dated this the 26 day of april 2013 -...

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IN THE HIGH COURT OF KARNATAKA AT BANGALORE

DATED THIS THE 26TH DAY OF APRIL 2013

BEFORE

THE HON’BLE MR.JUSTICE S. ABDUL NAZEER

WRIT PETITION NO.1813/2013

C/W W.P.NOS.1814/2013, 1815/2013, 2000-2001/2013

& W.P.NO.5074/2013 (GM-TEN)

W.P.NO.1813/2013

Between:

Sri Chennakeshava Transport,Reptd. By its Proprietor,Sri Ranga Swamy,S/o Ramesh Shetty,Aged about 39 years,No.69, 2nd Main Road, Bharathi LayOut,Bangalore – 560 029. …. Petitioner.

(By Sri K.N.Subba Reddy & Vivek S. Reddy, Advs.)

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And:

1 The Indian Oil Corporation Limited,(A Company Registered under theCompanies Act, 1956, with itsRegd. Office at G-9, Ali Yawan Jung Marga,Bandra (E), Mumbai – 400 051,and its Karnataka State Officeat Indian Oil Bhavan, No.29,P.Kalinga Rao Road, (Mission Road),Bangalore – 560 027, Reptd. By its DGM-Operations,Shri Anbalagan.

2 M/s Rajarajeswari Service Station,IOC Dealer Sy.No.34/1,Reptd. By its Proprietor,Sri Govindraj, Kulemepalya,Visweshwarapura,Nelamangala Main Road,Bangalore District 562 123.

3 M/s Anjanadri Enterprises,Reptd. By its Proprietor,Sri Prasanna, No.113/1 To 7,7th Cross, 5th Main, Chamrajpet,Bangalore – 560 018.

4 M/s Sree Venkateshwara Service Station,Reptd. By its Proprietor,Sri Prakash, Old Madras Road,Indiranagar, Bangalore – 560 038.

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5 M/s Varadaraja Service Station,Reptd. By its Proprietor,Sri Mahesh, No.596, Dr.Rajkumr Road, Rajajinagar,Bangalore – 560 010.

6 M/s Sri Banashankari Oils,Reptd. By its Proprietor,Smt.N.Susheela, Hongirana,No.248/5, 53rd C Cross,17th D Main, 3rd Y Block,Rajajinagar, Bangalore – 10.

7 M/s Abhiman Service Station,Reptd. By its Proprietor,Sri Prashanth, Indian Oil Dealers,B.H.Road, Tiptur =- 572 201.

8 M/s Sree Venkateshwara Service Station,Reptd. By its Proprietor,Sri Nagabushan, 100 Feet,Industrial Estate Road,Peenya, Bangalore – 58.

9 M/s Swathi Enterprises,Reptd. By its Proprietor,8th Mile Stone, Tumkur Road,Nagasandra Post,Bangalore – 73.

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10 M/s Sri Sharada Enterprises,Reptd. By its Proprietor,Sri Jayaram, No.106/7, 10th K.M.,N.H.7,. Bellary Road,Amruthahalli, Bangalore – 560 092.

11 M/s Triveni Service Station,Reptd. By its Proprietor,Smt. Savithri, No.39,Hesarghatta Main Road,Bagalgunte, Bangalore – 73.

12 T.N.Shashikanth,S/o G.Narasimha Shetty,Aged about 47 years,M/s Sharavani Service Station,N.H.206, Rajatadripura,K.B.Cross, Tiptur – 572 114,Tumkur Dist.

13 K.R.Narayanaswamy,S/o A.Rangappa,Aged about 58 years,M/s Sri Vanamala Service Station,Hulikunte Road, Koratagere 572 129,Tumkur District.

14 Nandeesha,S/o late Honnanna,Aged about 54 years,M/s Sri Honnaganga Petroleum,Mysore Road, Chelur – 572 117,Gubbi Taluk, Tumkur Dist.

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15 B.P.Aswathanarayana Gowda,major, M/s Kondur Enterprises,Indian Oil Dealer, Railway Station,Thondebhavi – 561 213,Gouribidanur Taluk,Chickballapur Dist.

16 H.V.Govindaraja Shetty,S/o Venkatachalapathy Shetty,Aged about 56 years,M/s SLR Agencies,J.C.Circle, Sira Road,Huliyur – 572 118, Tumkur Dist.

17 Smt. K.Shamalamma,major, M/s Raghu Agencies,IOC Dealer, Kuvempu Road,Pavagada – 561 202.

18 M/s Banashankari Service Station,Reptd. By its Partner, Sri Mallesh Gowda,S/o Sri Balaiah, Aged about 57 years,IOC Dealer, No.27/1,Kadirenahalli Cross, Gowdanapalya,Subramanyapura Main Road,Bangalore – 560 070. …. Respondents.

