WP(C) 4227/2007 BEFORE THE HON’BLE MR. JUSTICE IA ANSARI Can, in India, a subsidiary of a subsidiary of a holding company be trea ted as the subsidiary of the holding company even if the holding company is not registered in India and functions, in India, through its subsidiary, which is no t registered, in India, as a company under the Companies Act, 1956, but which, i n turn, functions through its subsidiary, which is registered, in India, as a co mpany under the Companies Act, 1956? When a subsidiary is a wholly owned subsid iary of the holding company, can the law ever treat the activities, acts or omis sions of such a subsidiary as the activities, acts or omissions of its holding c ompany? These are the two questions of paramount importance, which this writ pet ition has raised. 2. This writ petition is unusual. Unusual, because, in the present case, t he writ petitioners, instead of attacking the respondents, are themselves under attack, for, the writ petitioners are accused by the respondents to have suppres sed the truth, made incorrect, false and misleading statements, in their writ pe tition, in order to persuade the High Court to restrain, in exercise of its powe rs under Article 226 of the Constitution of India, the State respondents from re ceiving, pursuant to a tender process, a model of pacemaker, which was, in publi c interest, selected consciously by the State respondents for the common good of cardiac patients of the three medical colleges, in Assam, following a decision- making process, which was, otherwise, completely fair, entirely transparent and wholly legal. 3. Before I describe as to what the respective cases of the parties to this writ petition are, some material facts, which are not in dispute, may be noted. With the object of providing to some, if not all, cardiac patients ’Permanent P acing System’, commonly known as ’pacemaker’, within the financial year 2007-200 8, for three medical colleges of Assam, the Director of Health Services, Governm ent of Assam, published, on 03-05-2007, a Notice Inviting Tender (in short, ’NIT ’), whereby sealed tenders, under two bids system, namely, ’technical bid’ and ’ price bid’, for supply of about 400 ’Permanent Pacing System’ from the manufactu rers thereof. While the last date and time of receipt of the tender was 28-05-20 07 at 2.00 pm, the date and time of opening of tender was 28-05-2007 at 3.00 pm. The NIT stipulated opening of the bids in presence of the bidders’ representati ves, who ought to have had the authorisation to negotiate price, terms, conditio ns, etc. Six tenders were altogether received including the ones, which were sub mitted by the petitioner No.1 and the respondent No. 4. In course of time, resp ondent No. 4 stood selected for award of the contract. It is the selection of re spondent No.4, which stands challenged in this writ petition. 4. This writ petition, as succinctly indicated above, receives resistance, at its very threshold, from the respondents on the ground that the writ petition suffers from suppression of material facts and is largely based on incorrect, f alse and misleading statements and that it is on the strength of such incorrect, false and misleading statements that the writ petitioners have procured interim direction(s) from this Court. It is also alleged that after the writ petitioner s were found to have obtained interim order(s) by misleading this Court, the pet itioners have tried to save themselves by projecting a case, which is substantia lly different from what the case, originally, presented before this Court was. 5. In order to correctly appreciate as to why the petitioner company is cla imed to have changed and improved its case from what it had, originally, present ed to this Court, it is necessary to take note of the petitioner company’s case as, originally, presented and the manner in which the petitioner company is show n to have developed its case. The case with which the writ petitioners came to t his Court may, in a nut shell, be set out as under: In terms of the NIT, the tender papers were to be opened at 3.00 pm on 28-05-20 07 and accordingly, the petitioner company’s authorized representative, namely , Shri Indranil Gupta, was present, along with the representatives of other tend erers, in the office of the Directorate of Health Services, Govt. of Assam, to a ttend to the opening of the tenders on behalf of the petitioner company. Though the said Indranil Gupta was present as aforesaid at the scheduled time of openi ng of the tenders, the authority concerned merely informed the petitioner compan y’s said representative that the authorities were not in a position to open the tender papers on 28-05-2007. For their