1982 (6) TMI 240 - HC - Companies Law

Summary

Issues Involved:
1. Whether the first respondent-company is an "authority" under Article 12 of the Constitution.
2. Whether the rejection of the petitioner's lowest tender without assigning reasons violates Article 14 of the Constitution.
3. Whether the procedure of securing confidential information and acting on it without giving the petitioner an opportunity to respond violates the principles of natural justice.

Issue-wise Detailed Analysis:

1. Whether the first respondent-company is an "authority" under Article 12 of the Constitution:
The petitioner argued that the first respondent-company, Cochin Refineries Ltd., is an authority under Article 12 of the Constitution, making it amenable to writ jurisdiction. The company contended otherwise, stating it is not a statutory authority but a corporation incorporated under the Companies Act, 1956. The court examined various Supreme Court judgments, including Rajasthan State Electricity Board v. Mohan Lal, Heavy Engineering Mazdoor Union v. State of Bihar, and Sukhdev Singh v. Bhagatram Sardar Singh Raghuvanshi, which dealt with statutory corporations. It also considered Ramana Dayaram Shetty v. International Airport Authority of India and Som Prakash Rekhi v. Union of India, which discussed the concept of governmental instrumentality or agency.

The court noted that a government company could be regarded as an "authority" if it functions as an instrumentality or agency of the government. The court analyzed the company's structure, financial resources, and control mechanisms. It found that the Government of India holds only a bare majority of the company's share capital, with significant control also vested in a foreign company. The board of directors, which includes nominees from the government and the foreign company, has substantial control over the company's management. The court concluded that the company does not exhibit deep and pervasive state control and is not an instrumentality of the state under Article 12.

2. Whether the rejection of the petitioner's lowest tender without assigning reasons violates Article 14 of the Constitution:
The petitioner contended that the rejection of his lowest tender by the first respondent-company violated the equality clause under Article 14, arguing that the company's action was arbitrary and lacked transparency. The company countered that it is not bound by Article 14 as it is not an authority under Article 12. The court upheld the company's contention, stating that since the company is not an instrumentality of the state, the petitioner cannot claim a violation of Article 14 against it. Consequently, the court did not delve into the merits of the petitioner's arguments regarding arbitrariness and lack of transparency in the tender process.

3. Whether the procedure of securing confidential information and acting on it without giving the petitioner an opportunity to respond violates the principles of natural justice:
The petitioner argued that the company's procedure of obtaining confidential reports about his past performance and acting on them without providing him an opportunity to respond violated the principles of natural justice. The company maintained that the rejection of the petitioner's tender was based on an overall assessment of suitability and that principles of fair play or natural justice were not applicable as the company is not an authority under Article 12. The court agreed with the company, noting that since the company is not an instrumentality of the state, the petitioner cannot invoke the doctrine of natural justice against it.

Conclusion:
The court concluded that the first respondent-company is not an "authority" under Article 12 of the Constitution and, therefore, not amenable to writ jurisdiction. Consequently, the petitioner's claims of violation of Article 14 and principles of natural justice were not entertained. The petition was dismissed without costs.