Sri Suvendu Kumar Parida Vs. Senior Divisional Manager, Bharat Petrolium Corporation Ltd. and ors. - Court Judgment

J.P. Mishra, J.

1. The petitioner has prayed to issue a writ of mandamus for quashing the letter of intent issued in favour of Opposite Party Nos. 4 or 5 in regard to the Retail Outlet Dealership of Bharat Petroleum Ltd. at Baripada and to grant the said Retail Outlet Dealership in his favour pursuant to the advertisement (Annexure-1).

2. The claim of the petitioner is that in response to the advertisement (Annexure-1 in Samaj dtd. 15.6.1998 for the Retail Outlet Dealership under Open Category at Baripada, he applied (vide Annexure-2) for the same complying all requirements. He was called for the interview under Annexure-3 by the Dealer Selection Board (Opp. Party No. 3) and accordingly he appeared in the interview on 21.1.1999. He remained under the impression as per this information that he stood first in the Selection list. Since he did not get any intimation from the Opp. Party Nos. 1, 2 & 3 he tried to know it by correspondence and telegram (Annexures-4, 5 & 6), the last being on 10.3. 1999. Thereafter, he enquired and found that Opp. Party No. 4, namely Orissa Pisciculture Development Corporation to have been awarded with the Retail Dealership at Baripada. According to the averment, the Opp. Party Nos. 4 is not eligible for the said dealership being a non-applicant and the Opp. Party No. 5 is also not eligible as its Memorandum of Association do not authorize the Company to hold such a business. In addition Opp. Party No. 5 do not have the required qualification as per advertisement-Annexure-1 rather the Company has got disqualification. He has specially stated in the affidavit that Opp. Party No. 5 is restricted to hold any business beyond 15 Kms. of the entire length of seashore of Orissa State. It is further stated that since there is no merger/amalgamation of Opp. Party No. 5 i.e., Orissa Maritime & Chilka Area Development Corporation Ltd. (Opp. Party No. 4), the said opp. party No. 4 cannot run the business being the non-applicant on behalf of Opp. Party No. 5 who was the applicant in response to the advertisement-Annexure-1. As he did not get any intimation from the Opp. Party Nos. 1 to 3, he approached the extraordinary jurisdiction of the Court with the prayer indicated above.

3. The Opp. Party Nos. 1 & 2 filed counter affidavit admitting the petitioner to be the applicant but denied the allegation of the ineligibility of the Opp. Party Nos. 4 & 5 though admitted the Opp. Party No. 4 to be the non-applicant in response to Annexure-1. According to them the selection was made by the Dealer Selection Board and the letter of intent of Dealership was issued in favour of Opp. Party No. 4 as per the recommendation of the Board as Opp. Party No. 5 had already merged emerging in the new name of Opp. Party No. 4 - Orissa Pisciculture Development Corporation Ltd. According to them Opp. Party Nos. 4 & 5 are quite eligible in the open Category as per Annexure-A/1 series and the selection was not tainted with discrimination. The Opp. Party No. 3 i.e., non-member Secretary of the Dealer Section Board has state in the affidavit asserting the procedure of selection to be in accordance with proper procedure. According to him, the Opp. Party No. 5 Stood first in the interview and his name was recommended for the dealership resultantly Opp. Party No. 4 was issued with the letter of intent because of the merger and the new nomenclature of the Company i.e., Orissa Pisciculture Development Corporation Ltd. (Opp. Party No. 4).

4. In further affidavit the Opp. Party Nos. 4 & 5 have stated that the merger or amalgamation of Opp. Party No. 5 took place vide Government Notification No. 13502 dtd. 11.8.1998 with Orissa Fish Seed Development Corporation and a new Corporation emerged in the name of Orissa Pisciculture Development Corporation Ltd. i.e., Opp. Party No. 4 as per Annexure-A/4. They have further clarified that the Retailership is running from year to year basis and the Outlet is being managed/run by Opp. Party No. 4 and pursuant to Annexure-1 the dealership of the Retail Outlet has not yet given to the Opp. Party No. 4. According to them the selection was neither discriminating nor irregular.

