Kerala High Court
M/S.Lee Builders vs M/S.Inkel Ltd on 30 March, 2012
Author: T.R. Ramachandran Nair
Bench: T.R.Ramachandran Nair
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE T.R.RAMACHANDRAN NAIR
WEDNESDAY, THE 30TH DAY OF MAY 2012/9TH JYAISHTA 1934
WP(C).No. 10762 of 2012 (U)
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PETITIONER(S):
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M/S.LEE BUILDERS,
PMC XIV/489, 1ST FLOOR, KANAMPURAM BUILDING
KALADY JUNCTION, M.C.ROAD, PERUMBAVOOR-683542
REPRESENTED BY ITS MANAGING PARTNER MR.BABU THOMAS.
BY ADVS.SRI.M.K.DILEEPAN
SRI.TOMMY LOUIS
RESPONDENT(S):
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1. M/S.INKEL LTD.
INKEL CENTRE, VALLATHOL JUNCTION
SEAPORT-AIRPORT ROAD, THRIKKAKARA
KOCHI-682021 REPRESENTED BY ITS MANAGING DIRECTOR.
2. AMCON PAVERS AND PROJECTS PVT. LTD.
VII/129C, MATTAKUZHY, VARIKOLI P.O.
ERNAKULAM DISTRICT, PIN-682308.
BY ADVS. SRI.SAJI VARGHESE
& SRI.MARIAM MATHAI
& SRI.PHILIP T.VARGHESE
& SRI.THOMAS T.VARGHESE
& SMT.ACHU SUBHA ABRAHAM
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
30-05-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No. 10762 of 2012 (U)
APPENDIX
PETITIONER'S EXHBITS :-
EXHIBIT P1 : TRUE COPY OF THE TENDER NOTICE PUBLISHED BY 1ST
RESPONDENT DATED 30-3-2012.
EXHIBIT P2 : TRUE COPY OF THE LETTER GIVEN BY PETITIONER TO 1ST
RESPONDENT DATED 24.4.2012
EXHIBIT P3 : TRUE COPY OF THE PROTEST LETTER ISSUED BY PETITIONER
TO 1ST RESPONDENT DATED 27-4-2012.
EXHIBIT P4 : TRUE EXTRACT OF THE INFORMATION RECEIVED BY THE
PETITIONER FROM THE WEBSITE ABOUT 1ST RESPONDENT.
EXHIBIT P5 : TRUE COPY OF THE LETTER ISSUED BY THE COUNSEL FOR
PETITIONER DATED 4-5-2012.
EXHIBIT P6 : TRUE COPY OF THE E-MAIL DATED 4-5-2012.
RESPONDENT'S EXHBITS :-
EXT.R2 : TRUE COPY OF WORK ORDER ISSUED BY THE 1ST RESPONDENT
TO THE 2ND RESPONDENT DATED 4-5-2012.
EXT.R2(a) : TRUE COPY OF AGREEMENT DATED 5-5-2012 EXECUTED BY THE
RESPONDENTS.
EXT.R2(b) : TRUE COPY OF BANK GUARANTEE DATED 8-5-2012 GIVEN BY
2ND RESPONDENT TO THE 1ST RESPONDENT.
//TRUE COPY//
P.A TO JUDGE
amk
T.R. RAMACHANDRAN NAIR, J.
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W.P.(C). No.10762/2012-U
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Dated this the 30th day of May, 2012
J U D G M E N T
The petitioner's grievance mainly is with regard to the non acceptance of its tender in respect of work covered by Ext.P1.
2. The relevant facts of the case as pleaded by the petitioner show the following:
The first respondent is a company established by the Government of Kerala, who published a notice inviting tender for "Construction of Industrial Building (Standard Design Modules) for INKEL at Angamaly, for providing compound wall and yard works". Ext.P1 is the copy of the relevant pages of the tender document. The tender had to be submitted in two separate sealed covers, that is, (i) Technical Bid and (ii) Price Bid. It is averred that apart from the petitioner there were two other pre-qualified contractors and their price bids were opened on 12/04/2012 at 3 p.m and, the petitioner was the lowest tenderer for the work. Later, the first respondent decided to negotiate the rate quoted by the petitioner for certain items of work and the petitioner on 24/04/2012 submitted reduced rates for some items, which is evidenced by Ext.P2 letter. It is also W.P.(C). No.10762/2012 -:2:- alleged that on 27/04/2012, the petitioner was invited for another round of negotiation. On that day, the first respondent had invited the other two bidders including the second respondent and asked them to submit fresh rates for each item of works. According to the petitioner, this is in violation of all norms and procedures and a letter of protest was given as per Ext.P3. It is contended that unfair means have been adopted by the first respondent. Finally, on enquiry, the petitioner came to know that the tender submitted by the second respondent is being accepted. This Court by interim order dated 04/05/2012 restrained the first respondent from awarding the work.
