Ravinder Singh vs Indian Oil Corporation Limited
2009 Latest Caselaw 140 Del

*         HIGH COURT OF DELHI : NEW DELHI

+         Writ Petition (Civil) No.8321 of 2008

                                   WITH

Writ Petition (C) Nos.8322/2008, 8323/2008, 8324/2008, 8326/2008,
8328/2008, 8329/2008, 8331/2008, 8334/2008 & 8325/2008

                                  Judgment reserved on: January 7, 2009

%                                 Judgment delivered on: January 19, 2009

Ravinder Singh
Proprietor
M/s Rohit Road Lines
House No. 533
V.P.O. Kurar Ibrahimpur
District Sonepat - 131 001
Haryana                                               ...Petitioner

                      Through Mr. B.L. Wali with Mr. K.S. Negi,
                              Advocates

                      Versus

Indian Oil Corporation Limited
Delhi & Haryana State Office
OPS Department, 2nd Floor
World Trade Centre
New Delhi
(Through its Managing Director)                       ...Respondent

                      Through Mr. Abhinav Vashisht with
                              Mr. Raman Kumar, Advocates

Coram:

HON'BLE MR. JUSTICE MADAN B. LOKUR
HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

WP (C) No.8321/2008                                           Page 1 of 12
 1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                     Yes

2. To be referred to Reporter or not?                                  Yes

3. Whether the judgment should be reported
   in the Digest?                                                      Yes


MADAN B. LOKUR, J.

The question of law raised for consideration in this batch of writ

petitions under Article 226 of our Constitution is whether the Petitioners are

entitled to the award of a contract for road transportation of bulk petroleum

products pursuant to a tender issued by the Respondent. Our answer to the

question is in the negative.

2. In our opinion, the Petitioners had no vested or even any accrued

right to the award of a contract. The Respondent followed a fair, methodical

and transparent system of awarding the contract and we do not find any

discrepancy in the procedure followed by the Respondent. Merely because

the Petitioners were agreeable to the rates given by the lowest bidder, it did

not give then any right to a share in the transportation process.

3. As agreed by learned counsel for the parties, we have taken up

WP (C) No. 8321 of 2008 as the main case. All other cases have more or

less similar facts and nothing materially dissimilar has been brought to our

notice.

4. On or about 20th June, 2008 the Respondent issued a tender for

the road transportation of bulk petroleum products ex Panipat Terminal. The

estimated tank truck (TT) requirement was 631 TTs of 12 KL capacity and

111 TTs of 18/20 KL capacity making a total requirement of 742 TTs.

Sealed tenders were invited for transportation with effect from 1 st October,

2008 for a period of two years with an option for extension up to a further

period of one year.

5. In response to the tender, the Respondent received 525 bids for a

total of 1514 TTs. Some of the bids were liable for rejection being either in

an unsealed or open condition or without the earnest money deposit. There

were, in all, 499 successful bidders and they were given a ranking based on

the quoted rate. The lowest quoted rate was ranked L-1 and the highest was

ranked L-79.

6. Eight of the tenderers were ranked L-1 and they gave a total offer

of 47 TTs. These were naturally accepted by the Respondent. Since there

was still a huge shortfall in the required quantity, the Respondent addressed

a letter to all the successful tenderers on 15 th October, 2008 enquiring

whether they would be agreeable to transport the goods at the L-1 rate.

According to learned counsel for the Petitioners, this letter is of some

importance and so we quote its relevant portions.

"Ref. : DSO/OPS/POL/BULK/2008/01/PNP/22 M/s Rohit Road lines H.No.-533 V.P.O :- Kurar Ibrahimpur Distt.- Sonepat Pin :-131001 Kurar Ibrahim Pur

SUB: POL TRANSPORTATION TENDER EX PANIPAT:

TENDER NO. DSO/OPS/POL/BULK/2008/01/PNP

Dear Sir,

This is with reference to your bid submitted against the subject tender, further correspondence had with you and the SMS sent on your mobile number as given in the tender.

Further to the opening of Price Bid on 14.10.08, the L1 rate of

Rs 61.2 per KL and Rs 1.31 per KL per KM

received is being offered to you for your acceptance/ non- acceptance for the subject tender.

