Rajasthan High Court - Jodhpur
Kishan Gopal Atal & Ors vs Union Of India & Ors on 23 September, 2008
Author: H.R.Panwar
Bench: H.R.Panwar
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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT
JODHPUR
O R D E R
(1) S.B.Civil Writ Petition No. 5119/2008
(Udaipur Tanker Owners Association Vs. Union of India & Ors.)
(2) S.B.Civil Writ Petition No. 5622/2008
(Kishan Gopal Atal & Ors. Vs. Union of India and Ors.)
.........
Date of Order : 23/09/2008
PRESENT
HON'BLE MR. JUSTICE H.R.PANWAR
Mr. Mukesh Rajpurohit & Mr. Rajesh Shah for the petitioner.
Mr. M.S.Singhvi for the respondents.
BY THE COURT
REPORTABLE Both these writ petitions involve common questions of law and facts and therefore, with the consent of learned counsel for the parties, they are heard and decided together taking the facts of S.B.Civil Writ Petition No.5119/08 as a leading case.
The petitioner Udaipur Tanker Owners Association filed the instant writ petition stating therein that the petitioner Association is a registered Association and carrying on the business of tanker transportation of petroleum products. The respondent Indian Oil Corporation invited tenders for awarding 2 contracts for the road transportation of bulk petroleum products like MS/HSD/ Branded fuels etc. from the Bulk Oil Storage and handling location in Rajasthan State to locations within the State and outside the State vide Notice Inviting Tender Annex.1. Some of the members of the petitioner association submitted tender forms. The date of opening of the tender forms was scheduled to be 04.08.2008, however, in the meantime the petitioner Association filed writ petition before this Court and by order dated 30.07.2008 opening of the tenders was stayed and therefore, the tenders have not yet been opened. The petitioner association challenges the conditions enumerated in the tender form on the ground that they are discriminatory. According to the petitioner association, the earnest money for tanker owners has been fixed as Rs.5000/- whereas for retail outlet dealers the earnest money has been fixed as Rs.1000/-. So far as security deposit is concerned, for the tanker owners, a sum of Rs. 5,00,000/- has been fixed, whereas for the retail outlet dealers, only Rs. 50,000/- per contract has been fixed towards security deposit irrespective of the number of tank trucks. So also with regard to number of vehicles, the minimum vehicles required for tanker owners are two owned and three others whereas for the retail outlet dealers the minimum vehicles required are one owned and can supply to other dealer as a consortium with other retail outlet dealers. Apart from these 3 discriminatory conditions, according to the petitioner association, the other conditions imposed are that the carrier shall ensure that the truck-tanker is painted and maintained as per the colour scheme advised by the Oil Company from time to time and carrier shall also ensure that the name of Oil Company and Logo is prominently displayed on the tank of Truck-Tanker and the name of the base location in the information panel as per the directions of the Oil Company. The members of the petitioner association have raised objection with regard to such terms and conditions of the notice inviting tender on the ground of being discriminatory, impractical and inconsistent with the Act and the Rules. Hence these writ petitions.
A reply to the writ petition has been filed by the respondents raising a preliminary objection that the writ of mandamus is not maintainable by an Association, only an individual if aggrieved by any act of the respondents can seek the writ of mandamus. Learned counsel for the respondent Corporation has relied on two decisions of Hon'ble Supreme Court in Shri Mahinder Kumar Gupta etc. Vs. Union of India, Ministry of Petroleum and Natural Gas, JT 1995 (1) SC 11 and in Federation of Bar Associations in Karnataka Vs. Union of India (2000) 6 SCC 715.
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It has further been stated that the petitioners have concealed the material facts in the writ petition inasmuch as prior to issuance of notice inviting tender (for short 'the NIT' hereinafter), the respondent Corporation had organized pre bid meeting inviting objections and suggestions with regard to the proposed terms and conditions of the NIT and the meetings were held at various locations during the months of April 2008 and May, 2008 and were attended by various transporters and retail outlet dealers and in those meetings the revised terms of transportation contract which are impugned in the writ petition were also explained and various transporters participating in the said meeting agreed thereto as they did not raise any objection. The respondents have placed on record the attendance sheet of the pre bid meeting as Annex.R.2/1 and print out of the terms and conditions made known in the meeting as AnnexR.2/2. The petitioners have failed to disclose these material and important facts in the writ petition. It has further been submitted that it is a matter of policy decision and the respondent Corporation has taken a policy decision on the basis of their past experience including the complaints against small transporters who were found to be indulging in malpractices, pilferage and adulteration of petroleum products supplied by the respondent Corporation before it is delivered to the destination of the Retail outlet dealers. The details of the transporters /vehicles blacklisted 5 during the years 2005-06, 2006-07 and 2007-08 have also been annexed with the reply as Schedule-R. It has further been stated that so far as the question of Earnest Money and Security Deposit qua the persons like the petitioner and in favour of Retail Outlet Dealers is concerned, earlier also similar tenders were invited by the respondent company in the year 2005 having same conditions of earnest money and security deposit, but neither the petitioner association nor the members of the petitioner association choose to challenge those conditions. A copy of the tender inviting notice for the year 2005 has been placed on record as Annex.R.2/3. According to learned counsel for the respondent Corporation, since the petitioners having accepted the terms and conditions for the year 2005 which are same in the tender inviting notice in question, and therefore, they are estopped from challenging the same. The petitioners cannot be permitted to approbate and reprobate. Lastly it was submitted that none of the fundamental rights of the petitioner association has been infringed.
