Madras High Court
Vijay Roadlines vs Indian Oil Corporation on 28 September, 2012
Author: N. Paul Vasanthakumar
Bench: N. Paul Vasanthakumar
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 28-09-2012
CORAM
THE HONOURABLE MR. JUSTICE N. PAUL VASANTHAKUMAR
WRIT PETITION Nos.24406 of 2012, 24219, 24634, 24635, 24636, 24637, 24638, 24639, 24640, 24641, 24642, 24643, 24644, 24645, 24646, 24662, 24663, 24664, 24665, 24666, 24667 of 2012 and Connected MPs.
(21 cases)
W.P.No.24406 of 2012:-
1 VIJAY ROADLINES
PROP.S.THUKARAM
2 SRI ANNAI ABIRAMI TRASNPORT
PROP.N.V.RENUGA
3 SRI RAVINDAR ROAD LINES
PROP. T.D.KUMAR
4 SRI JAYALAKSHMI TRANSPORT
PROP.R.JAYALAKSHMI
5 SENTHIL ANDAVAR TRANSPORT
PROP.S.VELUSAMY
6 SUNDARAM TRANSPORT
PROP.K.KALYANASUNDARAM
7 R.SELVAKUMAR TRANSPORT
PROP.R.SELVAKUMAR
8 REVATHY TRANSPORT
PROP.P.J.GAJENDRAN
9 SRI BALAJI TRANSPORT
PROP.K.MURUALI
10 SRI SELVA VINAYAGA TRANSPORT
PROP.T.GANESAN
11 P.SATHISH TRANSPORT
PROP.P.PANDIAN
12 SRI LAKSHMI TRANSPORT
PROP. G.SRINIVASAN
13 SHOBA TRANSPORT
PROP.S.THANGARAJ
14 SARAVANA TRANSPORT
PROP.K.VIJAYAMKUMAR
15 RENUGAMBAL TRANSPORT
PROP. M.KOTHANDAN
16 SRI BHUVANESWARI TRANSPORT
PROP.D.UMAPATHY ... Petitioners
Vs.
1 INDIAN OIL CORPORATION
REP. BY ITS CHAIRMAN
CORPORATE OFFICE
3079/3, JB TITOMARG SADIAR NAGAR
NEW DELHI - 110 049.
2 THE DEPUTY GENERAL MANAGER (OPS)
INDIAN OIL CORPORATION (MD)
TAMILNADU STATE OFFICE
139, MAHATMA GANDHI ROAD
CHENNAI - 600 034. ... Respondents
Prayer in W.P.No.24406 of 2012: Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus calling for the entire records pertaining to the conditions 11(a) 11 (c) 11 (d) of A. General and 1 (a) and 1 (b) of E. Security deposit of tender terms and conditions in tender No.TNSO/OPS/POL/PT-3/2012-13 issued by the second respondent dated 14.8.2012 with due date 12.9.2012 and quash the same and thereby permitting the petitioners to participate in the said tender.
Prayer in W.P.No.24219 of 2012: Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus calling for the records pertaining to the Tender No.TNSO/OPS/POL/PT-3/2012-13 from the Deputy General Manager (ops), Indian Oil Corporation Ltd.(MD), Tamil Nadu State Office, Mahatma Gandhi Road, Chennai-600034, and quash the mandatory requirements laid down at Condition No.14 of the Technical Bid and direct the respondents to relax the condition No.14.
Prayer in W.P.Nos.24634 to 24646, 24662 to 24667 of 2012: Writ Petitions filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus calling for the records pertaining to the Tender for road transportation of bulk petroleum products MS/HSD/Branded Fuels, Location : Chennai Based Location (Korukkupet, Tondiarpet & FST Terminals) in Tender No.TNSO/OPS/POL/PT-3/2012-13 issued by the first respondent and quash the same as unconstitutional and consequently direct the first respondent to issue a fresh tender upon considering the representations of the petitioner while determining the minimum and maximum number of vehicles for qualifying for the tender.
