Karnataka High Court
Sri N Guruswamy Reddy vs Indian Oil Corporation Limited on 3 August, 2023
Author: Krishna S.Dixit
Bench: Krishna S.Dixit
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 3RD DAY OF AUGUST, 2023
BEFORE
THE HON'BLE MR. JUSTICE KRISHNA S.DIXIT
WRIT PETITION NO.10500 OF 2023(GM-TEN)
BETWEEN:
1. SRI.N GURUSWAMY REDDY,
S/O BHOOPAL REDDY,
AGED ABOUT 42 YEARS,
R/AT NO.20-7-2,
SAMETHANAHALLI VILLAGE & POST,
HOSAKOTE TALUK,
BENGALURU RURAL DISTRICT - 560 067.
2. SRI KRISHNAN AGARWAL,
S/O LATE P C AGARWAL,
AGED ABOUT 62 YEARS,
R/AT NO.702, III BLOCK,
KORAMANGALA, BENGALURU - 560 034.
3. S GOPALA REDDY,
S/O SRINIVASAPPA,
AGED ABOUT 62 YEARS,
S G R BULK CARRIERS,
NO.91/1, B-NARAYANAPURA,
WHITEFIELD ROAD, BENGALURU - 560 016.
(SENIOR CITIZEN BENEFITS NOT CLAIMED)
...PETITIONERS
(BY SRI.RAJASHEKAR S., ADVOCATE)
AND:
INDIAN OIL CORPORATION LIMITED.,
(MARKETING DIVISION),
SOUTHERN REGION OFFICE,
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CONTRACT CELL, NO.139,
NUNGAMBAKKAM HIGH ROAD,
CHENNAI - 600 034.
(REG UNDER INDIAN COMPANIES ACT, 1956)
...RESPONDENT
(BY SRI.VIKRAM HUILGOL, SENIOR COUNSEL A/W
SRI.SANTHOSH S NAGARALE, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
QUASH THE CLAUSE NO.V(C) OF CONDITIONS GOVERNING
OFFER OF TRUCKS, CLAUSE NO.4(17) OF THE GENERAL
INSTRUCTIONS TO THE BIDDERS, CALUSE NO.4(29) OF THE
GENERAL INSTRUCTIONS TO BIDDERS INSOFAR AS
IMPOSING RESTRICTION ON THE PARTICIPATION OF THE
BIDDERS, CLAUSE NO.10.09 OF GENERAL CONDITIONS AND
CLAUSE NO.19 OF THE LPG CYLINDER ROAD TRANSPORT
CONTRACT AGREEMENT OF TENDER NOTIFICATION DATED
04.5.23 VIDE NO.SRCC/PT/015/KASO/2023-24 ISSUED BY
RESPONDENT VIDE ANNEXURE-A AND ETC.,
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS, THIS DAY, THE COURT PRONOUNCED THE
FOLLOWING:
ORDER
Petitioners being the truck owners have been engaged in the transportation of LPG cylinders and other allied products from the Plants of the Respondent-IOC and other such Oil Corporations. They are knocking at the doors of Writ Court for assailing the following conditions of the Tender Notification dated 4.5.2023: 3
"(a) In Clause No. V(C) of conditions governing offer of trucks, it is mentioned as under:
"V(C) A bidder can quote any number of trucks but if they succeed in tender, they will be awarded contract for maximum 10% of total requirement of trucks in respective category of trucks (342 or 525). However, the number of trucks offered in respective category of truck is not able to meet the Plant requirements, then trucks offered by the bidder can be considered beyond 10%."
