2048R

IN THE

SUPREME COURT OF EREWHON

AT THE REPUBLIC OF EREWHON

________________________________________________

IN THE MATTERS OF

[C.A. 23415/2023]

STARK INFRASTRUCTURE ENTERPRISE LTD, BARATHEON DEVELOPERS

LTD & CIVIL AVIATION BOARD OF EREWHON………………………………………….
…………………………APPEALANTS

v.

CIVIL AVIATION BOARD OF EREWHON, MR. TYWIN LANNISTER & Mr. THEON
GREOJOY …………………………RESPONDENT

[Under Article 133 of the Constitution of Erewhon, 1949 read with Rule 1 of Order XIX of
Supreme Court Rules, 2013]

MEMORIAL ON BEHALF OF THE RESPONDENT

 TABLE OF CONTENT

INDEX OF AUTHORITIES 3

STATEMENT OF FACTS 4

STATEMENT OF JURISDICTION 7

ISSUES FOR CONSIDERATION 8

ARGUMENTS ADVANCED 9

PRAYER FOR RELIEF 22

 INDEX OF AUTHORITIES

Statutory Provisions:

 Article 21, Constitution of India

 Section 27, Companies Act, 2013
 Section 135, Companies Act, 2013
 Section 166, Companies Act, 2013
 Section 241, Companies Act, 2013
 Section 244, Companies Act, 2013
 Rule 144, General Financial Rules, 2017.

Case Laws

 Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta & Ors
 Piramal Enterprises Limited/ Shriram Transport Finance Company/Shriram Capital
Limited/ Shriram City Union Finance Limited
 Century Tokyo Leasing Corporation/Tata Capital Financial Services Limited
 Ultratech JAL
 Rhodia SA v. SEBI, 2001
 Union of India v. International Trading Co. 
 Reliance Energy Ltd. And Another v. Maharashtra State Road Development Corpn. Ltd.
And Others
 Ramana Dayaram Shetty vs. The International Airport Authority of India & Ors.
 Punnan Thomas v. State of Kerala
 Subhash Kumar vs. State. of Bihar
 M. C. Mehta vs. Union of India 

Journal Article:

 Evolution of the Definition of ‘Control’ under Indian Law and Regulations, Zia Modi &
Varoon Chandra
 STATEMENT OF FACTS

1. Erewhon is experiencing rapid growth in its civil aviation market, poised to become the
third-largest globally by 2026, necessitating rapid airport infrastructure development,
especially in medium-sized cities. To address this, the Braavos airport expansion project
(Braavos Project) was initiated by the Civil Aviation Board of Erewhon (CAB),
following a tendering process.CAB invited expressions of interest, requiring potential
developers to have specific experience criteria, including international and domestic
airport projects.

2. Baratheon Developers Limited (Baratheon), with extensive airport development

experience, was selected as the preferred bidder by the High-Powered Committee (HPC)
established by CAB.

3. Baratheon initiates efforts to secure additional financing for the Braavos Project and
potential future projects, leading to negotiations with potential investors. Stark
Infrastructure Enterprises Ltd. (Stark), a seasoned player in airport development within
and outside Pentos, is chosen for a substantial investment of US$ 500 million, acquiring a
24% equity stake in Baratheon.

4. Negotiations culminate in the signing of a Shareholders' Agreement on December 31,

2021, outlining significant rights granted to Stark, including:

- The authority to appoint two Directors to Baratheon's board.

- An affirmative veto power over specific matters that impact Stark's interests.
- Provisions designed to be incorporated into Baratheon's articles of association.
5. On January 15, 2022, the concerned parties formally notify the Commission for Unfair
Trade and Competition (CUTE) about the transaction involving Stark's investment in
Baratheon.

6. Subsequently, the Shareholders' Agreement is submitted to CUTE, which issues an order

(COMP No. 34/2021) on February 14, 2022, with the following key determinations:
- CUTE asserts that Stark exercises control over Baratheon in line with the
Competition Act.
- CUTE recommends certain mandatory structural adjustments but provisionally
approves the acquisition due to the absence of significant adverse effects on
competition.
- CUTE stipulates the removal of clauses granting control to Stark before the
agreement's enforcement.
7. Stark expresses dissatisfaction with CUTE's ruling, with Mr. Ned Stark, the CEO and
MD of Stark, asserting that the rights specified in the Shareholders' Agreement are
essentially protective measures and do not imply actual control over Baratheon.

8. In response to CUTE's order, Stark and Baratheon jointly appeal to the National
Commercial Appellate Tribunal (NCAT) under CA No. 311/2022. The NCAT's
deliberation results in the dismissal of the appeal, upholding CUTE's decision in an order
issued on April 23, 2023. In reaction to the NCAT's ruling, both Stark and Baratheon
choose to further appeal the case, elevating it to the Supreme Court through Civil Appeal
No. 23415/2023.