inability to open the tender papers, no r eason was assigned; rather, the petitioner company’s said representative was tol d by the authorities concerned that the ’probable date’ for opening of the tende rs would be intimated to the tenderers subsequently. Though, on 28-05-2007, as i ndicated hereinbefore, the authorities concerned had told the petitioner company ’s representative that the date of opening of the tenders would be notified subs equently, no intimation whatsoever was received by the petitioner company with r egard to the out-come of the tender process. However, on subsequent inquiry made from the office of the Directorate of Health Services, Assam, the petitioner co mpany could come to learn that in the absence of the representatives of the oth er tenderers, but in the presence of the representative of the respondent No.4, the tender papers, in respect of the technical bids, were opened on 02-06-2007, and the price bids were opened on 06-07-2007. Though the comparative statement, prepared by the authorities concerned, clearly reflected that the petitioner com pany’s offered price was lowest among the four tenderers, who had been found eli gible, it is the respondent No. 4, who has been selected as the successful bidde r, and the endeavour is being made by the authorities concerned to place the sup ply order with the respondent No. 4. Having come to know all these facts, the pe titioner company addressed a letter, dated 28-07-2007, to the Director of Health Services, Assam, bringing it to the notice of the latter that the petitioner co mpany was yet to receive information as regards the out-come of the tender proce ss and that they had come to know from their local representative that the produ cts of the petitioner company were not being considered despite the fact that th e offer made by the petitioner company was the lowest, its products satisfy the quality specifications and are being used, for the last more than 15 years, not only in India, but are also being exported to European and Asian countries; wher eas a foreign company’s product had been considered, though the said product had failed to meet the specifications mentioned in the bidding documents. On receip t of the petitioner company’s letter, dated 28-07-2007, the Director of Health S ervices, Assam, issued a letter, dated 31-07-2007, addressed to the petitioner c ompany and the other two eligible bidders informing them that the tender documen ts, submitted by the said three tenderers, were not in order and, hence, they we re requested to collect the Earnest Money Deposit (EMD) from the office of the D irectorate of Health Services, Assam. On receipt of the letter, dated 31.07.2007 , the petitioner company made further inquiry from the office of the respondent No. 2, namely, Director of Health Services, Assam, and came to learn that the re spondents concerned were preparing to give the supply order to the respondent No . 4 by going beyond the specifications mentioned in the NIT. The specifications, sought for by the tender documents, were for pacemakers having single chamber w ith multiprogrammable facilities, commonly known as VVI (Ventricular Inhibited M ode). The petitioner company had accordingly submitted its bid in respect of pac emakers of VVI mode; but surprisingly enough, the respondent authorities have de viated from the specifications and sought to place order for supply of Regency S R+2400 L having Auto Capture & Rate Response Mode at a price of Rs. 49,000/- eac h. This apart, the NIT stipulated submission of tenders by only manufacturers of pacemakers and none else, but respondent No.4, though not manufacturer of pacem akers, has been selected for allotment of the contract. Though the NIT was float ed inviting tenders in respect of pacemakers having VVI mode, the pacemakers, ev entually, selected by the State respondents is of a different mode, namely, VVI (r). Thus, there is material deviation from the stipulated specifications in sel ecting the product. The product, which had been offered by the petitioner compan y, was not considered at all by the Technical Committee and what the Technical C ommittee had examined was a model, which the petitioner company had never offere d. 6. Thus, when the writ petitioners came to this Court, challenge to the sel ection of the respondent No. 4, was based, broadly speaking, on the following fi ve grounds:- (i) The tender papers were not opened in presence of the representative of the p etitioner company. (ii) The selection of the respondent No. 4, as the awardee of the contract, cann ot be sustained inasmuch as the respondent No. 4 is not a ’manufacturer’ of any permanent pacing system, though Clause (ii) of the NIT