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2001 DAILYLAW 1440 (DEL)

HBL LIMITED v. UNION OF INDIA

2001-08-07

M A Khan

body2001
Delhi High Court (August 7, 2001) 2002 (TLS)126266 2001-AD (Del)-7-1060 :: 2002-AD (Del)-1-173 HBL LIMITED Vs. UNION OF INDIA MAHMOOD ALl KHAN ( 1 ) THE Electronic Corporation of India Ltd. (ECIL in short) has filed application for being impleaded as a party to this writ petition. Petitioners, are sister limited companies filed this writ petition for quashing the circular dated 7. 8. 1999 issued by the Department of Atomic energy respondent no. 2 impleading UOI and two other officers as respondents no. 1, 3 and 4. ( 2 ) THE facts as disclosed in the petition are as follows. The petitioners are engaged in the manufacturing of batteries for aircraft, torpedoes, and missiles etc. These supplies are made to the Indian Air-Force, Indian Navy, Indian Railways, Steel Authority of India Ltd. and Oil corporation etc. Under Government policy certain defence items which were hitherto manufactured by Electronic Corporation of India Ltd. of Department of Atomic Energy were permitted to be manufactured by private companies. The petitioners also obtained an industrial licence on 17. 5. 1999 for manufacture of projectiles and part thereof including various fuses (empty ). Petitioner no. 2 stated making arrangements for the conditions set out in the licence. Petitioner no. 1 used to supply specialised batteries manufactured by it to the Ministry of Defence. Ministry of Defence of the respondent no. 1 issued a circular dated 7. 8. 1999 against the petitioners in pursuance to a letter received from respondent no. 3. Joint Secretary (Randd) as a result the petitioner has not been able to make supplies to the ministry of Defence and its subordinate organizations. In the circular it is mentioned that an investigation is being conducted at Police Station at Kushaiguda, Hyderabad against two former employees of the ECIL on the allegation that they had taken away with them some fuses belonging to the ECIL stealthily and had joined to private companies. It was further alleged that the empty fuses were recovered from a sub-contractor of the petitioner no. 1 which indicated the involvement of the petitioner companies in the said theft. The circular was issued without any verification of the true facts. The petitioners are not involved in criminal case in any way. It was further alleged that the empty fuses were recovered from a sub-contractor of the petitioner no. 1 which indicated the involvement of the petitioner companies in the said theft. The circular was issued without any verification of the true facts. The petitioners are not involved in criminal case in any way. The circular is causing a great hardship for both the petitioners for doing business and to participate in the tenders in respect of the products manufactured by them for which Ministry of Defence are the major buyers. ( 3 ) THIS petition is resisted by the respondents, UOI by raising diverse pleas by affidavit. In the counter affidavit it is alleged that this court had no territorial jurisdiction. The petitioners have no right to file the petition or be granted relief prayed for. Petition is also mis-conceived because it was reported to the Government that the petitioners were one of the suppliers of sindered Nickel Plates for Nickel Cadmium Batteries for the Ministry of Defence and were supplying non-standard items. The Government was also informed regarding the poaching of the technology of defence products by the petitioners and others. The inter-departmental note was sent to Government and thus the petitioners cannot have any right to say that the said note prepared by the Government had affected the business right of the petitioners for tender. The petitioners cannot procure confidential documents and use it in the writ petition. It is an official communication pertaining to the affairs of the State and as such, the documents cannot be given nor can be procured. Entire public interest would be jeopardised and no administration can run if such disclosures are made and no reliance can be made upon such documents. The writ petitioners have stolen these documents. The petition should be dismissed in public interest as the petitioners have not come with clean hands. Mr. G. Siva, Sr. Manager, IOG, ECIL and Mr. Manikyelrao, Technical Manager, SDP, ECIL are still the employees of ECIL. They have been placed under suspension. They were arrested by the police but have been released on bail. They violated the service code by not marking their attendance with the security at ECIL. A criminal case was registered and investigations had taken place with regard to the alleged theft of 20 nos. of VT BA fuses from ECIL by these two employees. The inquiry is being conducted. Mr. They violated the service code by not marking their attendance with the security at ECIL. A criminal case was registered and investigations had taken place with regard to the alleged theft of 20 nos. of VT BA fuses from ECIL by these two employees. The inquiry is being