For Petitioners in : Mr.C. Gurulingam
WP.No.24406/2012
For Petitioners in : Mr.P.Vijendran
W.P.No.24219/2012
For Petitioners in : Mr.AR.L.Sundaresan
W.P.Nos.24634 to 24646/2012 Senior Counsel
& 24662 to 24667/2012 for Mr.S.S.Rajesh
For Respondents : Mr. M.Ravindran
in all the WPs. Senior Counsel, for
Mr.V.Anantha Natarajan
COMMON ORDER
The prayer in W.P.No.24406 of 2012 is to quash the condition Nos.11(a), 11(c), 11(d) of A.General and 1(a) and 1(b) of E.Security deposit of tender terms and conditions in tender No.TNSO/OPS/POL/PT-3/2012-13, issued by the second respondent dated 14.8.2012 with due date 12.9.2012 and quash the same and permit the petitioners to participate in the said tender.
2. The prayer in W.P.No.24219 of 2012 is to quash condition No.14 of the Technical Bid of the very same Tender dated 14.8.2012 and for direction to relax the said condition.
3. The other writ petitions are filed to quash the very same tender dated 14.8.2012 and to issue fresh tender upon considering the representations of the petitioners while determining the minimum and maximum number of vehicle for qualifying for the tender.
4. The petitioners claim that they are in the field of transporting bulk petroleum products from the Indian Oil Corporation (hereinafter referred to as "IOC") in the vehicles suitably built for the said purpose as per the terms set out by the IOC from time to time. According to the petitioners, they have employed number of drivers, cleaners and technical staffs. The petitioners also claim that they participated in the Tender for the year 2009-2010 and are successfully operating the vehicles with the respondents.
5. In these writ petitions, the Tender Notification issued on 14.8.2012 is challenged by the petitioners on the ground that the terms and conditions speak about minimum and maximum TTs by a transport operator other than Retail Outlet (RO) Dealer/ consortium for own supply and the said condition is in favour of giant operators in the field and the same is against the interest of small operators like the petitioners. If maximum 55 TTs are allowed to operate by one operator, the required vehicles can be bid by giant operators, leaving behind the small operators.
6. The condition regarding 5 TTs of which 3 TTs are to be owned by the Tenderer and additional TTs must be created at the ratio of 1:1 is without any basis. Clause 11(a) of Condition A General provided an indirect condition to retail outlet Dealers/Direct consumers, who are already enjoying commission and other incentives and allowing the retail outlet dealers to own a vehicle for their supply is contrary to the terms and conditions contained in the award of retail outlet dealership. Clause 11(d) empowers formation of consortium with two other IOC retail outlet dealers, which is a concession given to RO dealers which gives monopoly to RO dealers and the same is discriminatory and if RO dealers are allowed to operate from IOC, to their retail outlet there is other possibility of adulteration.
7. The security deposit of Rs.8 lakhs is demanded from general tenderers and for RO dealers the security deposit amount is a sum of Rs.50,000/- as in the case of SC/ST tenderers, which results in showing leniency to the RO dealers and loss of exchequer to the Government.
8. In W.P.No.24291 of 2012, the additional condition mentioned in item No.14 of the technical bid directing to furnish attested copies of valid registration certificate and CCOE (Chief Controller of Explosives) licence for each of the Tank Trucks offered (insurance, certificate of fitness and calibration certificate), which are to be produced during physical verification of TTs after LOI issuance.
9. In W.P.Nos.24634 to 24636, 24662 to 24667 of 2012, the petitioners have prayed to declare the entire tender notification as unconstitutional and to direct the first respondent to issue fresh tender by considering the representation of the petitioners while determining minimum and maximum number of vehicles to qualify for submitting tender contending that the conditions are violative of Article 14 and 19(1)(g) of the Constitution of India and the notification has been issued only to suit the needs of few people and without recognising the unblemished service rendered by the members of the association, who have been diligently transporting the petroleum products without any pilferage or theft.
