Andhra Pradesh High Court - Amravati
Indian Oil Corporation vs Sree Vijay Ganapathi Transport on 17 October, 2024
1
HCJ & RRR,J
W.A.Nos.680 & 681 of 2024
IN THE HIGH COURT OF ANDHRA PRADESH: AMARAVATI
HON'BLE MR. JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE
&
HON'BLE MR. JUSTICE R. RAGHUNANDAN RAO
W.A.Nos.680 & 681 of 2024
(Through physical mode)
BETWEEN:
Indian Oil Corporation,
Rep. by its Chief General Manager (OPS) TAPSO,
Malkapuram, Visakhapatnam,
Andhra Pradesh - 530011.
...Appellant
(in both W.As)
Versus
1. Sree Vijay Ganapathi Transport,
Rep. by its Managing Partner Sri D. Rama Naidu,
S/o. Chinna Appa Rao, R/o. D.No.65-3-135,
Nehru Nagar, Coramandal Gate,
Malkapuram, Visakhapatnam - 530011, and another.
...Respondents
(in both W.As)
Counsel for the appellants : Sri O. Manohar Reddy, representing
Sri S.V.S.S. Siva Ram
Counsel for respondent No.1 : Sri P. Kamalakar
2
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W.A.Nos.680 & 681 of 2024
COMMON JUDGMENT
Dt:_____.10.2024
(per Hon'ble Sri Justice R.Raghunandan Rao)
As both the writ appeals arise out of the same set of facts and
between the same parties, they are being disposed of by way of this
common judgment.
2. Heard Sri O. Manohar Reddy, learned Senior Counsel
representing Sri S.V.S.S. Siva Ram, learned counsel appearing for the
appellant in both writ appeals and Sri P. Kamalakar, learned counsel
appearing for the 1st respondent in both writ appeals.
3. The appellant, which is an Oil Marketing Company, for the
purpose of transport of its petroleum products, had issued a tender,
dated 22.05.2023, calling for bids from tank truck owners, for road
transportation of bulk petroleum products with effect from 01.08.2023,
for a period of two years, with an option for extension up to one year.
The tender was issued for employing 61 tank trucks.
4. The 1st respondent, which is registered under the Micro
Small and Medium Enterprises Act, 2006, had offered six tank trucks in
his bid. However, the 1st respondent received a letter of acceptance
dated 08.09.2023 for only one tank truck and a work order was also
issued on 05.10.2023.
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5. Subsequently, the 1st respondent came to know that one of
the successful bidders, who had been allotted one tank truck, could not
produce the necessary tank truck and the letter of acceptance and work
order given to the said bidder, were withdrawn. The 1st respondent had
then made a representation, dated 26.10.2023, for supplying the tank
truck, in the place of the said bidder whose letter of acceptance and
work order had been withdrawn. As this representation was not being
considered, the 1st respondent filed W.P.No.31150 of 2023 before this
Court and an interim direction, dated 01.12.2023, was issued to the
appellant to consider the representation of the 1st respondent as per the
existing guidelines / tender conditions, within a period of two weeks. In
pursuance of these directions, the appellant considered the
representation, dated 26.10.2023, and rejected the same. Aggrieved by
this rejection, the 1st respondent filed W.P.No.1268 of 2024, which came
to be disposed of, by an order, dated 23.04.2024, by a learned Single
Judge of this Court, setting aside the order of rejection dated
26.12.2023 with a direction to the appellant to reconsider the request of
the 1st respondent within a period of four weeks from the date of receipt
of the order.
6. The appellant, after receipt of this order, had rejected the
representation again, by way of an order, dated 22.05.2024. Aggrieved
by the said rejection, the respondent again approached this Court by
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way of W.P.No.14748 of 2024. In this writ petition, a learned Single
Judge of this Court, by way of an interlocutory order, dated 12.07.2024,
had directed the appellant to award the contract of the tank trucks to
the 1st respondent in view of the cancelled letter of acceptance by the
appellant, pending disposal of the writ petition.
7. Aggrieved by the order, dated 23.04.2024, in W.P.No.1268
of 2024, the appellant moved W.A.No.681 of 2024 before this Court.
Similarly, W.A.No.680 of 2024 was moved against the interlocutory
order dated 12.07.2024 in W.P.No.14748 of 2024.