Kindly intimate your written acceptance / non-acceptance of our above offer latest by 22nd of Oct '08. Your acceptance / non-

acceptance letters may be sent to our Delhi State Office at the address given below:

Operations Department, Indian Oil corporation Ltd World Tade Center, Barkhamba Road, New Delhi - 110001

In case no intimation is received by us till office working hours of 22nd of Oct'08, it will be presumed that our above offer of L1 rate is not acceptable to you.

You are also requested to please note that this letter only seeks your acceptance / non-acceptance of the above offer. Receipt of this letter in no way should be construed as an offer or assurance of LOI / Work Order / Award of business for any/all trucks offered by you. Final allocation will be done in line with the Tender Terms and Conditions given in the Tender Document.

Thanking you,

Yours Truly For Indian Oil Corporation Ltd."

7. Some of the successful bidders answered the enquiry in the

affirmative and some did not. The Petitioners were agreeable to transport

the goods at the L-1 rate. According to the Petitioners since they had agreed

to the L-1 rate, they should have been awarded the contract.

8. However, what the Respondent did (and we find nothing

objectionable about it) was that it awarded the balance TTs to identified

groups mentioned in the terms of the tender document. The identified

groups were (a) retail outlet dealers/customers of the Respondent; (b) SC

and ST tenderers; (c) the rest as per their initial ranking. The system

followed by the Respondent has been explained in its counter affidavit. The

sum and substance of the exercise undertaken suggests that the under-

mentioned grouping was adopted:

The first or (a) preference was given to the retail outlet

dealers/customers of the Respondent. This was in terms of Clause A-10(a)

and Clause B-9 of the tender. From this category, the Respondent could

meet the requirement of 402 TTs. Clause A-10(a) and Clause B-9 of the

tender read as follows:

"A-10(a) IOC existing RO Dealers/ Consumers can participate in this tender for award of transport contract. IOC reserves the right to give preference to award transport contract to their RO dealers/ consumers for transporting their own load requirements subject to their acceptance of L-1 rates offered by the Company at first instance. RO Dealers / Consumers not accepting L-1 rate offered by the company at first instance shall be treated at par with other tenderers and shall be evaluated based on their original rankings."

"B-9. RO Dealers/ Direct Customers who are offering Tank Trucks only for their own supplies and RO Dealers offering tank trucks for supplies to consortium of RO Dealers and RO Dealers earmarking owned tank trucks for their own supplies shall be

allocated on acceptance of L-1 rate/revised rate accepted by L-1 tenderers. For meeting remaining requirement, based on the ranking and acceptance by the tenderers, Tank Trucks would be allocated at above rates till full requirement of Tank Trucks is met."

The second or (b) preference was then given to SC and ST

tenderers. However, since these tenderers had already been accommodated

in the retail outlet dealers/customers category or had not accepted L-1 rate,

no one from these categories actually benefitted from the preferential

treatment.

The third or (c) preference was given to the rest depending upon

their original ranking. This was in terms of the last sentence of Clause B-9

of the tender quoted above. As a result of this, the tenderers ranking from L-

2 to L-26 were accommodated (except one of the bidders at L-16 who did

not accept the L-1 rate). Thus, 40 tenderers accounting for 274 TTs were

given the contract.

9. Out of the total requirement of 742 TTs, the Respondent had by

this method given contracts for 47+402+274 = 723 TTs. There was still a

shortfall of 19 TTs and L-27 consisted of 5 bidders offering 31 TTs.

10. The Respondent then took resort to Clause B-10 of the tender for

distributing the contract for the remaining 19 TTs. Clause B-10 reads as

follows:

"In case, for a particular ranking, Tank Trucks offered are more than the requirement then the tenderers in that particular ranking shall be further ranked based on the following order of priority and allocations shall be made only till such time the full requirement of Tank Trucks is met and the tenderers who are ranked lower in that particular ranking may not get any allocation.

i) Tank trucks offered by RO Dealer / Customer.

ii) Maximum number of TTs offered by the tenderer.

iii) Maximum number of owned TTs offered.

iv) Tenderer offering highest number of 18/20 KL TTs."

11. In the L-27 ranking, one tenderer had given an offer of 10 TTs

and another had given an offer of 6 TTs. Since they fell in group (ii) of

Clause B-10 of the tender [no one falling in group (i)] they were both given

the contract. The balance 3 TTs were given to the L-27 tenderer falling in

group (iii) of Clause B-10 of the tender. In fact, 5 TTs (2 additional) were

given to this tenderer, being marginally over the estimate of 742 TTs.