I have heard learned counsel for the parties.
Carefully gone through the pleadings of the parties.
It is contended by learned counsel for the petitioners that the respondent Corporation has adopted double standard in between the tanker owners and the retail outlet dealers with regard to earnest money, security deposit and minimum 6 requirement of vehicles which infringes the right to business of the members of the petitioner association. It has further been submitted that by NIT in question, the respondent Corporation has prescribed minimum and maximum rates and prescribing rate 10 plus or minus is unreasonable and arbitrary. Learned counsel for the petitioners has challenged certain terms and conditions of the price bid more particularly the technical bid and submits that the Condition No.8.1.1 (c) provides that upon second incidence of the proven malpractice during the tenure of the contract of a particular carrier's TTs, the whole contract comprising all the TTs belonging to the concerned carrier shall be terminated and the concerned carrier and their all TTs shall be black listed on industry basis, even though, the complicity of the carrier is not proved during the investigation as also the condition requiring an agreement on non-judicial stamp with regard to the Bulk Petroleum Products Road Transport Agreement providing a condition therein that Tank Trucks covered by this Agreement shall operate at the sole risk of the carrier. In no case, company would be held responsible for any loss or damage done to/ by the Tank Truck while on the company's work or parked in their premises or anywhere else. Learned Counsel submits that no such condition has been prescribed for the retail outlet dealers owing truck tankers. Similarly, a condition No. 10 (n) that if the consignee so desire 7 and is permitted by the company, the carrier shall allow such representative of the consignee to travel along with the Tank Truck, according to learned counsel, this condition is onerous to the extent that if a representative of the consignee is to be allowed along with the Tank Truck and for any mischief including happening of accident, the owner of the such Tank Truck has to bear the compensation since in such matter the insurance company of the tank truck would not be liable under the provisions of the Motor Vehicles Act, 1988. According to learned counsel for the petitioners, the price bid providing the tender to quote within plus and minus 10% of the estimated rate is arbitrary.
Learned counsel for the petitioner has relied on decisions of Hon'ble Supreme Court in Union of India and Ors. Vs. Hindustan Development Corporation and Others (1993) 3 SCC, 499, in Tata Cellular Vs. Union of India (1994) 6 SCC, 651, in Kumari Shrilekha Vidyarthi etc. etc. Vs. State of U.P. And Others AIR 1991 SC 537, in Dutta Association Pvt. Ltd. Vs. Indo Merchantiles Pvt. Ltd. and Others (1997) 1 SCC 53 and in State of Rajasthan and Others Vs. Basant Nahata 2005 AIR SCW 4456.
In SBCW No. 5622/08, Mr. M.S. Singhvi, learned Counsel appearing for the respondent Corporation adopts the 8 reply filed by the Corporation in SBCW No.5119/08. Learned counsel for the respondent Corporation has relied on decision of Hon'ble Supreme Court in AIR India Ltd. Vs. Cochin International Airport Ltd. and Others, (2000) 2 SCC, 617, in Directorate of Education and Others Vs. Educomp Datamatics Ltd. and Others (2004) 4 SCC, 19, in Global Energy Ltd. and Another Vs. Adani Exports Ltd. and Others (2005) 4 SCC, 435, in G.B.Mahajan and Others Vs. Jalgaon Municipal Council and Others (1991) 3 SCC 91, a Division Bench decision of Allahabad High Court in M/s Laxmi Transport Co. Mathura and Ors. Vs. Chief Operation Manager, Lucknow and Anr. Civil Misc. Writ Petition No.38215/05 decided on 10.05.2005, a Division Bench decision of Madras High Court in M/s Bharat Petrolum Corporation Ltd. and Anr. Vs. M/s S. Palaniappan and Ors. W.A. No.310/07 and 311/07 decided on 12.4.2007 and a Division Bench decision of Punjab and Haryana High Court in Didar Masih and Others Vs. Union of India and Others C.W.P. No.12048/08 decided on 16.07.2008.
It is contended by learned counsel for the respondent Corporation that the writ petition has been filed by Udaipur Tankers Association through its Secretary Devilal who was party to the pre bid meeting held vide Annex.R.2/1 which is evident from Annex.R.2/1 attendance sheet of pre bid meeting. So far as question of maintainability of the writ of mandamus by an 9 Association is concerned, learned counsel for the respondent Corporation submits that this controversy is covered by the decision of Hon'ble Supreme Court in Mahinder Kumar Gupta etc. Vs. Union of India (Supra) wherein Hon'ble Supreme Court held that the writ petition stands liable to be dismissed on the sole ground that the Association cannot file a writ petition as it has no fundamental right under Article 32 of the Constitution of India.
