Tirupati Lpg Industries Ltd. And ... vs Bharat Petroleum Corpn. Ltd. And ...
2001 Latest Caselaw 918 Del

ORDER

Mukul Mudgal, J.

1. CM.4900/2001 is an application for stay and CM.6708/2001 is an application filed by respondent No.1 in C.W.No.2831/2001 for modification of Order of status quo dated 30th of May, 2001, passed on he petitioners' miscellaneous application CM.490/2001 for interim stay and Civil Writ Petitioner No.2911/2001 is another connected matter to be taken up Along with this petition. Both these applications are being disposed of by this common order. Even though the application CM.6708/2001 originally sought modification of the interim order dated 30.5.2001 qua 4,40,000 cylinders eventually the matter was argued by both the parties for modification/variation of the interim order dated 30.5.2001. Both petitions raise the challenge to what is termed as post tender negotiation contrary to CVC guidelines. The petitioners are manufacturers of LPG gas cylinders used for domestic consumption and the supply is made to government undertakings such as respondent-BPCL in what is termed as a closed and captive market. According to the petitions the terms of the tender require that the bidder supply cylinders to no party other than the 4 public sector oil undertakings and further that the lowest price offered to any such public sector undertaking be offered to all of them. No single manufacturer can, however, supply the entire demand. Hence even beyond the quantity ordered on the lowest tenderer, other manufacturers have to be looked at to fully satisfy the demand of about 35 lacs cylinders of respondent No.1. Floatation of tender by respondent No.1 evinced a response from several manufacturers including petitioners and all except Balmer Lawrie/the lowest bidder at the rate of Rs.645/- per cylinder (hereinafter referred to as L1) and one Sahoo Industries, quoted an identical rate of Rs.890/- per cylinder for supply at all places in India. This response at an identical rate by manufacturers all over the country was termed as cartelization by the respondent No.1. Since Balmer Lawrie, the lowest bidder, which is another public sector concern, could only partly meet the requirements of the respondent No.1, in accordance with their own policy, respondent No.1 was required to have more than one supplier. The respondent-BPCL had, therefore, sought the supplies by negotiations from the other bidders at a rate which is even lower than that of L1. The petitioners who are not such proposed suppliers at rates lower than L1 but had quoted higher rates, have sought to impugn such negotiations for a price lower than L1 and supply consequent thereto inter-alia on the grounds that they violate CVC guidelines and in particular the guideline which reads as follows:

"The most far reaching direction issued to tackle the monster of corruption and to usher in transparent and effective system in the tendering process is to ban negotiations. The Commission has banned all post tender negotiation with immediate effect except in the case of negotiations with L1 (i.e. lowest tenderer)."

2. An ex-parte interim order of status quo was passed on 30th of May, 2001, which is sought to be vacated by the present application filed by respondent No.1 mainly on the plea that such prevalence of status quo affects the procurement of cylinders by the petitioners from a source other than Balmer Lawrie & Co. Ltd. (L1) who are in a position only to supply 3.6 lacs cylinders out of a total requirement of 35 lacs cylinders and in spite of having willing suppliers at rates even lower than L1, respondent No.1 is not able to secure its supplies owing to the said order of status quo. On the other hand the petitioners have contended that they are willing to supply at the rates quoted by Balme Lawrie in spite of having quoted higher rates in their tender, and it is not open for the respondent NO.1 to act contrary to the above CVC guidelines to negotiate post tender even for arriving by negotiation at a rate lower than L1. The respondent NO.1 has submitted that public interest will be subserved by getting supplies of cylinder at a lower rate than L1, as it is a public sector undertaking. In any event, the plea of the respondent No.1 is that there is no violation of CVC guidelines as once Balmer Lawrie is out of the way upon confirmation of the supplies at the rate L1 for supply of cylinders, a fresh L1 (lowest tenderer) has to be located from those tenderers remaining after eliminating Balmer Lawrie for the balance need of cylinders and this can be done by negotiations and such negotiations for a lower rate for locating L1 afresh do not violate the CVC guideline.

