Swati Enterpprises vs Indian Oil Corporation Limited
2015 Latest Caselaw 8105 Del

*        IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                       Date of decision: 28th October, 2015

+                                 W.P.(C) NO.912/2010

         SWATI ENTERPPRISES                                   ..... Petitioner
                     Through:           Mr. Abhijat with Mr. Rishabh Bansal
                                        Advocates.

                                  Versus

    INDIAN OIL CORPORATION LIMITED          ..... Respondent

Through: Mr. M.M.Kalra with Ms. Sonali Kumar, Advocates CORAM:

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1. The petition impugns the disqualification by the respondent Indian Oil

Corporation Limited (IOCL) of the petitioner in the selection procedure for

appointment as Del Credere Associate Cum Consignment Stockist (DCA

cum CS)/ Del Credere Associate (DCA) at Chandigarh.

2. The petition was entertained and vide interim order dated 15th

February, 2010, which continues to be in force, any decision taken by the

respondent IOCL of appointment of a agent, was made subject to result of

the writ petition. Pleadings have been completed. The counsels have been

heard.

3. The petitioner, in response to an advertisement published by the

respondent IOCL inviting applications for appointment as aforesaid had

applied. The respondent IOCL vide its letter dated 31st August, 2009 sought

certain further information from the petitioner and which also the petitioner

claims to have furnished under cover of its letter dated 10 th September,

2009. The counsel for the petitioner has argued that the respondent IOCL

however did not inform the petitioner the outcome of its application

aforesaid compelling the petitioner to seek information on 29th December,

2009 under the Right to Information Act, 2005 and in response whereto

respondent IOCL on 21st January, 2010 informed that the petitioner has

failed to meet the following prescribed eligibility criteria:

               i)      Average turnover (last three completed
                       financial years) of Rs. 5 crore per annum from
                       marketing        and        distribution     of
                       Polymer/Petroleum/Petrochemical/ Chemical
                       good
               ii)    Minimum average net worth of the last three
                      completed financial years of Rs. 2 crore.

4. Challenging the reasoning aforesaid of the respondent IOCL, this

petition has been filed.

5. The counsel for the petitioner has drawn attention of this Court to the

Agreement / Memorandum of Understanding (MoU) dated 1st April, 2004

signed between Mr. Ramesh Kumar Gupta, sole proprietor of M/s Swati

Enterprises and M/s Sturdy Industries Ltd. and on the basis thereof has

argued that though the petitioner Swati Enterprises prior to 1st April, 2004

was the sole proprietory of Mr. Ramesh Kumar Gupta but vide said

agreement / MoU became a the sole proprietory of M/s Sturdy Industries

Ltd. However, on inquiry, it is informed that the said document was not

filed by the petitioner alongwith its application for appointment aforesaid

with the respondent IOCL. Attention is thereafter invited to the application

submitted by the petitioner to the respondent IOCL in response to the

advertisement aforesaid and particularly to the endorsement "All above

details relate to Sturdy Industries Ltd. being proprietor of Swati Enterprises"

against the column "Remarks if any", under column 5 titled "Financial

details" in the form in which the application was prescribed to be made. On

the basis thereof, it is contended that the petitioner had made it known to the

respondent IOCL that the financial details furnished by the petitioner were

the details of Sturdy Industries Ltd. being the proprietor of the petitioner.

Attention in this regard is also drawn to the extract of the resolution passed

in the meeting of the Board of Directors of Sturdy Industries Ltd., stated to

have been filed along with the application aforesaid.

6. The counsel for the petitioner has next invited attention to the letter

dated 31st August, 2009 of the respondent IOCL seeking clarification from

the petitioner and from the response dated 10th September, 2009 thereto it is

shown that all the clarifications sought were duly furnished. It is thus argued

that the respondent IOCL erred in treating the petitioner as not meeting the

requisite qualification of having an average turnover of Rs.5 crores in the

preceding three years and having minimum marketing net worth of Rs.2

crores in the previous three years. It is contended that the petitioner, on the

basis of the particulars furnished by Sturdy Industries Ltd., meets both the

said criteria.

7. Per contra, the counsel for the respondent IOCL has drawn attention

again to the application form submitted by the petitioner to highlight that

against the column name of the applicant therein, although the name of the

applicant is given as Swati Enterprises but the photograph affixed and the

signatures are of one Mr. Amit Gupta. Attention is also invited to the

affidavit accompanying the application which is of Mr. Amit Gupta, where

he has described himself as an Indian National and has referred to "our

proprietorship firm M/s Swati Enterprises" and has further stated that „he is

not a Stockist/Agent/Distributor for Polyethylene and Polypropylene of any

company‟. Attention is further invited to the medical fitness certificate again

given of the said Mr. Amit Gupta and to the documents accompanying the

application showing Swati Enterprises to be the proprietorship of Mr.

