w w w . L a w y e r S e r v i c e s . i n

Steel Authority of India Limited & Another v/s International Commerce Limited & Others

Company & Directors' Information:- STEEL AUTHORITY OF INDIA LIMITED [Active] CIN = L27109DL1973GOI006454

Company & Directors' Information:- S A L STEEL LIMITED [Active] CIN = L29199GJ2003PLC043148

Company & Directors' Information:- M M S STEEL PRIVATE LIMITED [Active] CIN = U27109TZ1996PTC006849

Company & Directors' Information:- G. O. STEEL PRIVATE LIMITED [Active] CIN = U27100PB2007PTC031033

Company & Directors' Information:- INDIA E-COMMERCE LIMITED [Active] CIN = L99999MH1968PLC014091

Company & Directors' Information:- INTERNATIONAL COMMERCE LIMITED [Active] CIN = U10100WB1980PLC204139

Company & Directors' Information:- J M G STEEL PRIVATE LIMITED [Strike Off] CIN = U27105BR1992PTC004985

Company & Directors' Information:- H L STEEL PVT LTD [Active] CIN = U27107AS1992PTC003726

Company & Directors' Information:- K V M STEEL PRIVATE LIMITED [Active] CIN = U29141DL1988PTC031248

Company & Directors' Information:- K STEEL PRIVATE LIMITED [Strike Off] CIN = U27104JH1973PTC000998

Company & Directors' Information:- R. J. STEEL PRIVATE LIMITED [Active] CIN = U28112MH2009PTC193047

Company & Directors' Information:- M M STEEL PRIVATE LIMITED [Active] CIN = U27107MH2001PTC131270

Company & Directors' Information:- S H COMMERCE PRIVATE LIMITED [Active] CIN = U51109WB2008PTC121420

Company & Directors' Information:- A. M. COMMERCE PRIVATE LIMITED [Active] CIN = U51909WB2011PTC168744

Company & Directors' Information:- B L STEEL PVT LTD [Active] CIN = U51909WB1981PTC034021

Company & Directors' Information:- R K G STEEL PRIVATE LIMITED [Active] CIN = U27109DL2004PTC128852

Company & Directors' Information:- INDIA STEEL INTERNATIONAL PRIVATE LIMITED [Active] CIN = U53221MH1992PTC065824

Company & Directors' Information:- V B STEEL PRIVATE LIMITED [Active] CIN = U28112MH2010PTC211691

Company & Directors' Information:- I B STEEL COMPANY PRIVATE LIMITED [Strike Off] CIN = U28910MH2010PTC211344

Company & Directors' Information:- G S E-COMMERCE PRIVATE LIMITED [Active] CIN = U52100KA2013PTC067567

Company & Directors' Information:- J S C STEEL PRIVATE LIMITED [Active] CIN = U27106UP2013PTC061568

Company & Directors' Information:- S. M. STEEL PRIVATE LIMITED [Active] CIN = U51101MH2013PTC239811

Company & Directors' Information:- R K P STEEL LTD [Active] CIN = L27109WB1980PLC033206

Company & Directors' Information:- C P STEEL PRIVATE LIMITED [Active] CIN = U27100WB2008PTC127447

Company & Directors' Information:- V K COMMERCE PVT LTD [Amalgamated] CIN = U51109WB1984PTC037122

Company & Directors' Information:- A. K. J. STEEL PRIVATE LIMITED [Active] CIN = U28112WB2010PTC144880

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- P. R. COMMERCE PRIVATE LIMITED [Active] CIN = U51909WB2008PTC122333

Company & Directors' Information:- M & P E. COMMERCE PRIVATE LIMITED [Active] CIN = U74300DL1999PTC099198

Company & Directors' Information:- C D STEEL PVT LTD [Under Liquidation] CIN = U27109WB1981PTC034340

Company & Directors' Information:- T M S STEEL PRIVATE LIMITED [Strike Off] CIN = U02710TZ1996PTC007498

Company & Directors' Information:- R S COMMERCE PVT LTD [Converted to LLP] CIN = U51909WB1995PTC074372