12. On the facts of the case, we find that not only did the Respondent

follow a fair, reasonable and practical system of allocation of TTs, but also

that it was in accordance with the tender document. No one had objected to

or challenged any of the clauses of the tender document mentioned above,

and now it is too late in the day for anyone to do so. Indeed, learned counsel

for the Petitioners told us that no one was challenging the terms of the

tender. Consequently, we need not spend any further time on this issue.

13. What is the position in law? Learned counsel for the Petitioners

cited Common Cause v. Union of India & others, (1996) 6 SCC 530

wherein the Supreme Court referred (in paragraph 26 of the Report) to

Ramana Dayaram Shetty v. International Airport Authority of India,

(1979) 3 SCC 489 in the following words:

"This Court as far back as in 1979 in Ramana Shetty case held "it must, therefore, be taken to be the law ..." that even in the matter of grant of largesses including award of jobs, contracts, quotas and licences, the Government must act in fair and just manner and any arbitrary distribution of wealth would violate the law of the land."

14. There is no doubt about the proposition of law laid down by the

Supreme Court. Indeed, there is a host of other decisions of the Supreme

Court on the subject, such as, Fertilizer Corporation Kamgar Union

(Regd.) v. Union of India, (1981) 1 SCC 568, Collector of Central Excise

v. Dunlop India Ltd., (1985) 1 SCC 260, Tata Cellular v. Union of India,

(1994) 6 SCC 651, Ramniklal N. Bhutta v. State of Maharashtra, (1997) 1

SCC 134, Raunaq International Ltd. v. I.V.R. Construction Ltd, (1999) 1

SCC 492, Air India Ltd. v. Cochin International Airport Ltd., (2000) 2

SCC 617 and so on. As long as an administrative or commercial decision is

not fanciful, unrealistic or irrational, it ought not to be interfered with only

because a better or different view could have been taken. It is precisely for

dealing with such situations that the Courts must grant some latitude to the

decision taking authority. Justice Holmes in Bain Peanut Company v.

Dave Pinson, 282 US 499 put this rather felicitously in the following

words:

"We must remember that the machinery of government would not work if it were not allowed a little play in its joints."

Of course, this was said in the context of constitutional principles being not

too literally applied, but the general principle has been accepted by our

Supreme Court in a variety of cases including in cases involving

administrative decisions. (See for example, Tata Cellular v. Union of

India, (1994) 6 SCC 651, Sterling Computers Ltd. v. M&N Publications

Ltd., (1993) 1 SCC 445) and more recently in Dhampur Sugar (Kashipur)

Ltd. v. State of Uttaranchal, (2007) 8 SCC 418 [where the expression "play

in the joints" has been incorrectly referred to as appearing in Metropolis

Theater Company v. State (should be City) of Chicago, 228 US 61].

Consequently, merely because a decision is not palatable to the Petitioners,

it can hardly be a ground in law to set it aside.

15. Learned counsel for the Petitioners contended that acceptance of

the offer made by the Respondent in its letter dated 15 th October, 2008

entitled the Petitioners to an award of the contract. We are afraid that the

Petitioners have completely misread the letter. All that it solicits from the

Petitioners is a response whether or not they are willing to accept the L-1

rate. The apparent reason for asking this query was only to narrow down the

list of successful bidders - nothing more or less. As luck would have it,

most of the bidders accepted the L-1 rate and so they continued in the

reckoning, while some of them did not, with the result that they dropped out

of contention. Moreover, the letter itself made it explicit that its receipt

should not be construed "as an offer or assurance of LOI / Work Order /

Award of business for any/all trucks offered by you." This being so, the

letter cannot be interpreted to mean that a definite offer was being made to

the Petitioners for acceptance of the contract at the L-1 rate.

16. For all the above reasons, we do not find any merit in the writ

petitions. They are accordingly dismissed. Since the Petitioners have

enjoyed the benefit of an interim arrangement in their favour, they will pay

costs of Rs.10,000/- each. Each Petitioner is directed to deposit this amount

by means of a demand draft drawn in favour of the Registrar General of this

Court within four weeks from today.

17. List for compliance on 27th February, 2009.

                                          MADAN B. LOKUR, J




January 19, 2009                          SIDDHARTH MRIDUL, J
ncg

Certified that the corrected copy of
the judgment has been transmitted
in the main Server.