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2017 DIGILAW 623 (RAJ)

S. D. Verma & Company v. Union of India

2017-02-23

MOHAMMAD RAFIQ

body2017
JUDGMENT : MOHAMMAD RAFIQ, J. 1. This writ petition has been filed by four petitioners, who are proprietorship firms engaged in the business of transportation of products like petrol, diesel, oil, LPG and lubricant etc. in the State of Rajasthan, seeking a Writ of Mandamus quashing condition laid down in the tender (Annexure-1) floated by the respondent-Indian Oil Corporation by advertisement dated 13.01.2017 to the extent of providing priority/preference to LPG Distributors offering trucks under “Own Use Trucks” category over the open category bidders like the petitioners and also praying for consequential relief. Alternative prayer has also been made by the petitioners for quashing entire tender document with direction to re-tender the same after providing the conditions in consonance with the provisions of Article 14 read with Articles 19(1)(g) and 299 of the Constitution of India. 2. Respondent-Indian Oil Corporation Limited (for short ‘IOCL’) floated e-tender on 13.01.2017 for ‘Transportation of Indane LPG Cylinder in vertical position on unit rate basis Ex-Ajmer LPG Bottling Plant’ for a period of five years, which period was divided in two parts. First spell was for a period of initial three years with a provision of two yearly extensions of one year each at sole discretion of IOCL with effect from the date of placement of Letter of Intent or as advised by the State Office of IOCL. As per Clause 14 of the NIT (Tender Schedule-I), maximum age for the quoted truck should not be exceeding 14 years as on the closing date of tender. Submission of bids started from 27.01.2017 at 15.00 hours and lasted on 13.02.2017 at 11.00 hours. Technical bid was scheduled to be open on 14.02.2017 at 11.00 hours. Pre-bid conference was held on 23.01.2017 where after the respondents issued pre-bid clarification on 27.01.2017. 3. Mr. Ashish Saksena, learned counsel for the petitioners argued that condition giving preference to LPG Distributors over the open category tenderer violated right to equality enshrined under Article 14 of the Constitution of India. The respondents ought to have adhered to doctrine of ‘Level Playing Field’ and provided fair and reasonable opportunity to all the tenderer. Their action in putting condition providing preference to LPG Distributors is arbitrary, unfair and unreasonable, being violative of Article 14 read with Article 19(1)(g) of the Constitution of India. The respondents ought to have adhered to doctrine of ‘Level Playing Field’ and provided fair and reasonable opportunity to all the tenderer. Their action in putting condition providing preference to LPG Distributors is arbitrary, unfair and unreasonable, being violative of Article 14 read with Article 19(1)(g) of the Constitution of India. Learned counsel in this connection referred to Clause 9 of the General Conditions to Bidders wherein similar relaxation/preference has been granted to the LPG Distributors with regard to age of the vehicle to be used over the common transporter as per Clause 14(I)(b) of the Tender Evaluation Criteria, which is also discriminatory and violative of right of equality enshrined under Article 14 of the Constitution of India. Favourable treatment has been extended to the LPG Distributors by the respondent-Corporation also under Clause 3.0 of the Tender Document by providing relaxation of security deposit. It is submitted that prebid conference was held on 23.01.2017 wherein the petitioners submitted copy of letter sent to the office of Respondent No. 1 to 3 through the President of “Packed LPG Transporters Association, Ajmer” raising all the aforesaid objections, but no heed was paid by the respondents. Grievances of the petitioner were not remedied in the pre-bid clarification issued on 27.01.2017. If the substantial requirement of trucks, as per the Tender in question, is allowed to be satisfied by LPG Distributors only, then the petitioners, who are open tenderer, would suffer immensely. Representation on behalf of the petitioners' association was sent to various authorities and when such representation failed to evoke any response, the petitioners served notice for demand of justice on the respondents. Argument of learned counsel for the petitioners is that Clause 9 of the General Condition to Bidders; Clause 14(1)(b) of the Tender Evaluation Criteria and Clause 3.1 of Security Deposit, which provides preference/priority to LPG Distributors on offering their owned trucks in the instant tender under the category ‘Own Use Trucks’ is violative of Articles 14 and 19(1)(g) of the Constitution of India. Learned counsel for the petitioner, in support of his arguments, relied upon the judgments of the Supreme Court in Meerut Development Authority v. Association of Management Studies, (2009) 6 SCC 171 : 2009 (2) RLW 1137 (SC) and Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517. 