- (1.) HEARD learned counsel for the parties on the stay application.
(2.) THE issue presently is with regard to exclusion of the petitioner company from participating in the price bid pertaining to SAIL's NIT dated 10-1-2012. It is an admitted case from the pleadings on record that the petitioner company satisfies the technical and financial parameters required for acceptance of the technical bid, yet the petitioner company is sought to be excluded from the price bid with reference to clause 2.2 of the Invitation to tender dated 10-1-2012, which provides that "Tenderers whose contract were or have been terminated due to non-performance or unsatisfactory performance shall not be considered eligible". Mr.Kasliwal, learned Senior Counsel appearing for respondent Steel Authority of India (SAIL) would argue that the word "tenderers" referred in clause 2.2 of Invitation to Tender would include not only the relevant company itself which had been earlier granted a contract and terminated either for breach of unsatisfactory performance, but also other companies (not earlier terminated) which are run and controlled by a person who was earlier associated with a defaulting but different company whose contract had been terminated due to unsatisfactory performance or non-performance. Concretised, the submission is that one Shri Sharma Steel Rolling Mills Pvt. Ltd. had earlier entered into a contract SAIL and its contract has been terminated by SAIL in May,2010. At the relevant time the petitioner No.2 Shravan Kumar Sharma was working as the Chief Executive Officer of the said company. It is submitted that subsequent to termination of the contract with Shri Sharma Steel Rolling Mills Pvt. Ltd. the petitioner company Shri Sharma Steeltech (India) Pvt. Ltd. appears to have participated in the NIT dated 10-1-2012 to circumvent the effect of termination of the contract of Shri Sharma Steel Rolling Mills Pvt. Ltd. and its ineligibility. It is submitted that though the petitioner company Shri Sharma Steeltech (India) Pvt. Ltd. had been incorporated in the financial year 2006-07 much prior either to the termination of the contract of Shri Sharma Rolling Mills Pvt. Ltd. in 2010 or the NIT dated 10-1-2012, yet it would be of no consequence, for reason of the alleged association of Shri Sharma Steel Rolling Mills Pvt. Ltd. and the petitioner company Shri Sharma Steeltech (India) Pvt. Ltd. which is alleged to be proved by the fact that the petitioner company also uses the brand name and the logo of the Shri Sharma Steel Rolling Mills Pvt. Ltd. on its products. It is submitted by resorting to the doctrine of "lifting of the corporate veil" [New Horizons Limited Vs. Union of India, (1995) 1 SCC 478] that Shri Sharma Steel Rolling Mills Pvt. Ltd. and the petitioner company Shri Sharma Steeltech (India) Pvt. Ltd. can be and have been equated as being one entity consequent to which clause 2.2 of the NIT has entailed the disqualification of the petitioner company from being considered for the price bid. Mr. Sameer Jain, learned counsel for the petitioner however submits that the entire foundation for the rejection of petitioner company's technical bid and the direction that it could not participate in the price bid is based on a complete overlooking of the provisions of the Companies Act, 1956, more particularly section 34 thereof where under the company once incorporated is an independent juristic personality different from its share holders. It is submitted that even otherwise the share holders of the petitioner company Shri Sharma Steeltech (India) Pvt. Ltd. are different and distinct from the share holders of Shri Sharma Steel Rolling Mills Pvt. Ltd. It has been further submitted that neither Gajanand Sharma and Ghasi Ram Sharma, the directors of Shri Sharma Steel Rolling Mills Pvt. Ltd. are the directors or share holders of the petitioner company. It is submitted that the petitioner company was incorporated in the financial year 2006-07 i.e. much before the termination of contract of Shri Sharma Steel Rolling Mills Pvt. Ltd. and this fact by itself indicates that the petitioner company Shri Sharma Steeltech (India) Pvt. Ltd. has not been set up as an alter ego of Shri Sharma Steel Rolling Mills Pvt. Ltd. merely to circumvent the effect of the termination of the contract of Shri Sharma Steel Rolling Mills Pvt. Ltd. and its resultant ineligibility. It is further