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The Judgment of Y. V. Chandrachud, C.J., S. Murtaza Fazal Ali and A. D. Koshal, JJ. was delivered by, Chandrachud. C.J. V. R. Krishna Iyer J. gave a concurring Opinion of his own and on behalf of P.N. Bhagwati, J.

CHANDRACHUD, C.J. By this petition under Article 32 of the Constitution, the petitioners challenge the legality of the sale of certain plants and equipment of the Sindri Fertilizer Factory, whereby the highest tender submitted by Respondent 4 in the sum of Rs. 4.25 crores was accepted on May 30, 1980. The relief sought by the petitioners is that the respondents should be directed not to sell away the plant and equipment, that they should be asked to withdraw their decision to sell the same and that the said decision should be quashed as being illegal and unconstitutional.

Petitioner 1 is a Union of the Workers of the Factory, Petitioner 2, Shri A. K. Roy, a Member of Parliament from Dhanbad, is the President of that Union, while Petitioners 3 and 4 are workers employed in the Factory. Respondent 1 to the Writ Petition is the Union of India, Respondent 2 is the Fertilizer Corporation of India, ('FCI'), Respondent 3 is the Sindri Fertilizer Factory, while the added Respondent 4, Ganpatrai Agarwal, is the highest tenderer. Respondent 2, a Government of India Undertaking, is a Company incorporated under the Companies Act 1956 and is a 'Government Company' within the meaning of Section 617 of that Act. It established the Respondent 3 Factory, which was commissioned in 1951. By article 66(1) of the Articles of Association of respondent 2, its directors are appointed by the President of India.

On March 21, 1980 envelopes bearing No. 3 which contained the original offers and those bearing No. 4 which contained the modified offers, were opened in the presence of the tenderers. The highest original offer was that of respondent 4 in the sum of Rs. 7.6 crores. The highest modified offer of Rs. 6.2 crores was also made by respondent

4. The sale was thereafter adjourned.

On March 31, 1980 a letter was received by Respondent 2 that a part of the plants and equipment which were advertised for sale were needed by the Fertilizer (Planning and Development) India Ltd. for the purposes of experiment and research. On April 10, 1980 a similar request was received from the Ramagundam Division of Respondent 2. On May 14, 1980 the Board of Directors decided that only those items should be offered for sale which remained after meeting the requirements of the Fertilizer (Planning and Development) and the Ramagundam Division and that fresh offers should be invited for the reduced stock, restricted to the tenderers who had submitted modified tenders in sums exceeding Rs. 4 crores. There were six such tenders amongst the nine valid tenders. A week later, the six tenderers who had submitted those tenders were called to Sindri and a fresh list of reduced items was furnished to them. They submitted their revised tenders in sealed covers on May 23, 1980. On May 24, the Tender Committee considered the offer made by Respondent 4 in the sum of Rs. 4.25 crores as the best, that being the highest amongst the fresh reduced offers. The Tender Committee referred the matter to the Board on the same date and on May 29, the Board gave its approval to the acceptance of respondent 4's offer. On May 30, a letter of Intent was issued by Respondent 2 in the name of Respondent 4 who paid the security deposit of Rs. 50 lakhs on June 13, 1980. An order of sale in favour of Respondent 4 was issued by Respondent 2 on July 7, 1980 whereupon Respondent 4 started dismantling the machinery and equipment which he had purchased. This Writ Petition was filed on August 14, 1980. On August 25, the Court issued a show cause notice on the writ petition and stayed the sale.

1. Report of the Fertilizer Mission to India of the International Bank for the Reconstruction and Development published July, 1969.

2. Techno economic study of Alternative schemes for Sindri Modernisation Project prepared by Planning and Development Division of Fertilizer Corporation of India and published May 1971.

3. Techno economic Feasibility Report of Sindri Modernisation Project published by Planning and Development Division 1973 of Fertilizer Corporation of India.