8. The case of the 1st respondent/writ petitioner before the
learned Single Judge, in W.P.No.1268 of 2024, was that once a work
order for a tank truck has been withdrawn, the appellant corporation
has the power and authority to modify the tender and fill up the gap by
calling upon the qualified bidders, who are ranked next in line to supply
tank trucks. The 1st respondent also contended that such a course of
action would not prejudice anybody and would only result in savings for
the appellant corporation.
9. The appellant corporation contended that the shortfall
created by the withdrawal of any of the tenderers, from a finalized
contract, cannot be given to other tenderers in the said tender. It is also
submitted that there is no provision in the tender for issuance of
additional letter of acceptance as contended by the 1st respondent.
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10. The learned Single Judge, after noticing various clauses in
the tender, had held that the appellant corporation has power and
authority to continue to process the hiring of tank trucks till the entire
requirement of the appellant corporation, set out in the tender
document, is met. The learned Single Judge, while holding that there
was no clause or provision for issuance of letter of acceptance in lieu of
cancelled letter of acceptance, had held that the clauses also stipulate
that tank trucks should be allocated to successful tenderers till the full
requirement of the tank trucks is met, and the process has to be
continued till such requirement is met. The learned Single Judge held
that in such circumstances, rejecting the representation of the 1st
respondent would amount to an unreasonable exercise of discretionary
power, in the light of the judgment of the Hon'ble Supreme Court in
Shanti Vijay & Co., vs. Princess Fatima Fouzia 1, and set aside the
proceedings dated 26.12.2023 with a direction to the appellant to
reconsider the request of the 1st respondent.
11. Sri O. Manohar Reddy, learned Senior Counsel representing
Sri S.V.S.S. Sri Ram, learned counsel appearing for the appellant
corporation, would contend that the learned Single Judge ought not to
have entertained the writ petition, as the issue relates to interpretation
of tenders, on contractual terms; the judgment of the Hon'ble Supreme
(1979) 4 SCC 602
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Court in the case cited above, would not be applicable to the facts of the
present case, in as much as the observations of the Hon'ble Supreme
Court arose in a case where exercise of discretionary power by the
trustees, in the absence of a contract, has come up for consideration
while there is a contract with specific terms and conditions in the
present case; the 1st respondent does not have any vested right for being
given letter of acceptance for one more tank truck, especially, when all
other tenderers would also be entitled to participate, and contend, for
giving the tank truck, on hire, to the appellant corporation; the learned
Single Judge ought to have noticed that the requirement of 61 tank
trucks given in the tender was qualified by Clause-I of the tender, which
stated that the estimated requirement is indicative and subject to
change; the appellant was at liberty to increase or reduce the number of
tank trucks, and in the present case, the requirement of the appellant
was met by hiring 56 tank trucks, after which the tender had been
closed; and the clause relating to acceptance of tank trucks at L.2 rates
after all L1 bidders had been exhausted, does not mean that tank trucks
offered at L.2 rate have to be hired irrespective of whether the appellant
corporation requires the said tank trucks or not.
12. Sri P. Kamalakar, learned counsel appearing for the 1st
respondent would contend that there is no error in the order of the
learned Single Judge, which requires to be looked into by this Court. He
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would further submit that as far as W.A.No.680 of 2024 is concerned,
the same is against the interlocutory order, and as such, the writ appeal
is not maintainable.
13. The learned Single Judge, after noticing Clause-3 of Chapter
"Opening of Tender", Clause 4 of "Tender terms" and Clauses 6, 8 and 9
of Chapter "Evaluation of Tenders" had come to the conclusion that tank
trucks would have to be allocated to the successful tenderers till full
requirement of the tank trucks is met. On the basis of this finding, the
learned Single Judge had come to the conclusion that the appellant
corporation would have to be offered the tank trucks, which could not be
suffered by other successful tenderers and to the eligible tenderers in
the tender.
14. The learned Single Judge had arrived at this conclusion on
the basis of Clause 6, 8 and 9 which read as follows:
"Clause-6: In case, Tank Trucks offered by L-1
tenderers is not meeting full requirement then the L-1
rate / revised rate accepted by L-1 tenderers would be
offered to all the remaining successful tenderers, Tank
Trucks shall be allocated at above rates till full
requirement of Tank Trucks is met.
Clause-8: In case requirement is not met by the Tank
Trucks offered by the tenderers accepted L-1 rate /
revised rate accepted by L-1 tenderers, negotiations /
counter offer exercise shall be carried out with the
tenderers who are at highest ranking amongst
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remaining tenderers who have not accepted above rates
and the Tank Trucks offered by these tenders accepted
L-2 rate shall be allocated up to the requirement.