(b) As per Clause No.4 (17) of the General Instructions to the Bidders, the Tender Notification states that:
"4(17) The rate offered by the tenderer shall include all cost towards operation of their trucks including unloading and loading of cylinders at Bottling Plant, as well as at distributors premises, cost of vehicle and their maintenance, cost of fuel, lubricants, tyres including driver/helper and other statutory costs like insurance, registration and fitness, road tax and other applicable levies etc., excluding GST and toll charges. Toll charges, as applicable, shall be reimbursed as per the Govt. notified rates against each trip through IOC approved routes"
(c) Clause No. 4 (29) of the General Instructions to Bidders i.e. Clarification of bidding aspects:
Each bidder can submit only one bid. It is clarified that a person shall be deemed to have submitted multiple bids if a person 4 submits more than one bid individually or in any combination of person (individual capacity, proprietor, affiliates, partnership, association of persons, company). All such multiple bids shall be liable for rejection. An Affidavit to be submitted by the tender (as per the format in the tender) that no multiple bids have been submitted.
(i) A person shall for this purpose mean an individual, proprietor, any partner, association of person, affiliate and company.
(ii) A company shall for this purpose include any artificial person whether constituted under the law of Indian or any other country.
(iii) A person shall be deemed to have been in a partnership format or in association of persons format if he is a partner of the firm which has submitted the bid or is a member of any association of persons which has submitted the bid.
(iv) A person shall be deemed to have a bid in a company format, if the person holds more than 10% (ten percent) of the voting share capital of the company which has submitted a bid, or is a Director of the company which has submitted a bid, or holds more than 10% (ten percent) of voting share capital and/or is a Director of a holding company which has submitted the bid.
(v) Affiliates of firm are not permitted to make separate bids directly or indirectly. Two or more parties which are affiliates of one another can decide which affiliate will make the bid. Only one affiliate may submit a bid. If two or more affiliates submit more than one 5 bid, then all such bids shall be liable for rejection.
(d) It is observed that the price fixed by the Corporation for transportation of Indane LPG Cylinders in vertical position on unit rate basis is on the lower side in view of the escalation of prices.
The price stipulated by the Corporation is less than the price which was quoted in the earlier tender in spite of increase in operational expenses to the transporters.
(e)The respondent has imposed the transport charges as per Clause No.10.9 of the General Conditions which reads:
"The transport charges payable under the contract will be based on shortest route approved by the company on the round trip basis (Called RTKM). A list of current RTKM's applicable to storage points/bottling plants where trucks/LCVs are based are available with the concerned storage point/bottling plant. "RTDs are subject to change from time to time and recovery/payment shall be effected on this account from date of change of RTD at the sole discretion of the Corporation". Re-verified RTDs are to be made effective from the date of start of operating current contract or from the date of reduction/increase which is later and recovery/payment to be made in event of any downward/upward revision from such date."
(f). Clause No.19 of the LPG Cylinder Road Transport Contract Agreement proposes to impose charge for security cap with wire 6 spring and nylon chord for new self closing valves at Rs.4/- cost on the transporter."
2. Learned counsel appearing for the Petitioner vehemently submitted that: prescribing 10% ceiling on the number of trucks notified for tender work from one agency is unjust & arbitrary; Clause 17 of the GENERAL INSTRUCTIONS TO BIDDERS runs counter to the decision of a Coordinate Bench rendered in W.P.No.29585/2019; Clause 4.29 of the Tender Notification which provides for 'deeming of multiple bids' for the purpose of de- candidaturing is unconscionable; Clause 10.9 which prescribes the norm of 'shortest route' is impracticable, there being, at times narrow bridges, unplyable roads & the like; Clause 19 which enacts a kind of penal clause is manifestly arbitrary and patently harsh. He also draws attention of the court to the representation made by his clients which has remained unanswered at the hands of the respondent. In support of his submission, he banked upon certain Rulings.
