- (1.) THE petitioner, M/s. Frontier Alloy Steels Ltd., Kanpur, is a company, registered under the Companies Act. The petitioner is aggrieved by an order passed by the Railway Board, through its Joint Director, Railway Stores (IC), Railway Board, New Delhi, dated February 21, 2007, whereby the petitioner has been informed that the Ministry of Railways has decided to ban business dealings with the petitioner, being the sister concern of M/s. Frontier Springs Ltd., for a period of 5 years with effect from April 21, 2007.
(2.) SO far as the banning of M/s. Frontier Springs Ltd., the sister concern of the petitioner is concerned, the matter is not under challenge before us, and therefore, for the purposes of the present writ petition, it is recorded that such debarment of M/s. Frontier Springs Ltd. is in accordance with law. The only issue up for consideration before us is as to whether the present petitioner, namely, Frontier Alloy Steels Ltd., which is a distinct legal entity being a separate company incorporated under the Companies Act having different board of directors/shareholders, can be debarred from dealing with Railway Board for certain mistakes committed by its sister concern or not. Counsel for the petitioner Shri C.L. Pandey, senior advocate assisted by Shri R.P. Agarwal with reference to the constitution of the board of directors/share holders of the two companies pointed out that in the Frontier Allay Steels Ltd. there are six directors while in the case of the Frontier Springs Ltd. there are 8 directors. It is further pointed out that the two companies have been separately registered with the Ministry of Railways for the purposes of supply of commodities as per guidelines/instructions under Liaison Work Instructions (in short "ILW"). Counsel for the petitioner clarifies that even if certain mistakes have been committed by M/s. Frontier Springs Ltd. the same cannot per se justify the order of the Railway Board, to blacklist the present petitioner only because it was a sister concern, and more so, when absolutely no opportunity of hearing has been afforded to the petitioner before taking such a decision.
(3.) SHRI Govind Saran, counsel for the Railways on the contrary submits that the petitioner has been debarred in view of Clause 1102 of Chapter XI of the Vigilance Manual which provides that allied firms shall also be debarred from entering into business transaction with the Railways in case the main firm is so debarred. He further points out that in the facts of the present case, if the sister concern had supplied inferior quality of commodities to the Railways, this Court may not interfere with under Article 226 of the Constitution on a petition filed by the other allied company. No opportunity of hearing was required to be granted separately to the petitioner. Shri Govind Saran states that since the board of directors of both the companies are common, therefore petitioner -company assures the desorption of allied firms under Clause 1102 read with Clause 1113.;