ORDER : Ramalingam Sudhakar, J. Heard Mr. Amit Gupta, learned counsel appearing for the petitioners and Mr. D. C. Raina, learned senior counsel appearing for the Indian Oil Corporation. 2. In all the writ petitions, the petitioners have challenged the similar conditions in the different tender document though the serial No. of the condition (s) may vary in the tender documents. Hence all the writ petitions are taken up together for common hearing and disposal. 3. All the writ petitions are admitted to hearing and are taken up for final disposal as pleadings are complete. 4. Since the issues raised in all the writ petitions are same, to avoid repetition, the relief sought for and the brief facts of OWP No.380/2015 is taken and it is as follows:- This writ petition has been filed for issuance of :- i. An appropriate writ, order or direction in the nature of writ of certiorari quashing the tender Notice No.PSO/OPS/POL/TT/SKO/BULK/2015/04 dated 9-4-2015 issued by the respondent No.2; as the following impugned clauses of the NIT are arbitrary, irrational, discriminatory and seriously infringing the fundamental rights of the petitioners. A, Clause 9 of the Part-B of evaluation of tenderers stating: 'In case, for a particular ranking, tank trucks offered are more than the requirement, then the tenderers in that particular ranking shall be further ranked based on the following order of priority, allocations shall be made only till such time the full requirement of tank trucks is met. The tenderers who are ranked lower in that particular ranking may not get any allocation. i. Tank trucks offered by SKO Dealer/Director Customer. ii. Average age of the fleet. iii. Maximum number of owned TTs offered. iv. Maximum number of TTs offered by the tenderer. (TTs offered by bidder either equivalent to the numbers for which work order can be issued i.e., 10% of total requirement or 5 whichever is more or higher would be considered at par for evaluation). v. Tenderer offering highest number of 18KL & above TTs.
Maximum number of owned TTs offered. iv. Maximum number of TTs offered by the tenderer. (TTs offered by bidder either equivalent to the numbers for which work order can be issued i.e., 10% of total requirement or 5 whichever is more or higher would be considered at par for evaluation). v. Tenderer offering highest number of 18KL & above TTs. b. Clause 6 of miscellaneous part of NIT stating to the extent putting an embargo that as per the Petroleum Rules, 2002, Clause 64, the net carrying capacity of a tank shall be 97% of its gross carrying capacity in case of Petroleum Class-A and Petroleum Class-B and 98% in case of Petroleum Class-C. c. Clauses 8.2.2.1 to 8.2.2.15 to the extent of stating eventuality of blacklisting tank trucks (TTs) on certain occasions instead of banning driver of the said TTs. d. Clause 11 (d) of miscellaneous part of NIT read with other similar clauses to the extent of asking the tenderers to modify the tank trucks in violation of the rules in-vogue under the Motor Vehicles Act. e. Clause wherein the security amount has been raised from Rs. 5.00 lacs to Rs. 8.00 lacs. And For issuance of writ of mandamus commanding the respondents to allow the petitioners to participate in the tender by deleting the above said impugned clauses and also commanding the respondents to enhance the rates to be paid to the tenderers under present NIT upto 20% approximately at parity with the rates fixed to be paid to their counterparts in similar tenders floated by the respondents in other States. And For issuance of further writ of mandamus commanding the respondent to issue single tender for road transportation of clubbed bulk petroleum products like MS/HSD/SKO/LDO/Aviation products etc. from storage and handling locations/terminals/depots in various States to locations within the State and outside the State. 5. The petitioners are owners of tanks/trucks and carrying on the business of transportation of petroleum products for the respondent-Indian Oil Corporation. On 9-4-2015 respondent Nos. 2,3 & 4 floated a Tender for road transportation of bulk petroleum products - SKO (Non-AWS-EX-J. & K. Locations, to be precise the locations are Jammu, Srinagar, Kargil and Leh vide tender No.PSO/OPS/POL/TT/SKO/Bulk/2015/04. The tender is a two stage tender, i.e., technical and commercial bid.