(By Sri Ashok Haranahalli, Sr. Adv. For Sri A.K.Lakshmanan & Sri S.V.Angadi, Advs. For R1 R2 to R11 served Sri S.V.Krishnaswamy, Adv. For R12 to R17 Sri S. Visweswaraiah, Adv. For R18)

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W.P.NO.1814/2013

Between:

Sri Maruthi Transport,Reptd. By its Proprietor,Sri C.Ramesh S/o Channappa,Aged about 48 years, Door No.113, 5th Cross,Mahalaxmi Nagar,Manjunathanagar, Nagasandra Post, Bangalore – 560 073. …. Petitioner.

(By Sri K.N.Subba Reddy & Sri Vivek S. Reddy, Advs.)

And:


2 M/s Rajarajeswari Service Station,IOC Dealer Sy.No.34/1,Reptd. By its Proprietor,Sri Govindraj, Kulemepalya,Visweshwarapura,Nelamangala Main Road,Bangalore District 562 123.

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5 M/s Varadaraja Service Station,Reptd. By its Proprietor,Sri Mahesh, No.596, Dr.Rajkumr Road, Rajajinagar, Bangalore – 560 010.



8 M/s Sree Venkateshwara Service Station,Reptd. By its Proprietor,Sri Nagabushan, 100 Feet,Industrial Estate Road,Peenya, Bangalore – 58.

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10 M/s Sri Sharada Enterprises,Reptd. By its Proprietor,Sri Jayaram, No.106/7, 10th K.M.,N.H.7,. Bellary Road,Amruthahalli,Bangalore – 560 092.




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14 Nandeesha,S/o late Honnanna,Aged about 54 years,M/s Sri Honnaganga Petroleum,Mysore Road, Chelur – 572 117,Gubbi Taluk, Tumkur Dist.

15 B.P.Aswathanarayana Gowda,major, M/s Kondur Enterprises,Indian Oil Dealer, Railway Station,Thondebhavi – 561 213,Gouribidanur Taluk, Chickballapur Dist.

16 H.V.Govindaraja Shetty,S/o Venkatachalapathy Shetty,Aged about 56 years, M/s SLR Agencies, J.C.Circle, Sira Road, Huliyur – 572 118, Tumkur Dist.

17 Smt. K.Shamalamma,major, M/s Raghu Agencies, IOC Dealer, Kuvempu Road, Pavagada – 561 202.

18 M/s Banashankari Service Station,Reptd. By its Partner, Sri Mallesh Gowda,S/o Sri Balaiah, Aged about 57 years,IOC Dealer, No.27/1, Kadirenahalli Cross,Gowdanapalya, Subramanyapura Main Road,Bangalore – 560 070. …. Respondents.


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W.P.NO.1815/2013

Between:

Rajagopal Transport,Reptd. By its Proprietor,Sri Raja Gopal S/o Cheena Krishnan,Aged about 54 years,No.840, 8th Main, Yamuna Nadi Road,Bangalore – 560 050. …. Petitioner.

(By Sri K.N.Subba Reddy & Sri Vivek S. Reddy, Advs.)

And:


2 M/s Rajarajeswari Service Station,IOC Dealer Sy.No.34/1,Reptd. By its Proprietor,Sri Govindraj, Kulemepalya,Visweshwarapura, Nelamangala Main Road,Bangalore District 562 123.

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5 M/s Varadaraja Service Station,Reptd. By its Proprietor,Sri Mahesh, No.596, Dr.Rajkumr Road, Rajajinagar,Bangalore – 560 010.



8 M/s Sree Venkateshwara Service Station,Reptd. By its Proprietor, Sri Nagabushan, 100 Feet,Industrial Estate Road, Peenya, Bangalore – 58.

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10 M/s Sri Sharada Enterprises,Reptd. By its Proprietor,Sri Jayaram, No.106/7, 10th K.M.,N.H.7,. Bellary Road,Amruthahalli,Bangalore – 560 092.




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14 Nandeesha, S/o late Honnanna,Aged about 54 years, M/s Sri Honnaganga Petroleum,Mysore Road, Chelur – 572 117,Gubbi Taluk, Tumkur Dist.

15 B.P.Aswathanarayana Gowda,major, M/s Kondur Enterprises,Indian Oil Dealer, Railway Station,Thondebhavi – 561 213,Gouribidanur Taluk, Chickballapur Dist.