5. Learned Counsel for the petitioner Mr. K.N. Jena has contended that Opp. Party No. 4 is ineligible for the dealership in question being a non-applicant and the Corporation cannot run the Outlet on behalf of Opp. Party No. 5 as there was no valid amalgamation according to the Company Act and (Company) Court Rules. Further it is contended that Opp. Party No. 5 is also not eligible as Annexure-1 and earned disqualification for the specific provision mentioned in the Memorandum and Article of Association of Opp. Party No. 5. According to him, the petitioner is entitled for the dealership and the order being arbitrary in issuing the letter of intent in favour of Opp. Party No. 4 or 5 should be quashed. The rival contention of the counsel appearing on behalf of the Opp. Party Nos. 1, 2, 4 & 5 is that the selection procedure was in accordance with procedure and Opp. Party No. 4 is quite competent to hold the dealership of t he outlet at Baripada on the strength of merger/amalgamation under Annexure-A/4. Mr. R.P. Kar, learned counsel appearing on behalf of Opp. Party No. 3 contends that petitioner did not secure the highest mark awarded by the Selection Board. It is only the Opp. Party No. 5 who stood first and was recommended for the outlet maintaining all transparency.

6. The admitted facts are that the petitioner and Opp. Party No. 5 were the applicants in response to advertisement-Annexure-1 and Opp. Party No. 4 was the non-applicant. It is also admitted by the parties that both Opp. Party Nos. 4 & 5 are the registered Companies. In view of the above admitted fact the following questions fall for consideration :

1. Whether Opp. Party No. 5 is eligible to apply for the Retail Outlet of Bharat Petroleum 'Open Category' and act beyond the mandate of Memorandum and Article of Association.

2. Whether there was any merger or amalgamation in accordance with the law and Opp. Party No. 4 can hold the dealership on behalf of Opp. Party No. 5.

7. It is submitted by the Counsel for Opp. Party Nos. 4 & 5 that the condition mentioned in Annexure-A series are also applicable to the applicants as we Col. 7 of the advertisement-Annexure-1. To meet the above contention the petitioner submits that only the conditions of application form is applicable to the applicants but not the general brochure which starts from Page 1 and ends in Page 6 which is the check list for enclosures to application form and the application form again starts from Page 1 ending in printed general brochure ending at Page 6 (check list) could not be the part of the application form. According to the Counsel it has been tagged purposefully to make the Opp. Party No. 5 eligible for the retail dealership.

8. In Clause 7 of Annexure-1 it has been mentioned that the details of condition mentioned in the application form shall be applicable. It is true that Annexure-1 speaks of an individual. It further restricts applicants having multiple dealership. The eligibility criteria for award of dealership/distributorship under 'Open Category' in Part-I under Annexure-A/1 series reveals in Clause 9 that Corporation owned or controlled by Government and all PSUs are eligible to apply. Further restriction relating to annual income residence and multiple dealership/distributorships would not be applicable to Corporations owned or controlled by Government/PSUs. So these are the clauses overriding the clauses mentioned in advertisement-Annexure-1. Further the last page i.e., in Page 6 printed form instructing the candidates in the head line 'Check list' for enclosures to the application form showing in the bracket to be filled in by the applicant. This shows that the Pages from 1 to 6 (Part I) are the part of the application form carrying the Sl. No. of Pages from 1 to 9. Therefore, though the pages of printed application form begin from Page 1 ending at 9, it cannot be said the other part of Annexure-A series is not in continuance to the application form for the reason that the candidate has to fill up the page 6 (Check list) after completing the application form itself. Therefore, the Opp. Party No. 5-OMCAD was eligible to apply for the Retail Outlet. Then the next part comes in as to if the OMCAD can act beyond the mandate of the memorandum. There is no dispute that OMCAD being the Company is bound by its Memorandum of Association. The Company has to act within the ambit of its memorandum in case it exceeds its jurisdiction/restriction mentioned therein the same becomes viod ab initio. In this respect we may refer to the decision cited by the Counsel for the petitioner reported in the case of Dr. A. Lakshmanaswami Mudaliar and Ors. v. Life Insurance Corporation of India and Anr., AIR 1963 SC 1185. In the cited case in a meeting of shareholders a resolution sanctioning a donation of Rs. 2 lakhs out of the shareholders dividend to a Memorial Trust was given without the authority of Article of Association which was not approved by the Hon'ble Apex Court. The relevant paragraph is quoted below :