On 9-4-2015 respondent Nos. 2,3 & 4 floated a Tender for road transportation of bulk petroleum products - SKO (Non-AWS-EX-J. & K. Locations, to be precise the locations are Jammu, Srinagar, Kargil and Leh vide tender No.PSO/OPS/POL/TT/SKO/Bulk/2015/04. The tender is a two stage tender, i.e., technical and commercial bid. Scope of the work in terms of the tender is as follows:- (Tabullar Matter Is Omitted.....Ed) According to the petitioners, they are aggrieved by certain conditions in the tender document, more precisely the following conditions of the tender document:- 'IV. Submission of Tender/eligiblity Criteria 1,2,3............................. 4 a. The tenderer (quoting as transporter/dealer-transporter) shall have to offer minimum 5 (five) tank trucks and out of which the tenderer shall own minimum of 3 (three) tank trucks. The tenderer may offer additional owned tank trucks. For additional TTs offered, the minimum number of owned TTs shall be 50% i.e. Total TTs Owned Minimum Attached 5 3 2 6 4 2 7 4 3 8 5 3 9 5 4 And so on. The offer of additional attached tank trucks not meting the above criteria, shall not be considered. The maximum number of TTs that can be offered to a transporter (other than dealer/consortium for own supplies) is 27 TTs. In case of Tenderers offering tank trucks Ex-Kargil/Leh ONLY, the minimum eligibility criterion shall be one owned tank truck. b. SKO Dealer/Director Customer may offer tank trucks (any number of TTs, i.e., one or more) as per requirement for their own supplies only and all such trucks should be owned by the SKO Dealer/Direct Customer. c. SKO Dealer, who owns tank trucks and has part utilization of offered tank truck/s considering own supplies, can form consortium with only two other IOC SKO Dealers who are not having tank trucks and in that event specific terms mentioned in this tender document shall be applicable. d. SKO Dealer desirous to offer tank trucks more than their own requirement shall fulfil the norms of minimum offer of tank trucks as per Clause 4 (a) above. These SKO Dealers shall earmark the owned tank trucks as per their requirement for their own supplies and these tank trucks shall not be sued for other transportation work. In case of SKO Dealer not earmarking tank trucks for their own supplies, the supplies to their retail outlet shall be made at the discretion of IOC.
These SKO Dealers shall earmark the owned tank trucks as per their requirement for their own supplies and these tank trucks shall not be sued for other transportation work. In case of SKO Dealer not earmarking tank trucks for their own supplies, the supplies to their retail outlet shall be made at the discretion of IOC. These SKO Dealers shall be evaluated as general tenderer. SD will be as applicable to General Trans-porter's and evaluation will be based on relevant clause of 'Evaluation of Tenderers'. 6. The next conditions of which the petitioner are aggrieved, according to the learned counsel for the petitioners, are Clause 9 of Evaluation of tenderers conditions and Clause 6 of miscellaneous conditions, which are reproduced hereunder:- Clause 9 of Evaluation of tenderer '9. In case, for a particular ranking, tank trucks offered are more than the requirement, then the tenderers in that particular ranking shall be further ranked based on the following ordr of priority and allocations shall be made only till such time the full requirement of tank trucks is met. The tenderers who are ranked lower in that particular ranking may not get any allocation. (i) Tank trucks offered by SKO Dealer/Direct Customer. (ii) Average age of the fleet. (iii) Maximum number of owned TTs offered. (iv) Maximum number of TTs offered by the tenderer. (TTs offered by bidder either equivalent to the numbers for which work order can be issued i.e., 10% of total requirement or 5 whichever is more or higher would be considered at par for evaluation). (v) Tenderer offering highest number of 18L & above TTs. Condition No.6 of Miscellaneous conditions '6. The tank trucks offered should comply at all times with valid permits, rules and regulations of Statutory/Government authorities. Explanation for one factor as per the petroleum Rules 2002, Clause 64, the net carrying capacity of a tank shall be 97% of its gross carrying capacity in case of Petroleum Class A and Petroleum Class 'B' and 98% in case of Petroleum Class 'C'. The maximum safe carrying capacity (in weight) of petroleum that can be carried in a tank vehicle shall not exceed the difference between the unladen weight of the vehicle and the maximum gross weight permitted for the Class of vehicle under the appropriate transport regulations.' 7.
The maximum safe carrying capacity (in weight) of petroleum that can be carried in a tank vehicle shall not exceed the difference between the unladen weight of the vehicle and the maximum gross weight permitted for the Class of vehicle under the appropriate transport regulations.' 7. All these conditions, according to the learned counsel for the petitioners are arbitrary, irrational, discriminatory and infringing on the fundamental rights of the petitioners. Insofar as Part-A of Technical Bid is concerned, eligibility criteria 4(a) provides for a minimum requirement of tanker/trucks but it does not prescribe any such condition for SKO dealers. This, according to the petitioners, is arbitrary. 8. Insofar as Clause 9 of Evaluation of Tenderers is concerned, it is stated that priority is given to tanker/trucks offered by SKO dealers/Direct Customer. 9. The third limb of the argument is that Clause 6 of miscellaneous conditions is contrary to the advisory issued by the Petroleum and Explosives Safety Organization, Ministry of Commerce & Industry (Annexure-B) vide communication, dated 15-2-2015, which reads as under:- 'No.T1(NC)Misc/2014 Dated:26/2/2015 To, Shri Dharamveer Chaudhary Petrol Pump Dealers Association G. B. Nagar (U.P) C/o M/S Chaudhary Automobiles Housary Complex, Noida. Subject:- IOCL's Intervention in PESO affairs at Meerut terminal-reg. Ref. your letter No.PPDA/02/15 dated 1-3-2015. Dear Sir Please refer to your above letter received through e-mail intimating certain issues related to vapour space of petroleum tank truck raised by the Chief Terminal Manager M/s. IOCL, Meerut. In this regard please note that as required under Rule 64(2) of Petroleum Rules-2002, net carrying capacity of a tank truck shall be 97% of its gross carrying capacity in case of Petroleum Class-A & B. The minimum space of 3% required to be kept empty to accommodate the petroleum vapours during varying temperature. It is further clarified that the above rule does not specify the maximum limit of vapour space required for the petroleum vapours within the petroleum tank truck.' 10. According to the petitioners, in terms of clause 6 of miscellaneous conditions, the tankers/trucks of the petitioners, which has more than 3% space would become ineligible.