16 H.V.Govindaraja Shetty,S/o Venkatachalapathy Shetty,Aged about 56 years, M/s SLR Agencies,J.C.Circle, Sira Road,Huliyur – 572 118, Tumkur Dist.

17 Smt. K.Shamalamma, major,M/s Raghu Agencies, IOC Dealer, Kuvempu Road, Pavagada – 561 202.

18 M/s Banashankari Service Station,Reptd. By its Partner, Sri Mallesh Gowda,S/o Sri Balaiah, Aged about 57 years,IOC Dealer, No.27/1, Kadirenahalli Cross,Gowdanapalya, Subramanyapura Main Road,Bangalore – 560 070. …. Respondents.


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W.P.NOS.2000-2001/2013

Between:

1 M/s N.Shankarachary Transport,Reptd. By its Proprietor N. Shankarachary,No.13, 21st Main Road, BSK 2nd Stage,Near BDA Complex, Bangalore – 70.

2 M/s K.K.Manje Gowda Transport,Reptd. By its Proprietor K.K.Manje Gowda,No.214, Lakshmaiah Building,Kattamnallur, Virgonagar Post,Bangalore – 560049. …. Petitioners.

(By Sri B.K. Sampath Kumar, Adv.)

And:

1 Indian Oil Corporation Limited,Karnataka State Office,Indianoil Bhawan,29, P.Kalingarao Road (mission Road),Bangalore – 560 027.

2 Mr.V.Velu Murgan, major.

3 Mrs. Mallarkodi,W/o Mr.V.Velu Murgan, major.

R2 and R3 are r/a No.199,Ramgopal Layout, Subbannapalya,Banaswadi, Bangalore – 33.

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4 M/s Anjanadri Enterprises,No.113/1 to 7, 7th Cross, 5th Main,Chamrajpet, Bangalore – 18.

5 M/s Sree Venkateshwara Service Station,1, Old Madrs Road, Indiranagar,Bangalore – 38.

6 M/s Vardaraja Service Station,No.596, Dr.Rajkumar Road,Rajajinagar, Bangalore – 10.

7 M/s Abhiman Service Station,Indian Oil Dealers, B.H.Road,Tiptur- 572 201.

8 M/s Triveni Service Station,No.39, Hesaraghatta Main Road,Bagalgunte, Bangalore – 73.

9 M/s Swathi Enterprises,8th Mile Stone, Tumkur Road,Nagasandra Post,Bangalore – 73.

10 M/s Sri Sharadah Enterprises,No.106/7, 10th KM, NH-7,Bellary Road, Amruthally,Bangalore – 92.

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11 M/s Rajarajeshwari Service Station,IOC Dealer, Sy.No.34/1,Kulumepalya Viswesharapura,Nelamangala Main Road,Bangalore Dist. 562 123.

12 M/s Sri Banashankari Oils,Srimati N. Susheelaa, Hongirana,No.248/5, 53rd Cross, 17th D Main,3rd Y Block, Rajajinagar, Bangalore – 10.

13 M/s Sre Venkateshwara Service Station,100 Feet Industrial Estate Road,Peenya, Bangalore – 58.

14 M/s M.K.Prakash Transports,C/o M/s Subadra Transport,Near Big Bazar, Kolar – 563 101.

15 M/s A.Kavitha Transport,No.27, K.R.Puram, Cocks Town Extension,Vijanahalli, Bangalore – 5.

16 M/s Pragathishwara Nanda Transport,No.29, Mariamma Temple Street,16th Cross, Jayabharathnagar,Bangalore – 33. …. Respondents.

(By Sri Ashok Haranahalli, Sr. Adv. For Sri A.K.Lakshmanan & Sri S.V.Angadi, Advs. For R1 Sri Krishna S. Dixit, Adv. For R2, R3, R15 and R16 R6 to R14 served Notice to R4 & R5 served through hand summons)

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W.P.NO.5074/2013

Between:

B.S.Indu Shekar Singh,S/o late B.S.Bagwan Singh,Aged about 50 years,Prop: Bagwan Sri Balaji Fuels,No.4, Yammerahally, Sira,Tumkur District – 572 137. …. Petitioner.

(By Sri S.V.Krishna Swamy, Adv.)

And:

Indian Oil Corporation,By General Manager (Operations),Indian Oil Bhavan,No.29, P. Kalingarao Road,(Mission Road), Bangalore – 27. …. Respondent.

(By Sri A.K. Lakshmanan, Adv.)

---

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W.P.No.1813/2013 is filed under Articles 226 & 227 of the Constitution of India, praying to quash the letter of indent dated 23.11.2012 as illegal and discriminatory, etc.