specifically stipulated s ubmission of tenders by only the ’manufactures’ of Permanent Pacing System and n one else. (iii) There is major deviation in the specifications, stipulated in the NIT, in respect of the selected ’Permanent Pacing System’ inasmuch the mode of the ’Perm anent Pacing Systems’ in respect whereof the tenders were invited was VVI, where as the mode of the selected ’Permanent Pacing System’ is VVI (r). (iv) The product, which had been offered by the petitioner company, was not t aken into consideration by the Technical Committee and what the Technical Commit tee had examined was a model, which had not been offered by the petitioner compa ny. (v) The price in respect of the ’Permanent Pacing System’, which the petitio ner company had offered, was much below the price at which the respondent No.4’s offered model has been selected by the State respondents. 7. On the basis of the above pleaded facts, the petitioners prayed for, int er alia, (i) issuance of appropriate Writ(s) declaring that the award of the con tract, sought to be made in favour of respondent No. 4, is arbitrary, illegal an d unreasonable, (ii) setting aside and quashing the impugned order, dated 24.07. 2007, issued by the Director of Health Services, Assam, forwarding the approved list of Permanent Pacing System so as to enable the respondent No. 4 to sign the requisite agreement for supply of the said item, (iii) setting aside and quashi ng the award of the supply order made in favour of respondent No. 4 and (iv) d irecting the respondent authorities to issue order(s) awarding the contract to t he lowest eligible bidder, i.e., the petitioner company. 8. By making this writ application, the petitioners also sought for interim direction(s) suspending the operation of the impugned order, dated 24.07.2007, whereby the approved list had been forwarded to the various medical colleges of Assam for doing the needful so as to obtain supply of the pacemakers from respon dent No.4. 9. While entertaining this writ petition, the High Court passed an order, o n 20.08.2007, directing the official respondents/authorities concerned not to pe rmit supply of the appliances, in question, by the respondent No. 4 without le ave of the Court until next date, i.e. 29.08.2007. This interim direction conti nued until the time the Court considered the question of continuance of the said interim directions in the light of the affidavits filed by the respondents conc erned. Upon consideration of the respective cases of the parties concerned, the Court, by its order, dated 17.09.2007, modified the interim order and permitted thereby placement of supply order with the respondent No. 4 to the extent of 10 0 pacemakers. While so modifying the interim order, the Court, in its order, da ted 17.09.2007, observed, inter alia, as under. The contract, as already noticed, is for supply of pacemakers. If the petitione rs contentions are to be accepted in toto, the petitioner would be entitled to t he grant of the contract in which eventuality he would have made some profits fr om the supply of the pacemakers. Such profits are capable of being computed in terms of money. Mr. Saikia, learned Standing Counsel, Health, has made a statement that even if the interim order passed by the court is suitably modified and supply of 100 num bers of pacemakers are permitted to be executed In terms of the grant made in fa vour of the respondent No.4, the needs of the three Medical Colleges for a perio d of about three months would be taken care of. In view or the identification of the grievances of the petitioner and the eventu al relief being capable of being computed in terms of money, I am of the view th at the earlier interim order of this Court should be modified to permit placemen t of supply orders on the respondent No. 4 to the extent of 100 pacemakers. In d oing so, the Court has taken further note of the fact, as available from the rec ords, that the pacemakers, offered by the respondent No.4, has been cleared by a s many as four duly constituted Committees/Boards including a Technical Committe e, which consisted of three eminent Cardiologists of the State. It is also made clear that in the event the writ petition is answered in favour of the petitioner, the monetary benefit that the petitioner would have received, if the 100 pacemakers covered by the present interim order were to be supplied by him, may form part of the final relief(s) that may be granted by the Court. 10. From the observations made by the Court in the order, dated 17.09.2007, aforementioned, it is clear that the Court modified the interim order, dated 20. 