Ramesh Kumar Gupta. It is thus contended that there was nothing before the

respondent IOCL at that stage to know that the Sturdy Industries Ltd. was

the proprietor of Swati Enterprises, to relate the financial particulars of

Sturdy Industries Ltd. to Swati Enterprises. It is yet further argued that

Sturdy Industries Ltd. had filed an application for appointment for a different

location and which was not permissible. The counsel for the respondent

IOCL has also stated that Mr. Ramesh Kumar Gupta is also a partner of M/s

United Polymer Industries, stockist of GAIL India Ltd. It is however

clarified that it is not so pleaded in the counter affidavit.

8. The counsel for the petitioner in rejoinder has controverted that there

was any prohibition in applying for two different locations. He has in this

regard invited attention to the Guidelines published by the respondent IOCL

at the contemporaneous time for filling up of application forms and which

provided that the applicant who is authorised Distributor / Consignment

Stockist for any Indian or Foreign Plastic Raw Material Co., will have to

submit an undertaking along with the application to disengage himself from

such appointment, upon being selected as an agent for which application was

made. It is argued that the form of affidavit was also prescribed and Mr.

Amit Gupta aforesaid has furnished the affidavit aforesaid in the said form

only.

9. I have at the outset enquired, whether in pursuance to the

advertisement inviting application aforesaid any appointment has been made

and whether the person who so appointed has been impleaded as a party to

the present petition, inasmuch as finding an error in the selection process

aforesaid would necessarily entail setting aside of the agreement entered into

by the respondent IOCL with any other person.

10. The counsel for the petitioner states that the petitioner has no

knowledge of the same. He has further contended that no such thing has

been disclosed in the counter affidavit also. He has further stated that the

petitioner, even if not made an agent, would upon being successful be

entitled to claim damages against the respondent IOCL.

11. Counsel for the respondent IOCL, under instructions, states that M/s

GLS Industries (P) Ltd. has been appointed in 2010 itself.

12. I may in this regard notice that the petitioner, while making the query

under the Right to Information Act (RTI) 2005, had also sought the result of

the selection process and in response to the said RTI inquiry, the petitioner

was informed of the other applicants M/s Punjab Oil Machinery Stores,

Dana Mandi, Phagwara having scored 68 marks in the selection process and

M/s GLS Industries (P) Ltd. having scored 79 marks in the selection process.

The petitioner was thus aware of M/s GLS Industries (P) Ltd. having scored

the maximum marks in the selection process. The counsel for the petitioner

however states that the response to the RTI query did not disclose the

contract having been awarded to M/s GLS Industries (P) Ltd. or M/s GLS

Industries (P) Ltd. having been appointed as an agent of the respondent

IOCL at Chandigarh.

13. In my view, once this Court had not granted stay of appointment, as

sought by the petitioner by way of interim relief and had only granted relief,

of the decision making being subject to the outcome of the writ petition, it

was incumbent upon the petitioner to, if did not know, find out, as to who

had been selected and to implead the selected candidate with whom the

contract had been entered into as a party to this writ petition, to be entitled to

any final relief in this writ petition. Without the party who has been

appointed being before this Court, this Court, even if finds any error in the

decision of the respondent IOCL to disqualify the petitioner, would not be

entitled to set aside the appointment, which I am told is not for any definite

period. The petition is thus liable to be dismissed on this ground alone.

14. Though, in view of the aforesaid, there is no need for this Court to

render any finding on merits but for the sake of completeness and having

heard counsels, I proceed to do so.

15. The counsel for the petitioner, to satisfy my judicial consciousness

with respect to the genuineness of the agreement / MoU dated 1st April,

2004, has also taken me through the other documents pertaining to Sturdy

Industries Ltd, on record. However, need to advert thereto is not felt,

inasmuch as, I am of the opinion from the reading of the documents

aforesaid that the petitioner though appears to have, pursuant to the

agreement / MoU dated 1st April, 2004 become a sole proprietory of the

Sturdy Industries Ltd. but in 2009 while making application aforesaid to the

respondent IOCL did not make a clean disclosure of the state of affairs and

the possibility of the respondent IOCL in the absence of the petitioner

clarifying the position not knowing the relationship between the petitioner

and the Sturdy Industries Ltd., cannot be ruled out. The said action of the

petitioner could either be innocent or could also be guided by a desire to

become an agent of the respondent IOCL with respect to two different

locations under two names namely Swati Enterprises Ltd. and Sturdy

Industries Ltd. and which it admittedly was not entitled to, inasmuch as,

though a company can be a proprietor of business in an assumed name,

different from that of the company, but the said assumed name has no

independent legal identity and the only entity which exists in law is a limited

company.