In Federation of Bar Association, Karnataka (supra) it was held that there was no infringement of any fundamental right, nor any scope for enforcement of any fundamental rights. The petitioner Federation is not the accredited representative of the litigants of Karnataka.
Learned counsel for the petitioner submits that even otherwise, if a writ petition is not maintainable by the Association then also petitioners Kishan Gopal Atal and Ors. have filed a writ petition in their individual capacity being S.B.C.Writ Petition No.5622/08 involving the similar question of law and facts as also challenging the very notice inviting tender and terms and conditions including the conditions for the earnest money, security deposit and requirement of number of vehicles and therefore, the writ petition filed by Kishan Gopal Atal and Ors. can be independently examined involving the controversy raised in the writ petition filed by Tanker Owners Association. 10
In Union of India and Others Vs. Hindustan Development Corporation and Others (supra), the Hon'ble Supreme Court considered the question of dual pricing policy. In that case the tender for supply of cast steel bogies to railways by tenderers comprising big as well as small manufacturers came to be considered. While considering the question of formation of a cartel as also the question of legitimate expectation, the Apex Court held that the Government while entering into contracts or issuing quotas is expected not to act like a private individual but should act in conformity with certain healthy standards and norms. Such actions should not be arbitrary, irrational or irrelevant. In the matter of awarding contracts inviting tenders is considered to be one of the fair ways. If there are any reservations or restrictions then they should not be arbitrary and must be justifiable on the basis of some policy or valid principles which by themselves are reasonable and not discriminatory. In that case the validity of the conditions in the tender as such were not questioned and as such the Apex Court held that the Govt. had the right to either accept or reject the lowest offer but that of course, if done on a policy, should be on some rational and reasonable grounds. The test of reasonableness, which pervades the constitutional scheme particularly in the context of Arts. 14, 19 and 21, finds its positive manifestation and expression in the lofty ideal of social and economic justice which inspires and 11 animates the Directive Principles and Article 14 strikes at arbitrariness in State action. While considering the question of legitimate expectations in para 35 of the Report, the Apex Court held that legitimate expectations may come in various forms and owe their existence to different kind of circumstances and it is not possible to give an exhaustive list in the context of vast and fast expansion of the governmental activities. By and large they arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largess by the Government and in somewhat similar situations. Legitimate expectation gives the applicant sufficient locus standi for judicial review. The doctrine of legitimate expectation is to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. The doctrine does not give scope to claim relief straightaway from the administrative authorities as no crystallised right as such is involved. The protection of such legitimate expectation does not require the fulfilment of the expectation where an overriding public interest requires otherwise. In other words where a person's legitimate expectation is not fulfilled by taking a particular decision then decision-maker should justify the denial of such expectation by showing some overriding public interest. Therefore, even if substantive protection of such expectation is 12 contemplated that does not grant an absolute right to a particular person. It was further held that a case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfill. It is also held that even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is taken fairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected. If it is a question of policy, even by way of change of old policy, the courts cannot interfere with a decision. If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory, unfair or biased, gross abuse of power or violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 but a claim based on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. It can be one of the grounds to consider but the court must lift the veil and see whether the decision is violative of these principles warranting interference. It depends very much on the facts and the recognised general principles of administrative law applicable to such facts and the concept of legitimate expectation which is the latest recruit to a long list of concepts fashioned by the 13 courts for the review of administrative action, must be restricted to the general legal limitations applicable and binding the manner of the future exercise of administrative power in a particular case. It was further held that concept of legitimate expectation is not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits, particularly when the element of speculation and uncertainty is inherent in that very concept. The Courts should restrain themselves and restrict such claims duly to the legal limitations. The Hon'ble Apex Court further held that an aggrieved person was entitled to invoke judicial review if he showed that a decision of a public authority affected him by depriving him of some benefit or advantage which in the past he had been permitted to enjoy and which he could legitimately expect to be permitted to continue to enjoy either until he was given reasons for its withdrawal and the opportunity to comment on those reasons or because he had received assurance that it would not be withdrawn before he had been given the opportunity of making representations against the withdrawal. While examining the question of dual pricing, the submission before the Hon'ble Supreme Court was that in respect of same set of manufacturers, some of them cannot be made to supply at a lower price and the others namely smaller manufacturers cannot be given advantage to supply at a higher price and such 14 dual pricing is unreasonable and arbitrary. In that case, the Tender Committee worked out an upgraded price and taking other relevant factors like cost of the material etc. into consideration and applying the formula as was being done in the past and particularly taking into consideration the two concessions in respect of custom and freight fixed Rs. 76,000/- as the reasonable price. This was very close to the price quoted by the three big manufacturers. But at a post-tender stage, they entered into correspondence offering a lower price and ultimately the three big manufacturers committed themselves to supply at the rate of Rs. 67,000/- per bogie and on these premises, Hon'ble Supreme Court held that these big manufacturers formed a different category namely that they may be in a position to supply at that rate as is evident from their own commitment but to apply the same price which is much lower than the reasonable and workable price fixed by the Tender Committee to other smaller manufacturers would again result in ending the competition between the big and the small which ultimately would result in monopoly of the market by the three big manufacturers. In that case, the Apex Court had already directed the Tender Committee to consider the matter afresh and even if it results in dual pricing, it would not be bad in the circumstances mentioned therein.