9. On a parallel note, in March 2022, Mr. Tywin Lannister, a prominent figure in the
Lannisport Crusaders’ Party (LSP), filed a writ petition (Civil W.P. 12362/2022) in the
Madras High Court, challenging Baratheon's award of the Braavos Project. Mr. Tywin's
petition alleged impropriety and illegality in the contract award process. Allegedly, a
circulated video clip showed Mr. Joffrey Baratheon, a Baratheon public-relations officer,
boasting about arranging a lavish trip for certain CAB officials. The video clip was
posted online by Mr. Joffrey's wife following a domestic argument.

10. The LSP, grounded in anti-corruption principles, pursued the issue to uncover the truth.
Baratheon's board and promoters denied any knowledge of Mr. Joffrey's actions.
Committed to ethical governance, Baratheon's board sent the video's DVD to the Central
Forensic Sciences Laboratory (CFSL) in King’s Landing for authentication. Following a
rigorous forensic investigation, the CFSL couldn't confirm or deny the video's
authenticity.

11. The Government and the Central Bureau of Investigation (CBI) found insufficient
evidence to warrant further investigation. Mr. Tywin's writ petition contended that
alleged Baratheon misconduct and their perceived cooperation with CAB tainted the
tendering process. Concerns were raised about the broad discretion given to the High-
Powered Committee (HPC) in the Braavos Project's tendering process.

12. The Madras High Court found merit in Mr. Tywin's arguments, admitted the petition, and
subsequently annulled the concession agreement dated July 16, 2021, in May 2022.
Exhausting options in the Madras High Court, an appeal was lodged with the Supreme
Court, subsequently admitted.

13. The Lannisport Crusaders’ Party (LSP) championed the residents' cause and devised an
alternative approach to impede Baratheon's actions. Opting for a private remedy over
invoking the High Court's writ jurisdiction, LSP formulated what Baratheon later termed
a "sinister plot." On June 5, 2022, Mr. Tywin purchased 500 Baratheon shares (0.05%
 total shareholding), and simultaneously, Mr. Theon Greyjoy, a local politician, acquired
another 500 shares (0.05% total shareholding). A King’s Landing broker executed
parallel orders for both individuals, and funding for the acquisitions allegedly originated
from finance companies owned by the broker, operating from the same address.

14. Subsequently, Mr. Tywin and Mr. Greyjoy filed a joint application (Company
Application No. 563/2022) under Section 241 of the Corporations Act, 2013, with the
National Commercial Law Tribunal (NCLT), Braavos Bench. The application contended
that Baratheon and its directors breached their legal obligations toward corporate social
responsibility (CSR), neglecting environmental and community concerns related to the
Braavos Project.
15. Alleging that the directors' endorsement of the concession agreement with CAB and
pursuit of the Braavos Project violated their duties, the application sought to restrain the
directors from advancing the airport expansion. Additionally, the application requested a
declaration from the Tribunal, obliging Baratheon's board to allocate necessary funds for
fulfilling CSR obligations under prevailing laws.

16. Following a merits assessment, the Tribunal issued an ad-interim injunction, prohibiting
the directors from proceeding with Braavos Project-related matters. However, the court
declined to intervene in the CSR declaration, citing prematurity given uncertainty about
the project's future.

17. Faced with these developments, Baratheon's directors had no recourse but to appeal.
Their appeal before the Appellate Tribunal (CA No. 543/2022) met dismissal on May 28,
2023. Consequently, the directors opted to escalate the matter to the Supreme Court
(Civil Appeal No. 24969/2023).

Hence the present case.

 STATEMENT OF JURISDICTION

The respondents most humbly submit that the Hon’ble Supreme Court of Erewhon has the
requisite jurisdiction to hear this matter. The Civil Appeals No. 23415/2023 and 249659/2022
have been clubbed together. The appeal is filed under Article 133 of the Constitution of Erewhon
read with Rule 1, Order XIX of the Supreme Court Rules, 2013.

All of which is urged in detail in the written submission and submitted most respectfully.
 ISSUES FOR CONSIDERATION

I. Whether the control conferred to Stark Infrastructure Enterprises Ltd. over Baratheon
through the Shareholders' Agreement is valid, and did the National Commercial Appellate
Tribunal (NCAT) err in upholding the Commission for Unfair Trade and Competition's
(CUTE) ruling on control and related clauses?

