PROJECT REPORT ON

“NEW HORIZONS LTD. AND ANOTHER V. UNION OF INDIA”

IN PARTIAL FULFILLMENT FOR THE REQUIREMENTS OF THE COURSE BA.
LLB (HONS.) IN THE SUBJECT OF

COMPANY LAW

Submitted to - Submitted by -
Prof. (Dr.) Rita Vikrant
University Institute of Legal Studies Roll no: 147/20 (Sem.-7)

Panjab University, Chandigarh B.A LLB (Sec-C)

UILS, PU, Chandigarh
 ACKNOWLEDGEMENT

The success and final outcome of this project required a lot of guidance and assistance from
many people and I am extremely fortunate to have got this all along the completion of my
project report. Whatever I have done is only due to such guidance and I would never forget
to thank them.

I take this opportunity to record deep sense of gratitude to my teacher ,Prof. Rita, University
Institute of Legal studies, Panjab University, Chandigarh for her incontestably perfect
unmatched guidance, encouragement, valuable suggestions and efforts made during the
preparation of this project and during her lectures which enabled me to complete this project
successfully on the topic,

“NEW HORIZONS LTD. AND ANOTHER V. UNION OF INDIA”

I owe my regards to the entire faculty of the University Institute of Legal Studies,
Chandigarh from where I have learnt the basics of Company Law and whose informal
discussions, intellectual support helped me in the entire duration of this work.
 INTRODUCTION
In the subject of the statute and lawful hypothesis, the law perceives two sorts of people that are
normal individuals and legitimate individuals (counterfeit formation of law). A Corporation is a
fake individual appreciating in law jobs to have commitments and holding property. The people
shaping the corpus of the organization are called its individuals. The juristic character of
organizations pre-assumes the presence of the following conditions:

 There should be a gathering or assemblage of individuals related for a specific reason.

 There should be organs through which the company capacities,
 The organizations are ascribed will (enmity) by lawful fiction.
The privileges of organizations are unimaginable, similar to the right of holding property or
arranging it off, right of sue, right of going into contracts and so on. They are likewise responsible
for their demonstrations and demonstrations of specialists acted in their name. In the milestone
instance of The Citizen’s Life Assurance Company v. Brown1 the Privy Council has decided that
corporations may likewise be expected to take responsibility for their demonstrations suggesting
malignant aim. Along these lines, it is expressed that ‘artificial’, ‘conventional’ or ‘ juristic’ people,
are such masses of property or gatherings of individuals that according to the law are fit for rights
and liabilities, that is, to which the law gives recognition.

The word “Company‟ has no technical or legal meaning. Section 2 (20) of the 2013 Act defines
the term “company” to mean “a company incorporated under the Companies Act 2013 or any
previous company law. In the common law a company is a “Legal Person‟ or “Legal Entity‟
which is separate from and capable of surviving beyond the lives of members. Just like a juristic
person a company is an entity different from its members, having its rights and duties and
having a perpetual succession. So, Corporate Personality is one of the characteristic of the
company under which company is said to be a legal or artificial person. The concept of
corporate personality further says that a company is having a separate legal entity which is
different from its members. The concept of Corporate Personality was ruled out in the famous
case of Solomon v. Solomon2 whereby it was enunciated that a company is having a separate
legal entity as distinct from its members.

KINDS OF CORPORATE PERSONALITY

Comprehensively Corporate Personality is of two sorts –

 Corporation Aggregate
 Corporation Sole

Corporation Aggregate:
Is an association of human beings united for the purpose of forwarding their certain interest. A
limited Company is one of the best example. Such a company is formed by a number of persons

1
(1904 )AC 426
2
1895 – 99] All ER Rep 33
who as shareholders of the company contribute or promise to contribute to the capital of the
company for the furtherance of a common object. Their liability is limited to the extent of their
share-holding in the company. A limited liability company is thus formed by the personification
of the shareholders. The property is not that of the shareholders but its own property and its
assets and liabilities are different from that of its members. The shareholders have a right to
receive dividends from the profits of the company but not the property of the company3. The
principle of corporate personality of a company was recognized in the case of Saloman v.
Saloman & Co.