W.P.Nos.2000-2001/2013 is filed under Articles 226 & 227 of the Constitution of India, praying to direct the first respondent to issue work order vide tender dated 14.8.2012, etc.

W.P.No.5074/2013 is filed under Articles 226 & 227 of the Constitution of India, praying to direct the respondent to consider and grant the licence required for transportation of petroleum products from the terminal at Devanagondi to his bunk at Sira, etc.

These Writ Petitions coming on for Further Orders this day, the Court passed the following:

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ORDER

In W.P.Nos.1813/2013, 1814/2013 and 1815/2013, the

petitioners have sought for quashing the Letter of Indent at

Annexures 'C1' to 'C10' dated 23.11.2012 issued by the first

respondent in favour of the private respondents and for a

mandamus directing the first respondent not to issue work orders

and for certain other reliefs.

2. In W.P.Nos.2000-2001/2013, petitioners have sought for a

writ of mandamus directing the first respondent to issue the work

order vide tender notification at Annexure 'A' dated 14.8.2012 to

the petitioners as they have quoted the lowest price and for certain

other reliefs.

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3. In W.P.No.5074/2013, the petitioner has sought for a

direction to the respondent to consider and grant the licence

required for transportation of petroleum products from the terminal

at Devanagondi to his bunk at Sira and to the consortium members.

4. The pleadings in W.P.Nos.1813/2013, 1814/2013,

1815/2013 and 2000-2001/2013 are more or less similar. These

petitions have been filed by the unsuccessful bidders for the

transportation of bulk petroleum products. The first respondent

published tender for bulk transportation of petroleum products to

various locations in Karnataka. The notice inviting tender was

issued on 14.8.2012 from the Karnataka State. The offers were

sought from interested parties and the same was opened on

24.9.2012. The first respondent has completed the process of

issuance of letter of indent (LOI) on 23.11.2012.

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5. The contention of the petitioners is that they are the

owners of certain number of trucks and are presently carrying on

contract of supplying tank trucks to the first respondent. It is their

case that the tender documents contain two parts, viz.,

technical/commercial bid and price bid. In the price bid, rate

schedule for road transportation of bulk petroleum products

estimated rates were given at page No.71 of the tender document at

Annexure 'A'. The technical bids were opened by the first

respondent and petitioners were declared as eligible in the

technical bid along with other eligible bidders.

6. Respondent No.1 has also furnished the schedule date for

opening up of the price bids and the place/venue of the opening of

the price bid. As per the tender notification, evaluation of tenderers

shall be decided on minimum financial outgo to the IOCL by

considering the rates quoted in both the items and expected

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volumes of the business. The bidders are categorised as L1, L2, L3

etc., as per Clause B(4) of the evaluation of tenderers, which is the

criteria for deciding as the lowest bidder in the said tender

procedure. Petitioners were present on the day fixed for opening

the price bid of the aforesaid tender and price bids were announced.

The petitioners came to know that their price was lowest along with

some other participants. Sri Velumurugan was also a successful

bidder in technical bid and when his price bid was opened, he was

ranked as L2. As against this, the petitioners were ranked as L1. It

is further submitted that a complaint has been filed against

Velumurugan for stealing of diesel. Velumurugan and

Smt.Malarkodi are husband and wife. The police have mentioned

that there was a route diversion taken by the tanker to enable the

tanker to steal diesel. Despite the above facts, tenders have been

granted in favour of Velumurugan and his wife.

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7. The petitioners in W.P.Nos.2000-2001/2013 have raised

similar contentions. It is contended that despite the first respondent

knowing that a case against respondent No.2 for stealing of the

diesel is registered against him, it has approved the tender without

any regard to his past conduct. The petitioners have an

unblemished record and are in the business for close to 30 years.

The first respondent is trying to monopolise the transport industry

by favouring few tenderers, who do not deserve the tender and are

trying to throw out the petitioners from the business. The second

respondent-V.Velumurugan and his wife Smt.Malarkodi has been

awarded the tender without any rhyme or reason.

8. In W.P.No.5074/2013, the petitioner contends that

recommendation has been made to award the tender in his favour.

However, the licence has not been issued for carrying bulk

supplies.

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9. The first respondent has filed objections in

W.P.Nos.1813/2013, 1814/2013, 1815/2013 and 2000-2001/2013

contending that the terms and conditions of the public tender

covered under tender No.KASO/OPS/POL/2012-15/Bangalore

Terminal/01 dated 14.8.2012 read with corrigendum dated

15.8.2012 are the All India policy of Indian Oil Corporation, which

got evolved over a period of years and other stake holders for the

purpose of ensuring uninterrupted and smooth supplies of essential

petroleum products to the general public with a view to avoid

malpractices and quantity and quality issues. The terms and

conditions of the public tender revised and effective from

27.7.2012 is applicable for the POL tenders to be floated by the

POL locations of Indian Oil Corporation Limited on all India basis.