II. Whether the contract awarding process is inappropriate, illegal and liable to be
annulled?

III. Whether the Braavos Project is against public interest with respect to the surrounding
residents as well as the shareholders?
 ARGUMENTS ADVANCED

I. Whether the control conferred to Stark Infrastructure Enterprises Ltd. over Baratheon
through the Shareholders' Agreement is valid, and did the National Commercial Appellate
Tribunal (NCAT) err in upholding the Commission for Unfair Trade and Competition's
(CUTE) ruling on control and related clauses?

As per the factual matrix of the present dispute, negotiations between Stark and Baratheon
culminated in the signing of a Shareholders' Agreement on December 31, 2021, outlining
significant rights granted to Stark, including:

 The authority to appoint two Directors to Baratheon's board.

 An affirmative veto power over specific matters that impact Stark's interests including
amendments to the articles of association of Baratheon, commencement of a new
business by Baratheon, merger demerger or corporate restructuring of Baratheon,
issuance of shares by way of a preferential allotments, the appointment of the CEO of
Baratheon, and winding up of Baratheon.

Legally, this seems a valid shareholding agreement granting rights to Stark. However, in purely
commercial sense, it is essential to determine whether this would amount to control of
Baratheon. This can be seen in the context of company law as well as competitive law. Various
questions of fact and law including whether the control is participative or rather a mere
protective measure, whether the control is effective and whether Stark is required to make an
open offer to the shareholder of Baratheon, including others.

A. Stark exercises control over Baratheon in lieu of the Shareholder’s Agreement.

Section 2(27) of Companies Act1 defines control as;

“control” shall include the right to appoint majority of the directors or to control the
management or policy decisions exercisable by a person or persons acting individually or in
concert, directly or indirectly, including by virtue of their shareholding or management rights or
shareholders agreements or voting agreements or in any other manner.

From the aforesaid definition of “control”, one understands that an acquirer, or person acting in
concert with such acquirer or person, can acquire control of the target company by virtue of;

i. Quantitative Control

Where a threshold is determined, and any acquisition above such threshold would amount to
acquisition of control

1
Companies act, 18 C.A. § 2(27) (2013).
ii. Qualitative Control

This might include management rights through shareholders agreements, voting agreements, or
in any other manner, wherein such person is entitled to either appoint majority of the directors of
the target company; or control the management or policy decisions of the target company.

This distinction was further amplified in the case of Arcelor Mittal India Pvt. Ltd. v. Satish
Kumar Gupta & Ors.2, wherein the court opined that,

“The expression ‘control’ is defined into two parts. The first part refers to de jure control, which
includes the right to appoint a majority of directors of a company. The second part refers to de
facto control. So long as a person or persons acting in concert, directly or indirectly, can
positively influence, in any manner, management or policy decisions, they could be said to be in
‘control’. A management decision is a decision to be taken as to how the corporate body is to be
run in its day to day affairs. A policy decision would be a decision that would be beyond the
running day to day affairs, i.e. long term decisions. So long as management or policy decisions
can be, or are in fact, taken by virtue of shareholding, management rights, shareholders
agreements, voting agreements or otherwise, control can be said to exist”

In Piramal Enterprises Limited/ Shriram Transport Finance Company/Shriram Capital Limited/

Shriram City Union Finance Limited3 case, it was held that,

“To ascertain control, an enterprise must show that it has the ability to exercise ‘decisive
influence’ either by way of positive or negative control rights.”

Considering the present dispute, Stark has acquired 24% of shareholding in Baratheon. On a
standalone basis, this would not amount to control, but on taking into account the rights granted
to Stark Ltd. by way of the shareholding agreement it would amount to control. The most
significant of them is – the right to affirmative vote. The affirmative veto granted to Stark over
significant matters suggests a level of control, as it allows Stark to block certain decisions that
may affect its interests. It is a qualitative power to regulate decisions in the ordinary course of
business. If any managerial or policy decision of Baratheon has to be taken, it would mandatorily
require the consent of Stark with regards to the shareholding agreement, it is in relation to some
specific set of rights. These rights could influence decision making directly as well as indirectly.

2
Arcelor Mittal India Pvt. Ltd. v. Satish Kumar Gupta & Ors. 2018 SCC Online NCLT 14446 
3
Piramal Enterprises Limited/ Shriram Transport Finance Company/Shriram Capital Limited/ Shriram City Union
Finance Limited). 2015/02/249 
Amendments to the articles of association can affect the fundamental structure and governance
of Baratheon. Commencement of a new business can divert resources, alter Baratheon's focus,
and impact its financial performance. Merger, demerger, or corporate restructuring involve
significant changes to Baratheon's corporate structure, ownership, and business operations.
Issuance of shares via preferential allotments can dilute existing shareholders' ownership. The
CEO is a key decision-maker who can shape Baratheon's strategies and direction and the explicit
right to appoint a CEO signifies direct control in the affairs of the company.