16. The documents filed by the petitioner along with its application

showed Swati Enterprises to be a sole proprietory of Mr. Ramesh Kumar

Gupta. Though the petitioner also filed a copy of the Resolution of the

Board of Directors of M/s. Sturdy Industries Ltd. authorising Shri Amit

Gupta to make application on its behalf and also filed financial documents of

M/s. Sturdy Industries Ltd. but without disclosing that Shri Ramesh Kumar

Gupta had transferred the business being carried on by him in the name of

the petitioner Swati Enterprises to M/s. Sturdy Industries Ltd. Admittedly

the Agreement/MoU aforesaid signed between Shri Ramesh Kumar Gupta

and M/s. Sturdy Industries Ltd. in this regard was not filed with the

application. In the absence of any explanation and / or the copy of the

Agreement/MoU, no error requiring interference by this Court can be found

in the failure of the respondent IOCL to co-relate the financial details of M/s.

Sturdy Industries Ltd. with the petitioner. I may in this regard notice that the

petitioner in the application form also described itself as a proprietory

instead of as a limited company as it ought to have and nowhere stated that

M/s. Sturdy Industries Ltd. was its proprietor. The fact that it was not clear

to the respondent IOCL that the petitioner is a sole proprietory of M/s.

Sturdy Industries Ltd. ought to have been evident to the petitioner also from

the communication dated 31st August, 2009 of respondent IOCL in which

respondent IOCL sought balance sheet and financial details specific to Swati

Enterprises. The petitioner however in its reply dated 10 th September, 2009

also did not clarify the position or forward a copy of the Agreement/MoU

aforesaid between Shri Ramesh Kumar Gupta and M/s. Sturdy Industries

Ltd.

17. The jurisdiction of this Court in exercise of powers under Article 226

of the Constitution of India in the matter of entering into of a contract, by a

Body which qualifies as a State within the meaning of Article 12 of the

Constitution of India, is limited to ensuring that decision making is not

arbitrary or motivated and not guided by extraneous considerations. In the

present case, the counsel for the petitioner, on enquiry, has admitted that no

act of any mala fide on the part of any officer of the respondent IOCL in

disqualifying the petitioner and / or any extraneous reason in choosing M/s

GLS Industries (P) Ltd. have been pleaded, though he contends that the same

is obvious.

18. However, merely because in the light of the documents produced

before this Court it is obvious that respondent IOCL erred in co-relating the

financial documents of M/s. Sturdy Industries Ltd. with the application of

the petitioner is no reason to hold that the decision of the respondent IOCL

dis-qualifying the petitioner for the reason of ambiguity of the relationship

of the petitioner with M/s Sturdy Industries Ltd. is required to be set aside or

interfered with.

19. Supreme Court in Jagdish Mandal Vs. State of Orissa (2007) 14 SCC

517 held that judicial review of administrative action is intended to prevent

arbitrariness, irrationality, unreasonableness, bias and mala fides but

cautioned that a Court, before interfering in a tender or contractual matter in

exercise of power of judicial review, should pose to itself the questions

whether the process adopted or decision made by the authority is mala fide

or intended to favour someone or whether the process adopted or decision

made is so arbitrary and irrational that the Court can say that the decision is

such that no reasonable authority acting reasonably and in accordance with

relevant law could have reached and whether public interest is affected. It

was further held that if the answers to the said questions are in the negative

then there should be no interference under Article 226. This view has been

reiterated in Michigan Rubber (India) Ltd. Vs. State of Karnataka (2012) 8

SCC 216 and in Maa Binda Express Carrier Vs. North-East Frontier

Railway (2014) 3 SCC 760.

20. Similarly, in Nirmala J. Jhala Vs. State of Gujarat (2013) 4 SCC 301

it was held that the parameter of Court‟s power of judicial review of

administrative action or decision is limited. An order can be set aside, if it is

based on extraneous grounds or when there are no grounds for passing it or

when the grounds are such that no one can reasonably arrive at the opinion.

The Court cannot sit as a Court of appeal but it merely reviews the manner

in which the decision was made. The Court will not clearly exercise its

power of judicial review unless it is found that formation of belief by the

statutory authority suffers from mala fide, dishonest / corrupt practise. If the

authority is found to have acted in good faith, neither the question, as to

whether there was sufficient evidence before the authority can be raised /

examined nor the question of re-appreciating the evidence to examine the

correctness of the order under challenge arises. The jurisdiction of judicial

review is circumscribed and confined to correct errors of law or procedural

error if any resulting in manifest, miscarriage of justice or violations of

principles of natural justice.

21. Therefore, I do not find any merit in the petition.

22. Dismissed.

No costs.

RAJIV SAHAI ENDLAW, J.

OCTOBER 28, 2015 Gj..

(corrected & released on 20th November, 2015)