' 12. A Company is competent to carry out its objects specified in the Memorandum of Association and cannot travel beyond the objects. The objects of the Company are set our in Clause III. By the first Sub-clause. The Company is authorized to carry on life insurance business in all its branches and all kinds of indemnity and guarantee business and for that purpose to enter into and carry into effect all contracts and arrangements. By Sub-clause (ii) the Company is authorized 'to incest and deal with funds and assets of the Company upon such securities or investments and in such manner as may from time to time be fixed by the Articles of Association of the Company'. Sub-clauses (iii) and (iv) are not material for the purpose of this appeal. By Sub-clause (v) the Company is authorized to do 'all such other things as are incidental or conductive to the attainment of the above objects or any of them'. The Memorandum of Association must like any other document be constructed according to accepted principles applicable to the interpretation of all legal documents and no rigid canon of construction is to be applied to such a document. Like any other document, it must be read fairly and its import derived from a reasonable interpretation of the language which it employs. Egyptian Salt and Soda Co. v. Port Said Salt Association, 1931 AC 677, (AIR 1931 PC 182). As observed in Ashbury Railway Carriages and iron Company v. Riche, (1875) 7HL 653 :

'The covenant, therefore, is not merely that every member will observe the conditions upon which the companies established, but that no change shall be made in those conditions; and if there is a covenant that no change shall be made in the objects for which the company is established. I apprehend that includes within it the engagement that no object shall be pursued by the company, or attempted to be attained by the company in practice, except an object which is mentioned in the memorandum of association............'

In the present case, the Memorandum of Association of Orissa Maritime & Chilka Area Development Corporation Ltd. specifies in Clause III-A(1) mentioning the main objects for the establishment of the Corporation which reads as follows :

'1. To plan, develop, promote, do-ordinate, finance, supervise, participate or cause to be executed or execute a comprehensive and integrated development programme in the maritime and Chilka lake areas of the State of Orissa with a view to promote and advance on all round economic development of these areas in particular and the State of Orissa in general.

Maritime areas for the objects of the Corporation will mean in the case of land the strip of land along the entire length of the seashore of Orissa State and the lands bordering in and around Chilka lake extending inland to a distance of 15 kilometres. Provided where the economic interest of any project justifies it, Government of Orissa may extend the Company's area of operation upto the entire jurisdiction of the Panchayat Samitis (Blocks) having a sea/water front as part of their borders. In the case of offshore areas, it shall extend to the Exclusive Economic Maritime Zones fixed by the Government of India.

The object of the Corporation by its memorandum has restricted the activity of the Company to a distance of 15 kms. only from the shore i.e. the entire length of sea shore of Orissa. The present Outlet is admittedly located more than 60 kms away from the sea shore. Therefore, the Opp. Party No. 5 cannot run the outlet either itself or by any other Company without being amalgamated with proper memorandum to that effect.

9. Adverting to the merger/amalgamation there is absolutely no doubt that two registered Companies can amalgamate in a court by submitting their scheme according to Section 391, 394, 396 along with other provisions. An application for amalgamation based on compromise or arrangement by two or more Companies has to be filed before a competent court and the merger effected by an order of the Court. In this respect, we may refer to the decision reported in he case of Hindustan Lever and Ors. v. State of Maharastra and Ors., AIR 2004 SC 326. The relevant Paragraph 9 of the judgment of the Apex Court is quoted below.