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3. Learned Sr. Advocate appearing for the Respondent-IOC opposed the Petition making submission in justification of the impugned conditions in the subject Tender Notification. He drew attention of the Court to the Statement of Objections filed to resist the Writ Petition. What condition should be stipulated in a Tender Notification of the kind, is ordinarily left to the discretion of the authorities concerned; stipulation of such conditions is made on the basis of rich experience gained by the authorities of the IOC in the course of business; ordinarily, courts are not a proper forum to adjudge the wisdom & desirability of such stipulations; there is no much difficulty for considering the subject representation of the petitioners in accordance with law should an appropriate time be prescribed therefor. So contending, he seeks dismissal of the Writ Petition. He too pressed into service certain Rulings in support of his submission.
4. Having heard the learned counsel for the parties and having perused the Petition Papers, this 8 Court declines indulgence in the matter for the following reasons:
(a) In the last seven decades or so, the Apex Court and several High Courts have developed Tender Jurisprudence as a separate branch in the realm of Contract Law, precedent by precedent. Broadly speaking, what condition should be stipulated in a Tender Notification is a matter pertaining to the domain of authorities concerned and therefore ordinarily courts would not readily grant interference in matters that seek to lay a challenge to such conditions, subject to all just exceptions. It hardly needs to be stated that the Writ Courts cannot sit in appeal over the wisdom of the authorities in stipulating tender conditions, which they do with a wealth of operational experience in the field and therefore courts cannot run a race of opinions with them.
What should be stipulated as tender conditions cannot be a matter of debate on the floor of courts since Judges lack expertise. This view gains support from the decision of Apex Court vide SILPPI CONSTRUCTIONS 9 CONTRACTORS vs. U.O.I. & ANOTHER, (2020) 16 SCC 489, wherein it is observed as under:
" The essence of the law laid down in regard to the scope of judicial review in respect of government contracts is the exercise of restraint and caution; the need for overwhelming public interest to justify judicial intervention in matters of contract involving the state instrumentalities; the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable; the court does not sit like a court of appeal over the appropriate authority; the court must realize that the authority floating the tender is the best judge of its requirements and therefore, the court's interference should be minimal..."
(b) The submission of learned counsel for the Petitioner that the Respondent - IOC is not justified in prescribing a ceiling limit as to the number of trucks to be furnished by the tenderers at the rate of 10% of the notified requirement, is bit difficult to countenance. Learned Sr. Advocate Mr. Huilgol appearing for the IOC is right in contending that such a ceiling limit serves the intent of clauses (b) & (c) of Article 39 which is a constitutional directive to the State to ensure that the material resources are not monopolized at the hands of a 10 frugal few. Such a restriction enlarges the scope for the participation of several tenderers, which otherwise could have been not possible. Secondly, if bulk of the tender is held by a few, there is all possibility of putting the consumers of fuel to difficulty should such tenderers or their employees go on strike; the possibility of a small section of rogue tenderers holding the IOC for a sort of ransack, cannot be excluded. Added, there is assurance from Mr. Huilgol on the instruction of Mr. Alok Barua, the Chief Manager (LPG-OPS) that the short fall of tenderers would enure to the benefit of participants and to that extent, the ceiling limit stands relaxed. This would do a great justice to the persons in the tender fray.
(c) Learned counsel for the Petitioner sought to find fault with Clause 17 of the subject Tender Notification which prescribes incurring of all costs inter alia towards unloading & loading of cylinders at Bottling Point; he argues that the same runs counter to Clause 16(c) of G-Standard Tender Conditions of the IOC which 11 provides for rejection of tender if the bidder is found to be a transport contractor at the concerned LPG Bottling Point. . In support of this submission, he draws attention of the Court to certain observations made by a Coordinate Bench of this Court in W.P.No.29585/2019 between BENGALURU LPG TRANSPORT CONTRACTORS ASSOCIATION vs IOC, disposed off on 02.01.2023. This need not be much examined inasmuch as, Mr. Huilgol pointed out that the said anomaly has been duly addressed in the Tender No. RCC/SRO/PT/060/KASO/2022-23, a copy whereof avails at Annexure-R1.