It is further clarified that the above rule does not specify the maximum limit of vapour space required for the petroleum vapours within the petroleum tank truck.' 10. According to the petitioners, in terms of clause 6 of miscellaneous conditions, the tankers/trucks of the petitioners, which has more than 3% space would become ineligible. What is required to be provided is 3% minimum space but that is not a limiting factor but the department has chosen to impose limit of 3% so as to exclude the petitioners from the ambit of tender and to that extent it is violative of the clarification issued by the Petroleum and Explosives Safety Organization and, therefor, illegal and have acted in error of law. Reliance is placed on the decision of the Apex Court in Tata Cellular v. Union of India, (1994) 6 SCC 651 : ( AIR 1996 SC 11 ). Referring to the head notes, learned counsel for the petitioners submitted that the authority committed an error of law in not considering the directives issued by the Petroleum and Explosives Safety Organization. The learned counsel further relied on a judgment of the Apex Court rendered in the case of Natural Resources Allocation in RE, Special Reference No. 1 of 2012 (2012) 10 SCC 1 : (2012 AIR SCW 6194). Again referring to the head note, learned counsel pleaded that in executing public contracts in its trading activity, State must act as a prudent businessman and profit earned should be for public benefit and not for private gains. It is also stated that public authority should not arbitrarily pick and choose some category of persons and benefits to that limited class of persons. To buttress this argument, learned counsel submitted that preference is sought to be given to SKO dealers by putting such conditions. 11. The learned counsel further submitted that there is no level playing field between the petitioners and the SKO dealers. Reliance in this regard is placed on paragraph Nos. 22 to 25 of a decision of the Apex Court rendered in Reliance Energy Limited and Anr. v. Maharashtra State Road Development Corporation Ltd. & Ors., 2007(8) SCC 1 : (2007 AIR SCW 6416). '22. We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy.
v. Maharashtra State Road Development Corporation Ltd. & Ors., 2007(8) SCC 1 : (2007 AIR SCW 6416). '22. We find merit in this civil appeal. Standards applied by courts in judicial review must be justified by constitutional principles which govern the proper exercise of public power in a democracy. Article 14 of the Constitution embodies the principle of 'non-discrimination'. However, it is not a free-standing provision. It has to be read in conjunction with rights conferred by other articles like Article 21 of the Constitution. The said Article 21 refers to 'right to life'. In includes 'opportunity'. In our view, as held in the latest judgment of the Constitution Bench of nine Judges in the case of I.R. Coelho v. State of Tamil Nadu, (2007) 2 SCC 1 : ( AIR 2007 SC 861 ), Articles 21/14 is the heart of the chapter on fundamental rights. It covers various aspects of life. 'Level playing field' is an important concept while construing Article 19(1)(g) of the Constitution. It is this doctrine which is invoked by REL/HDEC in the present case. When Article 19(1)(g) confers fundamental right to carry on business to a company, it is entitled to invoke the said doctrine of 'level playing field'. We may clarify that this doctrine is, however, subject to public interest. In the world of globalization, competition is an important factor to be kept in mind. The doctrine of 'level playing field' is an important doctrine which is embodied in Article 19(1)(g) of the Constitution. This is because the said doctrine provides space within which equally-placed competitors are allowed to bid so as to sub-serve the larger public interest. 'Globalization', in essence, is liberalization of trade. Today India has dismantled licence-raj. The economic reforms introduced after 1992 have brought in the concept of 'Globalization'. Decisions or acts which results in unequal and discriminatory treatment, would violate the doctrine of 'level playing field' embodied in Article 19(1)(g). Time has come, therefore, to say that Article 14 which refers to the principle of 'equality' should not be read as a stand alone item but it should be read in conjunction with Article 21 which embodies several aspects of life. There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of 'level playing field'.
There is one more aspect which needs to be mentioned in the matter of implementation of the aforestated doctrine of 'level playing field'. According to Lord Goldsmith - commitment to 'rule of law' is the heart of parliamentary democracy. One of the important elements of the 'rule of law' is legal certainty. Article 14 applies to Government policies and if the policy or act of the Government, even in contractual matters, fails to satisfy the test of 'reasonablesness', then such an act or decision would be unconstitutional. 23. In the case of Union of India and another v. International Trading Co. and another, (2003) 5 SCC 437 : ( AIR 2003 SC 3983 paras 15 & 16), the Division Bench of this Court speaking through Pasayat, J. had held : '14. It is trite law that article of the Constitution applies also to matters of governmental policy and if the policy or any action of the Government, even in contractual matters, fails to satisfy the test of reasonableness, it would be unconstitutional. 15. While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give impression that it was so done arbitrarily or by any ulterior criteria. The wide sweep of Article 14 and the requirement of every State action qualifying for its validity on this touchstone irrespective of the field of activity of the State is an accepted tenet. The basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heart beat of fair play. Actions are amenable, in the panorama of judicial review only to the extent that the State must act validly for a discernible reasons, not whimsically for any ulterior purpose. The meaning and true import and concept of arbitrariness is more easily visualized than precisely defined. A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasona-bleness.' 24.