'9. Section 394 provides that application and order of amalgamation under Section 394 is based on compromise or arrangement which has been proposed for the purpose of amalgamation of two or more companies. The amalgamation scheme, which is an agreement between the companies is presented before the Court and the Court passes an appropriate order sanctioning the compromise or arrangement. The foundation or the basis for passing an order of amalgamation is agreement between two or more companies. Under the Scheme of amalgamation, the whole or any part of the undertaking, properties or liability of any company concerned in the scheme is to be transferred to the other company. The company whose property is transferor company and the company to whom property is transferred would be considered as the transferee company. The scheme of amalgamation has its genesis in an agreement between with the prescribed majority of shareholders and creditors of the transferor company with the prescribed majority of shareholders and creditors of the transferee company. The intended transfer is a voluntary act of contracting parties. The transfer has all the trappings of a sale. The transfer is effected by an order of the Court. The proposed compromise or arrangement is subject to verification by the Court as provided therein. First is that the scheme of compromise or arrangement proposed for the purpose of amalgamation or in connection therewith, shall not be sanctioned unless the Court has received a report from the Company Law Board or the Registrar that the affairs of the company have not been conducted in a manner prejudicial to the interest of its Members or to public interest and; secondly that the order of resolution of transfer of company shall not be made official liquidator on scrutiny of the books and papers of the Company makes a report to the Court that the affairs of the company had not been conducted in a manner prejudicial to the interest of its members or to public interest.'

It is admitted by the Opp. Party Nos. 4 & 5 that the OMCAD was merged with Orissa Fish Seed Development Corporation Ltd. and a new Corporation, namely, Orissa Pisciculture Developments Corporation Ltd.- Opp. Party No. 4 emerged out of the merger by Government Notification Nos. 13502 dtd 11.8.1998 and 72 dtd. 28.10.1998 under Annexures A-4 and G-4 respectively which reads as follows :

'As per Govt. decision, the Orissa Maritime & Chilka Area Development Corporation Limited and Orissa Fish Seed Development Corporation Limited have been merged to a new Corporation, namely Orissa Pisciculture Development Corporation Limited.

Consequent upon the incorporation of Orissa Pisciculture Development Corporation Limited, Government have been pleased to appoint Principal Secretary to Government, Fisheries & A.R.D. Department as the Chairman of the said Corporation until further orders.'

Sd/-

'In pursuance of Notification No. 13502 dtd. 11.8.1998 of Government in Fisheries and Animal Resources Development Deptt., the Orissa Maritime and Chilka Area Development Corporation Ltd. (O.C.L.) and Orissa Fish Seed Development Corporation Ltd., 90. (O.C.L.) Ltd., (OFISEED) have been merged to a new Corporation namely Orissa Pisciculture Development Corporation Limited, (OFDC) which is the sole owner of the above two Erstwhile Corporations with effect from 15.10.98. Consequently upon the incorporation of Orissa Pisciculture Development Corporation, the services of the employees of both the Erstwhile Corporations have been taken over by the new Corporation on the terms of continuous service with effect from 15.10.98.'

Since the Government has no authority to pass an order of amalgamation/merger, the Opp. Party No. 4 cannot hold the dealership on behalf of Opp. Party Nos. 1 to 3 in favour of Opp. Party No. 4 is not sustainable.

10. Annexure-I-4 dtd. 4.11.1993 reveal that OMCAD was willing to take the Management of the Dealers Outlet of Bharat Petroleum since 1993 and the Bharat Petroleum Corporation Ltd. appointed the OMCAD as temporary Caretaker/Dealer of the Outlet in question from year to year basis which tells a volume regarding the final selection of OMCAD.

11. In the result, our considered opinion is that the letter of intent in favour of Opp. Party No. 4 is not sustainable and we hereby quash the order of Opp. Party Nos. 1 & 2 along with the entire selection process of Dealer Selection Board dtd. 21.1.1999. The Oil Corporation is to proceed with the selection afresh in accordance with law.

12. The Writ Petition is allowed to the above extent only.

P.K. Mohanty, J.

13. I agree.