10. A common counter affidavit is filed by the respondents justifying the terms and conditions contained in the impugned tender notification and contending as follows:
(a) The IOC is dealing with various petroleum oil products like Petrol, Diesel and branded fuel, which are supplied from Korukkupet, Thondiarpet and Foreshore Terminals to IOC Retail Outlets in and around Chennai and adjoining districts, operated through Dealer Network and other various customers viz., State Transport Corporations, Railways, Defence, Police and other major Industries.
(b) For road transportation of petrol, diesel and branded fuels, tenders for the Chennai based locations from 1.11.2012 was issued under two bid system from tenderers, who are willing to participate, for a period of two years with option for extension upto one year at the sole discretion of the Corporation. The last date for submission of tender was fixed as 12.9.2012 at 10.30 a.m. and the bids will be opened on the same day (12.9.2012) at 11.a.m.
(c) So far as the challenge made to clause 11(a), it is answered that while awarding business to the successful tenderers, preference will be given to owned tank trucks. Maximum tank trucks that can be offered by a Transporter (other than the dealer/consortium for own supply) is 53 TTs only, i.e., 10% of the demand. The RO dealer/Direct customer, who own tank trucks can offer tank for own requirement and also can form consortium with two other IOC RO dealers, who are not having tank trucks for whom additional tanks were made applicable.
(d) The security deposit was fixed as Rs.8 lakhs per contract for general tenderers of which Rs.80,000/- shall be paid in the form of DD in the name of IOC and the balance may be deposited in the form of bank guarantee for a valid period of six months beyond the maximum period of tenure of the contract. For RO dealers/Direct customers and SC/ST tenderers the security deposit of Rs.50,000/- per contract irrespective of the number of tank trucks offered as RO dealers are already having contract with IOC. The demand of security deposit of Rs.50,000/- from RO dealers was already in the earlier tender as they are having a link with IOC to resolve any problem unlike the general tenderers.
(e) It is further stated that even in the previous tender, tenderers shall have to offer minimum five tank trucks out of which two shall be owned and three can be attached and there is no change in the eligibility criteria as alleged. During 2009-2012 tender, the tenderer shall have to offer minimum five TTs and there was no limitation or maximum number of TTs one can offer. As the said condition was creating monopolistic environment, in the present tender for 2012-2015 the limit for maximum tank trucks is fixed to avoid monopoly on the terms and conditions contained in Clause 11(c) dealing with RO Dealers/Direct customer. Supplies are delivered where responsibility is on IOC in terms of quality and quantity till it reaches destination. Thus, priority is given to RO dealers, who are already having contract with IOC. Permitting RO dealers to form consortium with any number of RO dealers is also only to ensure uninterrupted supply of petroleum products.
11. The learned Senior counsel and other counsels for respective petitioners reiterated the grounds raised in the writ petitions and contended that the action of the respondents by incorporating the conditions 11(a), 11(c), 11(d) of A General and 1(a) and 1(b) of E Security Deposit contained in the impugned Tender No.TNSO/OPS/POL/PT-3/2012-13 dated 14.8.2012 issued by the second respondent is creating monopoly in favour of ten Truck owners having more than 5 TTs. By permitting the retailers to use their Trucks, the other truck owners are prevented from participating in the tender and they are forced to furnish more security deposit and thereby IOC which is a Public Sector Undertaking of the Government of India is losing interest and there is discrimination insofar as demanding higher security deposit amount from the private truck owners when compared to RO Dealers. The action of the respondents in demanding same amount of security deposit from RO Dealers as to that of SC/ST tenderers are discriminatory and giving advantage to RO Dealers. By permitting RO Dealers to transport petroleum products, one checking point to the dealers is removed and if petroleum products are permitted to be transported through private truck owners there would be two checking points one at the time of loading of petroleum products from IOC and another one at the point of unloading the petroleum products at the retail outlet storage point. The conditions imposed in the tender notification are therefore unreasonable, irrational and are liable to be set aside.