A question whether the impugned action is arbitrary or not is to be ultimately answered on the facts and circumstances of a given case. A basic and obvious test to apply in such cases is to see whether there is any discernible principle emerging from the impugned action and if so, does it really satisfy the test of reasona-bleness.' 24. When tenders are invited, the terms and conditions must indicate with legal certainty, norms and benchmarks. This 'legal certainty' is an important aspect of the rule of law. If there is vagueness or subjectivity in the said norms it may result in unequal and discriminatory treatment. it may violate doctrine of 'level playing field'. 25. In the case of Reliance Airport Developers (P) Ltd. v. Airports Authority of India and others, (2006) 10 SCC 1 , the Division Bench of this Court has held that in matters of judicial review the basic test is to see whether there is any infirmity in the decision-making process and not in the decision itself. This means that the decision-maker must understand correctly the law that regulates his decision-making power and he must give effect to it otherwise it may result in illegality. The principle of 'judicial review' cannot be denied even in contractual matters or matters in which the Government exercises its contractual powers, but judicial review is intended to prevent arbitrariness and it must be exercised in larger public interest. Expression of different views and opinions in exercise of contractual powers may be there, however, such difference of opinion must be based on specified norms. Those norms may be legal norms or accounting norms. As long as the norms are clear and properly understood by the decision-maker and the bidders and other stakeholders, uncertainty and thereby breach of rule of law will not arise. The grounds upon which administrative action is subjected to control by judicial review are classifiable broadly under three heads, namely, illegality, irrationality and procedural impropriety. In the said judgment it has been held that all errors of law are jurisdictional errors. One of the important principles laid down in the aforesaid judgment is that whenever a norm/benchmark is prescribed in the tender process in order to provide certainty that norm/standard should be clear. As stated above 'certainty' is an important aspect of rule of law.
In the said judgment it has been held that all errors of law are jurisdictional errors. One of the important principles laid down in the aforesaid judgment is that whenever a norm/benchmark is prescribed in the tender process in order to provide certainty that norm/standard should be clear. As stated above 'certainty' is an important aspect of rule of law. In the case of Reliance Airport Developers (supra), the scoring system formed part of the evaluation process. The object of that system was to provide identification of factors, allocation of marks of each of the said factors and giving of marks had different stages. Objectivity was thus provided.' 12. In reply to the first ground raised by the petitioners, respondent Nos.2 to 4 have stated in paragraph No.5 as under:- '5. That in reply to para No.5 of the petition, the terms and conditions of NIT are formulated by expert in the field after taking entire gamut of the matter in view. In respect of Clause-4(a) of eligibility criteria of NIT stipulating that tenderer must own minimum five tanks is not without any basis. This clause is intended to provide a better control and monitoring of tank trucks of minimum number of transporters. This further facilitates communication to dispatching location with lesser number of transporters so as to ensure smooth supplies of petroleum products to various destinations. In the part it had been experienced that award of contract to transporters with single or two vehicles, there had been many cases of pilferage and malpractice, resulting in loss to the Corporation.' Further the selection criteria also includes average age of the vehicle because it is proposed in the tender that with low age vehicle, the transporters will be able to supply products to various destinations smoothly and without any delay, which includes supply to Army and other governmental agencies. The older vehicles have been found to have large number of maintenance problems, resulting in delayed supplies. This para is accordingly replied.' 13. Reply to the 2nd contention raised by the petitioners has been given by the respondents in para 9 of their objections, which reads thus:- '9. That it is denied that condition of providing preference to SKO dealer/direct customer is in any manner unreasonable or incorporated for collateral purpose. Even otherwise the said condition has already been approved by the Judicial dictum of this Hon'ble Court.
That it is denied that condition of providing preference to SKO dealer/direct customer is in any manner unreasonable or incorporated for collateral purpose. Even otherwise the said condition has already been approved by the Judicial dictum of this Hon'ble Court. In support of the above contention, learned senior counsel appearing for the respondents relied on a judgment of a co-ordinate Bench of this Court rendered in OWP No.1490/2013 dated 13-6-2014, '.......The offered trucks for own requirement shall be in open category and shall not be utilized for any other distributor/load and markets. If the distributor does not match the established offered L-1 rate at the first instance, he will be treated at part with general tenderers. On a plea reading of these provisions, it is manifestly clear that the confessional security deposit is available to the Indane distributors only in respect of trucks earmarked for own load transportation at L-1 rate. If such distributor offers trucks more than own requirement, he will have to make the security deposit at part with other tenderers. Provision for reservation has been made in the tender to the extent of 15% for SCs and 7.5% for STs. Even the reserved category tenderers are entitled to priority in allocation of trucks only as long as they accept the finalized L-1 rates. In the event of no response or inadequate response from reserved category, the unfilled quota is to be allotted to unreserved category. The reasons behind introduction of Clause 18 is eloquently spelt out. Since the petroleum products are essential commodity and breakdown of its supply chain has the potential to create law and order situation, an effective mechanism has to be provided for transportation of LPG cylinders to every nook and corner of the State. This is in tune with the commitment of IOC-the National Oil Company. In terms of the said clause, IOC has reserved the right to give preference to award transport contract to its LPG distributors for their own use subject to acceptance of offered finalized L-1 rates at the first instance. IOC has long terms agreements with its LPG distributors. The LPG distributors are having long term contracts with the IOC for distribution and sale of LPG cylinders and to make the LPG cylinders available to consumers.
