IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM THURSDAY, THE 15TH DECEMBER 2011 / 24TH AGRAHAYANA 1933 WP(C).No. 22767 of 2011(U) -------------------------- PETITIONER(S) : ------------- T.K. RANJITH, AGED 42 YEARS, S/O.DAMU KARIMPAMPUNATHIL, RESIDING AT HOUSE NO.37/3075-A, PLRWA-81, PALLIPPARAMBU LANE, PONOTH ROAD, KALOOR, ERNAKULAM, COCHIN - 682 017. BY ADV. SRI.PEEYUS A.KOTTAM RESPONDENT(S): ------------- 1. THE UNION OF INDIA, REPRESENTED BY THE SECRETARY, DEPARTMENT OF CHEMICALS AND FERTILIZERS, SHASTRI BHAWAN, RAFI MARG, NEW DELHI-110 001. 2. M/S.FERTILIZERS AND CHEMICALS TRAVANCODE LTD.(FACT), COCHIN DIVISION,AMBALAMEDU, COCHIN - 682 303, REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR. 3. M/S.METAL SCRAP TRADING CORPORATION LTD. (MSTCL), NO.19/5 & 19/6, 3RD FLOOR, KAREEM TOWERS, CUNNINGHAM ROAD, BANGALORE - 56002. 4. M/S.ANNAM STEELS (PVT) LTD., NO.3/3, 2ND LANE, T H ROAD, WASHERMENPET, CHENNAI-600021, REPRESENTED BY ITS MANAGING DIRECTOR, SRI.VIJAYAKUMAR. 5. CHIEF ENVIRONMENTAL ENGINEER, KERALA POLLUTION CONTROL BOARD, DISTRICT OFFICE, GANDHI NAGAR, ERNAKULAM, COCHIN - 682 020. R1 BY ADVS. SRI.P.PARAMESWARAN NAIR,ASG OF INDIA SRI.E.K.NANDAKUMAR,SC FOR R2-3 SRI.K.JOHN MATHAI FOR R2-3 SRI.P.BENNY THOMAS FOR R2-3 SRI.P.GOPINATH FOR R2-3 SRI.TITUS MANI, FOR R4 SRI.M.K.CHANDRAMOHANDAS,SC FOR R5 THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 15/12/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: AMV WPC NO.22767 OF 2011 (U) APPENDIX PETITIONER(S) EXHIBITS : P.1 : COPY OF THE STATEMENT OF SHARE HOLDING OF PETITIONER IN 2ND RESPONDENT COMPANY AS ON 30.07.2011. P.2 : COPY OF DETAILS OF BY PRODUCT FROM 2ND RESPONDENT COMPANY AT UDYOGAMANDAL. P.3 : COPY OF REPRESENTATION DTD: 01.08.2011 SUBMITTED BY PETITIONER BEFORE THE 1ST AND 2ND RESPONDENTS. P.4 : COPY OF PAPER REPORT OF PROGRESS OF HALDIA PETROCHEMICALS LIMITED (HPL) REPORTED IN HINDU NEWSPAPER DTD: 16.08.2011. P.5 : COPY OF MAIL DTD: 28.01.2011 ISSUED BY 2ND RESPONDENT COMPANY TO 4TH RESPONDENT. P.6 : COPY OF AUCTION NOTICE NO.MSTC/BLR/THE FERTILIZERS AND CHEMICALS TRAVANCORE LTD COCHIN DIVISION/7/KOCHI/10-11/3021 (29850) ISSUED BY 4TH RESPONDENT. P.7 : COPY OF CASE STUDY: EFFICIENCY IMPROVEMENT AND COST OPTIMIZATION IN FERTILIZERS PLANT-CONDUCTED BY K M TANDON AND HIS GROUP FOR SHRIRAM FERTILIZERS & CHEMICALS : KOTA. P.8 : COPY OF CASE STUDY-REVAMPING OF 23 YEARS OLD UREA PLANT AT IFFCO KALOL UNIT, GANDHI NAGAR GUJARAT-CONDUCTED BY V S VAISH AND A B SARKAR. P.9 : COPY OF CASE STUDY-RECENT EFFORTS IN ENERGY CONSERVATION IN AMMONIA AND UREA PLANTS CONDUCTED BY S NAND AND MANISH GOSWAMI FOR FERTILIZER ASSOCIATION OF INDIA. RESPONDENTS' EXHIBITS : R2(A) : COPY OF THE RELEVANT PAGES OF THE REPORT SUBMITTED BY M/S.PROJECT DEVELOPMENT (INDIA) LTD. (PDIL) IN OCTOBER 2009. /TRUE COPY/ P.A. TO JUDGE AMV C.K.ABDUL REHIM, J. ------------------------------------------- W.P.(C) No.22767 of 2011 ------------------------------------------- Dated this the 15th day of December, 2011 J U D G M E N T ---------------------- The petitioner is a share holder of the 2nd respondent company, which is a public sector undertaking owned by the Government of India, engaged in the business of manufacturing of fertilizers, Caprolactum, etc. Issue involved in this writ petition pertains to disposal of two plants of 2nd respondent company in the Cochin Division. According to the petitioner, the 2nd respondent company had established the plants in question during 1970's by spending nearly 110 crores. The company had decided to stop functioning of the units during the year 2003 and it was decided to preserve the plants to conduct a study with respect to feasibility of shifting of those plants to the premises at Udyogamandal Division, where Carbon Dioxide, which is a bye product in the process of manufacturing of caprolactum, is available in plenty. It is stated that the Ammonia and Urea plants were preserved W.P.(C).22767/11-U -2- with the above objective since the year 2011 onwards by spending several crores of rupees from the public exchequer. According to the petitioner there is absolutely no need to dismantle and sell the plants in question at scrap value. It is alleged that such a decision was taken with ill motives, without conducting proper and thorough study about re-utilisation of those plants in a more economical and feasible manner. A revamping of the plants can be achieved without any difficulty by utilising Carbon dioxide. But, which is available at the Udyogamandal Division due to extraneous considerations the 1st and 2nd respondents have proceeded with the sale of the unit. Therefore the petitioner is challenging the decision taken to sell out the plants. It is stated that the petitioner had submitted Ext.P3 representation in this regard, before the 1st and 2nd respondents. The petitioner alleges that the respondents 1 and 2 had colluded with respondent 3 and 4 or other prospective buyers in taking decision to sell the plants in question. W.P.