conducted. Mr. A. L. Prasad is the competitor of ECIL in the supply of batteries to the Ministry of Defence. He was in close contact with the employees of the ECIL. The HBL in collaboration with some of the employees of ECIL has been trying to poach the technology of defence products. The goods were recovered from the premises of one of the sub-contractors of HBL, the writ petitioner, which shows the nexus between the employees of ECIL and Dr. Prasad and the writ petitioner company HBL. It has also been found that those employees of ECIL were apparently working with M/s Sabnite Power System ltd. which is also a company promoted by the Chairman of the writ petitioners company. Intelligence Bureau has also registered a case against Dr. Prasad for his international leakage of information and that Dr. Prasad, Chairman of the writ petitioner company, acting against the interest of PSE and against the interest of the country. ECIL has filed a writ petition in the High Court of Hyderabad against the writ petitioner and an injunction has been granted restraining respondents no. 1 and 2, the employees, and joining services of the writ petitioners ( 4 ) DURING the pendency of the petition, ECIL had submitted an application dated 14. 2. 2000 under Order 1 Rule 10 Code of Civil Procedure read with Section 151 Code of Civil Procedure for being impleaded as a party to this petition. In the application it is alleged that the petitioner has filed this petition assailing the issuance of a circular dated 7. 8. 1999 by the Ministry of Defence of the UOI on the basis of the communication received from the applicant. In the writ petition there is averment against the applicant and the finding to be rendered by the court without the applicant company being impleaded as a party would cause great prejudice. Mr. Manikyelrao and Mr. G. Siva were working as Managers in the applicant company sometimes in June, 1999. In the writ petition there is averment against the applicant and the finding to be rendered by the court without the applicant company being impleaded as a party would cause great prejudice. Mr. Manikyelrao and Mr. G. Siva were working as Managers in the applicant company sometimes in June, 1999. It was noticed that 20 numbers of sensitive defence products by name VT 8-A fuses were missing from the premises of the applicant. A report was lodged with the police. Upon investigation it was revealed that the abovenamed Managers of the applicant had connivance with one Dr. Prasad. Dr. Prasad was promoter of the petitioner no. 1. The Managers of the applicant were suspended and criminal proceedings were initiated against them which are pending. While this process was on the matter was reported to the parent companies of the applicant company, the Department of Atomic Energy since the product which was stolen happened to be a threat to the national security. Accordingly, certain inter-correspondence ensued between the Joint Secretary (Randd) and her counter-affidavit in the Ministry of Defence suggested that promoters of writ petitioners Dr. Prasad was involved in certain espionage case in USA and has been convicted and fined there. Under the above circumstances looking to the threat perspective, the respondents were constrained in coming out with this circular. There were material to show that the above named employees of the application had link with the writ petitioners and were passing necessary information in the production and manufacture of the items mentioned above. Besides that the efforts put in by scientists of the applicant company in coming out with the product could not be hijacked by other manufacturers and pose in the market as their own product particularly when the product was meant for defence of the country. It was possible that the products could find in the hands of anti-national elements. Besides that the efforts put in by scientists of the applicant company in coming out with the product could not be hijacked by other manufacturers and pose in the market as their own product particularly when the product was meant for defence of the country. It was possible that the products could find in the hands of anti-national elements. The applicant feels that its grievance require to be vindicated and the petitioners without impleading it is seeking to wriggle out of the problem and get relief thereby putting the security of the country in Jeopardy and the manufacturing secret of the applicant company also as a threat perspective since all these days the manufacturing process was only within the knowledge of the scientists of the applicant company and they were under the terms and the conditions of the service were not required to divulge the secret involved in the production line. ( 5 ) THIS application was opposed by the petitioner. The petitioner in reply contended that the applicant ECIL by moving this application had tried to prejudice the mind of the court by raising frivolous and false pleas. The writ petitioners are wholly owned Indian company. They are not involved in any criminal litigation anywhere in the world. They are