(d) Learned counsel for the Petitioner next drew attention of the Court Clause 4.29 of the Tender document which provides for the candidature of the tenderer who has submitted "multiple bids" which expression has been expansively described in the Clauses appended to this Clause. Court is not impressed by this argument inasmuch as, such a stipulation for rejection of 12 multiple bids is intended to ensure that no monopoly is created in favour of a few persons who can manage to secure award of tenders within one or the other guise. This Clause also serves the intent of a Directive Principle constitutionally enacted in Article 39 (b) & (c) as rightly contended by Mr. Huilgol appearing for the Respondent - IOC. Similarly, this Court does not find force in the submission of Petitioner's counsel as to Clause 10.9 which norms the shortest route for the plying of vehicles in question. His contention that there are roads & routes that may not be vehicle worthy because of weak bridges, narrow bridges, ill maintenance & the like reasons and therefore, such a stipulation puts the tenderers at a disadvantage. Learned Sr. Counsel Mr. Huilgol at once draws attention of the Court to Clause 73 of the Tender document which vests discretion in the jurisdictional authorities of the IOC to grant redressal to the genuine grievances substantiated by the evidentiary material. There is no reason for this Court to assume that in 13 appropriate cases, no redressal would be granted to the grieving contractors.
(e) The next submission was as to the Penal Clause engrafted in Clause 19 of "12-LPG CYLINDER ROAD TRANSPORT CONTRACT AGREEMENT" format which provides for recovery of loss from the erring contactors. The counsel for the Petitioner argued that this is absolutely unfair & manifestly arbitrary and therefore, is liable to be invalidated in the light of the observations of Apex Court in SHREYA SINGHAL vs. UNION OF INDIA, AIR 2015 SC 1523. This submission does not impress the Court even in the least. The loss or damage to the articles & properties of IOC cannot be ruled out; if that is occasioned by the culpable act of the contractors or their servants, they are liable to make good the loss to be determined by the jurisdictional officials of the IOC. The impugned Clause has given the description of loss/damage to the gas cylinders & articles and the rates of penalty by way of reimbursement. This has been done to ensure that no arbitrary levy is made on the 14 contractors/truck owners at the hands of authorities; in fact, the table containing the description of loss/damage and the rates of levy for reimbursement do provide a kind of yardstick for the authorities to act upon with reason & logic and they ensure absence of arbitrariness in decision making. Such provisions have been there in several tenders of the kind since decades, needs no research for ascertainment.
(f) Invalidation of such protective clauses would only immune the erring contractors from the liability. The presence of such provisions in an arrangement like this also deter the potential delinquents and thereby minimize the misdeeds. Thus, there is an underlying thought for incorporating clauses of the kind. They are devised from the ground realities of working of the arrangement and the lessons drawn from long experience. Therefore, the argument of manifest arbitrariness would not hold water. It is for the truck owners to decide whether to participate in such tenders or not, with eyes wide open to such so 15 called "penury clauses" which expose them to certain risks. Nobody is compelling the truck owners to bid in the tender. Such clauses are protective of public interest & public property and therefore, as of necessity, they are stipulated.
(g) Lastly, Mr. Huilgol, learned Sr. Advocate appearing for the Respondent - IOC on instructions submitted that all worthy grievances if aired in writing and supported by cogent evidentiary material, would be addressed by the jurisdictional officials. There is no reason or rhyme for the Petitioner or the similar contractors to assume that they would not get justice at the hands of the officials of the IOC which is a Government Company and therefore, has been functioning as an instrumentality of the State under Article 12 of the Constitution. It hardly needs to be stated that the clauses in a tender document do not admit exceptional cases for the grant of redressal, if grievance is demonstrated. After all, ours being a 16 constitutionally ordained Welfare State, all its instrumentalities have to conduct themselves fairly & reasonably while dealing with the citizens.
With the above observations, this Writ Petition is disposed off.
Sd/-
JUDGE Bsv/cbc/Snb