Research › Search › Judgment

Calcutta High Court · body

2007 DIGILAW 467 (CAL)

I. B. ENTERPRISE v. CESC LTD.

2007-06-28

JAYANTA KUMAR BISWAS

body2007
( 1 ) THE three petitioners in this writ petition dated June 26th, 2007 are seeking writs in the nature of certiorar, prohibition and mandamus directing and commanding CESC Ltd. (the first respondent)not to award the contract for which notice inviting expression of interest was issued on february 27th, 2007 to any third party and to consider their bettered offer. ( 2 ) COUNSEL for CESC has raised the question of maintainability of the writ petition. His submissions on the preliminary issue are these, CESC is just a company incorporated under the Companies Act, 1956. It is a private person. The tender process was initiated in connection with its commercial activities, which had nothing to do with any public duty or function. Since it is not a State within the meaning of Art. 12 of the Constitution of India, alleging violation of Art. 14 no writ petition can be moved against it. To show that CESC is not a State within the meaning of Art. 12, he has relied on raghuraj Singh and Co. v. CESC Ltd. and Ors. . 1998 (1) CHN 325 and Mithai Lal Passi v. CESC Ltd. and Ors. , 2003 (3) CHN 357 . Counsel for the third respondent (Price Water house Coopers Pvt. Ltd.) cited to me Federal Bank Ltd. v. Sagar Thomas and Ors. , (2003) 10 SCC 733 : AIR 2003 SC 4325 . Counsel for the fourth respondent, M/s. Rajendra Ispat Pvt. Ltd. , the successful bidder has adopted submissions made by counsel for CESC. He has further added that the sale of plant and machinery of the generating station concerned had no connection with any public interest, or public duty, or public function CESC was supposed to discharge. ( 3 ) IN response counsel for the petitioners has said these. CESC initiated the sale process after obtaining permission from the west Bengal Electricity Regulatory Commission. As will appear from the provisions of the Electricity Act, 2003, Ss. 61-64, and the provisions of the West Bengal Electricity regulatory Commission (Terms and Conditions of Tariff) Regulations, 2007, the sale proceeds receive by CESC will be directly relevant at the time of determination of tariff by the commission. If the plant and machinery are sold at a low price, as CESC did in the present case ignoring quite a high price offered by the petitioners, ultimately the consumers would be seriously affected. If the plant and machinery are sold at a low price, as CESC did in the present case ignoring quite a high price offered by the petitioners, ultimately the consumers would be seriously affected. Hence it is apparent that the sale in question involved an element of public interest, and that CESC was selling the plant and machinery actually in the discharge of its public duty and public function; and therefore, with respect to the transaction in question it was required to act fairly and reasonably. Because of these things, even if CESC is a private body or person, it is amenable to writ jurisdiction, and law regarding this was clearly declared in Andi Mukta Sadguru etc. v. V. R. Rudani and Ors. , (1989) 2 SCC 69 : AIR 1989 SC 1607 . ( 4 ) THOUGH it has been pleaded in the writ petition that CESC is a State within the meaning of Art. 12, counsel has not argued that it is a State. Rather I have not been invited to examine whether CESC is a State within the meaning of Art. 12. In the circumstances, counsel for CESC has submitted that if it is not the case of the petitioners that CESC is a State, which according to him it is not, they cannot maintain the writ petition at all, because their whole case, as in all tender cases, is that in connection with the tender process CESC acted unfairly, unreasonably and arbitrarily. His argument is that an act of a State within the meaning of Art. 12 only, and not of a private person or body, can be subjected to judicial review of the writ Court on the ground that it is vitiated by unfairness, unreasonableness or arbitrariness, and hence violative of Art. 14. ( 5 ) IN my opinion, he is absolutely right in saying so. Article 14 prohibits the State from denying to any person equality before the law or the equal protection of the laws within the territory of India. In view of the law declared by the Apex Court, it is now known that any act of State if vitiated by unfairness, unreasonableness or arbitrariness will be hit by Art 14. Counsel has rightly said that generally all tender cases are based on the allegation of violation of art. 14. Here also such an allegation is the foundation of the case. Counsel has rightly said that generally all tender cases are based on the allegation of violation of art. 14. Here also such an allegation is the foundation of the case. But I have not been invited, I repeat, to decide whether CESC is a State within the meaning of Art. 12. Rather i have been given two Single Bench decisions of this Court holding that it is not. I therefore agree with counsel for CESC that unless it is held that CESC is a State within the meaning of Art. 12, the petitioners are not entitled to maintain the writ petition alleging that in connection with the tender process it acted unfairly or unreasonably or arbitrarily. ( 6 ) THE argument of counsel for the petitioners is rather something else. On the basis of Andi Mukta, AIR 1989 SC 1607 and federal Bank, AIR 2003 SC 4325 he has argued that even a private body discharging some public duty or public function is amendable to writ jurisdiction, arid hence it is not necessary for him to show that CESC is a State within the meaning of Art. 12. It is true that in the relied on Apex Court decisions it was clearly held that a writ petition under Art. 226 would be maintainable against a private body discharging any public duty or positive obligation of public nature. Therefore, the