VARSHA FABRICS PVT LTD Vs. STATE OF ORISSA

JUDGEMENT

(1.) The petitioner -M/s. Varsha Fabrics Private Limited (registered under the Companies Act, 1956) has filed the present writ petition seeking to challenge contemplated 'fresh bid' for dis -investments of Hirakud Industrial Works Limited (in short 'HIWL'), a subsidiary Industrial Development Corporation of Orissa Limited (hereinafter referred to as 'IDCOL') as arbitrary and whimsical action of the opposite parties in view of the petitioner -company's willingness to abide by the terms and conditions of negotiation with IDCOL. The petitioner -company essentially is aggrieved by a limited period of 'seven days' given to it for compliance with the terms and conditions contained in letter dated 27.2.2006 (Anenxure -8). The said communication contained a further threat to reject the petitioner's offer, in the event of petitioner not complying with the terms, within the period stipulated and in such an event IDCOL may invite a fresh tender. Certain important facts and events, which are not in dispute and have been raised in the present writ petition are noted hereunder: 7.2.2003 : An advertisement wasfloated inviting 'Expressionof interest' for HIWL.28.2.2003 : Petitioner -company submittedits bid documents in the shapeof 'Expression of interest'.17.12.2003 : Petitioner -company submittedits bid documents as the leadbidder for a price of Rs. 2,61crores along with earnestmoney deposited to the tuneof Rs. 25 lakhs by way bankguarantee.9.1.2004 : Petitioner was invited toattend in Inter DepartmentalCore Group Meeting.24.1.2004 : (A joint meeting was held)Postponed to 4.2.2004.4.2.2004 : Inter Departmental CoreGroup Meeting was held fornegotiation of final bidfor HIWL.In the said meeting, thepetitioner agreed inprinciple to the terms andconditions that wereproposed and put forth itsgrievance subjectto approval of the same bythe Cabinet Committeefor disinvestments.The petitioner revised the originalbid from Rs. 2.61crores Rs. 5,25 crores (Annexure -4):16.2.2005 : IDCOL intimated the petitioner -company that finalizationof disinvestments can onlybe made after final adjudicationof W.P.(C) No. 11178 of 2004pending before this Court(Annexure -5).26.2.2005 : Cabinet Committee on disinvestments(CCD) 'Accepted offer' of thepetitioner -company and whileconfirming such approvalCCE insisted for remittanceof upfront loan payment.22.8.2005 : Petitioner -company agreed topay the upfront IDCOL loanamounting to Rs. 206,97lakhs on 24.2.2005.22.9.2005 : W.P.(C) No. 11178 of 2004was dismissed.7.10.2005 : IDCOL sent a copy of sharepurchase agreement andjudgment of Orissa HighCourt (supra) and demandedpayment of Rs. 5,25,00,000/ -as purchase considerationand Rs. 3,98,23,288.15towards unsecured loan ofIDCOL to HIWL on 30.9.2005(Annexure -B)29.10.2005 : Petitioner seeks reconciliationof account and clarification(Anenxure -6).2.12.2005 : Hon'ble Supreme Court dismissesS.L.A. (Civil) No. 23818 of2005 where challenge hadbeen made to judgmentdated 22.9.2005 of theHon'ble Orissa HighCourt in W.P.(C)No. 1 1178 of 2004.29.1.2006 : Cabinet Committee onDisinvestment (in short)meets and approves/modifiesterms settled earlier on3.2.2005 to the followingeffect.27.2.2006 : IDCOL's letter containingthe terms and conditionsapproved by CCD andrequiring compliancewithin a period of sevendays (Impugned order).

(2.) IN the light of the aforesaid undisputed fact and sequence of events the following facts emerge for consideration: (a) M/s. Varsha Fabrics Private Limited had expressed its interest for participating in a bid for disinvestments of HIWL on 28.2.2003 and pursuant to it made an offer for Rs. 2,62 crores. Negotiation took place thereafter and offer was enhanced to Rs. 5.25 crores by 4th February, 2004. The Cabinet Committee on disinvestements met on 3.2.2005 and duly approved the offer of Varsha on certain specific terms and conditions and the same was accepted by M/s. Varsha Fabrics Private Limited vide its letter dated 28.2.2005. (b) This decision of the CCD could not be implemented because of the interim order dated 14.10.2004 passed by this Court in W.P.(C) No. 11134 of 2004 and the objection filed by the project institution/organization (IDCOL) of HIWL, opposing the decision of the Government for disinvestments of HIWL. (c) This Court by its judgment dated 22.9.2005 dismissed the aforesaid writ petition thereby upholding both the decisions of the State of Orissa for disinvestments of its share holding in HIWL as well as in its decision to accept the offer for purchase given by M/s. Varsha Fabrics Pvt. Ltd., the petitioner -company. - - - - It is relevant to mention here that the Judgment passed by this Court dated 22.9.2005 had been challenged before the Supreme Court of India in Special Leave to Appeal (Civil) No. 23818/2005 and the same was dismissed on 2.12.2005 in limine having no merit.

(3.) THE main issue that arises for consideration in the present writ application is whether the period of 'seven days' stipulated in the impugned letter under Annexure -8 for complying with the terms and conditions stipulated therein was just and reasonable in terms of the tender condition, post bid negotiation and earlier CCD decision dated 3.2.2005. It would be clear from the facts noted above that the petitioner has been seriously pursuing for acceptance of its offer since 2002. Further the petitioner has also agreed to enhance its bid price as well as to accept certain terms and conditions, which were not originally in the expression inviting tender. Accordingly the petitioner has also provided the earnest money deposit by way of bank guarantee and since then it has been continuously extending the validity thereof. Most importantly, the 'offer of the petitioned has been categorically 'accepted by the State' in the Cabinet Committee for disinvestments on 3.2.2005 and the terms and conditions approved by the State have been categorically 'accepted by the petitioner' vide letter dated 16.2.2005 (Annexure -A). The embargo in carrying out such decision was on account of challenge to the decision for disinvestement made by the State Government and interim order remained in force from 14.10.2004 till the judgment dismissing the writ application was passed on 22.9.2005 and subsequent challenge thereto before the Hon'ble Supreme Court. Thereafter, the matter went up once again before the Cabinet Committee for its approval and the said approval to certain modifications on being obtained was intimated to the petitioner vide letter dated 27.2.2006.