In terms of appointment of the directors, although Stark does not have the right to appoint
majority of directors, it would still constitute control since there always exists a possibility of
that director having the power to look into an imperative policy decision or of playing a
significant role in running an important part of that business. In the Jet Etihad Case, it was held
that the right to recommend candidates for senior management constitutes as ability to participate
in the managerial affairs.

The ambit of control is far wider than the definition, encompassing inter-se shareholder rights
within it, including veto or affirmative vote rights.4 The Century Tokyo5 case, similarly, dealt
with a contract granting affirmative rights to Century Tokyo over the business decisions of the
Leasing Division of Tata Capital Financial Services Ltd. [“TCFSL”]. Century Tokyo had entered
into a Business Partnership Agreement with TCFSL, under which certain decisions relating to
the Leasing Division of TCFSL could not be taken without the approval of a Century Tokyo
member. These decisions included approval of business plans, approval of budget and annual
operating plans, commencing a new line of activity or discontinuing an existing line of business,
appointment of Key Managerial Personnel and determination of their compensation. The
Commission found that this control over strategic affairs would amount to joint control over the
assets and operations of the leasing business of TCFSL. Additionally, the CCI observed that the
effect of these agreements including the governance structure envisaged established the
acquirer’s joint control over the target company, more particularly over the assets and the
operations. Therefore, A bundle of affirmative rights including in relation to approval of business
plan, commencement of a new line of business, discontinuing any existing line of business,
approval of budget and any other strategic business decision will be viewed as amounting to
control.

In addition to this, it was upheld in the Ultratech JAL 6 case that, control includes ‘material
influence’ in addition to de facto and de jure control. The ability to manage the affairs of the
other enterprise may be inferred from special rights/ veto rights, status and expertise of an
enterprise or a person.

4
Evolution of the Definition of ‘Control’ under Indian Law and Regulations, Zia Modi & Varoon Chandra
5
Century Tokyo Leasing Corporation/Tata Capital Financial Services Limited  C-2012/09/78
6
Ultratech JAL C-2015/02/246 
All this directly indicates that Stark would be in a position to influence major policy decisions of
Baratheon by virtue of affirmative voting rights.

While on paper, the contractors tweaked the terms to avoid an open offer, factors such as– their
prior intentions, same nature of business, affirmative vote, appointment of the directors, etc.,
clearly shows that it was to have some control over the functioning that would definitely be
beyond the ambit of the original consent given by the minority shareholders. A similar
preposition was held by SAT in Rhodia SA v. SEBI 7, wherein the SAT concluded that while veto
rights on day-to-day management decisions may not tantamount to control; it would when it is
with respect to the structural and strategic decisions of the company. In conclusion, having
twenty-four percent ownership in Baratheon, and in light of the agreement to share other
services, Starks, would now have a considerable amount of say in the company’s functioning.

B. The nature of rights granted to Stark by way of the shareholder’s agreement is

participative, and not protective.

The rights granted to Stark Infrastructure Enterprises Ltd. through the Shareholders' Agreement
with Baratheon appear to be more than just protective rights and lean towards participative
rights. This can be inferred from several factors.

The right granted to Stark to appoint two directors on the board of Baratheon goes beyond a
protective measure. Protective rights typically involve safeguarding the investor's interest
without directly influencing the company's management. In this case, Stark's ability to appoint
directors suggests a level of participation and influence in the decision-making process.

The right of affirmative veto given to Stark covers a wide range of significant matters, such as
amendments to articles of association, new business commencement, mergers, issuance of
shares, appointment of the CEO, and winding-up. While protective rights usually pertain to
specific areas that directly impact the investor's interest, these affirmative veto rights grant Stark
a participative role in critical corporate decisions.

The fact that these rights were intended to be incorporated into Baratheon's articles of association
implies a more substantial influence on the company's operations. Protective rights are typically
contractual and do not involve altering the company's constitutional documents. Stark's
substantial investment of US$ 500 million in exchange for a 24% equity stake further indicates a
deeper level of involvement. Such a significant equity stake suggests a genuine interest in
actively participating in the company's strategic decisions beyond mere protection of its
investment.

7
Rhodia SA v. SEBI, 2001 SCC Online SAT 30 : (2001) 34 SCL 597.
Overall, the combination of appointing directors, affirmative veto rights over significant matters,
equity stake, incorporation into articles of association, and the parties' actions and reactions
suggests that the rights granted to Stark in the Shareholders' Agreement extend beyond protective
measures and confer a participative role in Baratheon's decision-making processes.

Therefore, the orders of National Commercial Appellate Tribunal and the Commission for Unfiar
Trade and Competition of Erewhon should be upheld and the present appeal should be liable to
be dismissed.