IOC has long terms agreements with its LPG distributors. The LPG distributors are having long term contracts with the IOC for distribution and sale of LPG cylinders and to make the LPG cylinders available to consumers. The LPG distributors are permitted to participate in the bid for transportation of LPG cylinders with a separate condition imposed in regard to security deposit which is Rs. 50,000/- as compared to security deposit of Rs. 7.5 lacs per general tenderers. The reason for imposition of such condition is not far to seek. IOC is having control over LPG distributors. It is rightly contended by learned counsel for respondents that by imposing condition of higher security deposit for general tenderers, IOC is not deriving any benefit. The security deposits are refundable. Providing for lesser security deposit by LPG distributors cannot be treated as discriminatory treatment as the purpose for which the security deposit is demanded is to ensure the implementation of the terms of the contract and nothing beyond that. If LPG distributors are not complying with the terms of contract, IOC can deal with them as they are already having a long term contract with the IOC as LPG distributors. On the other hand, general tenderers are not under the control of IOC and the IOC is not in a commanding position to enforce the terms of the contract. Thus, imposition of condition requiring higher security deposit from general tenderers is warranted. Viewed thus, it cannot be said that there is discrimination in fixing different security deposit for general tenderers and LPG distributors. This conclusion is reinforced by the condition in tender document that if the LPG distributor offers trucks more than his own requirement, the security deposit has to be at par with the general tenderers. The classification between the LPG distributors and general tenderers for purposes of supplying trucks for transportation of LPG cylinders is thus based on an intelligible differentia, the object sought to be achieved being the uninterruped supply of LPG gas cylinders for the benefit of consumers. Allegations of discrimination and arbitrariness on this score, being unfounded, are rejected.' 14. Insofar as 3rd contention regarding Clause 6 of miscellaneous conditions raised by the learned counsel for the petitioners is concerned the respondent Nos.2 to 4 have stated in para No.10 as under:- '10. That in reply to para 10 of the petition, the contentions raised therein are denied.
Insofar as 3rd contention regarding Clause 6 of miscellaneous conditions raised by the learned counsel for the petitioners is concerned the respondent Nos.2 to 4 have stated in para No.10 as under:- '10. That in reply to para 10 of the petition, the contentions raised therein are denied. As per Petroleum Rules, 2002, in terms of Clause 64, 'net carrying capacity of a tank shall be 97% of the gross carrying capacity in case of petroleum Clause 'A' and petroleum Clause 'B' whereas 98% in case of petroleum Clause 'C' . Maximum safe carrying capacity (in weight) all petroleum product that can be carried in a tank vehicle shall not exceed the difference between the unladed weight of the vehicle and the maximum gross weight permitted for the class of the vehicle under the appropriate Transport Regulations'. Thus the grounds raised in this para is bereft of any legal content.' 15. Learned senior counsel appearing for the respondents relied on paragraph No. 22 of the judgment of Apex Court in Centre for Public Interest litigation v. Union of India and others (2016) 6 SCC 408 : ( AIR 2016 SC 1777 , para 20) to plead that Court's interference is minimal in matters of this nature. Paragraph No.22 reads as follows: '22. Minimal interference is called for by the Courts, in exercise of judicial review of a Government policy when the said policy is the outcome of deliberations of the technical experts in the fields inasmuch as Courts are not well-equipped to fathom into such domain which is left to the discretion of the execution. It was beautifully explained by the Court in Narmada Bachao Andolan v. Union of India (2000) 10 SCC 664 : ( AIR 2000 SC 3751 ) and reiterated in Federation of Railway Officers Assn. v. Union of India, (2003) 4 SCC 289 : ( AIR 2003 SC 1344 ), in the following words: '12. In examining a question of this nature where a policy is evolved by the Government judicial review thereof is limited. When policy according to which or the purpose for which discretion is to be exercised is clearly expressed in the statute, it cannot be said to be an unrestricted discretion. On matters affecting policy and requiring technical expertise the court would leave the matter for decision of those are qualified to address the issues.