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In Dutta Associates Pvt. Ltd. Vs. Indo Merchantiles Pvt. Ltd. and Others (supra), the Apex Court held that the consideration of the tenders received and the procedure to be followed in the matter of acceptance of a tender should be transparent, fair and open. Any abuse of power for extraneous reasons would expose the authorities concerned liable to appropriate punishment. In that case, the entire procedure followed by Commissioner and the Government of Assam in accepting the tender of the appellant Dutta Associates Pvt. Ltd. was found to be unfair and opposed to the norms which the Government should follow in such matters.
In Tata Cellular Vs. Union of India (supra), the Apex Court held that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best 16 quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down.
Kumari Srilekha Vidyarthi etc. etc. Vs. State of U.P. and Others (supra) while considering the State actions in contractual matter and the power of judicial review, the Apex Court held that the personality of the State, requireing regulation of its conduct in all spheres by requirements of Art. 14, does not undergo such a radical change after the making of a contract merely because some contractual rights accrue to the other party in addition. It is not as if the requirements of Art. 14 and contractual obligations are alien concepts, which cannot co-exist. The Constitution does not envisage or permit unfairness or unreasonableness in State actions in any sphere of its activity contrary to the professed ideals in the Preamble. Exclusion of Art. 14 in contractual matters is not permissible in constitutional scheme. The scope and permissible grounds of judicial review in such matters and the relief which may be available are different matters but that does not justify the view of its total exclusion.
In State of Rajasthan and Others Vs. Basant Nahata (supra), Hon'ble Supreme Court held that public policy is not capable of being given a precise definition. What is 'opposed to 17 public policy' would be a matter depending upon the nature of the transaction. The pleadings of the parties and the materials brought on record would be relevant so as to enable the Court to judge the concept as to what is for public good or in the public interest or what would be injurious or harmful to the public good or the public interest at the relevant point of time as contra- distinguished from the policy of a particular Govt. A law dealing with the rights of a citizen is required to be clear and unambiguous. Doctrine of public policy is contained in a branch of common law, it is governed by precedents. The principles have been crystallized under different heads and though it may be possible for the Courts to expound and apply them to different situations but it is trite that the said doctrine should not be taken recourse to in 'clear and incontestable cases of harm to the public though the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world'.
In Shri Mohinder Kumar Gupta Vs. Union of India, Ministry of Petroleum and Natural Gas (supra), the question came to be considered by Hon'ble Supreme Court as to whether the Govt. is justified in imposition of eligibility restrictions in the award of retail outlets, and it has been observed that the distribution of the largesse of the State is for the common good 18 and to subserve the common good of as many persons as possible. The Govt. of India intended to group together certain near relations as to unit and one among that unit alone was made eligible to apply for and claim for grant of dealership. Further, economic and social justice as envisaged in the preamble of the Constitution is sought to be achieved. Therefore, there is a reasonable nexus between the object and the prescription of the eligibility criteria envisaged in the guidelines. All those who satisfy the eligibility criteria alone are entitled to apply for the consideration of the grant of dealership. It is true that in case of physically handicapped persons, only three classes of persons were made ineligible. Physically handicapped persons have been treated as a class by themselves. Under these circumstances, any other person other than Physically handicapped cannot claim parity with physically handicapped persons. As far as partnership is concerned, if one of the persons either have a dealership or relations who were found to be eligible under the relationship criteria, and had the dealership, then clause 10 of the said guidelines gets attracted and such partnership also did not become eligible to apply for dealership/ distributorship. The object of clause 10 appears to be that for those partners who either one among themselves or any of the relations of one of the partners had a dealership, the other partner or the specified relations also not be eligible to apply for 19 grant of dealership individually or as a member of the partnership. Therefore, the guidelines are based on public policy to give effect to the constitutional creed of Part IV of the Indian Court and on these premises, the Apex Court held that no interference is warranted by the courts with the terms and conditions of the notice inviting tender.
In AIR India Limited Vs. Cochin International Airport Ltd. and Ors. (supra) Hon'ble Supreme Court observed as under:-
"The law relating to award of a contract by the State, its corporations and bodies acting as instrumentalities and agencies of the Government has been settled by the decision of this Court in Ramana Dayaram Shetty Vs. International Airport Authority of India, Fertilizer Corpn. Kamgar Union (Regd.) Vs. Union of India, CCE Vs. Dunlop India Ltd., Tata Cellular Vs. Union of India, Ramniklal N. Bhutta Vs. State of Maharashtra and Raunaq International Ltd. Vs. I.V.R. Construction Ltd. The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. 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. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation, for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest. But the State, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the court can examine the decision-making process and interfere if it is found 20 vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the court should intervene."
