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High Court Of Delhi
NEW HORIZONS LIMITED - Appellant
Versus
UNION OF INDIA - Respondent
Civil Writ 3837 of 1993
Decided On : 10/15/1993
CORPORATE VEIL - Lifting of-is for a limited purpose and in exceptional cases only-Govt. while awarding a contract not liable to lift the corporate veil and take into account the experience of the share holders of the company.
JOINT VENTURE - What is-Equity participation by another Company-can not be said to be a joint venture.
TENDER BID - Highest Offer-rejection of-must be based on reasons-Not necessary to communicate the reasons.
Held:
As far as the first petitioner, a company, is concerned it cannot make the argument of piercing the veil either as a ground of attack or as a ground of defense. How can the first petitioner say that look I am not what I am, but I am Thompson Press, Living Media, World Media, Aroon Purie, etc. Under Section 34 of the Companies Act, 1956, on the registration of the memorandum of a company the Registrar of the Companies is to certify that the company is incorporated. From the date of incorpuration mentioned in the certificate of incorporation the company shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functions of a incorporated company, and having perpetual succession and a common seal. Let us examine the argument of the petitioners from other angle. Can a creditor of the first petitioner proceed against its shareholders as well ? Certainly not. The shareholders would themselves advance the plea that they are not liable. Piercing the veil cannot be turn a limited purpose, when it comes to award of tender, but then the contract has to be performed and in case of breach if is the tenderer who is held liable. The shareholders of the first petitioner would not be saying that they would be liable for the breach, if any.
We do not think that the authorities failed in their duty lo look behind the facade corporate ness of the first petitioner. It was none of their duty. They rightly examined the experience, etc. of the first petitioner and came to the conclusion that it did not satisfy the eligibility conditions. We find no error in the approach of the authorities.
In the present case, the reasons exisled on the record of the authorities that the lender submitted by the first petitioner was not in conformity with the condition of the lender and the first petitioner was found ineligible for award of the lender and its offer, thereforee, could not have been accepted. We find that the third respondent acted in accordance with the terms laid down in the tender notice. The fourth respondent could not support the decision of the authorities in rejecting the tender of the first petitioner on any other ground except that given by the authorities, and we will not consider any such argument in arriving at the decision in the present case. The authorities had lo see if the preliminary conditions for award of tender were satisfied or not on seeing the bid. Since the bid was rejected at the threshold the authorities could not consider the further question of high amount of royally offered by the first petitioner. Highest bid could not be a substitute for eligibility conditions.
( 1 ) RULE D. B.
( 2 ) THERE are two petitioners. First petitioner is a public limited company registered under the Companies Act, 1956, and the second petitioner is the Director of the first petitioner. By this petition they seek to have issued a writ,direction or order in the nature of certiorari quashing the award of contract by respondents 1, 2 and 3 to respondent No. 4 for printing, binding and supply of telephone directory for Hyderabad. Then the petitioners seek a writ, order or direction in the nature of mandamus requiring the respondents 1, 2 and 3 to accept the tender of the first petitioner for the purpose aforementioned. The first respondent is the Union of India through the Secretary, Ministryof Communication, New Delhi; the second is the Chairman, Telecom Commission, Ministry of Communication, New Delhi; the third is the General Manager, Department of Telecommunications, Telecom District, Hyderabad; and the fourth respondent is M/s. M and N Pulications Limited, New Delhi, who have been awarded the contract.
( 3 ) A tender notice was published on 22 April 1993 by the General Manager, Hyderabad Telecommunications (Hyderabad Telecom) inviting sealed tenders from competent agencies for printing, binding and supply of telephone directories in English for three annual issues starting from 1993. The notice said that the jobinvolved "compilation of given data into directory format, procurement of paper, printing, binding and delivery of the telephone directories to General Manager, Hyderbad Telecommunications free of cost at the specified distribution points. Besides this, the tenderer had to pay a royalty to General Manager, Hyderabad Telecommunications for each issue by clearly specifying the maximum royally amount for each issue offered by him. The successful tenderer will he permitted to procure on his own classified advertisements and cover page advertisements". Then the notice said that "the directory shall conform to the technical specifications given in the tender document. The tenderer should have experience incompiling, printing and supply of telephone directories to the large telephone systems with the capacity of more than 50,000 lines. The tenderer should substantiate this with documentary proof. He should also furnish credentials in this field". Tender document containing terms and conditions, specifications etc. for the total job could be obtained from the Directory Officer, Hyderabad Telecom on payment of certain charges. Tender was to be received upto 15 hours on 14 May 1993 and to be opened on the same day after half an hour of closing time of receipt of tenders.
( 4 ) FIVE lenders were received offering various amounts of royalties in relation to printing, binding and supply of the directories. The details are as under :-
( 5 ) FOURTH respondent was found to be successful bidder and the first petitioner was informed by letter dated 3 August 1993 that its tender offer could not be considered thoughexpressing thanks for its interest and participation in the tender. Petitioners says that they came to know about the award of the tender to the fourth respondent on 1 August 1993 when they saw an adverisement in the Daily Hindu stating that M andn Publiccations (fourth respondent) was the only official publisher of Hyderabad Telecom telephone directories. Aggrieved by the action of respondents 1, 2 and 3 this petition was filed on 16 August 1993. It appears the petitioners did not lose much lime in coining to this Court. M/s. Sesa Seat Information Systems Ltd. also filed a writ petition in the High Court of judicature, Andhra Pradesh at Hyderabad seeking some what similar reliefs. The petitioners before us were not the parties to that petition. During hearing of this petition we were told that that petition was dismissed by the Andhra Pradesh High Court on 30 August 1993, but the petitioners contend that the challenge there was on a different ground.
( 6 ) FIRST petitioner says it was most sui
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