Karnataka High Court
Bulk Transportation Association vs The State Of Karnataka on 17 November, 2023
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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 17TH DAY OF NOVEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE SACHIN SHANKAR MAGADUM
WRIT PETITION NO. 103396 OF 2023 (GM-TEN)
C/W
WRIT PETITION NO. 103417 OF 2023 (GM-TEN)
IN WP NO.103396/2023
BETWEEN:
M/S SAIKRUPA ROADWAYS
H.NO. 189, NEAR MASJID,
AT POST BASAVANAKOPPA, SAVANUR TALUK,
HAVERI 581118,
BY ITS PROPRIETOR VAHIDKHAN KHANJADE,
AGED 47 YEARS, AT POST BASAVANAKOPPA,
SAVANUR TALUK, HAVERI-581118.
...PETITIONER
(BY SMT.ARCHANA.A.MAGADUM, ADVOCATE)
AND:
1. BHARAT PETROLEUM CORPORATION LTD
CPO-M, A-INSTALLATION,
SEWRI FORT ROAD,
SEWRI EAST, MUMBAI-400015,
BY ITS MANAGING DIRECTOR.
2. THE STATE OF KARNATAKA
REPRESENTED BY ITS SECRETARY TO
GOVERNMENT, DEPARTMENT OF
TRASPORT, VIKASASOUDHA,
DR.B.R.AMBEDKAR VEEDHI,
BENGALURU-560001
...RESPONDENTS
(BY SRI.C.V.ANGADI, ADVOCATE FOR R1;
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(RESPONDENT NO.2 IMPLEADED V/C/O DTD:01.06.2023
& SERVED)
THIS WP IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA PRAYING TO I) ISSUE A WRIT OF
CERTIORARI QUASHING THE IMPUGNED TENDER
NOTIFICATION DATED 15/05/2023 BEARING TENDER
REFERENCE NO.BPCL/RETAIL/POL/BULK/DESUR/2023-28
ISSUED BY RESPONDENT WHICH IS PRODUCED AT ANNEXURE-
C.
IN WP NO.103417/2023
BETWEEN:
BULK TRANSPORTATION ASSOCIATION
REPRESENTED BY ITS PRESIDENT
RAKESH GUNNAGOL
AGE 43 YEARS
SHOP NO 32, OPP MARATA MANDAL DENTAL COLLEGE
BELGAUM-590019
...PETITIONER
(BY SRI.RAJA RAGHAVENDRA V.NAIK, ADVOCATE)
AND:
1. THE STATE OF KARNATAKA
REP BY ITS SECRETARY TO GOVERNMENT
DEPARTMENT OF TRANSPORT
VIKASASOUDHA, DR B R AMBEDKAR VEEDHI
BENGALURU-560001
2. BHARAT PETROLEUM CORPORATION LIMITED
CPO- M, A INSTALLATION, SEWRI FORT ROAD
SEWRI EAST, MUMBAI-400015
MAHARASTRA STATE
3. GEET KAURA
THE CHIEF MANAGER
OPS, I-C (RETAIL)
BHARAT PETROLEUM CORPORATION LIMITED
BPCL DESUR POL DEPOT
NEAR DESUR RAILWAY STATION
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VILLAGE ZADSHAHAPUR
DISTRICT BELGAVI-590001
4. MR AMIT KUMAR
PROCUREMENT LEADER (CPO MKTG)
GROUP 10
BHARAT PETROLEUM CORPORATION LIMITED
CPO, SEWREE FORT ROAD, SEWREE (EAST)
MUMBAI-400015
MAHARASTRA
5. VARUM NOEL JOHN
DY GENERAL MANAGER OPS (RETAIL)
BHARAT PETROLEUM CORPORATION LIMITED
AMM BANGALORE, DUPARK TRINITY
7TH FLOOR, 17 M G ROAD
BANGALORE-560001
KARNATAKA
6. MR MAHESH KUMAR
PETROLEUM MANAGER (CPO MKTG)
GROUP -10, BHARAT PETROLEUM
CORPORATION LIMITED
CPO, SEWREE FORT ROAD, SEWREE (EAST)
MUMBAI-400015
MAHARASTRA
...RESPONDENTS
(BY SRI.P.N.HATTI, HCGP FOR R1;
SRI.C.N.ANGADI, ADVOCATE FOR R2;
R3 TO R6 ARE SERVED)
THIS WP IS FILED UNDER ARTICLES 226 & 227 OF THE
CONSTITUTION OF INDIA PRAYING TO A. ISSUE WRIT OF
CERTIORARI BY QUASHING THE IMPUGNED E TENDER
REFERENCE NO.BPCL/RETAIL/POL/BULK/DESUR/2023-28
DATED 15.05.2023 ISSUED BY THE RESPONDENT NO.2 VIDE
ANNEXURE-D BY ALLOWING THIS WRIT PETITION IN THE
INTEREST OF JUSTICE AND EQUITY AND ETC.,
THESE PETITIONS HAVING HEARD AND RESERVED FOR
ORDERS ON 09.10.2023 COMING ON FOR PRONOUNCEMENT
OF ORDER THIS DAY, THE COURT MADE THE FOLLOWING:
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ORDER
These two captioned petitions are filed assailing the impugned tender notification dated 15.05.2023 on the ground that the price fixed towards transportation of bulk POL (Petroleum, Oil and Lubricants) products in the impugned tender notification is arbitrary, unreasonable and the impugned notification is acted upon in discriminately fixing the rates of transportation of POL products.