The public tender was floated on 14.8.2012 and the offers were

sought from interested parties and the same was opened on

24.9.2012. Thereafter, respondent No.1 has completed the process

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of issuance of Letter of Indent strictly following the tender

conditions on 23.11.2012 and the activities of physical verification

of tank trucks and relevant documents were taken up for another

period during which time respondent No.1 has not received any

representations or objections.

10. It is further contended that the petitioners without any

objections have accepted the tender conditions in full and

submitted their tender documents for consideration. Objection is

raised only on their tenders not found to be successful as per tender

conditions at much a later stage. The contract is not for supplying

tank trucks as mentioned in the petition but for transportation of

petroleum products. The tender applicants have submitted the

tenders in line with the public tender conditions. They have

accepted all the terms and conditions of the public tender, which

were made available in the public domain, without any objections.

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The petitioners have participated in the tender process. Now after

becoming unsuccessful, they cannot challenge the terms and

conditions of the tender.

11. The categorization of L1, L2, L3, etc., have been

established in line with the tender conditions. Further evaluation

and issuance of Letter of Indent has been undertaken in line with

clauses B6 to B9 of the public tender document. Letter of Indent

has been issued to successful tenderers after evaluation of the

tenders in line with the terms and conditions of the public tender by

strictly evaluating all successful tenders as per the ranking

procedures enunciated in the tender conditions and after approvals

from competent authority in line with the policy of the Corporation

Letter of Indents were not issued to the petitioners in line with the

terms and conditions of the tender as they have participated in the

tender under General Transporter category and have quoted L2

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rates in their price bids.

12. Letter of Indents have been issued in the first instance

only for the tenderers under the category of

dealers/consortium/direct customers only for their own use and

who have subsequently accepted the L1 rates finalised for the

tender. These conditions were also deliberated and explained to the

prospective tenderes during the pre-bid meeting conducted at

Devanagunthi Terminal on 7.9.2012, much before the last date of

submission of the tender, which was on 24.9.2012. The petitioners

were also present during this pre-bid meeting where the terms of

tender were clarified. Similar terms and conditions were also

adopted for the previous tender finalised during October, 2009 for

Bangalore Terminal during which the petitioners were some of the

successful tenderers and they were awarded contract at that time.

Letter of Indents have been issued to other than L1 bidders only for

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own use requirement by tenderers who have participated under the

category of dealers/consortium/direct customers only and not for

general transportation even though such tenders were received

from IOC dealers, which is again strictly in line with the tender

conditions as the entire POL transportation contract is finalised for

ensuring the over all interest of IOC dealers and customers to

receive correct quality and quantity of products without giving

room for any kind of malpractice for which the self-transportation

for own requirement was found to be ideal.

13. It is pointed out that no discrimination has been resorted

to during the evaluation of the tender. No unfair and inequitable

treatment was given to any of the tenderers and all have been

treated equally in accordance with the terms and conditions of the

tender and Letter of Indents have been issued in accordance with

the public tender conditions.

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14. I have heard Sri Vivek S. Reddy, Sri B.K.Sampath

Kumar and Sri S.V.Krishnaswamy, learned Counsel for the

petitioners and Sri Ashok Haranahalli, learned Senior Advocate for

Sri S.V.Angadi, Sri S. Visweswaraiah and Sri Krishna S. Dixit,

learned Counsel for the respondents.

15. Sri Vivek S. Reddy, learned Counsel appearing for the

petitioners in some of the petitions submits that in the evaluation of

the technical bid, the petitioners have been qualified. However, in

the next stage of evaluation under Clause B(9), the tenderers were

not qualified because of the number of tank trucks owned by them.

Clause B(9) of the tender is itself arbitrary. Relying on the decision

of the Apex Court in MEERUT DEVELOPMENT AUTHORITY

VS. ASSOCIATION OF MANAGEMENT STUDIES AND

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ANOTHER – (2009) 6 SCC 171, he submits that though the terms

of the invitation tender cannot be open to judicial scrutiny because

the invitation to tender is in the realm of contract, a limited judicial

review may be available in cases where it is established that the

terms of the invitation to tender were so tailor-made to suit the

convenience of any particular person with a view to eliminate all

others from participating in the bidding process.