3. The respondents have filed separate counter affidavits.
4. Heard parties.
5. The first respondent in its counter affidavit has raised in detail an objection regarding the maintainability of the writ petition by pointing out that the first respondent is only a company and it does not come within the definition of State or other authority under Article 12 of the Constitution of India. The said contention is raised by the second respondent also. Thus, the contention raised by both the respondents is that the writ petition is not maintainable. W.P.(C). No.10762/2012 -:3:-
6. The facts pleaded in the counter affidavit of the first respondent are relevant in this respect. For easy reference, the relevant averments in para.2 are extracted below:
"2. ........ The first respondent is a company registered under the Companies Act on the initiative of the Government of Kerala with the main object to promote, set-up operate or otherwise deal in all Infrastructure facilities, projects and ventures and other facilities required for industries and to set up infrastructural facilities for establishing or for facilitating the establishment of manufacturing, processing, packaging and other industries. It has other objects incidental and ancillary to the main objects as well. The first respondent company has nine Directors out of which only three directors are appointed by the Government of Kerala. The other six Directors are appointed by the Shareholders of the Company. The issued equity Share Capital of the company is Rs.1,37,566 crores. The Government of Kerala is having only 40,500 shares in the Company constituting 29.44% of the total shareholding of the company. Two Kerala Government companies are having 8.7% of total share holding with 12000 shares. The remaining 61.84% of shares are held by companies and individuals who are members of the public. It is submitted that the Government of Kerala is a minority W.P.(C). No.10762/2012 -:4:- Shareholder and the majority shares of the company are held by the members of the public and private sector companies. The Government of Kerala has no control, still less, any deep and pervasive control over the first respondent. The first respondent company has availed of loans from banks and has not availed of loan or financial assistance from the Government of Kerala. It is respectfully submitted that the Government of Kerala has no administrative, financial or functional control of the first respondent company. The first respondent company does not satisfy any of the mandatory conditions or parameters declared by the Hon'ble Supreme Court to become State under Article 12 of the Constitution of India. ........."
7. The learned counsel for the petitioner submitted that in the tender document itself it is noted that the company is established by the Government of Kerala. Ext.P4 produced along with the reply affidavit is the true extract of the information received by the petitioner from the website of the first respondent. Learned counsel further submitted that therein also it is published that 'INKEL' has been set up by the Government of Kerala and, therefore, the contention raised by the company cannot be accepted. It is also submitted that the company has been set up with the object of W.P.(C). No.10762/2012 -:5:- channelising the private capital as well as professional expertise into large scale infrastructure projects initiated by the various arms of the Government and, hence the said functions make it amenable to the jurisdiction of this Court.
8. The learned counsel for the petitioner relied upon the decision of the Constitution Bench of the Apex Court in Pradeep Kumar Biswas v. Indian Institute of Chemical Biology and others [(2002) 5 SCC 111] in this context, and the learned Senior Counsel for the first respondent relied upon the decision of the Apex Court in G.Bassi Reddy v. International Crops Research Institute and another [(2003) 4 SCC 225].
9. The true tests to determine whether an institution comes within the definition of State under Article 12 of the Constitution of India have been laid down in various decisions of the Apex Court, especially, in Ramana Dayaram Shetty v. International Airport Authority of India [(1979) 3 SCC 489] and Ajay Hasia v. Khalid Mujib Sehravardi [(1981) 1 SCC 722]. All the relevant decisions were considered by the Constitution Bench in Pradeep Kumar Biswas's case [(2002) 5 SCC 111]. Para.27 of the Judgment W.P.(C). No.10762/2012 -:6:- extracts the principles stated in the decision of the Apex Court in 'Ramana Dayaram Shetty' (supra) which is extracted below:
"27. Ramana was noted and quoted with approval in extenso and the tests propounded for determining as to when a corporation can be said to be an instrumentality or agency of the Government therein were called out and summarised as follows:
"(1) One thing is clear that if the entire share capital of the corporation is held by Government, it would go a long way towards indicating that the corporation is an instrumentality or agency of Government.
(2) Where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some indication of the corporation being impregnated with governmental character.
(3) It may also be a relevant factor ... whether the corporation enjoys monopoly status which is State-
conferred or State protected.
(4) Existence of deep and pervasive State control may afford an indication that the corporation is a State agency or instrumentality.
W.P.(C). No.10762/2012 -:7:-
(5) If the functions of the corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government.
(6) 'Specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of this inference' of the corporation being an instrumentality or agency of Government."
Therefore, it will show that there should be either contribution of the entire share capital of the institution by the Government, or the financial assistance should be to an extent to meet almost entire expenditure or the institution should be one wherein it enjoys monopoly status which is State-conferred or State-protected; there should be existence of deep and pervasive State control and, lastly that the functions are of public importance and closely related to governmental functions.