II. Whether the contract awarding process is inappropriate, illegal and is liable to be
annulled?

Initiating the search for potential developers of the airport, (CAB) announced that interested
parties were invited. The essential requirements were that any bidder or their backer should have
a minimum of twenty years' experience in infrastructure projects. Additionally, they should have
completed at least one international airport project and four domestic airport projects, either
within Erewhon or abroad, each serving at least ten million passengers annually. Following this,
once the list of potential candidates was narrowed down, a specific deadline would be
communicated to these candidates. They would then be asked to submit their bids.

The final decision on the successful bidder would rest with a High-Powered Committee (HPC).
The HPC would include key figures such as the Secretary of the Ministry of Civil Aviation, the
Chairperson of the CAB, and a senior representative from the Ministry of Law, all from the
Erewhon Government. Based on the outlined criteria, the HPC selected Baratheon Developers
Limited (referred to as 'Baratheon') as the preferred bidder among the shortlisted candidates.
Interestingly, Baratheon turned out to be the second-highest bidder in terms of finances. The
highest bidder, Targaryen Developers Limited, was disregarded by the HPC due to perceived
inadequate experience compared to Baratheon in handling such a substantial project.
Consequently, a concession agreement in the required format was formalized between CAB and
Baratheon. The key legal issue is whether the tendering process, as conducted, meets the
requirements of transparency, fairness, and accountability, or if there were instances of misuse of
discretion, conflicts of interest, and violations of relevant laws or principles.

A. Mr. Jeoffery’s actions were in the ordinary course of business and conducted in
connection with the Braavos Project.

Mr. Joffrey Baratheon, a public-relations officer of Baratheon Developers Limited, is

purportedly involved in arranging an all-expenses-paid trip for certain senior officials of the
CAB. It is strange that the said trip comes at a time, when Baratheon has been selected by the
HPC, even after failing to be the highest bidder. It raises questions on whether the contract
awarding process was illegal and inappropriate, failing basic principles of transparency and
fairness.

For, the concept of corporate veil to be applied, it needs to be proven that the acts of Joffery were
in the ordinary course of business, in furtherance of the collective will, for the benefit of the
company.

Mr. Joffrey Baratheon's role as a public-relations officer involves fostering positive relationships
with stakeholders, including government officials like those from the CAB. His job entails
activities aimed at enhancing the company's reputation, securing contracts, and gaining favorable
consideration.

The alleged trip to Bangkok and Pattaya, was aimed at providing Baratheon Developers Limited
with a competitive edge by fostering personal connections with key decision-makers, potentially
influencing the outcome in favor of Baratheon. The trip should be viewed as a calculated move
to gain insights, gather information, and establish rapport with CAB officials, all of which are in
line with a broader business development approach.

The alleged conversation where Mr. Joffrey Baratheon discusses arranging the trip for CAB
officials, who might be handling the Braavos Project file, establishes a direct connection between
his actions and the specific project. This link suggests that his efforts were geared towards
influencing the individuals directly involved in the tendering process. These arguments
collectively suggest that Mr. Joffrey Baratheon's alleged actions were not merely personal or
unrelated to his employment but were undertaken to advance Baratheon Developers Limited's
position in the tendering process. The objective was to secure an advantageous position by
establishing connections and rapport with key officials involved in the Braavos Project decision-
making.

Therefore, all of his action fall in favor of the company’s interest. He would not have gained any
personal benefit out of arranging the alleged trip. Even though, the acts were done in his personal
capacity, they were in furtherance of the collective will, and not his personal perspective. This
implies that, Jeoffery’s corporate identity will supersede his natural identity. It is therefore
contended that all his actions, fall in the ordinary course of business, and by application of the
corporate veil, the company should be held liable for breaching the corporate governance
principles.

B. Mr. Joffery’s acts are in a violation of corporate governance principles.

Corporate governance refers to the system of rules, practices, and processes by which a company
is directed and controlled. It ensures that the interests of various stakeholders, including
shareholders, employees, customers, suppliers, financiers, government, and the community, are
safeguarded and balanced. When corporate governance principles are violated, it can lead to
unethical behavior, lack of accountability, and compromised decision-making. In the case of the
Braavos Project, the alleged actions of Baratheon officials raise concerns about a potential
violation of corporate governance principles.

Mr. Joffery’s act of arranging an all- expense trip for certain senior officials can be looked at in
two prominent ways. One, essentially the fact that Mr. Joffery, being a public relations officer
attempted to get an undue advantage in the tendering process. He has done the same under the
garb of personal connection, but for the benefit of the company. Secondly, the fact that the HPC
has granted the tender on arbitrary terms which were not even disclosed to the participating
companies and merely named ‘technical and financial criteria’. This raises a host of questions on
the legality as well as the validity of the tendering process, it being a public function.