(C).22767/11-U -3- 2. It is stated that when the illegalities and irregularities occurred in the process of sale was noticed, by the higher officials of the 2nd respondent, all further proceedings was stayed by virtue of Ext.P5. But it is pointed out that the said decision was challenged in writ petitions filed by the 4th respondent and rival competitor, and those cases are pending disposal before this court. 3. The petitioner has also challenged the sale proceedings contending that the decision taken in this regard is violative of Section 293 and other provisions of Indian Companies Act, 1956. According to the petitioner the consent of the general body has not been obtained with respect to the scraping of plants in question. If any decision to establish new plants is taken, that may incur a cost of about Rs.700 to 1000 Crores, where as existing plants can be revived at a considerably lesser cost. The petitioner is inter alia challenging the sale already conducted with respect to the plants through auction conducted by the 3rd respondent, and is seeking directions to restrain confirmation of the auction fixed in favour of the 4th W.P.(C).22767/11-U -4- respondent. He is also seeking directions for taking steps for shifting and revival of the plants in question. Further the petitioner is seeking directions commanding the Pollution Control Board to conduct a feasibility study with respect to the environmental and pollution problems created due to release of Carbon Dioxide by the 2nd respondent unit at Udyogamandal. 4. In the counter affidavit of the 2nd respondent it is contended that in the year 2003 the company had decided to stop production of Ammonia and Urea because it was found that production in the plants became not feasible due to the obsolete and energy intensive technology utilised. The decision to stop production was taken after detailed study conducted at various levels, within the company and within the Ministry of Chemicals and Fertilizers, Union of India. It was confirmed that revamping of the Ammonia plant was not feasible considering availability of modern energy efficient technology, as evident from a feasibility study report prepared by M/s. Project Development (India) Ltd., a Government of India Undertaking. The relevant W.P.(C).22767/11-U -5- extract of report of such study is produced as Ext.R2(a). The decision for selling out the plants was taken after conducting proper study and proper estimation of the value of the assets, and it was based on a decision of the Board of Directors. The company had decided to invite tenders for disposal of the scrap plants. The 3rd respondent being a Government of India Undertaking was entrusted with the task of selling out the plants and auction was conducted on that basis. It is stated that in the first e-auction conducted on 10/3/2010, the highest bid received was Rs.28.30 Crores only. Since the price was lower than what was accepted, the 3rd respondent was requested to conduct further e-auction. In the auction conducted on 7/4/2010, a higher bid of Rs.41.29 crores was received. But the bidder has not turned up for depositing the amount. Subsequently the bidder came up with a contention that what was actually quoted is only Rs.19.1 crores and not Rs.49.1 crores. But his earnest money was forfeited. Based on the decision of the Board of Directors, the third e-auction was conducted on 22/9/2010. The offer made by the 4th respondent was for W.P.(C).22767/11-U -6- Rs.33.5 crores Since the offer was higher than the reserve price fixed, sale order was issued to the 4th respondent. It is stated that the contract with the 4th respondent has not been concluded and no delivery order has been issued, since the 1st respondent has directed stoppage of further proceedings. With respect to contentions regarding revival and revamping it is stated that those suggestions are not technically and economically viable. It is also contended that there is no violation of the provisions of Section 293 of the Companies Act. 5. The petitioner had filed a detailed reply affidavit refuting contentions raised by the 2nd respondent. The petitioner had pointed out to various similar instances Fertilizer and Chemical plants of other establishments were revived and revamped. According to the petitioner non feasibility alleged by the 2nd respondent with respect to revival of the plants is not accepted and sustainable. 6. While considering the rival contentions raised, I am of the view that the prime question need to be considered is regarding locus standi of the petitioner. W.P.