Telangana High Court

Praksash Singh vs The Union Of India on 6 June, 2022

Bench: G.Radha Rani

               * THE HON'BLE Dr. JUSTICE G. RADHA RANI

                      + WRIT PETITION No.18632 of 2022

% 06.06.2022

# Prakash Singh S/o. Balam Singh,
Aged about 37 years, Occ: Business,
R/o.H.No.15-243, Vivekananda Nagar,
Jeedimetla, Hyderabad
                                                               .... Petitioner
                Vs.

$ The Union of India,
Rep. by its Principal Secretary,
Ministry of Petroleum and Natural Gas,
New Delhi, India and another
                                                         ..... Respondents

!Counsel for the Petitioner        :   Sri R. Sushanth Reddy


Counsel for the Respondents        :   Sri Dominic Fernandes
                                       Ms. B. Nava Pravalika Goud

<Gist :

>Head Note:

? Cases referred:

          1.    (2012) 8 SCC 216
          2.    2017 14 SCC 517
          3.    (2013) 7 SCC 1
                                                                              Dr.GRR,J
                                       2                           WP No.18632 of 2022



           THE HON'BLE Dr. JUSTICE G. RADHA RANI

                  WRIT PETITION No.18632 OF 2022

ORDER:

This writ petition is filed by the petitioner challenging the action of

the 2nd respondent in not permitting the petitioner to participate in the

Notice inviting e-Tender bearing Tender No.SRCC/PT/003/TAPSO/2022-

23 on the basis of the booking receipt of the respective category of the

trucks obtained from the authorized dealer as illegal, arbitrary and

unconstitutional and consequentially to direct the respondent to permit the

petitioner to participate in the tender on the basis of booking receipt.

2. Heard the learned counsel for the petitioner Sri R.Sushanth Reddy

and learned standing counsel for the respondent No.2/Indane Oil

Corporation Limited (IOCL) Sri Dominic Fernandez.

3. Learned counsel for the petitioner submitted that the respondent

No.2 invited tenders for award of contract for transportation of Indane

LPG cylinders in vertical position on unit rate basis, from Kondapally

bottling plant to locations within and outside the States of Telangana and

Andhra Pradesh for a period of 3 years. The respondent No.2/Corporation

was the manufacturer of Indane LPG gas cylinders. The said gas cylinders Dr.GRR,J

were distributed across the States of Telangana and Andhra Pradesh from

Kondapally Bottling Plant. The distributors of the said cylinders attached

to Kondapally Bottling Plant had an option to either opt to use their own

trucks for the transport of the cylinders from the bottling plant to the

warehouse or use the trucks provided by respondent No.2/Corporation. The

respondent No.2/Corporation had invited for Expression of Interest from

the existing distributors attached to Kondapalli Bottling Plant for own load

transportation on unit rate basis and the instant tender is floated for the

award of contract for transportation to regular distributors. The unit rate

basis under the expression of interest was to be fixed on the basis of L-1

rates arrived at in the instant tender. The purpose of both the tenders were

the same and they were intertwined.

4. As per clause-I pre-qualification criteria, the bidders were required

to provide the self-attested copy of the RC book or Invoice and temporary

registration certificates for new trucks. The bidder would also provide an

affidavit in case the bidder was willing to use attached truck (Trucks that

were not in the name of the bidder). In other words, the bidder should own

a truck as on the date of submission of the bids to meet the pre-

qualification criteria. The petitioner was a tenderer who was willing to

participate in the instant tender process but the petitioner did not have a Dr.GRR,J

truck of his own or an attached truck to participate in the tender process.