The Companies Act contains various provisions that address corporate governance standards and
practices. While the Act doesn't explicitly have a single section titled "Corporate Governance
Standards," several sections collectively establish the framework for corporate governance.

In addition to this, Rule 144 of General Financial Rules, 20178 states that,

“Every authority delegated with the financial powers of procuring goods in public interest shall
have the responsibility and accountability to bring efficiency, economy, and transparency in
matters relating to public procurement and for fair and equitable treatment of suppliers and
promotion of competition in public procurement.”

Moreover, the Supreme Court of India in Reliance Energy Ltd. And Another v. Maharashtra
State Road Development Corpn. Ltd. And Others9 stated that,

“Articles 21/14 are the heart of the chapter on fundamental rights. They cover various aspects of
life. “Level playing field” is an important concept while construing Article 19(1)(g) of the
Constitution. When Article 19(1)(g) confers fundamental right to carry on business to a
company, it is entitled to invoke the said doctrine of “level playing field”. We may clarify that
this doctrine is, however, subject to public interest…. The doctrine of “level playing field” is an
important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the
said doctrine provides space within which equally placed competitors are allowed to bid so as to
sub serve the larger public interest. Decisions or acts which result in unequal and
discriminatory treatment, would violate the doctrine of “level playing field” embodied in Article
19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of
“equality” should not be read as a standalone item but it should be read in conjunction with
Article 21 which embodies several aspects of life. Article 14 applies to government policies and

8
General Financial Rules, 2017, Rule 144.
9
Reliance Energy Ltd. And Another v. Maharashtra State Road Development Corpn. Ltd. And Others, Supreme
Court of India.
if the policy or act of the Government, even in contractual matters, fails to satisfy the test of
“reasonableness”, then such an act or decision would be unconstitutional.”

In another decision, Union of India v International Trading Co10, the court held that,

“it is trite law that Article 14 of the Constitution applies also to matters of governmental policy
and if the policy or any action of the Government, even in contractual matters, fails to satisfy the
test of reasonableness, it would be unconstitutional.”

The Supreme has emphasized on this in a number of judgements including, Ramana Dayaram
Shetty vs. The International Airport Authority of India and others11, V. Punnan Thomas v. State
of Kerala12, etc.

Applying these principles to the present case, the alleged provision of personal benefits to CAB
officials, as depicted in the video, indicates a lack of transparency in Baratheon's operations.
There is absence of clear and objective criteria for awarding the contract for the Braavos Project.
In the case of the Braavos Project, it is alleged that the tendering process was tainted by a lack of
transparency and fair competition, raising significant concerns about the legality and validity of
the process. It has been brought to light through a video clip that a senior official of Baratheon,
Mr. Joffrey Baratheon, allegedly boasted about arranging an all-expenses-paid trip for certain
senior officials of the CAB. This revelation raises serious doubts about the integrity of the
decision-making process and suggests the possibility of favoritism or manipulation in favor of
Baratheon.

The criteria set by the HPC for shortlisting potential developers lacked transparency and
objectivity. The HPC's discretion in determining the qualifications and experience required for
bidders to be shortlisted opens the door for arbitrary decision-making. The selection process was
heavily reliant on the subjective assessment of the HPC members. This subjectivity allows for
personal biases and influences to play a role in the decision-making process, potentially leading
to arbitrary outcomes. The absence of specific guidelines or detailed parameters for evaluating
technical and financial criteria leaves room for the HPC to interpret and apply these criteria in an
arbitrary manner, without clear standards for evaluation. The fact that Baratheon was selected as
the preferred bidder despite being the second highest bidder in financial terms raises questions
about the HPC's rationale.

The HPC's decision to prioritize other factors over the highest bid suggests a lack of consistency
and transparency in decision-making. The allegations of misconduct and bribery involving
Baratheon's officials, as highlighted in the petition, raise concerns about the integrity of the entire
tendering process. The HPC's decision to award the project to Baratheon despite these allegations

10
Union of India v. International Trading Co. 2003 5 SCC 437
11
Ramana Dayaram Shetty vs. The International Airport Authority of India and others, reported in AIR 1979 SC
1628
12
V. Punnan Thomas v. State of Kerala AIR 1969 Ker 81 
could be seen as arbitrary and lacking in due diligence. The HPC's composition and decision-
making process lack clear accountability mechanisms. This absence of checks and balances
increases the likelihood of arbitrary decisions being made without proper oversight.The fact that
the HPC and other relevant authorities were unable to definitively confirm or deny the
authenticity of the alleged video clip involving Baratheon's officials suggests a lack of thorough
investigation and due diligence. This failure to address the allegations undermines the credibility
of the tendering process and reinforces the perception of arbitrariness. All these point towards
the fact that HPC has acted arbitrary in the contract awarding process.