When policy according to which or the purpose for which discretion is to be exercised is clearly expressed in the statute, it cannot be said to be an unrestricted discretion. On matters affecting policy and requiring technical expertise the court would leave the matter for decision of those are qualified to address the issues. Unless the policy or action is inconsistent with the Constitution and the laws or arbitrary or irrational or abuse of power, the court will not interfere with such matters.' 16. Learned senior counsel for respondents further placed reliance on decisions of the Apex Court in Michigan Rubber (India) Limited v. State of Karnataka and others (2012) 8 SCC 216 : ( AIR 2012 SC 2915 ); Jagdish Mandal v. State of Orissa and others, 2007(14) SCC 517 and Raunaq International Limited v. I.V.R. Construction Ltd. and others, 1999(1) SCC 492 : ( AIR 1999 SC 393 ). 17. It will be useful to refer to paragraph No.23 of the judgment in Michigam Rubber (India) Ltd., ( AIR 2012 SC 2915 , para 19) (supra), where the Apex Court held as under:- '23. From the above decisions, the following principles emerge: (a) the basic requirement of Article 14 is fairness in action by the State, and non-arbitrariness in essence and substance is the heartbeat of fair play. These actions are amenable to the judicial review only to the extent that the State must act validly for a discernible reason and not whimsically for any ulterior purpose. If the State acts within the bounds of reasonableness, it would be legitimate to take into consideration the national priorities; (b) fixation of a value of the tender is entirely within the purview of the executive and courts hardly have any role to play in this process except for striking down such action of the executive as is proved to be arbitrary or unreasonable.
If the Government acts in conformity with certain healthy standards and norms such as awarding of contracts by inviting tenders, in those circumstances, the interference by Courts is very limited; (c) In the matter of formulating conditions of a tender document and awarding a contract, greater latitude is required to be conceded to the State authorities unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by Courts is not warranted; (d) Certain preconditions or qualifications for tenders have to be laid down to ensure that the contractor has the capacity and the resources to successfully execute the work; and (e) If the State or its instrumentalities act reasonably, fairly and in public interest in awarding contract, here again, interference by Court is very restrictive since no person can claim fundamental right to carry on business with the Government.' 18. In Jagdish Mandal's case (supra), Hon'ble the Supreme Court in paras 18 and 19 held as under:- '18. We may refer to some of the decisions of this Court, which have dealt with the scope of judicial review of award of contracts. 18.1. In Sterling Computers Ltd. v. M & N Publications Ltd., 1993 (1) SCC 445 : AIR 1996 SC 51 , this Court observed: 'While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the court is concerned primarily as to whether there has been any infirmity in the decision making process the courts can certainly examine whether 'decision making process was reasonable, rational, not arbitrary and violative of Article 14 of the Constitution.' 18.2. In Tata Cellular v. Union of India, AIR 1996 SC 11 , this Court referred to the limitations relating to the scope of judicial review of administrative decisions and exercise of powers in awarding contracts, 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 action. 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.
(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 action. 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. 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 facets 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. This Court also noted that there are inherent limitations in the exercise of power of judicial review of contractual powers. This Court also observed that the duty to act fairly will vary in extent, depending upon the nature of cases, to which the said principle is sought to be applied. This Court held that the State has the right to refuse the lowest or any other tender, provided it tries to get the best person or the best quotation, and the power to choose is not exercised for any collateral purpose or in infringement of Article 14. 18.3. In Raunaq International Ltd. v. I.V.R. Construction Ltd., 1999 (1) SCC 492 : AIR 1999 SC 393 , this Court dealt with the matter in some detail. This Court held : '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.
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; (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 State 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 be, 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 fulfilment 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 re-doing the entire work thus involving larger outlays or 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.
When a writ petition is filed in the High court challenging the award of a contract by a public authority or the State, the court must be satisfied that there is some element of public interest involved in entertaining such a petition. If, for example, the dispute is purely between two tenderers, the court must be very careful to see if there is any element of public interest involved in the litigation. A mere difference in the prices offered by the two tenderers may or may not be decisive in deciding whether any public interest is involved in intervening in such a commercial transaction. It is important to bear in mind that by court intervention, the proposed project may be considerably delayed thus escalating the cost far more than any saving which the court would ultimately effect in public money be diciding the dispute in favour of one tenderer or the other tenderer. Therefore, unless the court is satisfied that there is a substantial amount of public interest, or the transaction is entered into mala fide, the court should not intervene under Article 226 in disputes between two rival tenderers.' 18.4 In Air India Ltd. v. Cochin International Airport Ltd., 2000 (2) SCC 617 : AIR 2000 SC 801 , this Court summarized the scope of interference as enumciated in several earlier decisions thus : '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.
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. 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.' [Emphais supplied] 18.5. In Association of Registration Plates v. Union of India, 2005 (1) SCC 679 : AIR 2005 SC 469 , this Court held: '...Article 14 of the Constitution prohibits Government from arbitrarily choosing a contractor at its will and pleasure. It has to act reasonably, fairly and in public interest in awarding contracts. At the same time, no person can claim a fundamental right to carry in business with the Government. All that he can claim is that in competing for the contract, he should not be unfairly treated and discriminated, to the detriment of public interest. ...' 18.6. In B.S.N. Joshi v. Nair Coal Services Ltd., 2006 (11) Scale 526 : AIR 2007 SC 437 , this Court observed : 'It may be true that a contract need not be given to the lowest tenderer but it is equally true that the employer is the best Judge therefore; the same ordinarily being within its domain, court's interference in such matter should be minimal. The High Court's jurisdiction in such matters being limited in a case of this nature, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the face of the record.' 19. Judicial review of administrative action is intended to prevent arbitrariness, irrationalily, unreasonableness, bias and mala fides.