10. After consolidating the principles stated in various decisions, the Apex Court in Pradeep Kumar Biswas's case [(2002) 5 SCC 111] reiterated those principles at para.40 as the following:
"The picture that ultimately emerges is that the tests formulated in Ajay Hasia are not a rigid set of principles so that if a body falls within any one of them it must, ex W.P.(C). No.10762/2012 -:8:- hypothesi, be considered to be a State within the meaning of Article 12. The question in each case would be - whether in the light of the cumulative facts as established, the body is financially, functionally and administratively dominated by or under the control of the Government. Such control must be particular to the body in question and must be pervasive. If this is found then the body is a State within Article 12. On the other hand, when the control is merely regulatory whether under statute or otherwise, it would not serve to make the body a State."
Therefore, the true test is whether the institution concerned is financially, functionally and administratively dominated by or under the control of the Government.
11. In G.Bassi Reddy's case [(2003) 4 SCC 225] after referring to the above test laid down in Pradeep Kumar Biswas's case (supra), the Supreme Court also examined the real test to determine whether under Article 226 of the Constitution of India, a writ could be issued against a person for "any other purpose" and it was held in paras.27 and 28 as hereunder:
"27. It is true that a writ under Article 226 also lies against a "person" for "any other purpose". The power of the High Court to issue such a writ to "any person" can only W.P.(C). No.10762/2012 -:9:- mean the power to issue such a writ to any person to whom, according to the well-established principles, a writ lay. That a writ may issue to an appropriate person for the enforcement of any of the rights conferred by Part III is clear enough from the language used. But the words "and for any other purpose" must mean "for any other purpose for which any of the writs mentioned would, according to well-established principles issued".
28. A writ under Article 226 can lie against a "person" if it is a statutory body or performs a public function or discharges a public or statutory duty (Praga Tools Corpn. v. C.A. Imanual, Shri Anadi Mukta Sadguru Trust v. . V.R.Rudani SCC at p.698 and VST Industries Ltd. v. Workers' Union)."
12. Now we will have to consider the question whether the first respondent is one which is financially, functionally and administratively dominated by or under the control of the Government.
13. The fact that it is a company registered under the Companies Act cannot be of dispute. Out of the nine Directors, only 3 are appointed by the Government of Kerala and six Directors are appointed by the Share Holders of the company. Out of the total issued Equity Share Capital of the company, the Government's share W.P.(C). No.10762/2012 -:10:- is 29.44% and two other Government companies are having 8.7% of the total shares. The remaining 61.84% of the shares are held by companies and individuals who are members of the public. This will show that functionally, the Government is in a minority in the Board of Directors as well as among the share holders. The next aspect is regarding the financial affairs of the first respondent. Going by the averments in the counter affidavit, the company has availed of loans and financial assistance from Banks and has not availed loans or financial assistance from the Government of Kerala. Therefore, financially, it is not dependant on the Government for its affairs, and it is depending upon its own sources as well as from financial institutions. There are no materials to show that there is any administrative control by the Government over the company and there are no pleadings to that effect also.
14. Therefore, the three tests have failed as far as the first respondent is concerned, i.e. it cannot be termed as financially, functionally and administratively dominated by or under the control of the Government. The concept of all pervasive control for the Government is absent here.
W.P.(C). No.10762/2012 -:11:-
15. In that view of the matter, the arguments raised by the learned counsel for the petitioner that as the company was set up by the Government and as one of the Ministers is its Chairman, it should be presumed that it will fulfil the definition of State or other authority under Article 12 of the Constitution of India, cannot be accepted. None of the factors relevant as laid down in Pradeep Kumar Biswas's case [(2002) 5 SCC 111] and the earlier decisions of the Apex Court are present herein. Merely because in the tender document it is stated that the company is established by the Government of Kerala, it will not make it fully a Government controlled or Government company. Evidently, it is a company incorporated under the Companies Act and the majority Shareholders and Directors are outside the Government's fold.
16. It cannot be said that it exercises statutory or performs public functions. The purpose for which the tender is invited is for work of construction of industrial building. The said purpose of the contract cannot be termed as Governmental function or as public function. Therefore, the test laid down in G.Bassi Reddy's case [(2003) 4 SCC 225] also fails as far as the situation herein is concerned. Therefore, the objection raised by the respondents that W.P.(C). No.10762/2012 -:12:- the writ petition is not maintainable will have to be accepted, and I hold so.
17. The learned counsel for the petitioner submitted that the tender has been finalised in violation of the interim order passed by this Court which is stoutly denied by the respondents. I need not go into the merits of the matter including the award of the tender to the second respondent since the writ petition is not maintainable. Accordingly, the same is dismissed. No costs.
Sd/-
(T.R. Ramachandran Nair, Judge.) ms