(C).22767/11-U -7- Admittedly the petitioner is a share holder of the second respondent company. It is evident that the plants in question were stopped functioning as early in the year 2003. But the petitioner has not challenged or objected any such decision taken by the Board of Directors at any time during the long period of more than 8 years. He has not raised any request for revival of functioning of those plants or for restructuring the plants at any other location. He has not raised approached the Board of Directors or any other authorities contemplated under the Companies Act protesting against the plants being kept idle since the last more than 8 years. It is evident that the decision taken by the 2nd respondent for scraping of the plant is based on technical evaluations conducted through expert agencies. It is with the approval of the 1st respondent that an ultimate decision was taken to sell out the plants in question. Decisions in this regard are within the realm of policy matters of respondents 1 and 2. Unless it is established that such decision is totally unreasonable or arbitrary or is motivated by totally extraneous consideration, exercise of W.P.(C).22767/11-U -8- jurisdiction vested on this court under Section 226 to unsettle such decisions is not warranted. Eventhough vague allegations are raised that the decision to sell out the plants was taken without conducting proper feasibility study, the petitioner is not in a position to establish through any convincing materials that the study report obtained by the second respondent from the expert agencies are totally incorrect or irrational. 7. Learned counsel for the petitioner contended that eventhough the plants have stopped functioning as early as in the year 2003, the decision to sell the plants in question was taken only in the year 2010. But it is pertinent to note that even after such decision is being taken by the Board of Directors, the petitioner had not raised any protest or complaint either before the Board of Directors, or before any other higher authorities of the 1st respondent. Even though the petitioner had alleged violation of provisions of the Companies Act, it is worth noticing that he has not taken any appropriate steps to challenge the decision on the basis of such alleged vires or procedural irregularities by W.P.(C).22767/11-U -9- invoking remedies provided under the Companies Act. 8. Learned counsel appearing for the petitioner raised vehement contentions that the impugned decisions have resulted in huge wastage of public money and is causing heavy loss to the public exchequer. The money which is being lost would have been utilised for developmental activities and for welfare of the people at large, is the contention. While considering such contention, at the first instance, I notice that this writ petition cannot be termed as a Public Interest Litigation. The petitioner being a shareholder of the company, is a person interested in the subject matter of the writ petition. He cannot step into the shoes of a public interest litigant to invoke jurisdiction of this court based on an allegation of public interest and loss of public money. Further, for the very same reasons mentioned in the foregoing paragraphs this court is not convinced that the policy decision taken in this regard by respondents 1 and 2 on the basis of opinions collected from expert agencies, is totally unreasonable, arbitrary or irrational. Therefore I am not inclined to W.P.(C).22767/11-U -10- exercise jurisdiction vested on this court, which is discretionary in nature, since no extraordinary circumstances is prevailing with respect to the decision impugned herein. 9. It is worth mentioning that, even though the petitioner is claiming relief against the decision for scrapping and sale of the plants, simultaneous challenges are raised against the sale already conducted, and against confirmation of bid in favour of the 4th respondent. This aspect will indicate that the petitioner had certain hidden objectives, rather than challenging the decision taken by the 2nd respondent with respect to the sale of the Ammonia and Urea plants. However, the petitioner is not able to advance any convincing arguments pointing out any material irregularity crept in the process of auction sale, or in the matter of acceptance of bid of the 4th respondent. As mentioned above, further proceedings pursuant to confirmation of bid in favour of the 4th respondent has already been put on hold. The 4th respondent had filed another writ petition (W.P(C). 5541/11) before this court, W.P.(C).22767/11-U -11- seeking direction for proceeding with further steps pursuant to the sale. It is also brought to my notice that the petitioner herein had filed an application for impleading in the said writ petition. Under such circumstances I am not inclined to entertain this writ petition for considering any of the reliefs sought for. 10. Under the above mentioned circumstances I am of the view that the writ petition deserves no merit and the same is accordingly dismissed. (Sd/-) C.K.ABDUL REHIM, JUDGE. smm/okb True copy P.A to Judge