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2002 DIGILAW 154 (GAU)

Deltech (India) Pvt. Ltd. v. Oil and Natural Gas Corporation and Ors.

2002-04-05

J.N.SARMA

body2002
J.N. SARMA, J- This writ application has been filed challenging the legality and validity of a notice issued by the respondent No. 1. By the impugned notice certain clauses in the earlier tender notice issued by the Oil and Natural Gas Corporation (hereinafter called ONGC) were changed and that notice is dated 13.11.01. A prayer is made that this notice dated 13.11.01 issued may be quashed and there may direction to the ONGC either to proceed in terms of its earlier notice dated 28.8.01, Annexure-1 or to issue a fresh tender. 2. The brief facts of the case are as follows: 3. On 28.8.2001 the ONGC issued a notice inviting tender for hiring of services for operation and maintenance of work over Rigs and the number mentioned in that notice was 9 (nine). It was further stated in that notice that the bids are invited from the contractors having at least 1 year experience in providing drilling/work over rigs on charter, Hire or Operation and Maintenance Basics to ONGC Oil or any other similar oil company. On 1.10.01 a letter was sent alongwith Bid Document to the petitioner for the aforesaid work and in that letter it was mentioned that the duration of the contract shall be for a period of three years. As mentioned in the tender notice pre-bid conference was held on 16.10.2001 and on 20.10.2001 clarificatory letter was issued. There was a direction in that letter that the persons willing to submit tender must submit quotations as per terms and conditions of the tender document and the clarifications issued after the pre-bid conference. In Annexure-2 dated 1.10.01 it was stated that the tender was for 9 (nine) rigs and duration of the contract is for a term period of 3 (three) years. In Annexure-3 reply to the bidders queries during pre-bid conference held on 16.10.01 have been annexed and there in Clause 16 and 17 it has been provided as follows: "6. ONGC also clarified that this tender is for hiring services for "Operation and maintenance of ONGC owned rigs up to 9 Nos." Therefore, in case of any reduction in quantity of rigs for O&M service, the Distribution Criteria as stipulated at Clause 4.0 of Commercial EEC and 3.0 of Instruction to Bidders of tender document will get modified accordingly. 17. ONGC also clarified that this tender is for hiring services for "Operation and maintenance of ONGC owned rigs up to 9 Nos." Therefore, in case of any reduction in quantity of rigs for O&M service, the Distribution Criteria as stipulated at Clause 4.0 of Commercial EEC and 3.0 of Instruction to Bidders of tender document will get modified accordingly. 17. The following dates for tender closing/ opening were agreed with the bidders: Date of closing of tender: 19.11.2001 Date of opening of tender: 23.11.2001." 4. Thereafter, the impugned notification was issued whereby in Annexure-5 the number of rigs to be hired for services for operation and maintenance was reduced from 9 to 6 and the period of contract was reduced from 3 to 2 years. In the earlier clause at Annexure-4 it has provided for distribution of work and it was provided therein that the first person will have the entitlement of upto 4 numbers of rigs or the numbers of rigs he applied for, whichever is lower. 2nd person will have 3 numbers of rigs he applied for whichever is lower. 3rd person upto 2 nos. or nos. of rigs he applied fo^r, whichever is lower. 4th person will have balance quantity, if any, after award to the first 3 (three) persons. As the number of rigs were reduced from 9 to 6, other distribution of work also had to be re-scheduled and accordingly it has been provided as follows: "(iii) Distribution of work:- (a) L-l will be considered upto 3 nos. (b) L-2 will be considered upto 2 nos. Plus balance of L-l quota, if any. (c) L-3 will be considered upto 1 no. plus balance of L-l & L-2, if any. But - Subject to maximum of 3 nos. their respective offered quantity whichever is lower." 5. There is no dispute that when this amendment was issued the closing date for submission of tender was extended upto 29.11.2001 and the opening date was also extended upto 3.12.01 and the copies of the amendment to the earlier notice in tender was also sent to the writ petitioner to enable him to participate in the bid and that was received by him and that has been annexed to the writ application. 6.1 have heard Sri A.K. Phukan, learned advocate for the petitioner Sri P.C. Deka, learned advocate for the respondents No. 1 to 6 and Mr M. Bhuyan, learned advocate for the respondents No. 7 and 8. Mr Bhuyan, learned advocate for the respondents No. 7 and 8 supports the contention of the petitioner. Mr Bhuyan represents respondents No. 7 and 8 who are the tenderers in terms of the amendment notice issued therein. The petitioner herein is not a tenderer. Mr Phukan, learned advocate for the petitioner submits that ONGC has right to issue necessary amended notice but that amended notice must not cause prejudice to the person like the petitioner who in terms of the earlier notice made some preparation/calculation to submit the tender and all these preparations and calculations have been set at naught because of the amendment issued and by which amendment the number of rigs have been reduced and the period of contract also have been reduced and as such it has caused prejudice to him because his chance of getting a contract has been reduced in view of the reduction of the number of rigs. 7. On the other hand, that argument of Mr Phukan is adopted by Mr Bhuyan, learned advocate for the respondents No. 7 and 8. On the other hand, Mr Deka, learned advocate for the ONGC submits that ONGC has the absolute right to amend the clauses and that was done not after acceptance of the earlier tender but even before that was processed and/or accepted and he submits that the amendments are not fanciful and/or arbitrary/whimsical but based on reason/necessity of the Corporation and in support of this necessity and reasons he produced before me the