Company & Directors' Information:- P M R STEEL PRIVATE LIMITED [Active] CIN = U51102DL2003PTC122675

Company & Directors' Information:- C T STEEL PVT LTD [Active] CIN = U27109WB2005PTC106634

Company & Directors' Information:- P G STEEL PVT LTD [Strike Off] CIN = U24111AS1998PTC005409

Company & Directors' Information:- A AND S STEEL PRIVATE LIMITED [Active] CIN = U63090DL1987PTC027835

Company & Directors' Information:- P S COMMERCE PRIVATE LIMITED [Active] CIN = U51909WB1997PTC084487

Company & Directors' Information:- AND E-COMMERCE PRIVATE LIMITED [Active] CIN = U74120AP2015PTC096206

Company & Directors' Information:- J S STEEL PRIVATE LIMITED [Active] CIN = U52190CT1978PTC001432

Company & Directors' Information:- U M STEEL PRIVATE LIMITED [Strike Off] CIN = U27209TN1986PTC013670

Company & Directors' Information:- R. N. STEEL PRIVATE LIMITED [Active] CIN = U27100WB2007PTC116588

Company & Directors' Information:- P M STEEL PRIVATE LIMITED [Active] CIN = U27105MP1982PTC001915

Company & Directors' Information:- M R STEEL (INDIA) PRIVATE LIMITED [Active] CIN = U27100TG2013PTC088808

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- C K STEEL PVT LTD [Active] CIN = U29150WB1975PTC030259

Company & Directors' Information:- K STEEL & COMPANY PVT LTD [Strike Off] CIN = U51909WB1991PTC053960

Company & Directors' Information:- A P COMMERCE LIMITED [Strike Off] CIN = U51909WB1981PLC033798

Company & Directors' Information:- N S STEEL PVT LTD [Strike Off] CIN = U27106PB1980PTC004266

Company & Directors' Information:- K P INDIA COMMERCE PRIVATE LIMITED [Strike Off] CIN = U51909AS2001PTC006701

Company & Directors' Information:- R C STEEL PVT LTD [Strike Off] CIN = U28112AS1980PTC001811

Company & Directors' Information:- P D STEEL PRIVATE LIMITED [Strike Off] CIN = U74899DL1989PTC038426

Company & Directors' Information:- A K STEEL PVT LTD [Strike Off] CIN = U99999DL1961PTC003566

Company & Directors' Information:- H S P STEEL PRIVATE LIMITED [Strike Off] CIN = U27100MH2013PTC242983

Company & Directors' Information:- D H STEEL PRIVATE LIMITED [Strike Off] CIN = U27109RJ2012PTC039742

Company & Directors' Information:- R A STEEL PRIVATE LIMITED [Active] CIN = U51909MH2014PTC253625

Company & Directors' Information:- I P E-COMMERCE PRIVATE LIMITED [Active] CIN = U52399CH2012PTC033585

Company & Directors' Information:- N. V. STEEL PRIVATE LIMITED [Strike Off] CIN = U27310DL2009PTC186541

Company & Directors' Information:- K. D. STEEL PRIVATE LIMITED [Strike Off] CIN = U28939DL2012PTC244467

Company & Directors' Information:- STEEL INDIA PRIVATE LIMITED [Strike Off] CIN = U00349KA1958PTC001309

    CAN Nos. 2409 & 1863 of 2019 & MAT Nos. 313 & 244 of 2019

    Decided On, 01 April 2019

    At, High Court of Judicature at Calcutta


    For the Appearing Parties: L.K. Gupta, Arjun Ray Mukherjee, Saheli Mukherjee, Jayanta Kumar Mitra, Sarvapriya Mukherjee, Aritra Basu, Pallavi Gogoi, Joydip Kar, D.N. Sharma, R. Rai, Anunoy Basu, Kausik Chanda, Rajashree Venket Kundalia, Indrajeet Dasgupta, Advocates.

Judgment Text

Arindam Mukherjee, J.

