M/s.Shanti Construction Vs. M/s.Aavantika Gas Ltd & Ors.
Madhya Pradesh High Court (Division Bench (DB)- Two Judge)
WRIT PETITION, 8786 of 2021, Judgment Date: Sep 15, 2021
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 AGLgovernment 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 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.
M/s.Shanti Construction Vs. M/s.Aavantika Gas Ltd & Ors.