Corporation Sole:
Is an incorporated series of successive persons. It consists of a single person who is personified
and regarded by law as a legal person. In other words, a single person, who is in exercise of
some office or function, deals in legal capacity and has legal rights and duties. A corporation
sole is perpetual. Post – Master- General, Public Trustee, Comptroller and auditor general of
India, the Crown in England etc are some examples of a corporation sole. Generally,
corporation sole are the holders of a public office which are recognized by law as a corporation..
The chief characteristic of a corporation sole is its “continuous entity endowed with a capacity
for endless duration”. A corporation sole is an illustration of double capacity. The object of a
corporation sole is similar to that of a corporation aggregate. In it a single person holding a
public office holds the office in a series of succession, meaning thereby that with his death , his
property , right and liabilities etc., do not extinguish but they are vested in the person who
succeeds him. Thus on the death of a corporation sole, his natural personality is destroyed, but
legal personality continues to be represented by the successive person. In consequence , the
death of a corporation sole does not adversely affect the interests of the public in general.

POSITION IN INDIA
Article 12 of the Constitution of India provides that the State includes the Government and
parliament of India and the legislature of each state. What is the position of Indian State? It is
a juristic person. In Shiv Prashad V Punjab State4, the Punjab High Court observed-
The natural and obvious meaning of the expression is that person is a living human. being, a
man, woman or child, an individual of the human race. In law the word. includes natural person
and artificial persons like corporation and joint stock companies, but it does not include a State
or Government", for although a state is a moral person, having an understanding and a will,
capable of possessing and acquiring rights and of directing and fulfilling obligations, the state
in its political organization is entirely different and distinct from the inhabitants who may
happen to reside there.
Again in the State of Punjab V The Okara grain Buyers Syndicate Ltd.5, the court observed that
a state is not a juristic entity for the reason that it does not partaken the characteristic of or
satisfy in whole the definition of a corporation. The state is an organized political institution
which has several of the attributes of a corporation, e.g. under article 300 of the constitution

3
Colonial Bank v. Whilley, (1885) 30 Ch. D. 261
4
AIR 1957 P&H 150
5
1964 AIR 669
the Government of the Union and the Government of a State are able to sue and be sued in the
name of Union of India and of the Government of the State as the case may be.
As regards Ministers of Indian Government, they are appointed by the President or the
Governors and are officers within the meaning of articles 53 and 154 of the constitution. They
are in law, subordinate to the executive head and so are not personally liable for their acts of
commission and omission. They are not directly. liable in a court of law for their official acts.
They have no legal or constitutional entity. Any person aggrieved by them can bring a suit
against the Union of India or the State as the case may be. Consequently they are not
corporation sole. Like any other servant of the Government the Ministers are not liable
personally. In either case it is the state whether at the centre or in the federated units which is
liable in torts and contracts.
To conclude, it can be said that when there is an aggregate of persons forming a body corporate
we call it a corporation aggregate. But when there is not a body of persons, but a fund or an
estate or an officer-bearer by himself, we call it or him a corporation sole. In a corporation
aggregate there are two or more members at one time but in corporation sole there is only one
member at a time. Corporation aggregate is endowed with separate legal personality whereas
a corporation sole is not endowed with a separate legal personality.