12. The learned Senior Counsel appearing for the respondents on the other hand submitted that some of the conditions are already available in the previous tender notification and some of the petitioners have participated and they were also granted contract. Insisting 5 TTs from private contractors is only to safeguard the uninterrupted supply of petroleum products to the retail outlets and if less number of TTs are fixed as minimum eligibility, the retail outlet will not get timely supply of petroleum products, which are essential commodities for public consumption. The higher security deposit demanded from private contractors other than RO Dealers is only to safeguard the interest of the respondents in case of any default on the part of the contractors and insofar as the RO Dealers are concerned, they are already dealing with petroleum products with the respondents and the obligation of RO Dealers can be enforced even if lesser security deposit is made by them. The contention of the petitioners that the Government/respondents will lose interest from the security deposit is untenable as the interest accrued on the security deposit are being taken only by the Contractors and the IOC/Government is not getting interest from the security deposit. According to the learned Senior Counsel, the respondents have taken a policy decision throughout the country for the effective supply of petroleum products without any interruption and such conditions were already upheld by Courts. The term of monopoly alleged by the petitioners has no basis as minimum ten persons can compete as per the tender notification. The learned senior Counsel also cited few decisions in support of his contentions.
13. I have considered the rival submissions made by the respective Senior counsels and other learned Counsels.
14. The Respondent/IOC, a Public Sector Undertaking of the Government of India, has invited tender for the transport of bulk petroleum products to its storage points from Chennai based locations viz., Korukkupet, Thondiyarpet and Foreshore Estate terminals. The tender notification was issued on 14.8.2012 and most of the petitioners have earlier participated in the tender for the supply of petroleum products in the year 2009-2010.
15. The main contention raised in these writ petitions is permitting Retail Outlet Dealers, who are already enjoying commission and other incentives to utilise their own vehicle for supply is discriminatory. The RO Dealers are already having contract with the IOC for distribution and sale of petroleum products and to make the petroleum products available in the retail outlets, the RO Dealers are permitted to submit their applications individually or along with other RO Dealers and separate condition is imposed including deposit of lesser amount as security deposit viz., Rs.50,000/-, whereas for the general tenderers Rs.8 lakhs is fixed as security deposit. IOC is having control over RO Dealers and therefore the said lesser amount of security deposit is fixed. As rightly contended by the learned Senior Counsel for the respondents, by paying higher security deposit, the IOC or Government of India are not getting any benefit. The interest accrued on fixed deposits is always being received by the person, who made the security deposit and therefore the general tenderers will get interest for their security deposit and as such there is no loss to the IOC or to the Government of India. Fixing lesser security deposit to RO Dealers cannot be treated as discriminatory treatment as the purpose for which security deposit is demanded is to ensure the implementation of the terms of the contract and not beyond that. If the RO Dealers are not complying with the terms of the contract, the respondents can deal with them as they are already having a contract with the IOC as retail dealers and as against general tenderers the IOC is not having any control and only to enforce the terms of the contract, higher security deposit is demanded. Thus, there is no discrimination in fixing different security deposit for general tenderers and for RO Dealers.
16. Insofar as fixing of minimum tanker trucks is concerned, the same is also intended for uninterrupted supply of petroleum products to retail outlets and other bulk consumers. The purpose being to safeguard the public good, the petitioners cannot have any grievance saying that persons with less number of TTs are prevented from participating in the tender. Further, the very same condition was available even during the previous tender 2009-2012, i.e, minimum of 5 trucks and maximum of 10%, which means, 53 TTs can be offered. Thus, between 10 to 105 tenderers may be selected for awarding contract.