The petitioner was willing to procure a truck of his own and was ready to

provide a booking slip to prove his bonafides. The period of contract under

clause 10 of the Notice inviting e-Tender did not specify the

commencement date of the period of contract. The above clause would

show that the date of commencement of the contract was either from the

date of placement of the LOI or as advised by the State Office of Indane

Oil Corporation (IOC). If the petitioner purchased the truck, the same

would be lying idle from the date of submission of the bid till the date of

placement of LOI or the date advised by the State office of the IOC. Since

the said truck could only be used for the transportation of cylinders, the

same could not be used for any other purpose by the petitioner. The same

would cause severe financial loss to the petitioner would not be financially

viable. The expression of interest which was flouted for the existing

distributors attached to Kondapally Bottling Plant for own load

transportation also stipulated the condition for the ownership of the

vehicle at the time of submission of expression of interest and in the pre-

bid meeting dated 12.07.2021 when the said problem of the idling of the

truck was brought to the notice of the 2nd respondent, the distributors were

permitted to participate in the EOI on the basis of submission of booking Dr.GRR,J

receipt of the respective category of the trucks obtained from the

authorized dealer of the trucks. The conditions of the said EOI and the

instant tender were same. As such, no prejudice would be caused if the

petitioner was permitted to participate in the tender process basing on the

booking receipt and prayed to allow the petition.

5. The 2nd respondent filed counter affidavit. The learned standing

counsel for 2nd respondent submitted that e-Tender for packed LPG

transportation was an open tender to all public. The bidders who were

interested and who were agreeable to the tender terms and conditions only

would participate and they were assessed strictly in terms of the tender

terms and conditions, whereas the EOI flouted during July, 2021 was not

open to general public and was meant only for specified Indane

Distributors who were attached to IOC Kondapally, LPG plant, to facilitate

interested distributors to induct their trucks to enable them to uplift their

own load requirements subject to meeting the requisite eligibility criteria

mentioned therein. The EOI did not have any official bid except that they

would be required to accept the LI rates finalized subsequently through

public tender for the Kondapalli Plant from general transporters. Apart

from bidders offering ready trucks, the bidders were also given an

opportunity to apply with temporary registration certificate so that they Dr.GRR,J

would be having an option to build the body/cages and other accessories

after receipt of the LOI, if required. Taking into account the lead time

involved in Distributors ultimately placing the truck for their own

requirement in the new contract, facility of offering trucks with booking

slip was extended to the willing distributors with payment of Rs.50,000/-.

No EMD was required to be paid by the general transporters/bidders

against the present tender. Both EOI and transportation tender guidelines

and conditions were not the same, as could be seen from EMD clause. The

petitioner was seeking change of tender terms and conditions to suit his

personal benefit. As it was open public e-tender, those who would fulfill

the pre-qualification criteria could only offer their trucks against the

tender. The Corporation policy of EOI for distributors and public tender

for general transporters was prepared based on different yardsticks on all

India basis and not comparable. Hence, the petitioner's request for

extending the same facility could not be accepted to and relied upon the

judgments of the Hon'ble Apex Court in Michigan Rubber (India)

Limited v. State of Karnataka1, Jagdish Mandal v. State of Orissa2 and

Arun Kumar Agarwal v. Union of India3.

(2012) 8 SCC 216

2017 14 SCC 517

(2013) 7 SCC 1 Dr.GRR,J

6. An implead petition was also filed by the persons who purchased

new trucks and were participating in the tender, opposing the petition filed

by the writ petitioner on the ground that as they had already invested in

trucks, it would cause a grave loss to them if the petitioner was permitted

to participate in the bid basing on the booking receipt which would have an

unfair advantage over them.

7. Perused the record.

8. On a perusal of the pre-qualification criteria mentioned in the tender

document at clause (1), it lays down the prequalification criteria to

participate in the bid as follows:

"1. OWNERSHIP:

The bidder should upload the self-attested copies of RC books or invoice and temporary registration certificates for new trucks of all offered trucks (owned + attached) of capacity as defined in the scope of work above, out of which the bidder must OWN at least ONE truck in their name. If the bidder does not have minimum one OWN truck, then the bid of such bidder will not be considered."