Advantages of Incorporation

1) Independent Corporate Existence: A corporate person shall have an independent

corporate existence. It is in law a person. It is s distinct legal persona existing independent of
its members. In case of a company, by incorporation it gains a corporate personality which is
separate or distinct from the members who compose it. The property of the company belongs
to it and not its members ; it may sue or be sued in its own name ; it may enter into contracts
with third parties independently and even the members themselves can enter into contract with
the company According to Section 34(2) of the Companies Act , upon issue of the certificate
of incorporation , the subscribers to the memorandum and other persons , who may from time
, be the members of the company, shall be a body corporate, which is capable of exercising all
the functions of an incorporated company and having perpetual succession and a common seal.
Thus the company becomes a body corporate which is capable immediately of functioning as
an incorporated individual. With the incorporation, the entity of the company becomes
institutionalized. This principle of the independent corporate existence and the principle of
corporate personality of a company was recognized in the case of Saloman v. Saloman & Co.
In this case Salomon was a boot and shoe manufacturer. He incorporated a company named
Salomon & Co Ltd, for the purpose of taking over and carrying on his business. The seven
subscribers to the memorandum were Salomon, his wife, his daughter and four sons and they
remained the only members of the company. The company went into liquidation within a year.
The unsecured creditors contended that though incorporated under the Act, the company never
had an independent existence, it was in fact Salomon under another name; he was the managing
director, the other directors being his sons and under his control. It was held that Salomon &
Co Ltd was a real company fulfilling all the legal requirements. It must be treated as a company,
as an entity consisting of certain corporators, but a distinct and independent corporation. Thus
it was decided in this case that a corporate body has its own existence or personality separate
and distinct from its members and therefore, a shareholder cannot be held liable for the acts of
the company even though he holds virtually the entire share capital. The case has also
recognized the principle of limited liability of a company.
2) Limited Liability: One of the principal advantages of an incorporated company is the
privilege of limited liability. It is the main feature of registered companies which provides a
special attraction to investors. The principle of limited liability implies that the liability of a
member in the event of the company's winding up, in respect of the shares held by him is
limited to the extent of the unpaid value on such shares. Thus the liability does not fluctuate
but remains limited to the amount which, for the time being remains unpaid, whether from the
original shareholder or the transferee of such shares as the case may be. limited liability of
members extends only for company's debt in the event of its winding up. The company itself,
being a legal persona, is always fully liable and therefore its liability is unlimited. In other
words, it is liable to pay the debts so long as assets are available. The order of priority for
payment of debt shall, however, depend on the class of creditors as laid down in the Companies
Act. No member is bound to contribute anything more than the nominal value of the shares
held by them6. Section 34(2) of the Companies Act, 1956 provides that in the event of the
company being wound up, the members shall have liability to contribute to the assets of the
company in accordance with the Act, In the case of limited companies, no member is bound to
contribute anything more than the nominal value of shares held by him. The privilege of
limiting the liability is one of the main advantages of carrying on business under a corporate
organization.

3) Perpetual Succession: An incorporated company has perpetual succession, that is

notwithstanding any change in its members, the company shall retain as the same entity with
the same privileges and immunities, estate and possessions. the death or insolvency of
individual member does not in any way, affect its corporate existence and the company shall
continue its existence as usual until it is wound up in accordance with the provisions of the
Companies Act, The perpetual existence of an incorporated company is well illustrated by
proverbial saying, "members may come and members may go, but the company can go on for
ever."
In Gopalpur Tea Co. Ltd. v. Penhok Tea Co, Ltd7., the court while applying the doctrine of
company's perpetual succession observed that though the whole undertaking of a company was
taken over under an Act which purported to extinguish all rights of action against the company,
neither the company was thereby extinguished nor any body's claim against it.

4)Transferability of shares : Section 82 of the Companies Act, 1956, specifically provides

that the shares or other interest of any member in a company shall be movable property,
transferable in the manner provided by the articles of association of the company. Thus the
member of an incorporated company can dispose of his share by selling them in the open
market and get back the amount so invested. The transferability of shares has two main
advantages, namely it provides liquidity to investors and at the same time ensures stability of
the company.