Clause-9: In case, Tank Trucks offered by the tenderers
accepted L-2 rate is not meeting full requirement then
the L-2 rate would be offered to all the remaining
successful tenderers who have not accepted L-1 rate /
revised rate accepted by L-1 tenderers and based on
their ranking and acceptance by the tenderers, Tank
Trucks shall be allocated at above rates till full
requirement of Tank Trucks is met. In case the
requirement is still not met, IOC shall have the option to
continue the above process.
15. Clause-9 of the tender terms and conditions stipulates that
the estimated number of tank trucks shown in the tender notice is
indicative and is subject to change. IOC reserves the right to contract
additional tank trucks. In view of this clause, no finding can be arrived
at, that there is a firm offer of hiring 61 tank trucks, and that the
process of hiring will continue till 61 tank trucks, at the very least, are
hired.
16. The aforesaid Clauses 6, 8 & 9 in the Evaluation of Tenders
are in relation to the hire rate at which the tank trucks would be taken
by the appellant corporation.
17. A conjoint reading of the aforesaid Clauses would clarify that
the appellant corporation would hire only tank trucks, which are offered
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W.A.Nos.680 & 681 of 2024
at the lowest price. If the trucks offered at the lowest price are not
sufficient to meet the requirement of the appellant-corporation, all the
tenderers would be given an opportunity to match the lowest rate and
tank trucks offered by any bidder at the lowest rate would also be taken.
Even if these trucks are not sufficient, the trucks offered at the second
lowest rate would be accepted. Thereafter, the tenderers would again be
given an option to match the second lowest rate and their trucks would
be taken and so on and so forth, till the requirement of the appellant
corporation is met. This, again does not mean that the appellant
corporation is bound to carry on this process till all the tank trucks are
hired. A practical reason why such an interpretation cannot be placed
on the tender conditions is the fact that the corporation would always
have the option of rejecting all or any of the bids if the appellant
corporation finds that the rate offered by the bidders is not
commercially viable. Similarly, the appellant corporation may find the
lowest rate commercially viable while the second lowest rate may not be
commercially viable or acceptable to the appellant corporation. In such
circumstances, there cannot be a direction that the corporation has to
hire all the tank trucks which are offered, irrespective of the fact
whether the rate offered for such tank trucks is acceptable to the
appellant corporation or not.
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18. The initial order of rejection, dated 26.12.2023, was passed
on the ground that there was no tender clause or provision for issuance
of additional letter of acceptance in lieu of a cancelled letter of
acceptance in the tender document and the shortfall cannot be filled for
a finalized contract. This contention is in relation to the interpretation
of the contract by the appellant corporation.
19. It can be argued that interpretation of these clauses, placed
by the 1st respondent, are also equally tenable. Even if such a situation
was to be accepted, the Hon'ble Supreme Court in the case of Slippi
Constructions Contractors vs. Union of India2 and in Agmatel India Pvt.
Ltd., vs. REsoursys Telecom & Ors.,3, had held that the author of the
tender document would be the best person to understand and appreciate
the requirements of the tender and the interpretation placed by the
author of the tender should be accepted even if there could be an
alternative interpretation of the tender conditions.
20. In that view of the matter, the judgment of the learned
Single Judge, dated 23.04.2024 in W.P.No.1268 of 2024 is set aside. As
W.P.No.14748 of 2024 is consequential to the directions of the learned
Single Judge in W.P.No.1268 of 2024, nothing further would survive in
the said writ petition. Consequently, the interim direction given in
W.P.No.14748 of 2024 would also have to be set aside.
(2020) 16 SCC 489
(2022) 5 SCC 362
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21. Accordingly, both the writ appeals are allowed setting aside
the orders of the learned Single Judge in W.P.No.14748 of 2024 and
W.P.No.1268 of 2024. There shall be no order as to costs.
As a sequel, pending miscellaneous petitions, if any, shall stand
closed.
DHIRAJ SINGH THAKUR, CJ R. RAGHUNANDAN RAO, J
JS.
HCJ & RRR,J
W.A.Nos.680 & 681 of 2024
HON'BLE MR. JUSTICE DHIRAJ SINGH THAKUR, CHIEF JUSTICE
&
HON'BLE MR. JUSTICE R. RAGHUNANDAN RAO
W.A.Nos.680 & 681 of 2024
(per Hon'ble Sri Justice R.Raghunandan Rao)
_______ October, 2024
JS