submitted by Mr. Sameer Jain that the term of "tenderer" has been defined in terms and conditions of the contract of the NIT dated 10-1-2012 wherein it has been provided that "Tenderer" shall mean the person, firm/ company or corporation submitting a tender against the Invitation to Tender and shall include his/ its successors and assigns. It is submitted with reference to above definition that the petitioner company is neither the assign nor successor of Shri Sharma Steel Rolling Mills Pvt. Ltd. and no link or connection in law exists between the petitioner company and Shri Sharma Steel Rolling Mills Pvt. Ltd. to oust the petitioner company from the bidding process of SAIL's NIT dated 10-1-2012. It is further submitted that merely because Shri Shravan Kumar Sharma the main share holder and director of the petitioner company was earlier the Chief Executive Officer of Shri Sharma Steel Rolling Mills Pvt. Ltd. it cannot be contended that the petitioner company is under the control of Shri Sharma Steel Rolling Mills Pvt. Ltd. or related to in law, inasmuch as the Chief Executive Officer is merely an employee and not the owner of a company he works for. It is submitted that in the circumstances and facts of the case there is no legal foundation for the respondent SAIL for excluding the petitioner company from participating in the price bid in spite of the fact that the petitioner company admittedly fulfills all requisite criteria on infrastructure and financial parameters. The petitioner company's turn over is of Rs.150 crores p.a. and the mere factum of obtaining a loan of Rs.50 lacs from Shri Sharma Steel Rolling Mills Pvt. Ltd. is absolutely irrelevant for the purpose of establishing a umbilical connection between two companies. It is further submitted that the mere incident of the petitioner company having purchasd by way of an assignment the goodwill of Shri Sharma Steel Rolling Mills Pvt. Ltd. (Brand and Logo) is not relevant as the transaction in a lawful transaction which in any event has no connection with the contract for conversion under consideration with reference to the NIT dated 10-1-2012. It is submitted that under the contract under consideration the successful bidder would only be required to convert on behalf of SAIL steel ingots supplied by it into TMT bars with the name and logo of SAIL and SAIL is not to be supplied products of any other brand/ logo. It is submitted that the petitioner company Shri Sharma Steeltech (India) Pvt. Ltd. is an independent juristic personality and not even a holding or subsidiary company of Shri Sharma Steel Rolling Mills Pvt. Ltd.
(3.) HAVING heard learned counsel for the parties, I am of the view that as against the legal arguments raised by counsel for the petitioner, the arguments of the Senior counsel appearing for the respondent SAIL are prima facie mere arguments of prejudice. Reference to the doctrine of lifting the corporate veil [New Horizons Limited Vs. Union of India, (1995) 1 SCC 478] to establish commonality between the Shri Sharma Steel Rolling Mills Pvt. Ltd. and the petitioner company Shri Sharma Steeltech (India) Pvt. Ltd. is of no avail as no material has been placed before this court to hold that Shravan Kumar Sharma or other director/ share holders of the petitioner company were the real owners of Shri Sharma Steel Rolling Mills Pvt. Ltd. who now seek to pursue their earlier business in a new avtar to circumvent the consequences of an earlier disqualification. I am of the view that the petitioner company Shri Sharma Steeltech (India) Pvt. Ltd. having been incorporated in the financial year 2006-07 with distinct and different share holders and Directors than that of Shri Sharma Steel Rolling Mills Pvt. Ltd. has to be treated an independent juristic personality. The petitioner company cannot suffer the consequence of the breaches and termination of contract entered into by Shri Sharma Steel Rolling Mills Pvt. Ltd. with SAIL. The non-consideration of the petitioner company for price bid in spite of meeting the financial and infrastructural parameters requisite for technical bids is prima facie arbitrary and unsustainable. Consequently it is directed that the petitioner company Shri Sharma Steeltech (India) Pvt. Ltd. shall be allowed to participate in the financial bid pursuant to its bid in response to SAIL's NIT dated 10-1-2012. The stay application stands allowed. ;