6 .H. Rayner Ltd v. Deptt of Trade and Industry , (1989) 3 WLR 969 HL

7 (1982) 52 Comp. Out. 238

5) Separate Property: Incorporation helps the property of the company to be clearly
distinguished from that of its members. The property is vested in the company as a body
corporate , and no changes of individual membership affect the title. In case of a company, it
being a legal person is capable of owning , enjoying and disposing of property in its own name.
The company becomes the owner of its capital and assets. The shareholders are not the several
or joint owners of company’s property. In Bacha F Guzdar v. CIT Bombay 8 it was held that
the company is a real person in which all its property is vested , and by which it is controlled ,
managed and disposed of”. In Macaura v. Northern Assurance Co Ltd 9it was held that “ the
property of a company is not the property of the shareholders ; it is the property of the
company”.

Disadvantages of Incorporation

1) Lifting or Piercing the Corporate Veil : A corporation is cloth with a distinct personality
by fiction of law, yet in reality it is an association of persons who are in fact , in a way , the
beneficial owners of the property of the body corporate. A company being an artificial person,
cannot act on its own, it can act only through natural persons. The whole theory of incorporation
is based on the theory of corporate entity but the separate personality of the company and its
statutory privileges should be used for legitimate purposes only. Where the legal entity of the
company is being used for fraudulent and dishonest purpose, the individuals concerned will
not be allowed to take the shelter behind the corporate personality. The court in such cases shall
break through the corporate shell and apply the principle of what is known as “lifting or
piercing the corporate veil”. The corporate veil of a company may be lifted to ascertain the true
character and economic realities behind the legal personality of the company. Undoubtedly, the
theory of corporate entity of a company is still the basic principle on which the whole law of
corporations is based. But the separate personality of the company, being a statutory privilege,
it must always be used for legitimate business purposes only. Where the legal entity of a
corporate body is misused for fraudulent and . dishonest purposes, the individuals concerned
will not be allowed to take shelter behind the corporate personality. In such cases, the court
will break through the corporate shell and apply the principle of what is known as "lifting or
piercing the corporate veil". That is, the court will look behind the corporate entity.

2) Expenses and formalism: Incorporation of a company is an expensive affair. Besides, it

involves completion of a number of formalities. Moreover, the administration of a company
has to be carried on strictly in accordance with the provisions of the company law and activities
are limited by its memorandum which at times creates problems in its progress.

4) Company is not a citizen: Though a company is a legal person, it is not a citizen under the
constitutional law of India or the Citizenship Act, 1955. The reason as to why a company cannot
be treated as a citizen is that citizenship is available to individuals or natural persons only and
not to juristic persons. The question whether a corporation is a citizen was decided by the

8
(1955) 1 SCR 876
9
1925 AC 619 HL
Supreme Court in State Trading Corporation of India v. Commercial Tax Officer 10. Since a
company is not treated as a citizen, it cannot claim protection of such fundamental rights as are
expressly guaranteed to citizens, but it can certainly claim the protection of such fundamental
rights as are guaranteed to all persons whether citizens or not. In Tata Engineering Company v.
State of Bihar 11 it was held that since the legal personality of a company is altogether different
from that of its members and shareholders, it cannot claim protection of fundamental rights
although all its members are Indian citizens. Though a company is not a citizen, it does have a
nationality, domicile and residence. In case of residence of a company, it has been held that for
the purposes of income tax law, a company resides where its real business is carried on and the
real business of a company shall be deemed to be carried on where its Central management and
control is actually located. Statutory Corporations or Companies
Companies and undertakings concerned with public utility such as railways, roadways, docks,
electricity etc. are usually incorporated by special Acts of the Legislature. They are mostly
invested with extensive powers. The examples of statutory corporations are the Reserve Bank
of India established by the Reserve Bank of India Act, 1934, the Industrial Finance Corporation
of India established by the Industrial Finance Corporation Act, 1948, Air India incorporated
under the Air Corporation Act, 1953, the Life Insurance Corporation of India created by the
Life Insurance Corporation of India Act, 1956 and so on.
5) One Man Company: A one man company means a single person owns the whole or
practically the whole of share capital. There may or may not be other members. The other
members shall be acquaintances like friends, relatives or nominees. The central person shall
have the full control over the company. These types of company enjoy a corporate status and
has limited liability of the company. They also have a legal status. The concept of one man
company was accepted in Saloman’s case.