16. It is further argued that policy of the Government from

the point of view of public interest is to prohibit concentration of

economic power and to control monopolies so that the ownership

and control of the material resources of the community are so

distributed as best to subserve the common good and to ensure that

while promoting industrial growth there is reduction in social and

economic justice. In this connection, he has relied on the decision

of the Apex Court in UNION OF INDIA AND OTHERS VS.

HINDUSTAN DEVELOPMENT CORPORATION AND

31

OTHERS – (1993) 3 SCC 499. It is further contended that though

the Madras High Court has upheld the terms of the tender

notification, this question has not been considered by the said

Court. It is argued that discrimination based on person having more

number of trucks is unconstitutional. He has also relied on the

decision of the Apex Court in NATURAL RESOURCES

ALLOCATION, IN RE, SPECIAL REFERENCE NO.1 OF 2012

– (2012) 10 SCC 1 and has drawn my attention to different

paragraphs in this judgment.

17. It is further argued that Velumurugan had a complaint

filed against him for stealing of diesel. The first respondent despite

knowing that the said respondent had a complaint filed against him

has awarded the tender in his favour. Velumurugan and

Smt.Malarkodi are husband and wife.

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18. Sri B.K.Sampath Kumar, learned Counsel submits that

FIR has been registered against respondent No.2. Despite the same,

he has been awarded the contract, which is not permissible in law.

In this connection, he has taken me through various clauses in the

tender document.

19. The contention of Sri Krishnaswamy, learned Counsel

for the petitioner in W.P.No.5074/2013 is that though there is a

recommendation to award the tender, allotment letter has not been

issued so far.

20. On the other hand, Sri Ashok Haranahalli, learned Senior

Counsel appearing for respondent No.1 submits that the petitioners

having submitted the bid cannot now challenge different clauses in

the tender. It is further submitted that if the applicants are

blacklisted then only they are barred from applying for the tender.

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The procedure has been prescribed in the tender document for

blacklisting. Merely because FIR has been registered against some

of the respondents, will not bar them from participating in the

tender.

21. It is further argued that none of the conditions of the

tender are in violation of the fundamental rights of Part III of the

Constitution of India. The ranking procedures dealt by clause No.9

of Part B of tender evaluation in case for particular ranking, the

tank trucks offered are more than the requirement, then tenderers in

that particular ranking will be further ranked based on the orders of

priority. It is further argued that granting contract to tenderers

having highest number of 18/20/24 KLs are given preference in

case of tie in evaluation in the previous stage. This again to take

commitment of major and big operators who have invested more in

the high capacity tank trucks as compared to those who have

34

invested less in small capacity tank trucks ('TTs' for short) to say 12

KL capacity TTs. The granting of contract to tenderers, who

possess more trucks is to ensure commitment of tenderers in their

business to avoid malpractice as punishment for any malpractice

will be highly prohibitive and the same will also grossly improve

safety and administrative effectiveness as a promising business

proposition to the first respondent as all TTs of all L1 tenderers

cannot be accepted as the requirement for viable operation is 265

TTs as against 440 TTs offered by eligible L1 tenderers.

22. I have carefully considered the arguments of the learned

Counsel made at the Bar and perused the materials placed on

record.

23. It is settled that the Courts can scrutinise the award of

contract by the Government or its agencies in exercise of its powers

35

of judicial review to prevent arbitrariness or favouritism. However,

there are inherent limitations in the exercise of power of judicial

review in such matters. The Apex Court in TATA CELLULAR VS.

UNION OF INDIA – (1994) 6 SCC 651 has laid down the

principles with regard to the power of judicial review by the

Courts. They are as under:

“The principles deducible from the above are:

(1) The modern trend points to judicial restraint in

administrative action.

(2) The Court does not sit as a Court of appeal but

merely reviews the manner in which the decision

was made.

(3) The Court does not have the expertise to correct

the administrative decision. If a review of the

administration decision is permitted, it will be

36

substituting its own decision,without the necessary

expertise which itself may be fallible.

(4) The terms of the invitation to tender cannot

be open to judicial scrutiny because the invitation

to tender is in the realm of contract. Normally

speaking, the 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.

(5) The Government must have freedom of

contract. In other words,a fair play in the joints is

a necessary concomitant for an administrative body

functioning in all administrative sphere or quasi-

administrative sphere. However, the decision must

not only be tested by the application of

Wednesbury principles of reasonableness

(including its other facts pointed out above) but

must be free from arbitrariness not affected by bias

37

or actuated by malafides.

(6) Quashing decisions may impose heavy

administrative burden on the administration and

lead to increased and unbudgeted expenditure.”