The High Court's jurisdiction in such matters being limited in a case of this nature, the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent on the face of the record.' 19. Judicial review of administrative action is intended to prevent arbitrariness, irrationalily, unreasonableness, bias and mala fides. Its purpose is to check whether choice or decision is made 'lawfully' and not to check whether choice or decision is 'sound'. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. A contract is a commercial transaction. Evaluationg tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance. If the decision relating to award of contract is bona fide and is in public interest, courts will not, in exercise of power of judicial review, interfere even if a procedural aberration or error in assessment or prejudice to a tenderer, is made out. The power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest, or to decide contractual disputes. The tenderer or contractor with a grievance can always seek damages in a civil court. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some technical/procedural violation or some prejudice to self, and persuade courts to interfere by exercising power of judicial review, should be resisted. Such interferences, either interim or final, may hold up public works for years, or delay relief and succour to thousands and millions and may increase the project cost manifold. Therefore, 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.
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. Cases involving black-listing or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action. Re : Contract for First Stretch' 19. In Raunaq International limited ( AIR 1999 SC 393 ) (supra), the Apex court in para 19 obseved as under:- “19. A somewhat different approach may be required in the cases of award of a contract by the Government for the purchase of items for its use. Judicial review would be permissible only on the established grounds for such review including mala fides, arbitrariness or unreasonableness of the Wednesbury variety. Balance of convenience would play a major role in moulding interim relief.' 20. At the outset it has to be noticed that decisions of the Supreme Court right from Tata Cellular's case ( AIR 1996 SC 11 ) (supra) makes it clear that scope of the Court's interference in tender is very limited. One of the very vital indication given by the Apex Court in Tata Cellular's case (supra), which has been extracted in paragraph No.18 of Jagdish Mandal's case (supra) is that the terms of invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. More often than not, such decisions are made qualitatively by experts. 21. Keeping this in mind, we have to examine the issue raised by the petitioners. Petitioners would submit that there is a preferential treatment insofar as SKO dealers are concerned. That allegation is denied by the respondents stating that insofar as SKO dealers are concerned they are treated a Class apart and insofar as general tenderers/transporters/tank truck operators are concerned there is a specific provision in the tender document. Therefore, the eligibility criteria in no way affect or discriminates the petitioners. The SKO dealers transport their own goods to their outlets and the two cannot be intermingled. 22.
Therefore, the eligibility criteria in no way affect or discriminates the petitioners. The SKO dealers transport their own goods to their outlets and the two cannot be intermingled. 22. In this view of the matter, the petitioners have no case on the plea of arbitrariness because their right to participate in the tender has got nothing to do with the transportation of the commodity by SKO dealers to their own outlets. 23. The condition prescribed for two different categories cannot be clubbed together to contend that there is arbitrariness. Therefore, the first plea in terms of eligibility criteria namely Clause 4(a) in the tender document does not merit consideration and is rejected. 24. The next issue is relating to evaluation of tenderers. This condition is sought to be justified by the respondents stating that priority is given to SKO dealers/direct customers and it does not in any way affect the rights of the petitioners to offer their tankers/trucks. Even otherwise such a condition imposed, has been upheld by this Court in O.W.P. No. 180/2016 titled Amrinder Road Line v. Union of India and others, decided on 7-6-2016. That being the position, it cannot be gainsaid that merely because direct customer/SKO dealers are given leverage it would affect the tender process. The condition imposed would not amount to arbitrariness nor can it be said to be unreasonable because the right of the petitioners to participate has not been ousted. The learned counsel for the petitioners pleads that if large number of SKO dealers/direct customers offer their tankers then there will be no scope for private operators to participate. That argument is in the realm of the conjectures and surmises. It is not supported by any material to say that the entire requirement would be met by SKO dealer/direct customers. Presumptively the Court cannot come to the conclusion that SKO dealers/direct customers will steal a march over the private operators. Vague statement of fact is of no avail. Even otherwise, it is for the tender issuing authority to decide the basis and manner in which the allocation should be done for smooth and effective transportation of the commodity taking note of the fact that this tender is intended for supply of fuel to difficult terrain in Jammu-Srinagar-Kargil and Leh region. The respondents are the best person to judge and specify the terms and conditions in this regard. 25.