Case Law: New Horizon Ltd. vs Union of India

Date of Judgement: 9th November 1994

Equivalent Citation: 1995 SCC (1) 478
Court: Supreme Court of India
Bench: Justice S. C. Agrawal
Coram: Justice S. C. Agrawal
Justice M. K. Mukherjee
Petitioner: New Horizon Ltd
Respondent: Union of India, M&N Publications & Others

10
AIR 1963 SC 1811
11
AIR 1965 SC 40
Introduction and Background
Earlier during 19th century when telephones were major and elementary source of
communication telephone directories is used to be printed and supplied by government on its
own expenditure. But during 90's when globalisation and modernisation were flourishing, the
era of advertisement was also on its dawn. Hence later during 90's the telephone directories as
become the medium of revenue for the government. This has become possible by making it a
medium of advertisement by industrial and other commercial concerns. A separate section in
the directories were exclusively devoted to advertisements known as Yellow pages. The person
who undertakes the task of printing directories procures the advertisement for the private
parties and collect the amount for the same and supplies the prescribed number of directories
for free on behalf. He also presents certain amount of his income which is obtained from these
advertisements to the state in form of royalty. The contract and printing and publishing
telephone directories is awarded by inviting tenders. and selecting the suitable offer among
received tenders. In Sterling Computers Ltd. v. M & N Publications Ltd12. I this Court has dealt
with the award of such a contract for printing and publishing of the telephone directories for
Delhi and Bombay. This case relates to the telephone directory for Hyderabad.
Facts
An advertisement was published on 22.4.1993 in various newspaper by Telecommunication,
Telecom District, Hyderabad inviting the sealed tenders for printing, binding and supplying
specified number of telephone directories in English for three commencing annual issue i.e. for
1993, 1994 and 1995. The tender was also required to supply free of cost to the General
Manager, Hyderabad Telecommunications at the specific places. The tenderer was also
required to specify the amount of royalty provided by him for each issue with further
requirements to be fulfilled as stated in advertisement.
"The tenderer should have the experience in compiling, printing and supply of telephone
directories to the large telephones systems with the capacity of more than 50,000 lines. The
tenderer should substantiate this with documentary proof. He should also furnish credentials in
this field. The successful tenderer will also submit copies of telephone directories printed and
supplied by them to the telephone systems of capacity more than 50,000 lines as credentials of
his past experience...... The tenderer should intimate while submitting the tender the equipment
and the list of machines etc. along with the locations available with him which he would employ
for carrying out this work, if selected. The tenderer also should forward a memorandum.
furnishing details of out-turn that can be given daily and the actual time required for the
completion of the job after the input material is handed over to him." The tender had to be
submitted by 14.5.1993,

Five people submitted their tenders offering different royalty amount as mentioned below:

12
1993 SCR (1) 81
 No. Name of Tenderer Agreed amount offered as
Royalty (in Lakhs)
1993 1994 1995
issue issue issue
1. SESA Seat Information System Ltd., Pune. 41 121 151
2. M&N Publications Ltd., Banglore 20 30 45
3. New Horizon Ltd., New Delhi 39 129.30 291.60
4. Hyder Media Information Services Pvt. Ltd 6 45 72
5. Kaljothi Process Pvt. Ltd., Hyderabad 102 138 160