1. Steel Authority of India (hereinafter referred to as 'SAIL') and Durgapur Steel Plant (in short 'DSP') being respondent nos. 2 and 4 in the writ petition has preferred an appeal being MAT No. 313 of 2019(Steel Authority of India & Anr. vs. International Commerce Limited &Ors.). In the said appeal the appellants have assailed the judgment and order dated 25th January, 2019 by which the writ petition W.P. 33074 (W) of 2013(International Commerce Limited & Anr. vs. Union of India & Ors.) was allowed. The appellants have also filed an application for stay in the said appeal being CAN No. 2409 of 2019.

2. Ferro Scrap Nigam Limited (hereinafter referred to as 'Ferro'), the respondent no. 5 in the aforesaid writ petition has filed a separate appeal being MAT No. 244 of 2019 (Ferro Scarp Nigam Limited vs. International Commerce Limited & Ors.) wherein it has challenged the order dated 25th January, 2019 by which the writ petition was allowed. Ferro has also filed a stay application being CAN No. 1863 of 2019.

3. Both the appeals along with their connected stay applications are taken up together for consideration as common and over lapping issues are involved therein.

4. Sail alleges that in its Durgapur Steel Plant in course of its manufacturing process huge quantities of slag are produced on regular basis. This slag is dumped in its slag yard within DSP factory premises. For over the years it is handing over such slag to Ferro, a public sector undertaking on nomination/preferential selection basis, who in turn within the factory premises of DSP recycles the said slag to recover the residual ferrous contained therein which is converted into iron ingots and made over to SAIL for being used as raw material at the DSP. The residual product after extracting the ferrous contents from the slag is also made over to SAIL which is spread out on the inundated portions of the open factory land at DSP to level the same so that the constructions can be made in future on such levelled surface. SAIL says that, it has been awarding this job to Ferro by way of nomination/preferential selection over the years and this transaction is not a sale transaction but a job work awarded to Ferro. No ingredients of sale is present in this transaction. In this process, the slag does not leave the factory premises of DSP when the same is made over to Ferro and, as such, there is no security hazard. SAIL is not required to provide any security or other infrastructural support which would otherwise been required if the said slag was sold out or handed over to any other third party for such job work as the slag then would go out of the factory premises and there would be no control over the ferrous contents recovered. In fact, Ferro has incurred huge expenditure to set up its own machineries within the premises of DSP for doing the recycling of slag, on finding that, a sizeable amount of such slag was available for conversion work throughout the year.

5. Sail further submits that after pronouncement of the judgment reported in (Caterpillar India (pvt) Ltd. vs. The Western Coal Fields Limited &Ors., (2007) 11 SCC 32), the awarding of contract by SAIL to Ferro on nomination basis was again reconsidered by the concerned ministry in minute details and a report in form of a policy guideline was prepared by the ministry. The ministry has opined in favour of awarding the recycling work on nomination basis to Ferro instead of putting up the slag for sale or for job work through e-auction.

6. It is further submitted on behalf of SAIL that the Central Vigilance Commission (in short 'CVC') had, however, opined in favour of putting the slag for sale through e-auction. Since it is the decision of the ministry to prevail, the nomination procedure continued instead of e-auction basis. Contract has been, thereafter, awarded to Ferro from time to time on nomination basis. The present contract in favour of Ferro is valid till 31st March, 2019. SAIL submits that unless an interim stay of the judgment and order dated 25th January, 2019 is granted there will be a stalemate condition which is ultimately going to affect the operation and the manufacturing process at DSP. In terms of the order impugned the slag is required to put up for sale through auction. As of now, SAIL does not have a mechanism to put up the slag for sale through e-auction. It is also not possible within such a short period of time to prepare the infrastructural requirements needed to put the slag for sale through e-auction. As a consequence thereof slag will pile up in the slag yard and it will over flow. The slag has to be dumped in other places within the premises of DSP. This will cause space crunch which will in turn hamper the daily operation and production process at DSP within a short period of time from 1st April, 2019. The slag stored for long is likely to deteriorate and ultimately the ferrous contents that may be recovered will be less apart from wastage.