24. In DIRECTORATE OF EDUCATION VS. EDUCOMP

DATAMATICS LTD. - AIR 2004 SC 1962, the Apex Court has

held that the terms of invitation to tender are not open to judicial

scrutiny the same being in the realm of contract. The Government

must have free hand in setting the terms of the tender. It must have

reasonable play in its joints as a necessary concomitant for an

administrative body in an administrative sphere. The Courts would

interfere with the administrative policy decision only if it is

arbitrary, discriminatory, malafide or actuated by bias. The Courts

cannot strike down the terms of tender prescribed by the

Government because it feels that some other terms in the tender

38

would have been fair, wiser or logical.

25. In GLOBAL ENERGY LTD. AND ANOTHER VS.

ADANI EXPORTS LTD. AND OTHERS – (2005) 4 SCC 435, the

Court has reiterated the principles as under:

“10. The principle is, therefore, well settled that the

terms of the invitation to tender are not open to

judicial scrutiny and the Courts cannot whittle down

the terms of the tender as they are in the realm of

contract unless they are wholly arbitrary,

discriminatory or actuated by malice. This being the

position of law, settled by a catena of decisions of

this Court, it is rather surprising that the learned

Single Judge passed an interim direction on the very

first day of admission hearing of the writ petition

and allowed the appellants to deposit the earnest

money by furnishing a Bank guarantee or a Bankers'

cheque till three days after the actual date of

39

opening of the tender. The order of the learned

Single Judge being wholly illegal, was, therefore,

rightly set aside by the Division Bench.”

26. In ASSOCIATION OF REGISTRATION PLATES VS.

UNION OF INDIA AND OTHERS – 2004 AIR SCW 7074, the

Apex Court was considering the terms and condition of notices

inviting tenders for supply of high security registration plates to

motor vehicles. A contention was raised that the tender conditions

are discriminatory being aimed at excluding indigenous

manufacturers from the tender process. The Court held that the

State as an implementing authority has to ensure that scheme of

high security plates is effectively implemented. Keeping in view

the enormous work involved in switching over to new plates within

two years for existing vehicles of such large numbers in each

State, resort to 'trial and error' method would prove hazardous. Its

concern to get the right and most competent person cannot be

40

questioned. It has to eliminate manufacturers who have developed

recently just to enter into the new field. The insistence of the State

of search for an experienced manufacturer with sound financial and

technical capacity cannot be misunderstood. The terms and

conditions are so formulated to enable the State to adjudge the

capability of a particular tenderer who can provide a fail-safe and

sustainable delivery capacity. Only such tenderer has to be selected

who can take responsibility for marketing, servicing and providing

continuously the specified plates for vehicles in large number.

Capacity and capability are two most relevant criteria for framing

suitable conditions of any notices inviting tenders. The impugned

clauses by which it is stipulated that the tenderer individually or as

a member of joint venture must have an experience in the field of

registration plates in atleast three countries, a common minimum

net worth of Rs.40 crores and either joint venture partner having a

minimum annual turnover of atleast Rs.50 crores and a minimum

of 15% turnover of registration plates business have been, as stated,

41

incorporated as essential conditions to ensure that the manufacturer

selected would be technically and financially competent to fulfil

the contractual obligations, which looking to the magnitude of the

job requires huge investment qualitatively and quantitatively. The

Court has repelled the argument that the terms of notice inviting

tenders deliberately exclude domestic manufacturers and new

entrepreneurs in the field.

27. In M/S MICHIGAN RUBBER (INDIA) LIMITED VS.

STATE OF KARNATAKA AND OTHERS – (2012) 8 SCC 216,

the Apex Court has held that judicial review is not permissible with

regard to the Government contract in the absence of any malafides

or arbitrariness in the process of evaluation of bids and

determination of the eligibility of bidders.

28. A limited judicial review may be available in cases

42

where it is established that the terms of the invitation to tender

were so tailor-made to suit the convenience of any particular person

with a view to eliminate all others from participating in the bidding

process. In MEERUT DEVELOPMENT AUTHORITY''s case

(supra), the Apex Court has held as under:

“A tender is an offer. It is something which

invites and is communicated to notify acceptance. It

must be unconditional; must be in the proper form,

the person by whom tender is made must be able to

and willing to perform his obligations. The terms of

the invitation to tender cannot be open to judicial

scrutiny because the invitation to tender is in the

realm of contract. However, a limited judicial

review may be available in cases where it is

established that the terms of the invitation to tender

were so tailor-made to suit the convenience of any

particular person with a view to eliminate all others

from participating in the bidding process.”

43

29. This view has been reiterated by the Apex Court in

NATURAL RESOURCES ALLOCATION's case (supra).

