross, Yelahanka New Town, Bangalore PIO, KSIIDC Ltd., Khanija Bhavan, No. 49, 4 th Floor, East Wing, Race Course Road, Bangalore KIC 1286 COM 2007 The Chief Executive Officer, Bangalore International Airport Ltd., No. 118, Gayatri Lake front, Outer Ring Road, Hebbal. Bangalore