serving the country by producing the specialised batteries for defence purposes which are used in missiles, torpedoes, tank and fighter aircraft. The technology for torpedoes batteries was available with only eight companies in the world. It took about 12 years to develop and Indianise these batteries with active cooperation of Indian Navy, Ministry of Defence and DRDO (Defence research and Development Organisation ). The ECIL is a public sector undertaking and had licence to manufacture certain defence item. It has a monopoly in defence licences as private sector was not granted licence to manufacture defence items. In 1998 the Government of india permitted private sector to manufacture certain defence items on their own accord. The writ petitioners were supplying batteries to ECIL also. They also applied for grant of industrial licence under the new policy and the licence was granted on 17. 5. 1999 for the manufacture of electronic product as alleged in the writ petition . they became direct competitor with the ecil. The fuse is a device" which activate the explosive and is of various types. They also applied for grant of industrial licence under the new policy and the licence was granted on 17. 5. 1999 for the manufacture of electronic product as alleged in the writ petition . they became direct competitor with the ecil. The fuse is a device" which activate the explosive and is of various types. Since the applicant was not showing any interest in development of new fuses and was encouraging the imports, ARDE approached petitioner no. 2 for development of advance electronic fuses which had necessary technology from ARDE to manufacture VT fuses too. The applicant has not come to the court with clean hands. It is direct competitor of the writ petitioner and its main profit making division is fuse division and it may go out of business on account of this competition. The FIR was lodged only under Section 379 Indian Penal Code and no allegations of any conspiracy or involvement of the petitioners company has been made in the FIR. Only the name of Mr. Rama Rao, sub-contractor of the applicant figures in it who also happened to be a sub-contractor of the writ petitioners and many other companies. The missing fuses were recovered two months after disappearance and this seems to be planted on an innocent person. The plaint was also made two months after the disappearance of the fuses. Mr. Chaudhary Manikyala Rao was working on the marketing side of ECIL and-not on the research side. Mr. G. Siva has nothing to do with the petitioner company. It was denied that they had connivance with Dr. J. Prashad as the FIR did not have any whisper about the connivance. There is case of espionage against Dr. J. Prashad. He was merely detained and was released when there was found no evidence against him. The circular has been issued without proper investigation and verification. ARDE has awarded writ petitioners the contract to develop new generation fuses which they would be producing it from competitive prices. The know-how of the manufacturing process is not only with the applicant but also with writ petitioners and ARDE. It is, therefore, prayed that the application should be disposed. The circular has been issued without proper investigation and verification. ARDE has awarded writ petitioners the contract to develop new generation fuses which they would be producing it from competitive prices. The know-how of the manufacturing process is not only with the applicant but also with writ petitioners and ARDE. It is, therefore, prayed that the application should be disposed. ( 6 ) THE applicant ECIL has applied for being impleaded in the writ petition under Order 1 rule 10 (2) Code of Civil Procedure which provides:- " (2) Court may strike out or add parties:- the court may at any stage of the proceedings, either upon or without the application of either party, and on such terms as may appear to the Court to be just, order that the name of any party improperly joined, whether as plaintiff or defendant, be struck out, and that the name of any person who ought to have been joined, whether as plaintiff or defendant, or whose presence before the Court may be necessary in order to enable the Court effectually and completely to adjudicate upon and settle all the questions involved in the suit, be added. " ( 7 ) A person may be impleaded as a party to a suit for a proceeding (i) when he ought to have been joined in the suit as a plaintiff or as a defendant but has not been so joined. In other words if he is a necessary party or a formal party to a suit and (ii) whose presence before the court may be necessary to enable the court to effectually and completely adjudicate upon and settle all the questions involved in the suit. It is necessary that in the absence of that person the court is not able to decide all the issues and disputes involved in the suit finally and completely. A party who is not directly interested in the issues but is only indirectly effected cannot be added as a defendant in a suit. It is necessary that the person must be