2. W.P.No.103396/2023 is filed by a proprietary concern engaged in transportation business. The petitioner in the said petition admits that he was awarded with tender on earlier occasion by the respondent/ Corporation for transportation of MS/HDS/SKO from Ex- Desur depot to various retail outlets/customers within Karnataka. The connected writ petition in W.P.No.103417/2023 is filed by the Association questioning the very impugned notification.
3. The respondent/Corporation has filed statement of objections in both the petitions. The -5- respondent/Corporation has countered the petitioners' reliance on Government of Karnataka notification vide Annexure-B. The petitioners placing reliance on the Government notification vide Annexure-B would contend that the bench mark rates have to be in conformity with the rates fixed by the State Government under notification vide Annexure-B. The petitioners claim that rates indicated in the impugned tender notification is found to be exorbitant and high compared to the Government notification is countered by the respondent/Corporation on the ground that the notification vide Annexure-B only refers to goods carriages which are registered in the State of Karnataka, while respondent/Corporation is accepting bids involving tank trucks registered in other States in India vide impugned Tender Notification at Annexure-C.
4. The respondent/Corporation has contended that under notification vide Annexure-B, there is no guarantee that tank trucks will get next load since they are not under contract. The respondent/Corporation has also contended that all Public Sector Undertakings (Indian Oil Corporation -6- Limited, Bharat Petroleum Corporation Limited and Hindustan Petroleum Corporation Limited) which are working under the aegis of Union of India and Ministry of Petroleum and Natural Gas have adopted similar methodology and are not adhering to the notification issued by the State Government vide Annexure-B. Referring to the Petroleum Rules, 2002, the respondent/Corporation has contended that the rules provide for detailed requirement as regards construction of tank trucks, role of Chief Controller, restrictions, capacity, etc., Referring to the provisions of Petroleum Act, 1934, the respondent/Corporation has claimed that the Act is brought into force with the object of framing laws relating to import, transport, storage, production, refining and blending of petroleum and the Petroleum Act defines 'Tank Truck'.
5. The respondent/Corporation further contended that determination of bench mark rates is based on departmental guidelines and different parameters and criteria. The respondent/Corporation further claimed that -7- optimization model has also been used by the Corporation which is a software application in order to arrive at the requirement of tank trucks of each capacity. On the basis of output of Vehicle Optimization Model on the vehicle requirement, tender is published which would not warrant any interference at the hands of this Court.
6. Both counsels appearing for the petitioners have addressed their arguments. Reiterating the grounds urged in the writ petition, both the Counsels have contended that the action of respondent/Corporation must be in consonance with Article 14. Referring to the impugned notification, both counsels on record have contended that the rates indicated in the impugned notification is prima facie found to be arbitrary, unreasonable and therefore, the decision making of the respondent/Corporation while issuing impugned notification warrants review at the hands of this Court. The prevailing rates indicated in the impugned notification are detrimental to the interest of the transporters and -8- therefore, it is contended that the impugned notification is vitiated by arbitrariness, unfairness and irrationality.
7. To buttress their arguments, reliance is placed on the judgment rendered by the Apex Court in the case of Tata Cellular vs. Union of India1. Reliance is also placed on the judgment rendered by the Apex Court in the case of Food Corporation of India vs. Kamdhenu Cattle Feed Industries2. Learned counsel appearing for the petitioners would vehemently argue and contend that in contractual sphere, the State and all its instrumentalities have to confirm to Article 14 on which non-arbitrariness is a significant facet. Though authorities have discretion, the said discretion is not unfettered in public law. Reliance is also placed on the judgment rendered in the case of Union of India vs. Hindustan Development Corporation3 to contend that the State instrumentalities have to display fairness and equality and the action of the State and its instrumentalities depict that the actions are fair without discrimination and without 1 (1994) 6 SCC 651 2 (1993) 1 SCC 71 3 (1993) 3 SCC 499 -9- unfair procedure. The petitioners have also placed reliance on the dictum laid down by the Apex Court in the case of Om Kumar and Others vs. Union of India4.