As per clause 2 : In case year of manufacturing or month & year of manufacturing is not mentioned in the RC Book then the month & year of manufacture will be established from the copy of original invoice of quoted trucks. In case Original Sale invoice is not available, then the month & year of manufacturing will be established from the copy of Certificate issued by Manufacturer, in Dr.GRR,J

case the manufacturing date cannot be established from any of the documents then the relevant quoted truck will be rejected.

9. Thus, the tender provides for a tender evaluation criteria under

which there is a ranking criteria wherein the ranking is based on the age of

the truck, which will be determined by the month and year of

manufacturing which will be found in the sales invoice and /or the

registration certificate and/ or in the temporary registration certificate. The

said condition is prescribed in the pre-qualification criteria under 1 (2) age

of trucks.

10. The contention of the learned counsel for the petitioner was that the

2nd respondent allowed the distributors to participate in the expression of

interest basing on the booking receipt, but imposed condition in public

tender for general transporters to own the truck as on the date of the

submission of the bids to meet the pre-qualification criteria and the said

imposition of condition was arbitrary and unconstitutional. The contention

of the learned standing counsel for the 2nd respondent was that the

corporation policy for distributors and general transporters was based on

different yard sticks and was not comparable. He demonstrated the same

vide a table in his counter as to how they both were distinguishable.

Dr.GRR,J

Sl. EOI for Distributors Public Tender for General Transporters No.

1. Trucks inducted will be utilized for Trucks inducted by General Transporters INDANE Distributors for their own will be utilized for sending it to any load purposes only. In case there is no Distributors/s attached to the Plant. fund deposited by the Distributor and Thereby not much of idling of or there is no Indent/requirement, then Transporters' trucks. For Transporters' the Distributor truck will NOT be trucks, running mileage will be slightly utilized and will be idle. Monthly better when compared to Distributors' running mileage will be lesser and own trucks and thereby the earnings will therefore lesser income earned. be more.

2. Not more then 2 or 3 trucks Maximum of 10% in the total NIT
(depending upon their daily load requirements of trucks can be allotted to
requirements), Distributors can the Transporters under both Smaller
offer/get allotment of trucks in the capacity (342 cylinders) and bigger
EOI. capacity (525 cylinders) trucks.
3. As per eligibility and requirements, No restriction for Transporters. They can
few Distributors will be restricted to offer any capacity trucks in the Tender.
offer higher capacity trucks only.
4. In view of expected time delay and NO EMD is payable by the Transporter
lead time required in the finalization presently for any truck being offered in
of the Contract, Distributors can also the tender and opportunity available for
offer new trucks with Booking slip, offering new trucks with Temporary
but with EMD of Rs.50,000/- per Registration/Invoice of the chassis also,
truck. Forfeiture of EMD in case of apart from Ready trucks.
failure on the part of Distributor in
inducting trucks and will NOT be
entitled to offer induct trucks in the
entire period of contract.
5. EOI participation is restricted only to This NIT/E-Tender is open to General
those INDANE Distributors who are public/Transporter on all India basis and
attached to concerned LPG Plant and No restrictions, as long as they meet the
taking their loads generally. PQC.
6. INDANE Distributors (selected Transporters are only for the
through different process) continue to particular/specific tender period and the
be Distributors for IOCL for indefinite binding ends on the expiry of the
period and offering of trucks through Contract/extended Contract for that
EOI for own load purpose is a part of particular LPG Plant in which they are
facility extended for ensuring timely attached.
delivering of cylinders for customer
satisfaction and improving market
share.
Dr.GRR,J

11. Learned counsel for the respondent No. 2 also relied upon the

judgment of the High Court of Judicature at Madras in Writ Petition

Nos.315, 316, 3066 and 3818 of 2016 in T. Vijaya Sekar v. Union of

India and Indian Oil Corporation Limited decided on 25.04.2016 on the

same issue. It was held that:

"26. The main grievance of the petitioners insofar as IOCL is concerned, is that the terms and conditions of the tender do not provide equality and fair play among the participants in the tender. There is a clear discrimination between the truck operators and the distributors since they are given undue preference and there is a clear favoritism for the distributors in such a way that the trucks offered by the distributors alone are given preference and awarded contract. Insofar as BPCL is concerned, the grievance of the petitioners is that BPCL has sought for Expression of Interest from its distributors and allotted the contract by nomination on the basis of the EOI (Expression of Interest) received, and thus, the tender allowing the distributors to offer trucks to lift their own load requirements based on EOI is clearly arbitrary, discriminatory and irrational."

