JUDGMENT:

D.N. PATEL, J.

1. This petition has been preferred against the decision taken by the Central Government, whereby approval has been given to the Guardian Industries Corporation, U.S.A. for establishment of a Wholly Owned Subsidiary (WOS) in India for manufacturing of glass and glass products and coating of glass, under the provisions of Clause 1(2) of Schedule-1 to be read with Regulation 5(1) of Foreign Exchange Management (Transfer or issue of Security by a person resident outside India) Regulations, 2000 (hereinafter referred to as the “the Regulations, 2000”) framed under and in exercise of power conferred by clause (b) of sub-section (3) of section 6 and section 47 of the Foreign Exchange Management Act, 1999 (hereinafter referred to as “the Act, 1999”). The impugned decision taken by the Central Government is dated 26th October, 2006.

2. An important question arises for the adjudication of this Court is:

“Whether, the Central Government, has taken into consideration, the relevant factors necessary, for taking a decision for giving permission to respondent No. 3 to initiate Wholly Owned Subsidiary in India or it has considered irrelevant factors for arriving at the decision under the Foreign Exchange Management (Transfer or issue of Security by a person resident outside India) Regulations, 2000 and Foreign Exchange Management Act, 1999 or in short, Whether the decision taken by the Central Government suffers from “Wednesbury unreasonableness” or is illegal or is there any “judicial impropriety” in taking decision?

3. Learned Senior Counsel Mr. Mihir Thakore for the petitioner submitted that while passing the impugned order, the Central Government has not taken into consideration the relevant factors. On the contrary, the Central Government has considered irrelevant facts for granting permission to respondent No. 3 for starting its Wholly Owned Subsidiary. It is also submitted that looking to the guidelines issued by the Central Government, which are popularly known as Press Note No. 1 (2005 series), before grant of approval, Central Government ought to have considered whether a joint venture between the petitioner and respondent Nos. 2 and 3 is, in any way, jeopardized or not. Learned counsel for the petitioner submitted that the petitioner and respondent Nos. 2 and 3 entered into a Memorandum of Understanding and Shareholders Agreement and have started joint venture company known as Gujarat Guardian Limited for manufacture of float glass. The joint venture was running smoothly. Learned counsel for the petitioner showed balance sheet of the joint venture and showed that the joint venture is a profit making unit. In a joint venture i.e. Gujarat Guardian Limited, respondent Nos. 2 and 3 are having 50% of the shares whereas rest of the 50% shares are held by Modi Block, which includes shares owned by Modi Rubber Limited, and shares owned by GACL and shares owned by GMDC and by other persons of group of Modi. Thus, 50% shares are with Modi block, whereas remaining 50% are with respondent Nos. 2 and 3 in a joint venture. Learned counsel for the petitioner submitted that as per clause 14 of the Shareholders Agreement, respondent Nos. 2 and 3 were restrained from starting any company in India for manufacturing of float glass. The clause has been referred hereinafter in detail. Despite this agreement, an application was preferred to the Central Government by respondent No. 3 seeking approval under Foreign Direct Investment Scheme, especially under Clause 1(2) of Schedule-1 read with Regulation 5(1) of the Rules, 2000 read with Section 6(3)(b) and Section 47 of the Act, 1999. Looking to the Press Note No. 1 (2005 series), they are the guidelines pertaining to the approval of Foreign technical collaboration under the automatic route having previous venture/tie-up in India. As per these guidelines, the permission granted by the Central Government is absolutely illegal and in breach of policy laid down by the Central Government.