8. Learned counsel appearing for the petitioner in W.P.No.103396/2023 has vehemently argued and contended that judgment relied by the respondent/Corporation are not at all applicable to the present case on hand. She would point out that the ratio laid down by the Apex Court in the case of Lakshmikanth Raju and Others vs. Union of India and Another5 is not at all applicable as the facts are totally different. On the contrary, learned counsel for the petitioner would contend that the petitioner is in fact relying on notification issued by the State Government as per Annexure-B. She would point out that the respondent/Corporation has not made any attempt to seek clarification from the State.
9. Per contra, in support of defence raised by the respondent/Corporation in statement of objections, 4 (2001) 2 SCC 386 5 W.P.No.33724/2016 and connected matters Dtd: 29.08.2016 -10- learned counsel appearing for the respondent/Corporation has placed reliance on the following judgments:
1) National High Speed Rail Corporation Limited vs. Montecarlo Limited and Another - (2022) 6 SCC 401;
2) Tata Cellular vs. Union of Inda - (1994) 6 SCC 561;
3) Directorate of Education & Others vs. Educomp Datamatics Limited - AIR 2004 SC 1962;
4) Jagadish Mandal vs. State of Orissa & Others - (2007) 14 SCC 517;
5) Meerut Development Authority vs. Association of Management Studies - (2009) 6 SCC 171;
6) Michigan Rubber (India) Limited vs. State of Karnataka & Others - (2012) 8 SCC 216;
7) Lakshmikanth Raju and Others vs. Union of India and Another - W.P.No.33724/2016 Dtd:29.08.2016.
10. Placing reliance on the judgment rendered by the Apex Court in the case of National High Speed Rail Corporation Limited (supra), he would contend that the Government and its State instrumentalities have freedom of contract. Any interference in tender matters may lead to heavy administrative burden on the administration and -11- lead to increased and unbudgeted expenditure. He would point out that the Apex Court in the said case held that any interference at the hands of the Courts may seriously impede the execution of the projects of public importance and displace the Corporation from discharging the legal obligation towards the citizen. He would point out that in both the petitions, the petitioners have not made out any arbitrariness which would seriously prejudice the rights of the petitioners. He would also point out that the grounds urged do not indicate that the impugned notification is actuated by malafides.
11. Placing reliance on the judgment rendered in the case of Tata Cellular vs. Union of India (supra), he would point out that the Apex Court has held that the Courts cannot interfere with the Governments freedom of contract, invitation to tender and refusal of any tender which pertain to policy matter unless a foundation is laid that decision/action is vitiated by arbitrariness, unfairness. Placing reliance on the law laid down by the Apex Court in the case of Jagadish Mandal vs. State of Orissa -12- (supra), he would point out that the Apex Court while examining the scope of judicial review at the hands of this Court has held that evaluating tenders and awarding contracts are essentially commercial functions and therefore, the principles of equity and natural justice stay at a distance.
12. Learned counsel would point out that the tender of the petitioner in W.P.No.103396/2023 though has expired, to protect his private interest at the cost of public interest has filed the present captioned petition and has come up with imaginary grievances and therefore, no indulgence is warranted at the hands of this Court by exercising power of judicial review. Insofar as the petition filed by the Association in W.P.No.103417/2023, he would point out that the Association has no locus to question the tender notification and therefore, would request this Court to dismiss the petition on the ground of maintainability.
13. Heard learned counsel appearing for the petitioners in both the petitions, learned counsel appearing for the respondent/Corporation and learned HCGP for the -13- State. I have given my anxious consideration to the grounds urged in both the petitions.
14. The impugned tender notification for transportation of bulk POL products as per Annexure-C is under challenge. The petitioner in W.P.No.103396/2023 and the Association in W.P.No.130417/2023 are questioning the benchmark rates indicated in the impugned tender notification as per Annexure-C. The petitioners in both the petitions are placing reliance on the Circular/Notification issued by the State Government as per Annexure-B. On perusal of the notification issued by the State Government vide Annexure-B, the said notification relates to fixing of fares and freights for stage carriages, contract carriages and goods carriages. Therefore, I find some force in the stand taken by the respondent/Corporation in regard to the applicability of notification issued by the State Government vide Annexure-B. The present tender under challenge relates to transportation of petroleum products and falls within the domain of Petroleum Act which is referable to -14- corresponding entry 53 of Union List under VII Schedule read with Article 246 of the Constitution of India.