The offers were considered by the Tender Evaluation Committee and the offer of M&N
Publications Ltd, was accepted.
The Assistant General Manager, Telecommunication Department, Hyderabad in his letter dated
3.08.1993 informed New Horizon Ltd. that its offer could not be considered. The said letter did
not indicate the reason for non-consideration of the offer.
As a result, the appellant i.e. New Horizon Ltd. filed a writ petition in Delhi High Court under
Articles 226 & 227 of the constitution of India seeking a writ.
Arguments
In High Court of Delhi, the major question while giving judgement was whether the appellant
fulfils requirements in tender notice to be a successful tenderer.
In high court it was urged on behalf of appellant that New Horizon ltd is completely eligible
and competent to compile, print and supply telephone directories and fulfil all other criteria as
per the invitation of tender. The appellant venture himself doesn't have any experience in
printing and supplying such directories but its parent companies have expertise management
and equipment for this purpose and its parent company IIPI. have lots of experience of printing
yellow pages telephone directories in Singapore. But this doesn't accept by the court.
The said contention is negative by the High Court in its judgement dated 15.10.1993 whereby
the writ petition filed by the appellant was dismissed. The High Court has proceeded on the
assumption that the shareholders of appellant joint venture have all the experience in compiling
and printing the telephone directories but has observed that that it is not at all job requirement.
According to the High Court it is one thing to say that shareholders of a company have vast
experience in the publication of telephone directories with yellow pages and it is entirely
another thing if the company itself has that experience. The approach of the High Court is that
a company is an independent person distinct from its members and that New Horizon Ltd. is
carrying on its business independently from that of the shareholders.
The High Court rejected the contention urged on behalf of the appellants regarding the absence
of reasons for rejecting the tender of appellant on the ground that the non- communication of
reasons is not fatal in all circumstances and that in the present case the reasons existed on the
record of the authorities that the tender submitted by appellant was not in conformity with the
condition of the tender and appellant was found ineligible for award of the tender and its offer
could not have been accepted.
Further, appellant appealed in Supreme Court of India against the Delhi High Court Judgement
to seek relief.

Appellant:
The major question in front of court while giving judgement of this case was regarding the
eligibility of New Horizon Ltd. in the argued tender. Regarding which Shri Soli Sorabjee, a
learned counsel appearing for appellant after the Delhi High Court's judgement against New
Horizon Ltd. saying that joint venture is not eligible for the discussed tender argued in supreme
court that High Court was in error in considering whether appellant fulfilled the condition
regarding experience contained in the tender notice and that authorities should have taken into
consideration the experience of the constituent appellant which is a joint venture company duly
approved by the Government of India. New Horizon Ltd is a joint venture company in which
40% equity shares is owned by Integrated Information Pvt. Ltd. (IIPL), Singapore and the
remaining 60% equity share is held by Indian group of companies consisting Thomson Press
(India) Limited (TPI), Living Media (India) Limited (LMI), World Media Limited (WML) and
Mr Aroon Purie. Constituent of joint venture had expertise and experience in publishing yellow
page directories as well as telephone directories and had necessary resources for that purpose.
Learned counsel of appellant also submitted that it is fit case in which authorities should have
lifted the co-operate veil and if they had done so they would have seen the reality of the
situation. He also emphasis that there is difference of more than three and half crore rupees to
whom the contract is awarded.
The appellant further argued that the new company, though having persons with experience in
the field, has no experience in its name while the original company having experience in its
name lacks persons with experience. The requirement regarding experience does not mean that
the offer of the original company must be considered because it has experience in its name
though it does not have experienced persons with it and ignore the offer of the new company
because it does not have experience in its name though it has persons having experience in the
field. If the Tender Evaluation Committee had adopted this approach and had examined the
tender of NHL in this perspective it would have found that NHL, being a joint venture, has
access to the benefit of the resources and strength of its parent/owning companies as well as to
the experience in database management, sales and publishing of its parent group companies.
because after reorganisation of the Company in 1992 60% of the share capital of NHL is owned
by Indian group of companies namely, TPI, LMI, WMI., etc. and Mr Aroon Purie and 40% of
the share capital is owned by IIPL a wholly-owned subsidiary of Singapore Telecom which
was established in 1967 and is having long experience in publishing the Singapore telephone
directory with yellow pages and other directories. Moreover, in the tender it was specifically
stated that IIPL will be providing its unique integrated directory management system along
with the expertise of its managers and that the managers will be actively involved in the project
both out of Singapore and resident in India.
New Horizon Ltd. is a joint venture, as claimed by it in the tender, the experience of its various
constituents namely, TPI, LMI and WML as well as IIPL had to be taken into consideration if
the Tender Evaluation Committee had adopted the approach of a prudent businessman.
Respondent:
Shri K. K. Venugopal a learned counsel appearing for respondent i.e. M&N Publications Ltd.
supported the judgement passed by high court. He argued that authorities were justified in not
considering the tender submitted by appellant on basis that it didn't fulfil the condition
regarding experience as per asked in an invitation of tender. He also submitted that there is
nothing to show that the constituent of appellant had any kind of experience of supplying
telephone directories to large telephone systems with capacity of the more than 50,000 lines as
per given in tender notice and have no document to prove that appellant had necessary
experience was submitted by appellant along with its tender.
Many things are argued in the court while giving the judgement of this case including the
eligibility of the New Horizon Lid as per invitation of Tender, Power and impact of parent
company in joint venture and breach by Tender Evaluation committee. While discussing these
questions court also justify the term Joint Venture and the terms in advertisement published on
22.04.1993 inviting the tenders. While discussing the issues the court refer various precedents
for the same
The process of evaluation of tender was discussed as terms of the invitation to tender cannot
be open to judicial scrutiny because the invitation to tender is in the realm of contract, he
decision to accept the tender or award the contract is reached by process of negotiations through
several tiers. More often than not, such decisions are made qualitatively by experts.