08.2007, aforementioned, because of the fact that the Court took the view that t he loss, if any, to be incurred by the petitioner company, can be computed in te rms of money. 11. Let me, now, deal with the writ petitioners’ averments, made in the writ petition, in paragraph 7 and 8, which allege thus: The tender papers were to be opened at 3-00 p.m. on 28.05.2007, the petitioner company’s authorised represen tative, Indranil Gupta, was, along with the authorized representatives of the ot her tenderers, present in the office of the Director of Health Services, Assam, on 28-05-2007 at 3.00 pm; but the authorities concerned informed the petitioner company’s representative that they were not in a position to open the tender pap ers on 28.05.2007. The respondents/authorities concerned, however, assigned no reason as to why they were not in a position to open the tender papers; rather, the respondents/authorities concerned told the petitioner company’s said represe ntative that the ’probable date’ for opening of the tender papers would be intim ated to the tenderers subsequently. No intimation was, however, ever received by the petitioner company as regards the outcome of the tender process and it was only upon enquiry made, later on, by the petitioner company from the office of t he Director of Health Services, Assam, that they came to learn that the tender p apers for the technical bid were opened on 02.06.2007 and the tender papers for the price bid were opened on 06.06.2007, but these bids had been opened in the absence of the representatives of all the other tenderers except the respondent No. 4. 12. In the counter-affidavit, which was filed, on 07.09.2007, by respondent No. 2, namely, Director of Health Services, Assam, this respondent, while reacti ng to the petitioner company’s above accusations, asserted that all the tenderer s, including their representatives, were informed, vide notice, dated 28.05.2007 , about the extension of the last date and time of receipt of the tenders up to 29.05.2007 due to a Bandh call on 28.05.2007 and, in consequence of this notice, the petitioner company’s representative, Indranil Gupta, was accordingly presen t on the following day, i.e., on 29.05.2007, at the time of opening of the tende r papers. With the help of their counter, the respondent No. 2, thus, challenge d the veracity of the very foundation of the petitioner company’s case that no reason had been assigned by the authorities for not opening the tender papers on 28.05.2007 and since no reason had been assigned for not opening the tender pap ers on 28.05.2007, the petitioner company remained ignorant of the reason as to why the tenders had not been opened on 28.05.2007 nor could they learn, on 28.05 .2007, as to when the tender papers would be opened. These assertions of the res pondent No.2 further challenged the correctness of the petitioner company’s case that all the tenderers were merely told, on 28.05.2007, that they would be inf ormed about the ’probable date’ of opening of the tenders, but contrary to such assurance given by the State respondents, no information was ever given to anyo ne and the petitioner company remained completely in the dark as regards the ope ning of the said tender papers. This apart, in support of his assertion that t he last date and time of receipt of the tenders was extended up to 29.05.2007 du e to a Bandh call on 28.05.2007, respondent No. 2 annexed a copy of the Notice, dated 28.05.2007 (Annexure A1), which is reproduced hereinbelow: No. HSPB/5/Pacemaker/07/664 Dated Guwahati the 28.05.2007. N o t i c e Last date & time of receipt of Tender Vide NIT No. HSPB/5/Pacemaker/0 7/480 dated 03.05.2007 is hereby extended up to on 29-05-2007 due to Kamrup Band h on 28-05-2007. Other terms and conditions will remain unchanged. Sd/- Jt. Director of Health Services, Assam Hengerabari; Guwahati - 36. Memo No. HSPB/5/Pacemaker/07/665-66 dated Guwahati the 28-05-2007. Copy to: 1. The Secretary to the Govt. of Assam, Health & F.W. Deptt., Dispur, Guwah ati-6. 2. Notice Board of this Directorate. Sd/- Jt. Director of Health Services, Assam Hengerabari; Guwahati - 36. 13. In short, thus, with regard to the petitioner company’s averments, made in their writ petition, that they had not known as to why the tender papers had not been opened on 28.05.2007, they had not been informed as to when the tender papers would be opened and that the tender papers had been opened behind the bac k of the petitioner company, the respondent No. 2 asserted that the tenderers ha d come to know, in consequence of the notice, dated 28.05.2007, aforementioned, that the date and time of receipt of the tender papers had been extended up to 2 9.05.2007 due to a Bandh call and that the other terms and conditions of the ten der notice would remain unchanged and in consequence of such a notice, when the tender papers were opened on 29.05.2007, the petitioner company’s representative , namely, Indranil Gupta, was very much present. 