In Directorate of Education and Others Vs. Educomp Datamatics Ltd. and Others (supra), the Hon'ble Supreme Court held that it is well settled now that the courts can scrutinise the award of the contracts by the Government or its agencies in exercise of their powers of judicial review to prevent arbitrariness or favouritism. However, there are inherent limitations in the exercise of the power of judicial review in such matters. The point as to the extent of judicial review permissible in contractual matters while inviting bids by issuing tenders has been examined in depth by this Court in Tata Cellular Vs. Union of India. Hon'ble Supreme Court in Tata Cellular Vs. Union of India culled out the following principles:-
(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.21
(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.
In Global Energy Ltd. and Another Vs. Adani Exports Ltd. and Others (supra), Hon'ble Supreme Court observed as under :-
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"The principle is, therefore, well settled that the terms of the invitation to tender are not open to judicial scrutiny and the courts cannot whittle down the terms of the tender as they are in the realm of contract unless they are wholly arbitrary, discriminatory or actuated by malice. This being the position of law, settled by a catena of decisions of this Court, it is rather surprising that the learned Single Judge passed an interim direction on the very first day of admission hearing of the writ petition and allowed the appellants to deposit the earnest money by furnishing a bank guarantee or a bankers' cheque till three days after the actual date of opening of the tender. The order of the learned Single Judge being wholly illegal, was, therefore,rightly set aside by the Division Bench."
In G.B. Mahajan and Others Vs. Jalgaon Municipal Council and Others (supra), Hon'ble Supreme Court observed that while it is true that principles of judicial review apply to the exercise by a government body of its contractual powers, the inherent limitations on the scope of the inquiry are themselves a part of those principles. For instance, in a matter even as between the parties, there must be shown a public law element to the contractual decision before judicial review is invoked. In the present case the material placed before the Court falls far short of what the law requires to justify interference.
The Hon'ble Supreme Court while considering the comparable parameters in inviting tenders held that the point again is that no other tenderer expressed any grievance. The tenders were such that the tenderer could identify the terms which form the basis of comparative evaluation. The charge of 23 arbitrariness cannot be upheld. Tests to be applied in a given case may be influenced by the extent to which a decision is supported by a democratic unanimity which evidences the decision.
Similar matters came to be decided by the Division Bench of Madras High Court, Allahabad High Court and Punjab and Hariyana High Court.
In Raunaq International Ltd. Vs. I.V.R. Construction Ltd. and Others (1991) 1 SCC, 492, Hon'ble Supreme Court observed as under :-
"The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations which are of paramount importance are commercial considerations. These would be:
(1)the price at which the other side is willing to do the work;
(2) whether the goods or services offered are of the requisite specifications;
(3)whether the person tendering has the ability to deliver the goods or services as per specifications.
When large works contracts involving engagement of substantial manpower or requiring specific skills are to be offered, the financial ability of the tenderer to fulfil the requirements of the job is also important;
(4)the ability of the tenderer to deliver goods or services or to do the work of the requisite standard and quality;
(5)past experience of the tenderer and whether he has successfully completed similar work earlier;
24(6)time which will be taken to deliver the goods or services; and often (7)the ability of the tenderer to take follow-up action, rectify defects or to give post-contract services. Even when the Sate or a public body enters into a commercial transaction, considerations which would prevail in its decision to award the contract to a given party would be the same. However, because the State or a public body or an agency of the State enters into such a contract, there could, in a given case, an element of public law or public interest involved even in such a commercial transaction."
"What are these elements of public interest? (1) Public money would be expended for the purposes of the contract. (2) the goods or services which are being commissioned could be for a public purpose, such as, construction of roads, public buildings, power plants or other public utilities. (3) The public would be directly interested in the timely fulfillment of the contract so that the services become available to the public expeditiously. (4) The public would also be interested in the quality of the work undertaken or goods supplied by the tenderer. Poor quality of work or goods can lead to tremendous public hardship and substantial financial outlay either in correcting mistakes or in rectifying defects or even at times in redoing the entire work- thus involving larger outlays of public money and delaying the availability of services, facilities or goods e.g. A delay in commissioning a power project, as in the present case, could lead to power shortages, retardation of industrial development, hardship to the general public and substantial cost escalation."