The respondents are the best person to judge and specify the terms and conditions in this regard. 25. The earlier decision of this Court, also holds the field and no other view can be taken on that issue. That takes us to the last component of the argument that Clause 6 of the miscellaneous conditions is contrary to Petroleum and Explosives Safety Organisation's letter dated 26-2-2015. From this letter, it is evident that minimum space of 3% has to be kept empty to accommodate the petroleum vapours during varying temperature. The respondents in their wisdom have chosen to fix the same parameter in this tender. Merely because the tanks/trucks of the petitioners have more than 3% space for vapours, they cannot plea for change of norm. Merely because they will become ineligible is no ground to challenge because the tender conditions cannot be moulded to suit one or the other tenderer. If such a plea is accepted then different yardsticks will have to be followed for different tanks/trucks. For example, one may have 4% open space, other may have 6% and one may have 10% and so on and so forth. It will, therefore, create chaos. The decision of the tendering authority to limit open space upto 3% cannot be faulted because it is for them to decide as to what should be the type of the tanks/trucks required to carry the commodity to the special destination. 26. The Hon'ble Supreme Court in paragraph No.27 of Raunaq International Limited's case ( AIR 1999 SC 393 ) (supra) observed as under:- '27. In the present case, however, the relaxation was permissible under the terms of the tender. The relaxation which the Board has granted to M/s. Raunaq International Ltd. is on valid principles looking to the expertise of the tenderer and his past experience although it does not exactly tally with the prescribed criteria. What is more relevant, M/s. IVR Construction Ltd. who have challenged this award of tender themselves do not fulfill the requisite criteria. They do not possess the prescribed experience qualification. Therefore, any judicial relief at the instance of a party which does not fulfill the requisite criteria, seems to be misplaced.
What is more relevant, M/s. IVR Construction Ltd. who have challenged this award of tender themselves do not fulfill the requisite criteria. They do not possess the prescribed experience qualification. Therefore, any judicial relief at the instance of a party which does not fulfill the requisite criteria, seems to be misplaced. Even if criteria can be relaxed both for M/s. Raunaq International Ltd. and M/s. IVR Construction Ltd., it is clear that the offer of M/s. Raunaq International Ltd. is lower and it is on this ground that the Board has accepted the offer of M/s. Raunaq International Ltd. We fail to see how the award of tender can be stayed at the instance of a party which does not fulfil the requisite criteria itself and whose offer is higher than the offer which has been accepted, It is also obvious that by stopping the performance of the contract so awarded, there is a major detriment to the public because the construction of two thermal power units, each of 210 MWs., is held up on account of this dispute. Shortages of power have become notorious. They also serioulsy affect industrial development and the resulting job opportunities for a large number of people. In the present case there is no overwhelming public interest in stopping the project. There is no allegation whatsoever of any mala fides or collateral reasons for granting the contract to M/s. Raunaq International Ltd.' The petitioners stating that they do not qualify such requirement, cannot fault the tender. The said plea is also rejected. 27. The sheet anchor of the petitioners argument relying on Tata Cellular's case ( AIR 1996 SC 11 ) (supra) is that the tender suffers from error of law insofar it has misread the clarification issued by the Petroleum and Explosives Safety Organization in communication dated 26-2-2015 (Annexure-B). This argument has to be rejected because what is stated in the communication is the minimum space of 3% required to be kept empty to accommodate the petroleum vapours during varying temperature and that has been adhered to by the respondents. Therefore, fixing of minimum standard in consonance with the letter of Petroleum and Explosives Safety Organisation, Ministry of Commerce and industry cannot be faulted. There is no error of law. 28. There is no requirement that higher margine should be left for vapour. If minimum requirement is specified there ends the matter.
Therefore, fixing of minimum standard in consonance with the letter of Petroleum and Explosives Safety Organisation, Ministry of Commerce and industry cannot be faulted. There is no error of law. 28. There is no requirement that higher margine should be left for vapour. If minimum requirement is specified there ends the matter. The petitioners cannot call upon the respondents to fix minimum and maximum limit. If such an exercise is permitted it would amount to re-writing the tender conditions. 29. As has been observed by the Supreme Court in Centre for Public Interest Litigation ( AIR 2016 SC 1777 ) (supra) that minimal interference is called for by the courts in exercise of judicial review of a Government policy when the said policy is the outcome of diliberations of the technical experts in the fields. These principles are highlighted by the Apex Court in para 23 of Michigan Rubber (India) Ltd.'s case ( AIR 2012 SC 2915 , para 19) (supra) that in matter of fourmulating conditions of a tender document and awarding contract, greater latitude is required to be conceded to the State Authorities. 30. The dicision relied on by the learned counsel for the petitioners in the case of Natural Resources Allocation relates to 2G Spectrum case where without there being open tenders, allocation was made to individuals, therefore, it was faulted stating that the State must act as a prudent businessman and profit earned should be for public benefit and not for private gains. 31. In the present case there appears to be no such arbitrariness because it is an open tender. According to the decision in Reliance Energy Limited (2007 AIR SCW 6416) (supra) relied on by the learned counsel for the petitioners, there should be a level playing field. The tender does not in any way encroach or infringe upon the right of petitioners to participate in the tender by all private tank/truck owners. Therefore, this decision is of no help to the petitioners. 32. For all the above reasons, I find no merit in the writ petitions. The writ petitions are, therefore, dismissed. 33. Interim directions, if any, shall stand vacated.