17. Insofar as condition No.14 is concerned, the same was imposed to satisfy the readiness of the tenderers to carry out the transportation on awarding the contract and the same is incorporated considering the business requirement, which is followed throughout India. The said condition to submit all the details and enclosures as has been asked for in the tender form is to verify the eligibility of the tenderer, which the respondents are entitled to fix. The condition is fixed to avoid non-serious tenderers from submitting tenders. As per Condition No.16, all quoted valid documents must be shown on the date of opening of the tender. The said condition to have valid document at the time of submitting tender application, is not discriminatory and it is the prerogative of the respondents to impose any reasonable condition.
18. The action of the respondents in inviting tender is purely a contractual affair. The scope of interference by the Courts in contractual matters has already been settled by the Honourable Supreme Court in very many decisions.
(a) In (1994) 6 SCC 651 (Tata Cellular v. Union of India) in paragraph 94 the Supreme Court held thus, "(1) The modern trend points to judicial restraint in administrative action.
(2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made.
(3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible.
(4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts.
(5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides.
(6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.
(b) In (1999) 1 SCC 492 (Raunaq International Ltd. v. I.V.R.Construction Ltd) the Supreme Court reiterated the said principle and held that the writ Court would not be justified in interfering with the commercial transaction in which the State is one of the parties to the same except where there is substantial public interest involved and in cases where the transaction is mala fide.
(c) In (2000) 2 SCC 617 (Air India Ltd. v. Cochin International Airport Ltd.) the Supreme Court held that the award of contract is essential in commercial transaction, which involves commercial consideration and results in commercial decision. In para 7 it is further held, "7. ........... The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny. .........."
(d) In (2007) 14 SCC 517 (Jagdish Mandal v. State of Orissa) in paragraph 22 it is held thus, "22. ................... 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."
(e) In AIR 2009 SC 2894 (Meerut Development Authority v. Association of Management Studies) it was held that the tender is an offer. It is something which invites and communicated to the intending tenderers to notify their acceptance. The terms of invitation of tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract.
(f) The decisions cited in (a) to (d) above were followed in the recent decision of the Supreme Court reported in (2012) 6 SCC 464 (Tejas Constructions & Infrastructure (P) Ltd v. Municipal Council, Sendhwa) and dismissed similar challenge by holding that in the absence of any mala fide or arbitrariness in the process of evaluation of bids and determination of the eligibility of the bidders, the Court shall not interfere.
(g) The fixation of different unit price for transportation of petroleum products was challenged as arbitrary before the Orissa High Court in W.P.(C)No.1105 of 2012 order dated 31.7.2012 and the said contention was negatived by holding that the unit price can be fixed depending upon the distance.
(h) The Division Bench of the Allahabad High Court in Civil Miscellaneous Writ Petition No.38215 of 2005 by order dated 10.5.2005 rejected the contention of arbitrariness in reserving tenders in favour of big transporters. It is further held that the Court cannot strike down the terms of the tenders prescribed by the competent authority merely because it feels that earlier term of contract could have served the purpose better or could be more fair. The said decision was rendered in a batch of cases filed by transport companies like the present petitioners challenging the conditions made in the terms and conditions inviting tenders by IOC.
(i) The Division Bench of Punjab & Haryana High Court at Chandigarh in CWP No.21361 of 2011 by order dated 8.8.2012 in the case filed by IOCL upheld the provision enabling the RO Dealers to submit tenders and upheld the similar provision specifying to offer minimum of 5 TTs by following the Division Bench judgment of Delhi High Court.
(j) This Court in 1999 (2) LW 134 (M/s.Jaganathan & Sekar & Others v. M/s.Indian Oil Corporation Ltd.) upheld the exemption of paying EMD given to RO Dealers of LPG cylinders for transportation as the Distributors and retailers are already having sufficient deposits with IOC and therefore there is an excess with the object sought to be achieved.
19. In the light of the above cited decisions, I am unable to find any ground to interfere with the tender conditions impugned in these writ petitions, as none of the conditions are arbitrary, irrational or unreasonable.
There are no merits in the writ petitions and all the writ petitions are dismissed. No costs. Connected miscellaneous petitions are also dismissed.
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