It is reasonable to infer that the actions of Mr. Joffrey Baratheon have unduly influenced the
decision-making process, potentially leading to an unfair advantage for Baratheon in the bid
evaluation. This not only compromises the integrity of the process but also undermines the core
principles of fair competition that are vital for a legitimate and legal tendering process. The lack
of transparency, combined with the alleged misconduct, distorts the level playing field that is
essential for fair competition among bidders. Other potential bidders were not privy to the same
benefits or influence allegedly enjoyed by Baratheon, creating an uneven and unjust
environment. This distortion of fairness erodes the very foundation of fair competition, making it
impossible for other bidders to compete on equal terms and presenting a compelling case for the
illegality of the tendering process.

Moreover, companies are expected to operate with the highest ethical standards, avoiding actions
that could compromise the reputation or integrity of the organization. The provision of personal
benefits for favorable treatment could be seen as an ethical breach.

Baratheon officials providing personal benefits to CAB officials could compromise their ability
to make unbiased decisions regarding the contract award, violating the principle of fairness and
impartiality. The public relies on such processes to allocate public resources effectively and
responsibly. When a conflict of interest is suspected, it damages the credibility of the process and
undermines the public's confidence in the legitimacy of the contract award.

Additionally, Boards of directors and management are accountable to shareholders and other
stakeholders for their decisions and actions. This includes the responsible management of
company resources. The board of directors is responsible for ensuring that the company's actions
align with corporate governance standards. If it is proven that Baratheon officials engaged in the
alleged misconduct, questions could arise about the board's oversight and diligence in preventing
such actions.

A violation of corporate governance principles erodes the credibility of the entire governance
structure within the company. Shareholders and stakeholders rely on these principles to ensure
that the company is being managed responsibly and ethically. Any breach casts doubt on the
company's commitment to upholding these principles.
In light of the same, it is evident that the tendering process for the Braavos Project lacked the
required transparency and fair competition. The alleged misconduct and undue influence not
only undermine the credibility of the process but also raise significant doubts about its legality.
The principles of transparency and fair competition are not mere formalities; they are
foundational to upholding the rule of law and ensuring that public resources are allocated
responsibly. Thus, based on the lack of transparency and fair competition alone, there is a
compelling case to assert the illegality of the tendering process for the Braavos Project. In
conclusion, the tendering process is manifestly inappropriate, illegal and grossly vitiated and
hence should be declared invalid. Therefore, the decision of Madras High Court is to be upheld
and the concession agreement between Baratheon and CAB should be annulled.

III. Whether the Braavos Project is against public interest with respect to the surrounding
residents as well as the shareholders?

The Braavos Project raises some fundamental public interest issues for the surrounding residents
as well as the shareholders. For the surrounding citizens, the project will not only cause large
scale rehabilitation and resettlement but also noise pollution to the remaining residents. In case
of shareholders, a number of factors come into play, especially with respect to the fact that
Baratheon is a public listed company, and the implications of the project which are primarily
negative in context of reputational damage and legal liabilities would directly harm the interest
of the shareholders. This raises a fundamental question on whether the project should be
continued or not and if continued, the board of directors must be obligated to expend the
necessary funds in furtherance of their CSR obligations under the extant laws.

A. The continuation of Braavos Project would significantly harm the interest of the public,
especially the surrounding residents.

Article 21 of the Constitution of India13 states that,

“No person shall be deprived of his life or personal liberty except according to procedure
established by law”

The judiciary has attempted to expand the reach and ambit of Article 2114 rather than accentuate
their meaning and content by judicial construction. In Subash Kumar 15 case, the Court observed
that 'right to life guaranteed by article 2116 includes the right of enjoyment of pollution-free water

13
Ind. Const. cl. III, § 21.
14
ibid
15
Subhash Kumar vs. State. of Bihar (1991) 1 SCC 598
16
supra 13
and air for full enjoyment of life. This was reaffirmed in M.C. Mehta v. Union of India. 17 The
case concerned the deterioration of the world environment and the duty of the state government,
under article 2118, to ensure a better quality of environment. the Supreme Court has held that life,
public health and ecology have priority over unemployment and loss of revenue.

An application of this principle on the present case implies that the interest of the residents
surrounding the potential site for the project will be affected. The residents in the surrounding
area have the fundamental right to a clean and healthy environment, as enshrined in the
constitution. The potential noise pollution and disruption caused by the proposed project would
directly impact their quality of life and well-being. The flights approaching the airport at low
heights over residential areas pose potential health and safety risks to the citizens. Noise
pollution and disturbance could lead to stress-related health issues, affecting both physical and
mental health.