In M/s Bharat Petroleum Corporation and Anr. Vs. M/s S. Palaniappan (supra), while considering the decision of Hon'ble Supreme Court in Raunaq International Ltd. Vs. I.V.R. Construction Ltd. and Others (supra), A Division Bench of Madras High Court held that it has been repeatedly held that tender 25 terms are contractual and it is the privilege of the Government which invites its tenders and courts did not have jurisdiction to judge as to how the tender terms would have to be framed. In that case, the transportation of petroleum products of the Corporation is effected through the tank-lorries not only owned by the dealers but also by independent transporters. In fact, nearly 70% of the transportation of petroleum products is carried through transporters who are not dealers. The Corporation has decided to explore new technique processes adopted by global companies and engaged the services of the consultants and on the basis of the detailed study, the terms and conditions of the tender were settled. As per the tender conditions, the dealers can also participate in the tender by complying with the conditions of tender. The allegation that the appellant Corporation intended to favour only few big fleet operators is wholly baseless. It has been brought to the notice that nearly 77 tenders have been found eligible as per the terms and conditions of the tender. The revised tender conditions have been framed by the Corporation by taking into consideration of the present trend for effective use of the transportation and to suite their own requirements. The award of contract, whether it is by a private party or by a public body or the State is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial 26 considerations. It is open for the corporation to choose its own method to arrive at a decision. It is free to fix its own terms of invitation to tender and it is not permissible for this Court to sit in appeal over the decision of the Corporation. If the argument of the dealers is accepted then the Corporation will have no other option but to continue the transportation contract perpetually and it would mean that Corporation cannot review its own earlier decision and introduce a new policy decision even for valid reason. On these premises, the challenge to the tender condition was held to be devoid of any substance.
In Didar Masih and Others Vs. Union of India and Others (supra) while considering the similar controversy, a Division Bench of Punjab and Haryana High Court observed as under :-
"Undisputedly, vide Annexure P-12, tenders were invited for the road transportation of Bulk Petroleum Products for 2008-2011. Keeping in view the nature of the transaction, the respondent Corporation has required that the tenderer must own at least two tank trucks. In our opinion, this decision taken by the respondent Corporation for giving the tender to a person owning at least two tank trucks cannot be said to be unreasonable. The aforesaid condition imposed by the respondent Corporation, while inviting the tenders, also cannot be said to be violative of Article 19 (1)
(g) of the Constitution of India. The condition imposed by the respondent Corporation cannot be said to be unreasonable and the same falls under reasonable restriction on the exercise of rights conferred by this sub clause.
Undisputedly, the aforesaid condition is not in 27 violative of any existing law. Even it is not the case of the petitioner that the aforesaid condition has been imposed by the respondent Corporation with some ulterior or malafide motive or for extraneous consideration. In view of these facts, we do not find any ground to quash clause 11 (a) of the terms and conditions of Tender (Annex.P-12)."
In M/s Laxmi Transport Compay, Mathura and Ors.
Vs. Chief Operation Manager, Lucknow and Anr. (supra), a Division Bench of Allahabad High Court while relying on various decisions of Hon'ble Supreme Court in Directorate of Education and Ors. Vs. Educomp Datamatics Ltd. and Ors. (supra), Tata Cellular Vs. Union of India (supra), Air India Ltd. Vs. Cochin International Airport Ltd. (2000) 2 SCC 617 and in Union of India Vs. Dinesh Engineering Corporation and Anr. (2001) 8 SCC, 491,reached to an unescapable conclusion 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 Court cannot interfere unless the policy decision is arbitrary or mala fide.
So far as the maintainability of the writ petition filed by Udaipur Tanker Owners Association (SBCW No.5119/08) seeking writ of mandamus is concerned, this question has already been examined and considered by the Hon'ble Supreme Court in Shri Mahinder Kumar Gupta etc. Vs. Union of India, 28 Ministry of Petroleum and Natural Gas (supra) and the Hon'ble Supreme Court held that the writ petition filed by the Association is liable to be dismissed on the sole ground that the Association cannot file a writ petition as it has no fudamental right. This view was reiterated by Hon'ble Supreme Court in Federation of Bar Associations in Karnataka Vs. Union of India (supra) and the Apex Court held in the petition filed by Federation of Bar Association there being no infringement of any fundamental right nor any scope for enforcement of any fundamental rights. The petitioner Federation therein is not the accredited representative of the litigants of Karnataka. Keeping in view the two decisions of Hon'ble Supreme Court referred herein above, in my view, a writ petition filed by Udaipur Tanker Owners Association seeking issuance of a writ of mandamus is not maintainable and is liable to be dismissed. However, since the other writ petition filed by Kishan Gopal Atal and Others being SBCW No.5622/2008 raises the identical controversy and involves the same issue as also the notice inviting tender Annex.1 which has been challenged by the petitioner Udaipur Tanker Owners Association has also been challenged by the petitioners Kishan Gopal Atal and Others and therefore, the controversy raised in the instant writ petition is being considered and decided on merit.
In the instant writ petitions, the question for consideration is as to whether the terms and conditions of the 29 notice inviting tender Anex.1 as pointed out by the petitioner are arbitrary, irrational, irrelevant, unreasonable and discriminatory.
The main thrust of the arguments of the learned counsel for the petitioner is that by Annex.1 notice inviting tender, the respondent Corporation has adopted a dual policy inasmuch as different amount under the caption earnest money, security deposit and minimum requirement of vehicles has been adopted between two classes i.e. the Truck-Tanker Owners Association and Retail Outlet Dealers.