14. Confronted with such a bold denial of the petitioners’ case by the respo ndent No. 2, as mentioned hereinabove, the petitioner company retraced their ste ps, modified their assertions and came up with a new story, which can be best de picted in their own words, for, they, at para 6 of their affidavit-in-reply, ass erted as follows: 6. That, the statements made in paragraph 7 of the Affidavit are not wholly cor rect and as such, the same are denied by the deponent. The tender in the instant case is a two bid system and as such, the tenderers were required to submit Tec hnical Bid and Price Bid in two separate and different sealed envelopes. Thereaf ter, those two sealed envelopes were to be put inside a single sealed envelope s ubscribing \Tender for supply of Permanent Pacing System for D.H.S Assam (Tender No.HSPB/5/Pacemaker/2007/480) due at 14 Hrs on 28.05.07 addressed to the Direct orate of Health Services, Assam\. Thereafter, the said sealed single envelope c ontaining the Technical Bid and Price Bid in two different sealed envelopes was required to be submitted in a sealed tender box provided by the Directorate of H ealth Services (hereinafter referred to as DHS) in his office. It may be pointed out that the tender specifically mentioned that 28.05.07 up to 2.00 PM is the l ast date and time of receipt of the tender. However due to an \Assam Bandh\ on 2 8.05.07 though many tenderers were ready to submit their tenders on 28.05.07. Ho wever, a notice was found to be affixed on the Notice Board of the office of the DHS informing that the last date and time of receipt of the tender papers are e xtended up to 29.05.07 but the said notice is absolutely silent about the date a nd time of opening of the tender. The deponent further states that thereafter th e Tender Box was opened and the single sealed envelopes containing both the Tech nical Bid and Price Bid belonging to different tenderers were opened in presence of the tenderers/representatives of the tenderers who participated in the tende r on 29.05.2007 itself. The present deponent was present on 29.05.2007 at the ti me of opening the Tender Box and the single sealed envelopes containing Technica l Bids and Price Bids. However, the two sealed single envelopes containing Techn ical Bids and Price Bids of the tenderers were not opened. They were kept in the Office of the DHS. On completion of the aforesaid exercise, the tenderers were informed on 29.05.2007, that they would be informed about the probable time and date of opening of the tenders namely Technical Bids and Price Bids on a subsequ ent date. But the Petitioner-company was never informed about the time and date of opening the Technical Bids and Price Bids. It may be pertinent to note that t he notice dated 29.05.2007 affixed on the aforesaid Notice Board (Annexure A-1 t o the Affidavit) also did not mention specifically about the time and date of op ening the tenders (Technical Bids and Price Bids). It is further stated that the tender papers could not have been opened on 29.05.2007 as contended by the Resp ondent No. 2 In his Affidavit. The tender papers consist of Technical Bid and Pr ice Bid. The Technical Bids are required to be scrutinized by the Technical Comm ittee. Therefore, a Technical Committee for scrutinizing the Technical Bids was constituted by the DHS by letter-dated 04.06.2007 (vide Annexure B/ Page 16 to t he Affidavit). By the said letter, the members of the Technical Committee were requested to be present to examine the Technical Bids in the meeting to be hel d at 11.00 AM on 09.06.2007. Similarly, the Bid Evaluation Committee evaluated the Bids on 07.07.2007 which can only be done on receipt of the Scrutiny Reports of the Technical Bids made by the Technical Committee, which was done on 09.06. 2007. Therefore, the tender papers (Technical Bid and Price Bids) could not have been opened on 29.05.2007 as contended by the Respondent No.2 in his Affidavit. In that view of the matter, the deponent reiterates and reaffirms that the tend er papers including the Technical Bid and Price Bid, were not opened in presence of the Petitioner-company or his representative. 15. Apart from the fact that respondent No. 4 fully supported, in their coun ter affidavit, dated 17.09.2007, the assertions made by the respondent No. 2 to the effect that on 29.05.2007, six tenders were opened in the presence of the bi dders/their representatives to ensure whether the technical and price bids were in separate envelopes, the earnest money