15. The core question that needs consideration at the hands of this Court is, as to whether a participant in tender process has locus to question the benchmark rates indicated in the impugned tender notification for transportation of petroleum products. While fixing the benchmark rates, the public sector undertakings in petroleum sector adhere to a meticulously structured frame work for determination of transportation rates for their products. This system is characterized by a judicious blend of economic prudence, regulatory compliance and strategic considerations. Oil companies possess a measure of discretion in not only setting their fuel prices, but also prices relating to logistics while transporting petroleum products. The benchmark rates for transportation is dependent on several factors. Each oil company has its own cost structure, which includes factors such as production cost, refining cost, transportation expenses and marketing expenses. These can vary -15- significantly between companies leading to different pricing strategies. It is also known fact that all companies differentiate themselves based on their brand image, marketing efforts and customer services. The level of competition in a specific area can influence pricing and that has a direct impact on other expenses which includes logistics. Oil companies have different margins and expectations and business models. Some prioritize higher margins, while others may focus on volume sales with thinner margins.
16. In the light of the discussion made supra, what needs to be examined is, whether the benchmark rates indicated in the impugned tender notification can be subject matter of judicial review.
17. The impugned tender notification is under challenge on the ground that the other companies have quoted a lesser benchmark rates compared to the price fixed by the respondent/Corporation while issuing the impugned tender notification. On perusal of the grounds urged in both the petitions, I am more than satisfied that -16- no valid grounds are made out which would invite judicial review at the hands of this Court. The Apex Court in the case of Jagadish Mandal vs. State of Orissa (supra) cited by the learned counsel appearing for the respondent/Corporation is squarely applicable to the present case on hand. The Apex Court citing the judgment rendered in the case of B.S.N.Joshi & Sons vs. Nair Coal Services Limited6 held that evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to awarding of contract is bonafide, the power of judicial review is not permitted to be invoked to protect the private interest at the cost of public interest. The petitioner in W.P.No.103396/2023 was in fact a successful bidder and in view of stay granted by this Court is still rendering transportation services to the respondent/Corporation.
18. The basic requirement of Article 14 is fairness in action by the State or its instrumentalities and non- arbitrariness in essence and substance is the heartbeat of 6 (2006) 11 SCC 548 -17- fair play. As rightly pointed out by the learned counsel appearing for the respondent/Corporation, the scheme of Petroleum Act and Rules are comprehensive in nature with regard to transportation of petroleum products and with reference to tank trucks. The notification issued by the Government of Karnataka as per Annexure-B is not applicable to the transportation of petroleum products. On examination of the impugned tender notification, I am more than satisfied that the benchmark rates specified in the tender notification is based on departmental guidelines and these figures are arrived at by taking into consideration different parameters and criterias. The benchmark rates i.e., estimated price band is arrived at by the experts of the respondent/Corporation by taking cognizance of various considerations. In the statement of objections, the respondent/Corporation has successfully countered the allegations made in the writ petition. The respondent/Corporation has introduced a optimized model which is a software application named as Vehicle Optimization Model in order to arrive at the requirement of -18- tank trucks of each capacity i.e., 12 kiloliters, 20 kiloliters and 24 kiloliters.
19. Therefore, on meticulous examination of records placed by the respective parties, this Court is of the view that logical system employed by each oil companies in finalizing transportation rates for petroleum products is a testament to their commitment to economic prudence, regulatory adherence and strategic acumen. Certainly, the process of inviting tenders and subsequently awarding them to deserving candidates by public sector companies constitute a corner stone of transparent and accountable governance. The sanctity of this tendering process is underscored by the principle that such decisions, when made in accordance with established procedures, fall within the domain of administrative discretion. It is equally imperative to recognize that public sector companies have a responsibility of safeguarding the interests of both State and public at large. In this pursuit, the technically employed approach prioritize the evaluation of bids on objective and predefined criteria, such as -19- technical competence, financial stability and past performance records. The Courts, cognizant of the complexities inherent in procurement activities, exercise restraint and deference to the expertise of administrative authorities. Judicial intervention is warranted only when the procedure adopted by public sector companies is found to be tainted by arbitrariness or malafides.
20. The material placed on record by the petitioners does not prima facie indicate any arbitrariness, malafides, bias or irrationality in the impugned notification vide Annexure-C. No materials are placed on record to indicate that decision making process while fixing the benchmark rates is tainted with malafides or is intended to favour someone. The Apex Court in catena of judgments has held that fixation of value of the tender is entirely within the purview of the concerned authority and the Court hardly have any role to play in this process except striking down such action if it is proved to be arbitrary or unreasonable.
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21. The petitioners are banking on the notification issued by the State Government vide Annexure-B. The said notification has no application to the impugned tender notification vide Annexure-C. The writ petition filed by the Association in W.P.No.103417/2023 cannot be entertained as the Association has no locus to question the impugned tender notification vide Annexure-C. The Association has no fundamental right under Article 19 and the Association cannot complain arbitrariness or equality under Article 14 of the Constitution of India.
22. For the reasons stated supra, I pass the following:
ORDER The writ petitions are devoid of merits and accordingly stand dismissed.
The pending interlocutory application, if any, does not survive for consideration and stands disposed of.
Sd/-
JUDGE CA