As has been averred in the reply filed by the respondent Corporation that even in the earlier year i.e. notice inviting tender for the year 2005, there were different rates for the Truck-Tanker Owners and the Retail Outlet Dealers to which the petitioners were party and the respondents have placed on record Annex.R/2/3 the notice inviting tender for the year 2005 issued by the respondent Corporation and the petitioner having accepted the terms and conditions of the notice inviting tender for the year 2005 and in the notice inviting tender under challenge Annex.1 there is no big variation in respect of the amount required to be deposited as earnest money, security deposit.
Even otherwise, so far as the question of security deposit is concerned, the respondent while engaging the private truck tanker owners for transportation of bulk petroleum 30 products from the Bulk Oil Storage and Handling Location in Rajasthan State to Retail Outlet or to any other location in State or outside the State, such truck-tanker transports a huge quantity of petroleum products and bulk involving a high cost and therefore, by a policy decision, the respondent Corporation decided to have a sizable amount to be deposited by the truck- tanker owners in order to secure/ protect the interest of the Corporation in the event of indulging such truck-tanker owners in malpractices, pilferage and adulteration of the petroleum products supplied by the Corporation to be delivered to the destination of retail outlet dealers. At the time of allotment of retail outlet, the retail outlet dealer deposits a sizable amount as security which remains with the Corporation and in the event of any such mischief by such retail outlet dealer, the interest of the respondent Corporation is protected by the amount of security deposit at the time of allotment of retail outlet which always remains with the respondent Corporation as long as the dealership continues.
So far as the deposit of earnest money is concerned, it also cannot be said to be so unreasonable as in the earlier notice inviting tender for the year 2005, a similar amount was fixed and since the truck-tanker owners and the retail outlet dealers form two different classes and therefore, if there is some difference in the rate of earnest money, it cannot be said that it 31 is irrational, arbitrary or discriminatory. It is a policy decision and the respondent corporation taking in view overall interest of the respondent Corporation and the smooth functioning of the transportation of the bulk petroleum product has decided to have two different rates and merely on this ground it cannot be said that the policy decision is arbitrary, irrational or discriminatory. Even otherwise, by such policy decision if two different rates are prescribed for two different classes, it cannot be said that they are arbitrary, discriminatory or unreasonable.
So far as the condition requiring the truck-tanker owners to prominently display the name of the oil company and Logo, it cannot be said that it violate any of the rights of the truck-tanker owners on the contrary, oil company of which the petroleum products are transported in a larger interest of the business transaction have asked the transporters to prominently display the name of the company and Logo, in my view, such a requirement cannot be said to be unreasonable.
So far as the condition incorporated in the tender inviting notice requiring the truck-tanker owners to enter into an agreement on a non-judicial stamp that the truck tanker covered by the agreement shall operate on the sole risk of the carrier and in no case the respondent company would be held responsible for the loss or damage done or caused to / by the truck tanker while on the company's work, also cannot be said to be 32 unreasonable or arbitrary. In a business transaction, such supplier/ owner of the goods has to protect their own interest and for that incorporating such condition in the agreement cannot be said to be violative of any of the fundamental right of the truck-tanker owners, on the contrary, such an agreement would protect the interest of both the parties to the extent that the truck-tanker owners will also be conscious of the fact that if any loss or damage is caused to the petroleum product carried in such truck-tanker, they would be liable, without fixing a liability, it will be highly unsafe and prejudicial to the interest of the owner and the goods/ petroleum product carried in such truck- tankers. So is the case of permitting to carry the consignee's representative. Allowing such representative of the consignee to travel along with the truck-tanker while transporting bulk petroleum product from bulk oil storage and handling location to the destination i.e. retail outlet dealers, it cannot be said that it will be prejudicial to the interest of the truck-tanker owners in any manner. Such representative of the owner of the petroleum product travelling while transporting in the truck the petroleum product from the bulk oil storage and handling locations to the locations where the retail outlet is stationed, can be covered by the insurance policy as per the provisions of Section 147 of the Motor Vehicles Act, 1988 and every owner of the vehicle may be truck tanker owner is required to compulsorily have an insurance 33 coverage. Section 147 (1) (b) of the Motor Vehicles Act, 1988 provides that a policy of insurance must be a policy which insures the persons or classes of persons specified in the policy to the extent specified in sub-section (2)- (i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person, including owner of the goods or his authorised representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place. Therefore, in view of the provisions of Section 147 of the M.V. Act, it cannot be said that in the event of any mis-happening or accident the truck owner has to bear the compensation to be paid to such representative. If a representative of owner of the petroleum product travels with the truck-tanker in order to ensure the safety of the petroleum product being transported to the destination and to avoid malpractices or adulteration of the petroleum product in transit, in my view, this condition in the notice inviting tender cannot be said to be discriminatory, arbitrary or unreasonable or irrational. On the contrary, these conditions have nexus with the object sought to be