The decision of the Tender Evaluation Committee to exclude the tender of New Horizon Ltd.
on grounds of lack of experience from consideration was, therefore, not warranted by the terms
and conditions for submission of tender as contained in the notice for inviting scaled tenders.
dated 26-4-1993.
Further replying the questions of appellant respondent said that the conclusion would not be
different even if the matter is approached purely from the legal standpoint. It cannot be disputed
that, in law, a company is a legal entity distinct from its members.
It was so laid down by the House of Lords in 1897 in the leading case of Salomon v. Salomon
& Co. Ever since this decision has been followed by the courts in England as well as in this
country, But there have been inroads in the doctrine of corporate personality propounded in the
said decision by statutory provisions as well as hy judicial pronouncements. By the process,
commonly described as "lifting the veil", the law either goes behind the corporate personality
to the individual members or ignores the separate personality of each company in favour of the
economic entity constituted by a group of associated companies. This course is adopted when
it is found that the principle of corporate personality is too flagrantly opposed to justice,
convenience or the interest of the Revenue.
Judgement
Court has been informed that while the matter was pending in the High Court and in this Court
the telephone directory for the year 1993 has been printed and supplied to the Department by
M&N Publications Ltd. as per terms of the contract. Insofar as the directory for the year 1994
is concerned Court find that, as per the terms of the contract, the process for preparation of the
telephone directory has already commenced. Which cannot lose sight of the fact that as a result
of quashing of the contract in respect of the directory for 1994 fresh steps will have to be taken
to award a fresh contract and the said process would take some time and thereafter the
contractor will require time to print and publish the telephone directory. It would, therefore,
not be feasible to bring out the directory for 1994 before the close of the year. As a result, the
Department would suffer loss of revenue which it would otherwise earn by way of royalty from
M&N Publications Ltd. for the directory for the year 1994, Insofar as the contract in respect of
the year 1995 is concerned there is sufficient time for the Department to award a fresh contract
if the contract awarded to respondent is cancelled and the new contractor will have sufficient
time at his disposal to print and deliver the directory as per the time schedule.
The appeal against the judgment and order of the Delhi High Court dated 15-10-1993 in CWP
No. 3837 of 1993 is allowed, the said judgment is set aside and the Writ Petition No. 3837 of
1993 filed by the appellant is disposed of with the direction that the award of the contract for
printing and publishing the telephone directories for Hyderabad for the years 1993, 1994 and
1995 is set aside to the extent it relates to the directory for the year 1995.