7. Ferro on the other hand, relies upon a report of the Committee on Purchase Preference Policy for Ferro Scrap Nigam Limited prepared by the Ministry of Steel, Government of India on 4th May, 2008. The committee is said to have been constituted with experts in the field. Relying upon various portions of the said report Ferro submits that after the 'Caterpillar' judgment, the ministry through the said committee has considered the issue thread bare taking into consideration the various aspects of matter and, thereafter, has framed a policy by considering the matter afresh and then have decided to award the contract on nomination basis to Ferro instead of putting the same for sale or for job work through e-auction. Ferro further submits that over the years they have developed expertise in the recycling of slag and have established their own set up within the factory premises of DSP investing huge sum of money. They are providing cost effective services to SAIL. The operation and functioning of Ferro is dependent on the recycling of slag in different plants of SAIL one of which is DSP. In the event the slag at DSP is put up for e-auction the same fate will occur in respect of the other plants of SAIL where such recovery process is in operation and Ferro will be ultimately ruined. It has been fairly submitted on behalf of Ferro that the points in the writ petition which are the subject-matter in appeal requires detailed hearing. The appeal may be heard at any time convenient to the Court but to prevent a stalemate condition on and from 1st April, 2019 which is approaching within a couple of days, an interim stay on the judgment and order dated 25th January, 2019 should be passed at least for a limited period to enable the Court to hear out the appeal.

8. The Additional Solicitor General representing Union of India places reliance on page-661 of CAN 2409 of 2019 being the stay application filed by SAIL to inform us the brief historical background which led to the formation of Ferro for the purpose of recovery of ferrous scrap from slag and debris and allied waste arisings at various steel plants including DSP. This document is actually the agenda notice for the first board meeting of Ferro which was scheduled to be held on 27th June, 1979 at the registered office of Metal Scrap Trade Corporation Limited (in short 'MSTC'). It is submitted that Ferro is a wholly owned subsidiary of MSTC. By relying upon the said document, the Additional Solicitor General submits that there is no question of nomination or issuance of work on preferential basis to Ferro. Ferro has been constituted for the recovery of ferrous from slag as a part of the government policy as far back in the late seventies. This policy was continuing over the years until the same was revisited by the ministry in 2008 pursuant to the judgment rendered in Caterpillar Case. By referring to the report he submits that even after such reconsideration, the Ministry of Steel, Government of India decided with the approval of the competent authority that Ferro will continue to be awarded the work of metal scrap recovery of other allied work like slag processing etc. on nomination basis by PSUs under the Ministry of Steel. It was also decided that in case there is a difference of opinion on the price between Ferro and the concerned PSU the matter will be referred to the Ministry of Steel for taking a decision. By referring to the said order the Additional Solicitor General submits that the learned Single Judge erred in holding that there is no policy decision in awarding the job to Ferro. He also submitted that this order is not under challenge so as to the report.

9. The learned Additional Solicitor General then referred to page 235 being a document signed by the Steel Minister on 11th February, 2010 wherein it appears that the concerned minister was not convinced with the awarding of work by one PSU to another at the behest of the ministry and, as such, intended to refer the matter to CVC and seek their comments on whether SAIL can continue to award the work to Ferro. The learned Additional Solicitor General submits that the learned Single Judge considered this letter but did not consider the subsequent decision which is duly signed by the same minister and appears at page 840 of CAN 2409 of 2019. He refers to the document dated 16th June, 2010 and, in particular, to paragraph three thereof by which it was decided to engage Ferro on nomination basis. This document was signed by the concerned minister on 17th June, 2010. According to the learned Additional Solicitor General it is absolutely clear that there exists a government policy on the basis whereof the work is awarded by SAIL to Ferro for processing the slag at DSP. The learned Additional Solicitor General then relied upon page 460 of CAN 2409 of 2019 being the letter dated 19th May, 2010 to show the approval of awarding contract on nomination basis to Ferro.

10. The learned Additional Solicitor General submits that the learned Single Judge has erred both in law as well as on facts and, as such, has transgressed into the domain of executive policy decision. The order impugned, therefore, is required to be set aside.