question is what is a public duty or positive obligation of public nature. According to counsel for the petitioners, since the sale proceeds received by cesc would ultimately have some impact on the determination of tariff by the commission, it must be held that it was selling the plant and machinery in the discharge of its public duty. According to counsel for cesc. the only public duty cast on CESC as a licensee is to give reasonably good service to the public at a reasonable rate. ( 7 ) IN Andi Mukta, AIR 1989 SC 1607 it was said (in Para 19 of the report) : "the words "any person or authority" used in article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be denied. " ( 8 ) IN Federal Bank, AIR 2003 SC 4325 it was held (in Para 17 of the report) : "from the decisions referred to above, the position that emerges is that a writ petition under article 226 of the Constitution of India may be maintainable against (i) the State (Government); (ii) an authority; (iii) a statutory body; (iv) an instrumentality or agency of the State; (v) a company which is financed and owned by the State; (vi) a private body run substantially on State funding; (vii) a private body discharging public duty or positive obligation of public nature; and (viii) a person or a body under liability to discharge any function under any statute, to compel it to perform such a statutory function. " ( 9 ) FINALLY their Lordships said (in Para 32 of the report) : "a private body or a person may be amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. We don't find such conditions are fulfilled in respect of a private company carrying on a commercial activity of banking. Merely regulatory provisions to ensure such activity carried on by private bodies work within a discipline, do not confer any such status upon the company nor put any such obligation upon it which may be enforced through issue of a writ under Article 226 of the Constitution. " ( 10 ) THE provisions of the Electricity Act, 2003 have cast various duties and obligations on generating companies and transmission and distribution licensees. Here cesc is a generating company and a transmission and distribution licensee, an all-in-one. The relevant provisions casting the duties and obligations are Ss. " ( 10 ) THE provisions of the Electricity Act, 2003 have cast various duties and obligations on generating companies and transmission and distribution licensees. Here cesc is a generating company and a transmission and distribution licensee, an all-in-one. The relevant provisions casting the duties and obligations are Ss. 10, 40 and 42 of the Act, and by none of them any duty towards the public or any positive obligation towards the public has been cast on a generating company and a transmission and distribution licensee such as CESC with respect to sale of plant and machinery of a generating station. To be precise, it can be said that there is no provision of law casting any specific public duty or function on cesc with respect to sale of its any property, and particularly of plant and machinery of any generating station. ( 11 ) I agree with counsel for CESC that the fact that the sale proceeds received by cesc would affect the tariff determination, cannot be the determining factor in ascertaining whether CESC was selling the plant and machinery in question in the discharge of its public duty or function involving any public interest. He has rightly said that only because there are certain regulatory provisions it cannot be held that sale of the plant and machinery in question was undertaken by CESC in the discharge of its public duty or function involving any public interest. As i have already said there is no provision of law casting any duty or obligation on CESC towards the public in the matter of sale of its plant and machinery of any generating station including the station involved in the present case. I agree with counsel for the third and fourth respondents that qua the steps taken by CESC involving its commercial activities are concerned, it cannot be said that it was discharging any public duty or function involving any public interest. ( 12 ) TO what extent it will get benefit or the consumers will be affected in the process of determination of tariff would be a question for examination and determination entirely by the commission. Linking that possible future situation, in my opinion, at the present moment the petitioners cannot invoke the writ jurisdiction for assailing the tender process. ( 12 ) TO what extent it will get benefit or the consumers will be affected in the process of determination of tariff would be a question for examination and determination entirely by the commission. Linking that possible future situation, in my opinion, at the present moment the petitioners cannot invoke the writ jurisdiction for assailing the tender process. The tender process as I find- an entirely private commercial activity of cesc, is not to be scrutinized by the writ court for finding out involvement of some public duty or function involving some public interest, so that the unsuccessful bidder may avail of the remedy of judicial review by the writ Court. The process initiated by cesc, not in the discharge of its any duty or obligation qua a generating company, or a transmission or distribution license, but in the capacity of a private business person, is absolutely beyond the scope of judicial review of the writ Court. ( 13 ) FOR these reasons, I hold that the writ petition involving the matters in issue indicated hereinbefore is not maintainable. It is accordingly dismissed. There shall be no order for costs in it. ( 14 ) URGENT certified xerox copy of this order shall be supplied to the parties, if applied for, within three days from the date of receipt of the file by the section concerned. Petition dismissed. .