Strict construction of security clearance clauses limits shareholder-based denial, while piercing the corporate veil requires sham or camouflage.

A security clearance condition referring to the applicant company and its directors was held not to extend by implication to shareholders, especially where refusal of clearance carried serious civil consequences and the clause required strict construction. The notice's express reference to shareholder control in other provisions reinforced that shareholders were excluded from clause 3.8. The corporate veil could be pierced only in a restrictive case showing that the company was a sham or camouflage used to evade liability or conceal wrongdoing, which was not established on the stated facts. Accordingly, denial of security clearance was not justified and the rejection founded on it could not stand.

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Issues: Whether denial of security clearance under the auction notice could be sustained on the basis of allegations against persons said to have indirect shareholding interest in the applicant companies, and whether the corporate veil could be pierced to treat those allegations as relevant to the companies for the purpose of clause 3.8 of the notice.

Analysis: Clause 3.8 required security clearance of the applicant company and its directors. On its plain wording, it did not extend to shareholders. The expression was treated as clear, and because refusal of security clearance carried serious civil consequences, the clause was held to call for strict construction. The notice itself used express language where shareholder control was intended in other clauses, showing that shareholders were not included in clause 3.8 by implication. The doctrine of piercing the corporate veil was held to be available only in a restrictive manner, where the company is a camouflage or sham used by those in control to evade liability or conceal wrongdoing. No such case was made out: the petitioners had been operating for years, there was no allegation that the companies themselves were vehicles of illegality or security concern, and the controlling shareholding lay with persons against whom no allegations were raised.

Conclusion: Denial of security clearance was not justified on the facts, and the impugned rejection based on that denial could not be sustained.

Ratio Decidendi: Where a condition requiring security clearance refers only to the company and its directors, it cannot be extended to shareholders by implication, and the corporate veil may be pierced only on a restrictive showing that the company is a sham or camouflage controlled for wrongful ends.

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