11. On behalf of the writ petitioner it is submitted that the order impugned is based on cogent reasons after considering the all aspects of the matter in details. No illegality and/or perversity is apparent. No interference to the order impugned is called for and no interim stay should also be allowed. The slag at DSP is government largesse. The Steel Ministry has guarded such government largesse form being exposed to public auction in violation of provisions of Article 14 of the Constitution. Moreover, fair play and transparency in government action demands that the slag be put up for public auction instead of being awarded to Ferro on nomination basis. Ferro can compete with other private players in an unguaranteed system. This will bring better competition and cost effective offers. Private players will charge much less than that charged by Ferro. The learned senior advocate representing the writ petitioner referred to a document appearing at page 258 of CAN 2409 of 2019 which is a document of June, 2012. Relying upon the said document of SAIL the learned senior advocate submits that a clear decision has been taken to follow the advice of CVC by strictly following the route of open tender. This letter clearly shows that no awarding of work to Ferro on nomination basis should be made after 31st March, 2013. He then refers to a letter dated 11th December, 2012 issued by the CVC and submits that from the said letter it is explicit that awarding of contracts on nomination basis is deprecated by CVC. The CVC has advised to adhere to competitive tendering mechanism for the purpose on integrity, transparency, fairness and equality in decision making. The learned senior advocate for the writ petitioner further submits that these are documents post 2010 being the document referred to by the Additional Solicitor General. He submits that both the two appeals one preferred by SAIL and the other by Ferro are liable to and should be dismissed.

12. We have considered the submission made on behalf of the parties. We have also considered the materials on record as discussed above. We find that there is in existence a government order dated 28th August, 2008. Whether this government order still subsists or not cannot be ascertain without a detailed enquiry in course of hearing of the appeal. We also find the brief historical background which led to the formation of Ferro and the decision to award work to it on nomination basis for over decades. This procedure has continued over the years. Even after the document appearing at page 258 of CAN 2409 of 2019 and referred to by the senior advocate on behalf of the writ petitioner, the awarding of contract in favour of Ferro on nomination basis did not stop even after expiry of 31st March, 2013 being the cut off date mentioned in such document. Six years from 31st March, 2013 has elapsed in between and there has been no change in awarding contract in favour of Ferro on nomination basis. The continuous issuance of work on nomination basis to Ferro which continued even after 31st March is an issue which requires consideration in details by referring to various government documents taken from time to time. Both the appellants have made out a prima facie case for the appeals being admitted and finally heard which cannot be done before expiry of 31st March, 2019 due to paucity of time. On the other hand we find, if on expiry of 31st March, 2019 in terms of the order impugned no further work can be awarded to Ferro on nomination basis, there will be piling of huge quantities of slag within the factory premises of DSP till we hear out the appeal which is likely to cause operational inconvenience to SAIL as submitted. No tender process has till be initiated and due to paucity of time and lack of infrastructural facilities as submitted by SAI

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L it is not possible for them to put up the slag for processing work or for recovery job through e-auction. Ferro will be similarly inconvenienced on sudden stoppage of the job. Its existence is likely to be effected. On the other hand, if the order impugned is stayed for a limited period no inconvenience will be caused to the writ petitioner. Considering all these aspects and, in particular, in view of a prima facie case made out in both the appeals being MAT 313 of 2019 and MAT 244 of 2019 by the respective appellant(s) which is duly supported by the Union of India, and the balance of convenience and inconvenience, we are inclined to stay the operation of the order dated 25th January, 2019 being the order under appeal till disposal of the appeal. The existing system of awarding work to Ferro on nomination basis shall continue till the disposal of the appeal. This interim arrangement shall not create any equity in favour of Ferro. We direct the parties to the two appeals to prepare an index of the papers on record for each of the two appeals. Acceding to the submissions made by the parties that both the appeals can be disposed of on the basis of the papers annexed to the stay petition, we direct that the two appeals being MAT 313 of 2019 and MAT 244 of 2019 respectively to be heard together on the basis of the stay petition filed in the said two appeals. The appeal be listed in the monthly list May, 2019 for hearing. Urgent photostat certified copy of this judgment and order, if applied for, be supplied to the parties on a priority basis.