Relevance & Conclusion

New Horizon Ltd herein appellant after getting letter from Assistant General Manager of
Department of Telecommunication, Hyderabad of non-consideration of their tender with no
specified reason of the same. New Horizon Ltd filed a writ petition under Article 226 and
Article 227 in Delhi High Court seeking the writ.
Writ of certiorari can be issued under both the articles and therefore, the question of
differentiation is important. On technical aspects, the difference is that while the proceedings
under Article 226 are of original nature the proceedings under Article 227 are of revisional
nature i.e., not original.
Further the High Court dismissed the petition on grounds of non-experience of New Horizon
Ltd. and hence saying that Appellant venture is not eligible as per the conditions of Invitation
of tender published on 22.04.1993.
Later Appellant again filed a writ petition in Supreme Court of India against the decision of the
Delhi High Court and seek writ under Article 14 which talks about the Equality before Law
saying that "The state shall not deny to any person equality before the law or the equal
protection of the laws within the territory of India.
The supreme court find that the approach from the legal standpoint also leads to the conclusion
that for the purpose of considering whether Appellant venture has the experience as
contemplated by the advertisement for inviting tenders dated 22-4-1993, the experience of the
constituents of NHL. i.e., the Indian group of companies (TPI, LMI and WML) and the
Singapore- based company, (IIPL) has to be taken into consideration. As per the tender of
appellant, one of its Indian constituents (LMI) had printed and bound the telephone directories
of Delhi and Bombay for the years 1992 and its Singapore-based constituent (IIPL) has 25
years' experience in printing the telephone directories with "yellow pages" in Singapore.
The said experience has been ignored by the Tender Evaluation Committee on an erroneous
view that the said experience was not in the name of New Horizon Ltd and that this joint venture
did not fulfil the conditions about eligibility for the award of the contract. In proceeding on that
basis, the Tender Evaluation Committee has misguided itself about the true legal position as
well as the terms and conditions prescribed for submission of tenders contained in the notice
for inviting tenders dated 26-4-1993. The non-consideration of the tender submitted by NHL
has resulted in acceptance of the tender of M&N Publications Itd.
And hence it concluded that the expertise and technic matter more than an experience and the
experience of parent companies was also matter in their joint venture.
The Judgement passed by Supreme Court was unquestionable and relevant in telling the legal
position and standpoint of joint venture companies. As there was no one responsible for the
breach of Tender Evaluation Committee as it was misguided the court order to reissue of tender
again with no such misconceptions. The court beautifully explain the legal standpoint of
companies and provide a chance of equal opportunity once again to tenderers by reissuing
tenders for the year 1995.

BIBLIOGRAPHY
 Companies Act, 2013.
 Avtar Singh, Company Law 8(Eastern Book Company, Lucknow,16th edn.,2015)
 Dr N.V. Paranjape, The New Company Law 48 (Central Law Agency, Allahabad,6th
edn.,2014)
 Dr Monomita Kundu Das, An Introduction to Jurisprudence: Legal Theory 96 (Central
Law Publications, 1stedn., 2012)
 N.K. Jayakumar, Lectures in Jurisprudence 250 (LexisNexis, 2ndedn., 2014)

WEBLIOGRAPHY
 https://blog.finology.in/Legal-news/What-is-a-Concept-of-Corporate-Personality
 https://blog.ipleaders.in/all-you-need-to-know-about-corporate-personality-and-
theories-of-corporate-personality/
 https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID3921301_code4177987.pdf?abstr
actid=3921301&mirid=1
 https://www.lawteacher.net/free-law-essays/company-law/principles-of-corporate-
personality-company-law-essay.php
 https://indiankanoon.org/doc/1736797/