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The High Court of Madhya Pradesh Bench at Indore
Case Number
W.P.No.8786/2021
Parties Name
M/s.Shanti Construction
Vs.
M/s.Aavantika Gas Ltd & Ors.
Date of Judgment
15/09/21
Bench
Division Bench:
Justice Sujoy Paul
Justice Anil Verma
Judgment delivered
by
Justice Sujoy Paul
Whether approved
for reporting
YES
Name of counsel for
parties
Shri.Prateek Maheshwari, learned counsel for
petitioner.
Shri Aniket Naik with Shri Pradyumna Kibe,
learned counsel for respondents.
Law laid down
1.
Constitution of India – Article 12 –
Whether Avantika Gas Ltd (AGL) is an
instrumentality/authority and amenable to writ
jurisdiction of High Court. As per averments of
reply of AGL - it is a public company limited - a
joint venture of two PSUs namely GAIL and
HPCL - government does not hold share in AGL
“directly” - government has no pervasive/deep
control in the “day to day affairs” of AGL-
government has no direct share holding in AGL
but through three PSUs which are not government
itself and AGL is not performing any sovereign or
public function.
2.
Held – Reply is artistically drafted – there
is no absolute denial about control of government
through PSUs. The defense is confined to day to
day affairs of AGL etc.
3.
Avatika Gas Limited – whether is an
authority/instrumentality of the State – It was held
that Court can see through the corporate veil to
ascertain whether behind that veil is the face of an
instrumentality or agency of the State. It was held
that three PSUs were directly having significant
share holding in AGL. PSUs senior officers are
holding key/leading positions on deputation of
AGL. The AGL is thus an agency/authority within
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the meaning of Article 12 of the Constitution.
4.
Article 226 and Article of Association–
Three Central Government PSUs on whom
Central Government has ultimate and effective
control are having significant share holding in
AGL. In addition, the AGL's objective shows that
its duty have a public element in it.
5.
Industrial Disputes Act – First schedule –
entry 29 of first schedule covers the activities of
AGL. A conjoint reading of memorandum of
association and entry 29 aforesaid shows that AGL
is performing “public function”. Thus, it is
amenable to writ jurisdiction.
6.
Termination of contract and holiday
listing/black listing – in a contract of this nature
cancellation of which has a public law element –
writ jurisdiction can be invoked despite
availability of remedy of arbitration. Once body is
held to be covered under Article 12 of the
Constitution and is amenable to the writ
jurisdiction, the action/order of the said body must
be judged on constitutional principles.
7.
Doctrine of Proportionality – The black
listing order can be judged on the anvil of
principles of natural justice and doctrine of
proportionality. The petitioner completed 82.50%
work (total 824 out of 1000 connections) could not
have been visited with such a drastic order of
cancellation of contract and holiday listing.
8.
Alternative remedy/arbitration clause –
is not a bar for exercising writ jurisdiction.
Significant
paragraph numbers
21, 25, 27, 34, 29, 51.
Prateek Maheshwari,
15.9.2021
Sujoy Paul,J.
This petition filed under Article 226 of the Constitution assails
the order dated 11/1/2021 (Annexure P/10) passed by respondent No.2
whereby the contract was cancelled and the petitioner was put on
‘holiday listing’ for a period of two years with effect from 4/1/2021.
This will deprive the petitioner from submitting his bid in future
tenders during the holiday listing period. At the outset it is worth
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noting that learned counsel for the parties agreed that effect of
‘holiday listing’ and ‘black listing’ is one and the same.
Shorn of unnecessary details, the relevant facts as stated by the
petitioner are that the petitioner Firm is involved in business of
infrastructure development in oil and gas pipe line projects for past
several years. The respondents issued notice inviting tenders (NIT)
on 11/10/2014 calling the contractor for laying MDPE pipe line net
work and PNG connections (Lar mild connectivity) in Ujjain city for
supplying natural gas to domestic, commercial and industrial
consumers for engagement of services on certain terms and
conditions. The petitioner submitted his bid and succeeded in getting
the contract. The work order dated 15/11/2014 is filed as Annexure
P/4. The said contract was revised on 21/2/2018 through revised
work orders dated 21/2/2018 and 3/6/2018 which are filed as
Annexure P/5 and P/6.
The stand of petitioner is that right from 2014 when first work
order was issued, petitioner deployed sufficient work force to fulfill
the contractual obligation. Despite maximum efforts on the part of
petitioner, the project work could not be completed because necessary
work front was not provided by the respondents to the petitioner. The
petitioner preferred several representations (Annexure P/7) to the
respondents for the purpose of providing work front to the petitioner
so that he can complete the work on its part. The petitioner averred
that 82.50% work (total 824 out of total 1000 connections) were
completed by the petitioner. Rest of the work could not be completed
for want of work front in regard to completion of contract. Petitioner
was all along ready and willing to complete the entire contractual
work of 1000 connections within stipulated time. Petitioner is even
ready today to complete the same in a very short span of time because
only 176 connections remains due which could be completed on
receipt of registration from respondents. Shri Prateek Maheshwari,
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learned counsel for petitioner during the course of argument,
repeatedly urged that given the opportunity, the petitioner can still
complete the remaining work within short span of time and petitioner
should be given an opportunity by the respondents to complete the
same.
The respondents issued a show cause notice dated 10/9/2020 to
the petitioner. In turn, petitioner submitted his detailed reply on
14/9/2020 (Annexure P/9). In turn, respondents passed the impugned
order dated 11/1/2021 terminating the contract and placing the
petitioner on 'holiday listing'. In this order, it is mentioned that no
reply has been filed by the petitioner to the show cause notice whereas
the clear stand of petitioner is that reply to the show cause notice was
indeed filed and duly acknowledged by the respondents. In the return
they have accepted that the finding in the impugned order that no
reply has been filed by the petitioner is a typographical error on their
part.
Petitioner’s contention about maintainability:-
The parties are at loggerheads on the question of maintainability
of this petition against the respondent company. To demonstrate that
respondents are amenable to the writ jurisdiction of this Court under
Article 226 of the Constitution of India, the petitioner urged that
respondent No.1 is a joint venture of Gas Authority of India Limited
(GAIL) and Hindustan Petroleum Corporation Ltd (HPCL).
Respondent No.1 is engaged in distribution of piped natural gas and
compressed natural gas