records to show that there was earlier a direction from the Head Office to invite tenders for six rigs and there was further direction that tender may be invited for another three rigs only for a limited period of one year if the necessity arises at a subsequent point of time but the tender committee as stated above did not adhere to that direction and they thought that it would be better and prudent to invite tender for 9 rigs for three years. But that was not approved by the Head Office and as it did not receive approval from the Head office the tender notice had to be amended. But that was not approved by the Head Office and as it did not receive approval from the Head office the tender notice had to be amended. I have perused the record and in the records reasons have been given as to why there is the necessity to invite tender only for servicing of six rigs and not nine rigs and why there should be tender only for three rigs for one year at a later point of time. 8. The Dictionary meaning of the word tender is an offer or a proposal for consideration and acceptance by somebody and in contract it is well known that such an offer or proposal does not become a contract before it is accepted by somebody. It is merely (sic) right and as such the authority before accepting the tender may make some changes in the clauses. Mr Phukan, learned advocate for the petitioners in support of his contention places reliance in 2000(5) SCC 287 (Monarch Infrastructure(P) Ltd.-Vs-Commissioner, Ulhasnagar Municipal Corporation and others). That was a case where the Municipal Corporation issued a notice inviting tender for appointment of agents for collection of toll subject to the terms and condition set forth therein. Five parties submitted their documents and papers but there was an interim order from the High Court and the Municipal Corporation could not open the tender. Meanwhile, the State Government, in exercise of its power, deleted a clause of the tender. Therefore, the Commissioner awarded the contract in favour of a tenderer who at the time of tender did not satisfy the condition which was deleted subsequently and that was challenged before the High Court and the High Court came to the finding that the Corporation has acted arbitrarily in considering the bid of that person. The High Court pointed out that once that clause was deleted there was the necessity to go for fresh tender so that other persons who also will come within the zone of consideration may make their offer. Accordingly, the High Court quashed the award of the contract and directed the Corporation to go for a fresh tender. The High Court pointed out that once that clause was deleted there was the necessity to go for fresh tender so that other persons who also will come within the zone of consideration may make their offer. Accordingly, the High Court quashed the award of the contract and directed the Corporation to go for a fresh tender. That was challenged before the Supreme Court and the Supreme Court pointed out that the order of the High Court is justified on the following grounds: i) That when the tender paper was submitted the person in whose favour the award was made did not satisfy the requirement of the tender notice. ii) He got that benefit only when that clause was deleted and once that clause was deleted there was the necessity to go for fresh tender inasmuch as other person with that qualification also may come and participate. The Supreme Court pointed out that the Corporation is from to^ alter the conditions but that cannot be done once the play starts inasmuch as after the start of the play rules of the game cannot be changed. That is not the situation in the case in hand inasmuch as in this case even before the tenders were submitted the amendment was made and the authority has the power to amend the terms of the notification. On the other hand, Mr Deka, learned advocate for the respondents No. 1 to 6 places reliance on the following decisions: i) 1997(7) SCC 592 (M.P. Oil Extraction and another- Vs-State ofM.P. and others). That is a case with regard to the policy decision of the State Govt. and there the Supreme Court pointed out that how a policy decision is to be taken, and it was further pointed out that if the policy decision is not patently arbitrary, the Court's interference therewith not called for. That case is not relevant to decide the controversy in this case. ii) 2001(3) SCC 635 (Ugar Sugar Works Ltd. - Vs-Delhi Administration and others). That case is also with regard to the policy decision. iii) 1994(6) SCC 651 (Tata Cellular-Vs-Union of India). That is a case with regard to the scope of the Court to exercise the power of judicial review with regard to the contract and tender. ii) 2001(3) SCC 635 (Ugar Sugar Works Ltd. - Vs-Delhi Administration and others). That case is also with regard to the policy decision. iii) 1994(6) SCC 651 (Tata Cellular-Vs-Union of India). That is a case with regard to the scope of the Court to exercise the power of judicial review with regard to the contract and tender. There the Supreme Court pointed out that only decision making process and not the merits of the decision itself is reviewable as Court does not sit as appellate Court while exercising power of review. Mr Phukan does not dispute it and he submits that he never argued for sitting as an appellate Court to decide the matter. He submits that his submission was limited within the zone of consideration as I have dealt with earlier. iv) 2000(2) SCC Page 617 (Air India Ltd-Vs-Cochin International Airport Ltd. and others) wherein in paragraph 7 the Supreme Court pointed out as follows: "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. 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 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. 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." 9. Considering the matter from all the angles and on perusal of the materials on record, I do not find this to be a fit case where interference is called for. Accordingly, this writ application shall stand dismissed. Stay order, if any, passed earlier shall stand vacated.