achieved for the safe transportation of the bulk petroleum product of the respondent Corporation from bulk oil storage and handling location to the retail outlet dealers or any other location in the State or outside the State. More so, in the instant case, firstly in the earlier notice inviting tender for 34 the year 2005, the similar terms and conditions were incorporated which have been accepted by the petitioners and on such terms and conditions the petitioners were awarded the contract for the transportation of the petroleum product of the respondent Corporation from bulk oil storage and handling location to the destination of the retail outlet dealers and even before determining the terms and conditions of the notice inviting tender in question, the respondent Corporation had organized pre-bind meetings inviting objections and suggestions with regard to the proposed terms and conditions of the notice inviting tender Annex.1 and the meetings were held at various locations during the month of April and May 2008 and attended by the various transporters including the Secretary of the petitioner association and most of the terms and conditions of the notice inviting tender were agreed upon including the technical bid which is evident from pre-bid meeting vide Annex.R.2/1 and Annex.R.2/2. It also appears that for the earlier years i.e. 2005-06, 2006-07 and 2007-08 some small transporters, truck tanker owners were found to be indulging in malpractices, pilferage and adulteration of petroleum products while transporting from bulk oil storage and handling location of the Corporation to the destination of retail outlet dealers and some transporters/ vehicle owners have already been blacklisted which are quite large in number as has been shown in Schedule- 35 R annexed with the reply to the writ petition and keeping past experience in view the respondent Corporation have made some variation in the terms and conditions of the NIT, in my view, it cannot be said to be unreasonable, arbitrary and irrational. At any rate, such terms and conditions of the NIT are not hit by Article 14 of the Constitution of India. Rather, there is a reasonable nexus between the object and the prescription of the eligibility criteria envisaged in the NIT.
So far as the question of legitimate expectation of the petitioner while competing the bid in pursuance of the NIT Annex.1, it is settled law that the doctrine of legitimate expectation is to be confined mostly to right of fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. The doctrine does not give scope to claim relief straightway from the administrative authorities as no crystallised right as such is involved. The protection of such legitimate expectation does not require the fulfillment of the expectation where an overriding public interest requires otherwise as has been held by Hon'ble Supreme Court in Union of India and Others Vs. Hindustan Development Corporation and Others (supra). Even otherwise, in the instant case, as has been stated above, the respondent Corporation before issuing the notice inviting tender Annex.1 held the meetings at various locations during the month of April and May, 36 2008 and the petitioner and other truck-tanker owners as also other transporters and retail outlet dealers have participated and after deliberation a revised terms and conditions of the transportation contract has been arrived at and therefore, it cannot be said that right of fair hearing before taking a policy decision by the respondent Corporation has not been provided to the petitioner and such like transporters. The scope of judicial review, in the contractual matters while inviting bids by issuing tenders came to be examined by Hon'ble Supreme Court in Tata Cellular Vs. Union of India (supra) and one of the principles culled out therein as noticed herein before, provides that 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. It has been further provides that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. In M/s Bharat Petroleum Corporation and Anr. Vs. M/s S. Palaniappan (supra) while relying on the decision of Hon'ble Supreme Court in Raunaq International Ltd. Vs. I.V.R. Construction Ltd. and Others (supra), a Division Bench of Madras High Court held that tender terms are contractual and it is the 37 privilege of the Government which invites its tenders and Courts did not have jurisdiction to judge as to how the tender terms would have to be framed. In that case the transportation of petroleum products of the Corporation is effected through the tank-lorries not only owned by the dealers but also by independent transporters and the Corporation has decided to explore new technique processes adopted by global companies and engaged the services of the consultants and on the basis of the detailed study, the terms and conditions of the tender were settled and the allegation therein that the Corporation intended to favour only few big fleet operators was found to be baseless and it was held that in arriving at a commercial decision, considerations which are paramount are commercial considerations. It is open for the Corporation to choose its own method to arrive at a decision. It is free to fix its own terms of invitation to tender and it is not permissible for this Court to sit in appeal over the decision of the Corporation and on these premises, similarly writ petition filed by private lorries owners for transportation of petroleum products challenging the NIT came to be dismissed. A similar view was taken by Allahabad High Court in M/s Laxmi Transport Company, Mathura Vs. Chief Operation Manager, Lucknow and Anr. (supra) and it was held that the Court cannot strike down the terms of the Tenders prescribed by the competent authority merely because it feels 38 that earlier term of contract could have served the purpose better or could be more fair. The Court cannot interfere unless the policy decision is arbitrary or mala fide. In the instant case, neither there is allegation of malafide nor the case of arbitrariness, unreasonableness or irrational has been made out.
In view of the aforesaid discussion, both the writ petitions are devoid of any merit and are dismissed accordingly. However, there shall be no order as to costs. Interim order dated 30.07.2008 is vacated and both the stay petitions also stand dismissed.
(H.R.PANWAR), J.
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