directly and legally interested in the dispute involved. A person cannot be impleaded simply because he will be affected by the final decision in the suit. A party who is not directly interested in the issues but is only indirectly effected cannot be added as a defendant in a suit. It is necessary that the person must be directly and legally interested in the dispute involved. A person cannot be impleaded simply because he will be affected by the final decision in the suit. Applying the provision of clause (2) of Rule 10 or Order 1 Code of Civil Procedure on the case in hand there is no escape from holding that ECIL is neither a necessary nor a formal party to these proceedings. None of its legal rights are going to be effected by the decision in this petition. Its presence is also not required to decide the issues involved effectually and completely. The ECIL in fact, is not going to be affected even by the final order passed in the writ petition. ( 8 ) THE writ petitioners have questioned legality of a circular dated 20. 7. 1999 as confidential issued by the respondent UOI and the Deptt. of Atomic Energy. Its copy is submitted with the writ petition. It has been sent by the Department of Atomic Energy to the Ministry of Defence. It is extracted as under:- "it has been reported that M/s Hyderabad Batteries Ltd. (HBL), one of the suppliers of Sindered Nickel Plates for Nickel Cadmium batteries for the Ministry of Defence has been supplying non-standard items by replacing the Nickel mesh with that of ms wire mesh. HBL and SABNITE Power sources have also been supplying VT8a fuses and related technology/products to Ministry of Defence. M/s HBL was a sub contractor for Electronics Corporation of India Ltd. (ECIL), a Public Sector Undertaking under the administrative control of this Department for manufacture and supply of power sources for VT-8a fuses. It is alleged that HBL in collaboration with some of the employees of ECIL has been trying to poach the technology of defence products. Some of the VT-8 fuses which were illegally taken out by ECIL employees have been recovered from a sub contractor of HBL. The matter is under investigation by the Kushaiguda Police Station, Ranga Reddy district, A. P. Dr. Alluri Jagadesh Prasad, promoter of HBL and SABNITE Power sources is understood to have been involved in an espionage case in the United states and has been convicted with fine. The matter is under investigation by the Kushaiguda Police Station, Ranga Reddy district, A. P. Dr. Alluri Jagadesh Prasad, promoter of HBL and SABNITE Power sources is understood to have been involved in an espionage case in the United states and has been convicted with fine. I am enclosing herewith a copy of the investigation report received from the CVO of ECIL. The said information may be kept in mind while awarding contracts to M/s Hyderabad Batteries Ltd/sabnite Power sources". ( 9 ) THIS letter has been sent to the Ministry of Defence in pursuance to secret information received from the applicant regarding theft of some VT 8-A fuses in which its employees were involved and a criminal case was registered against them and the recovery of the stolen fuses was made from the sub-contractor, allegedly associated with the writ petitioners. There is also some information regarding involvement of Dr. A. J. Prashad s, promoter of the writ petitioners, in an espionage case in USA and his conviction there. Only because the circular is based on certain information which was contained in the FIR lodged with the police and the investigation carried thereon or even disciplinary proceedings taken against its employees, if any, would not be a reason for the presence of the applicant before the court. The respondents are UOI and Department of Atomic Energy which has issued the circular. They are contesting this petition. It is the action taken by the respondent no. 1 UOI and Department of Atomic energy and the Defence which are under challenge in this writ petition. Even formal presence of the applicant ECIL is not at all necessary. The applicant cannot claim to be added as a party to help and/or assist the respondents no. 1 and 2 in any manner whatsoever. It will be naive to think that the respondents UOI would not be able to defend this case and protect the national interest in the absence of the applicant. The applicant can provide whatever assistance and information it has to the respondents for their proper defence in the case. But impleadment of the respondent would change the nature of the case and enlarge the scope of the writ petition by introducing the controversy between the applicant and the petitioners in this writ petition which is neither necessary nor warranted. The applicant ECIL, therefore, has no merit. It is dismissed. But impleadment of the respondent would change the nature of the case and enlarge the scope of the writ petition by introducing the controversy between the applicant and the petitioners in this writ petition which is neither necessary nor warranted. The applicant ECIL, therefore, has no merit. It is dismissed. --- *** --- .