"27. Inasmuch as the petroleum products are essential commodity and breakdown of its supply chain has the potential to create law and order situation, it is the prime concern of the Corporations to provide an effective mechanism for transportation of LPG cylinders to every nook and corner of the State. According to the respondents/Corporations, the tender conditions are framed as per the laid down guidelines and their requirement and if the distributors are permitted to lift their own load requirements, the liability of the Corporations would be minimized and the main object for awarding the contracts to the distributors is to avoid frequent strikes by loading and unloading labourers engaged by the transporters, who used to put unreasonable demands and breakdown the supply of essential commodity of LPG to the general public at large and also to prevent the pilferage of LPG cylinders. Hence, by way of entrusting the distributors who are having their own trucks in uplifting their loads, the Corporation will not face any of the above said issues. Therefore, keeping in view of this object, the Corporations have given preference in favour of the distributors, which in my considered opinion, would not amount to either clear discrimination or favoritism to the distributors as contended by the petitioners and that Dr.GRR,J

there is absolutely no mala fide intention on the part of the Corporations in their administrative action in awarding the contract to the distributors. Further, by way of this, the supply of LPG cylinders to the consumers, would lead to smooth functioning without there being any disturbance thereof. In fact, every distributor has to necessarily compete with other distributors who are participating in the bid and in order to get the contract, he has to quote L1 rate and the bids get finalized only at lowest rates first and the distributors who quotes lowest rates, only will get benefit. Otherwise, if requirement of trucks are not fulfilled from lowest quoted bidders, no benefits will be extended to the distributors and they would be treated as normal transporters. Therefore, there is nothing unreasonable in giving preference to the distributors by the Corporations by way of their administrative action, which in my considered opinion, does not suffer from unreasonableness, bias and mala fide, warranting interference of this Court. In such view of the matter, no judicial review of such administrative action is required."

12. The Hon'be Apex Court in Jagdish Mandal's case (2 supra) held as

under:

"22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. Its purpose is to check whether choice or decision is made 'lawfully' and not to check whether choice or decision is 'sound'. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay Dr.GRR,J

relief and succour to thousands and millions and may increase the project cost manifold. Therefore, a court before interfering in tender or contractual matters in exercise of power of judicial review, should pose to itself the following questions :

i) 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 : 'the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached.'

ii) Whether public interest is affected.

If the answers are in the negative, there should be no interference under Article 226. Cases involving black-listing or imposition of penal consequences on a tenderer/contractor or distribution of state largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action.

13. In Michigan Rubber (India) Limited's case (1 supra), after

considering all the judgments with regard to the nature and scope of

judicial review in matters relating to tender conditions the Hon'ble Apex

Court stated the principles as follows :

From the above decisions, the following principles emerge:

(a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities;

(b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable. If the Government acts in Dr.GRR,J

conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited;

(c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted;

(d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and

(e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government.

14. Hence, the above judgments of the Hon'ble Apex Court, would

show that the scope of the judicial review by the Court in contractual

matters is very limited and unless malafides and arbitrariness was shown,

the Court could not interfere with the administrative action. Considering

that the distributors and general transporters are not standing on the same

footing and allowing the petitioner to participate in the public tender

basing on the booking receipt would give him an unfair advantage over the

other prospective bidders who had already invested in trucks and would

put them to grave loss and altering the terms of tender conditions after

initiation of the bid would amount to change in the rules of the game after

the game started and would cause prejudice to other bidders and Dr.GRR,J

unnecessary hardship to them, it is considered fit to dismiss the Writ