30. It is also to be noticed here that the invitation to tender

impugned herein was a subject matter of challenge before the

Madras High Court in W.P.Nos.32166 to 32171/2012 (between SRI

NAVAJEVAN TRANSPORTS AND OTHERS VS. THE INDIAN

OIL CORPORATION LIMITED AND OTHERS). A learned

Single Judge of the said Court has dismissed the writ petitions on

1.3.2013. In the said case, even clause B(9) was also under

challenge. The contention has been negatived by holding as under:

“In so far as the petitioners, who have filed the writ

petitions praying for a writ of declaration are

concerned, I am of the view that they have no locus

standi to file these writ petitions now and they are

estopped from questioning the tender conditions as

arbitrary, not followed properly, etc., that too, after

44

participation in the tender process and failing to get

the contract. The petitioners after having read and

understood the tender conditions and signed and

sealed each page of the tender document challenge

the same after participation and failing to get the

contract. Further, the preferential treatment has a

meaning to ensure uninterrupted supply in the

public interest. RO Dealers/Direct Customers and

the petitioners are not equals and therefore, there is

no question of offending Article 14 of the

Constitution of India. RO Dealers/Direct Customers

are already under the control of the first respondent

Corporation and the same is not the case of the

petitioners who are just transporters. Therefore, it is

reasonable classification and the question of

discriminatory treatment does not arise.”

31. Therefore, the writ petitions challenging the various

clauses in the tender document have to fail on the ground that they

have participated in the tender process.

45

32. Be that as it may. I am of the view that condition B(9) is

not violative of the fundamental rights of Part III of the

Constitution of India. The ranking procedures dealt by Clause No.9

of Part B of tender evaluation in case of particular ranking, the tank

trucks offered are more than the requirement, then the tenderers in

that particular ranking will be further ranked based on the orders of

priority as elaborated therein. The Dealers/Direct Customers are

given preference over others as they are the total beneficiary of

tender to receive uninterrupted quality and quantity supplies in time

so as to supply to the customers and face competition in the

markets. They are the permanent feature of business

relations,unless any malpractice is committed by them. Hence,

utilizing their tank trucks and encouraging them in transportation is

highly essential to protect the supply of essential petroleum product

supplies from vagaries of en-route malpractices in quantity and

quality.

46

33. Maximum number of owned TTs offered is given with

next preference in the tender to promote transporters having more

number of owned TTs instead of depending on the TTs of the other

owners on attachment basis as the control over these TTs will be

more difficult and challenging and they are also not the direct

beneficiary. It involves the commitment of transporters as they own

more number of Tank Trucks in the contract. Maximum number of

TTs offered by the tenderer is given next preference in case of tie in

above evaluation to involve more commitment and for utilizing

their business acumen and commitment in the business as it was the

practical experience of the company that the tenders with less

number of TTs were indulging in malpractice and even if any

action is taken they are not much affected as affected by big

operators due to which the services of big operators are found to be

good. There is no merit in the contentions of the petitioners that

this clause is against public interest and has the effect of

concentrating economic power on some persons. Materials on

47

record would disclose that the contract has been awarded in favour

of several bidders, who satisfy the eligibility criteria. I do not find

any arbitrariness in the aforesaid clauses.

34. Coming to the other contention that since FIR has been

filed against Velumurugan, he should not have been granted any

contract and that his wife has also been granted the contract is

without any merit. It is needless to say that both of them had the

eligibility to apply for the grant of contract. The wife of

Velumurugan has been granted contract under the quota reserved

for Scheduled Caste and Scheduled Tribe. Velumurugan has been

ranked on the basis of the maximum number of owned TTs. It is

not the case of the petitioners that Velumurugan has been

blacklisted. The tender document provides procedure for the

blacklisting of the contractors. Mere filing of FIR does not amount

to blacklisting under the tender document. Therefore, the

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contention of the petitioners that Velumurugan should not have

been granted the contract is hereby rejected.

35. In the light of the above discussions, I pass the

following:

ORDER

(i) W.P.Nos.1813/2013, 1814/2013, 1815/2013 and 2000-

2001/2013 are dismissed.

(ii) The Indian Oil Corporation is directed to consider the

case of the petitioner in W.P.No.5074/2013 for grant of licence in

accordance with law. This writ petition is disposed of accordingly.

36. In view of the disposal of the writ petitions as above,

I.A.Nos.3/2013, 4/2013 and 6/2013 in W.P.Nos.1813/2013,

1814/2013 and 1815/2013 and I.A.No.2/2013 in W.P.Nos.2000-

49

2001/2013 do not survive for consideration. They are accordingly

dismissed. No costs.

Sd/- JUDGE.

BMM/-

dated this the 26 day of april 2013 -...

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