4. Mr. Learned counsel for the petitioner, in support of his arguments, relied upon the judgments of the Supreme Court in Meerut Development Authority v. Association of Management Studies, (2009) 6 SCC 171 : 2009 (2) RLW 1137 (SC) and Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517. 4. Mr. S. Kasliwal, learned Senior Counsel appearing on behalf of the respondents opposed the writ petition and argued that decision to give preference to LPG Distributors was based on the policy decision of the Respondent-IOCL. Such policy decision was framed by the policy makers, who are experts in the field, after taking into consideration various aspects like experience, convenience and requirement etc. It is settled legal position that the authority inviting tender is free to set the terms and conditions as it desires appropriate considering the need and scope of the tender as well as in view of its past working experience in the field. The authority can choose its own method to arrive at a decision and can fixed its own terms of invitation of tender and in view of settled legal position, which is not open to judicial scrutiny. It is contended that LPG distributors are separate class in themselves so far as up-lift-ment of own load requirements is concerned. Preference given to them is only to the extent of their own load requirement. Argument of discrimination can be available to those, who are equal and not to those who fall in two different categories. Indane LPG Distributors can offer trucks in their name limited to their own use requirements and all such trucks should be owned by the LPG distributors. The distributors quoting for their own requirement has to match the established offered L1 rate for all the trucks for their own requirement at the first instance and such trucks shall not be utilized for any other distributor/load and market. It is contended that as per Clause 4(D) of definition the Indane LPG Distributor can offer trucks in their name limited to their own use requirement as given in minutes of Pre-Bid Meeting and such trucks shall be treated as own use trucks. Clause 9 of general instructions to bidders provided that the LPG distributors may offer trucks (any number of trucks i.e. once more) as per requirement for their own supplies only and all such trucks should be owned by LPG distributor. Clause 9 of general instructions to bidders provided that the LPG distributors may offer trucks (any number of trucks i.e. once more) as per requirement for their own supplies only and all such trucks should be owned by LPG distributor. The distributors quoting for only their own requirement has to match the established offered L-1 rate for all the trucks for his own requirement at the first instance. If the distributors are not willing to match the established offered L-1 rate at the first instance, then they will be treated at par with other tenderer (General SC/ST transporter or General transporter category) and would not be entitled to any preference/priority. Clause 14(I)(a) of the tender evaluation criteria provides that in case qualified trucks under unreserved category are less than the requirement, then all the trucks qualified will be allocated. Clause 14(I)(b) provides that in case qualified trucks are more than the requirement, then unreserved trucks will be first allocated to Indane distributors qualified for own-use starting from lowest age of the truck till the requirement is met. It is only when distributors quote minus 5% rates and trucks offered by L-1 bidders are more than requirement, then distributors (quoting rates minus 5%) trucks offered for own supplies will be inducted first because distributors are interest to carry their load in their own trucks. Learned Senior Counsel, in support of his arguments, relied upon the judgment of this Court in Mahalaxmi Gas Service v. Hindustan Petroleum Corporation Limited (S.B. Civil Writ Petition No. 12279/2016 decided on 07.11.2016). 5. On hearing learned counsel for the parties and perusing the material on record, this Court is not persuaded to uphold the argument of the petitioners that certain latitude granted to LPG Distributors for offering their trucks owned by them under the category of ‘Own Use Trucks’ would in any manner be discriminatory qua the petitioners, who fall under the open category. The petitioners, who are transporters in the open category, can appear and compete with the transporters of the open category and doctrine of ‘Level Playing Field’ can be invoked only amongst equals and not among those who are not equals. LPG distributors for the purpose of transportation of their own load requirement have to be treated as separate and distinct class and different from the open category transporters. There can be no equality amongst unequals and unequals also cannot be equated. LPG distributors for the purpose of transportation of their own load requirement have to be treated as separate and distinct class and different from the open category transporters. There can be no equality amongst unequals and unequals also cannot be equated. Classification of LPG distributors for offering their used trucks for carrying their own load requirement is reasonable and based on intelligible differentia. 