Along with this, the disruption caused by the construction and operation of the new runway
could potentially disrupt local businesses and sources of livelihood for the residents. The
citizens' right to earn a living and engage in economic activities may be compromised. The
disruption could lead to economic instability and job loss, which directly impacts the citizens'
right to earn a living and support their families.

B. The continuation of Braavos Project would significantly harm the interest of the
shareholders.

The Braavos Project is prompting discussions about how shareholders might be affected. This
project is not just about progress; it's about the people who own parts of it. Amidst other
concerns is also the matter of how shareholders' interests could be influenced. It's crucial to
understand how their investments might be impacted by the decisions made about the project's
future.

The project has already encountered a number of unforeseen challenges include legal disputes.
These could lead to the financial loss for the company. This, in turn, could result in reduced
profitability and lower dividends, impacting shareholders' returns on their investment. Any
negative consequences arising from the project, such as environmental damage, legal issues, or
community backlash, could tarnish the company's reputation. This may lead to reduced consumer
trust, investor confidence, and ultimately a decrease in shareholder value.

Uncertainty surrounding the project's success could lead to increased stock price volatility.
Shareholders may become wary of the company's future prospects, causing fluctuations in the
stock price that might negatively impact their investment value. If the project faces continuous

17
M. C. Mehta vs. Union of India 1987 SCR (I) 819
18
supra 13
setbacks or controversies, shareholders might lose confidence in the company's management and
decision-making abilities. This could lead to shareholder sell-offs, further depressing the stock
price.

Although section 24419 read with section 24120 of the Companies Act specifically mentions 10%
requirement to bring an action under the said provision, the tribunal’s discretion to allow the
application on public interest grounds recognize the importance of addressing concerns that
impact broader society even if the threshold of 10% shareholding is not met.

C. Baratheon has not complied with the CSR obligations and has not acted in the best
interests of the company and its stakeholders.

Section 16621 of the Companies Act states that,

“(1) Subject to the provisions of this Act, a director of a company shall act in accordance with
the articles of the company.

(2) A director of a company shall act in good faith in order to promote the objects of the
company for the benefit of its members as a whole, and in the best interests of the company, its
employees, the shareholders, the community and for the protection of environment.

(3) A director of a company shall exercise his duties with due and reasonable care, skill and
diligence and shall exercise independent judgment.

(4) A director of a company shall not involve in a situation in which he may have a direct or
indirect interest that conflicts, or possibly may conflict, with the interest of the company.

(5) A director of a company shall not achieve or attempt to achieve any undue gain or advantage
either to himself or to his relatives, partners, or associates and if such director is found guilty of
making any undue gain, he shall be liable to pay an amount equal to that gain to the company.

(6) A director of a company shall not assign his office and any assignment so made shall be void.

(7) If a director of the company contravenes the provisions of this section such director shall be
punishable with fine which shall not be less than one lakh rupees but which may extend to five
lakh rupees.”

This section delineates several obligations, including the duty to act in good faith, further the
company's interests, exercise due diligence, and prioritize the company's and stakeholders' best
interests. It also underscores the obligation to avoid conflicts of interest and prevent seeking or

19
Companies act, 18 C.A. § 244 (2013).
20
Companies act, 18 C.A. § 241 (2013).
21
Companies act, 18 C.A. § 166 (2013).
benefiting from any undue gain, whether for oneself, one's relatives, partners, or associates.
These collective duties underscore the director's role in acting ethically, diligently, and in the
best interests of the company and all those it affects.

Section 135 of the Companies Act 2013 22 mandates certain classes of companies to spend a
certain percentage of their average net profits on CSR activities. The Act also specifies the types
of projects and initiatives that can be considered as CSR activities.

Directors have fiduciary duties towards the company and its stakeholders, including
shareholders. Ensuring compliance with CSR obligations and acting in the best interests of the
company and its stakeholders is a fundamental aspect of these duties.

In conclusion, the Braavos Project marks a critical crossroads where the concerns of both
residents and shareholders converge with the project's trajectory. The implications stretch beyond
immediate boundaries, impacting wider public interests.

22
Companies act, 18 C.A. § 244 (2013).
 PRAYER FOR RELIEF

In the light of facts stated, issues raised, authorities cited and arguments advanced, it is most
humbly and respectfully prayed that this honourable court may be pleased to:

1. Uphold that Stark has control over Baratheon and the clauses conferring such control have to
be removed.

2. Quash the award of the airport development concession to Baratheon

3. Prevent the project from continuing, and if it is allowed to continue, the board of Baratheon
must be obligated to expend the necessary funds in furtherance of their CSR obligations.

And further pass any such order in favor of the respondent which the honorable court may deem
fit in the ends of justice, equity and good conscience.

All of which is most humbly and respectfully submitted.