3. The learned counsel for the petitioners has submitted that the consultant appointed by the public sector undertaking M/s Price Waterhouse had itself recommended rate of Rs.800/- per cylinder inclusive of all levies for the period 1st July, 1999 to 30th June, 2002. He thus contended that there was no cartelization and the figures quoted by the petitions were reasonable. He has further submitted that in this view of the matter interest of justice would require that the petitioners may be permitted to supply cylinders at the rate L1, quoted by Balmer Lawrie & Co. Ltd. He has further submitted that this would not affect public interest as the respondent No.1-BPCL in C.W.28318/01 & respondent NO.3-BPCL in C.W.2911/01 itself are sourcing only about 3.6 lacs cylinders from Balmer Lawrie and the balance have to be sourced from the non-L1 tenderers. He submitted that the petitioners being exclusive suppliers to the respondent public sector undertaking in a closed and captive market and being bound by the Clauses which forbid supply to any party expect the public sector undertaking, such and order pending the writ petition would eminently be in the interest of justice. He has also relied upon an Order dated 30th of May, 2001, passed by the Learned Single Judge and the Order dated 29th of June, 2001, passed by a Division Bench of this Court, declining to interfere with the said Order dated 30.5.2001. Learned counsel for respondent No.1-BPCL in C.W.2831/01 & respondent No.3-BPCL in C.W.2911/01, however, submitted that the public interest would be subserved if the respondents are permitted to negotiate for a rate lower than L1 and considering the fact that it is a public sector undertaking, public interest would be amply subserved by the lesser rates. He also submitted that the respondents not having joined the affected parties such as Gujarat Cylinders Pvt. Ltd. who has offered to supply at the rate of Rs.786/- per cylinder and M/s Jagdamba Engineering Pvt. Ltd., who offered to supply at the rate of Rs.690/- per cylinder, who are clearly affected parties by the Order of status quo dated 30th of May, 2001, the writ petition is not maintainable.

4. I am of the view that it will be in the interest of justice if pending the hearing of the petition the Order of status quo passed on 30th of May, 2001 is modified and accordingly it is directed that the respondents are permitted to negotiate for the lowest possible rates post tender. Prima facie, I am of the view that the plea of the learned counsel for the respondent-BPCL that with the ousting of Balmer Lawrie & Co. Ltd. a fresh L1 can be located as per the Clauses 1 to 4 is not devoid of substance. The relevant portions of the aforesaid Clauses read as under:

"1) The evaluation of the tenders will be based on the Net Delivered Price offer per State. Ranking of vendors will be based on the original quotation. Order distribution will be based on the evaluation criteria explained below.

2) Maximum order allocation on a party by the Corporation shall be limited, whichever is lower. Further, while accepting orders OMCs, the successful tenderer shall ensure that the total order accepted does not exceed 1.5 times the assessed capacity.

3) The minimum number of parties per state would be as under:

 Rule     Requirements of  Minimum Number
         State per annum  of Vendors
----     ---------------                --------------



         and including 2



 

4) If the number of lowest quotes (L1) for a particulars state is less than the minimum number of vendors as mentioned above, then L1 rate (with or without negotiations) may be offered to the second lowest quoted party/parties (L2), third lowest quoted party/parties (L3) and so on till the number of vendors is reached. If the parties to whom the revised rate is offered, accepted the revised offer, then such parties will be considered. However, for order distribution, all such parties in L2 and beyond will be treated as L2."

It cannot be held at this stage that Clause 2.4 of the direction of the CVC dated 18.11.98 read with Clause 4 of the tender conditions can bar the location of a fresh L1. Furthermore the present tender is different from the usual tenders where a tenderer bids for the whole quantity at stake at one go. It is not in dispute that supplier quoting L1 in the present case, is able to meet only 10% of the demand of respondent No.1-BPCL/applicant.

5. As an interim measure, public interest would not suffer, if the respondents are permitted to negotiate for obtaining lower rates post tender. The effect of the directive of Central Vigilance Commission is an issue which would be determined at the final hearing. At this interim stage, the attempt to locate lower rates prima facie cannot be said to breaching probity in the tender process. This is of course subject to the result of the writ petition. However, it is made clear that in respect of the price of cylinders which the petitions may supply even at the rates lower than L1 and in the event of the writ petition succeeding, the petitioners would be entitled to recover the price which may be found due and payable to them depending upon the result of the writ petition. In the event of petitioners' succeeding in the writ petition and the petitioners being held entitled to a higher price, such petitioners, which may have supplied any cylinders to the respondent No.1-BPCL/applicant will be entitled to recover the difference in, prices paid to them in the interregnum and the prices which they may be found entitled to in the event of success in the writ petition in case they have been called upon to supply cylinders, plus interest on the differences of price at 12% per annum.

6. The applications accordingly stand disposed of C.W.2831/2001

7. List on 23.8.2001 for further directions.