6. Cited judgments by the petitioners in Meerut Development Authority (supra) and Jagdish Mandal (supra) are distinguishable on the facts of the present case and do not in any manner provide any help to the petitioners. The Supreme Court in Meerut Development Authority (supra) while dealing with the argument of discrimination held that there cannot be any disagreement that unjustified discrimination violates the Constitution and unreasonable decisions are susceptible to be interferred with and corrected in judicial review proceedings. In the present case, the latitude/preference given to LPG distributors cannot be said to be unjustified and discriminatory because such treatment has been accorded by treating them as distinct and separate category and such classification is based on intelligible differentia and has a nexus with the objective to be achieved. 7. The Supreme Court in the case of Jagdish Mandal (supra) held that interference in tender or contractual matters in exercise of power of judicial review is permissible only if, (i) the process adopted or decision made is mala fide or intended to favour someone; or (ii) the same is so arbitrary and irrational that no responsible authority acting under law could have arrived at it, or (iii) it affected the public interest. None of aforesaid three parameters would be attracted in the present case. This Court in Mahalaxmi Gas Service (supra) dealing with challenge to certain conditions of E-Tender floated by Hindustan Petroleum Corporation Limited repelled the argument of discrimination and dismissed the writ petition. 8. The Supreme Court in the case of Association of Registration Plates v. Union of India, (2005) 1 SCC 679 was dealing with the scope of judicial review with regard to validity of pre condition/pre qualification of a tender which stipulated that for awarding work of supplying high security registration plates, which require certain level of experience, the bidders would have certain level of experience for award of such work. The Supreme Court held that such condition did not, in any manner, discriminate against indigenous manufacturers of high security registration plates. The Supreme Court held that such condition did not, in any manner, discriminate against indigenous manufacturers of high security registration plates. Merely because few manufacturers did not qualify to submit the tender, the terms and conditions of the tender cannot be said to be discriminatory. 9. The Supreme Court in the case of Tata Cellular v. Union of India, (1994) 6 SCC 651 has laid down six golden principles for ascertaining the power of judicial review of the court in contractual matters, which still holds the field. Those principles, as contained in para 94 of the report, are reproduced hereunder: “(1) The modern trend points to judicial restraint in administrative action. (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3) The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise which itself may be fallible. (4) The terms of the invitation to tender cannot be open to judicial scrutiny because the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.” 10. In Michigan Rubber (India) Limited v. State of Karnataka, (2012) 8 SCC 216 , it was held by the Supreme Court that in the matter of formulating conditions of a tender document, 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 the Court is not warranted. Unless the action of tendering authority is found to be malicious and a misuse of its statutory powers, interference by the Court is not warranted. In Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, the Supreme Court held that evaluating tenders and awarding contracts are essentially commercial functions. Principles of equity and natural justice stay at a distance in such matters. 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. It was held by their Lordships that 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. In Puravankara Projects Ltd. v. Hotel Venus International, (2007) 10 SCC 33 it was held by the Apex Court that tender terms are contractual and it is the privilege of the Government which invites tender and the Courts do not have jurisdiction to decide which conditions should be framed. 11. This Court in Jindal Saw Limited v. State of Rajasthan, 2015 (3) WLC (Raj.) 153, after dealing with the aforesaid decisions dismissed the writ petition filed by the petitioner therein challenging the terms and condition of the contract impugned therein. 12. In view of above, there is no merit in this writ petition and the same is accordingly dismissed. Stay application also stands dismissed. Petition dismissed.