Indian Oil Corporation Limited v. South Kashmir Petroleum Dealers Association
2020-09-03
SINDHU SHARMA
body2020
DigiLaw.ai
JUDGMENT This petition has been filed under Article-227 of the Constitution of India seeking quashing of order of Sub-Judge, Pulwama dated 04.07.2020 extending the time for fulfilling the conditions of Expression of Interest (EOI) and raises a question whether a decree of permanent prohibitory injunction could be passed by a Civil Court for grant of following reliefs:- “a) …That a decree for declaration declaring the tender notice bearing EOI No. PSO/OPS/EO1/(MS-HSD)/Jammu Kashmir and Ladakh locations bearing tender ID No. 2020PSO113260, ineffective, inoperative, illegal, unfair and detrimental to the interest of the plaintiffs and other RO dealers operating in South Kashmir; b) That a decree for permanent injunction restraining the defendants from competing the tender process till life returns to normalcy from COVID-19, with a further direction to the defendants to continue with the arrangements for transporting of petroleum products as per the allotment of 2014 which is in vogue till date, be passed in favour of the plaintiffs and against the defendants.” 2. The suit was filed by the plaintiffs/respondents herein alongwith an application for grant of interim relief. The Trial Court/Sub-Judge (CJM)”, Pulwama vide order dated 20.05.2020, while directing issue of notice to the defendants also directed that the impugned order inviting tender shall remain in abeyance. But after the defendants /petitioners herein appeared and filed their written statements as well as objections, the order dated 20.05.2020 was modified vide order dated 04.07.2020 by directing as under :- “therefore, arguments advanced by ld counsel for the applicants seems to be just, proper and appealing to the extent of extension of time, hence application to that extent is allowed hence interim order dated 20.05.2020 is modified to the extent that non-applicants are directed to extend three months more time to the applicants for fulfilling the condition of EOI in question from the date of this order keeping into account peculiar and unhealthy circumstances of the South Kashmir.” 3. The petitioners have challenged this order on the following grounds:- ‘i) that the order is against the mandate of law laid down by the Supreme Court in Tata Cellular Vs.
The petitioners have challenged this order on the following grounds:- ‘i) that the order is against the mandate of law laid down by the Supreme Court in Tata Cellular Vs. Union of India, 1994 (6) SCC 651 holding that; “Before interfering in tender or contractual matter, the Court in exercise of its powers of judicial review should pose to itself the following questions: (a) 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 or irrational that the Court can say that the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached; (b) Whether the public interest affects, if the answer is in the negative, there should be no interference under Article-226 of the Constitution and judicial review it appears is always to test the grievance under Article 14 of the constitution.” 4. There is nothing in the plaint to show that the action of the plaintiffs in inviting EOI was mala fide or they wanted to help someone as there is no such allegation in the plaint. Moreover, the EOI was issued to the plaintiffs, has been admitted in the plaint. They could have also participated in the process but it appears they wanted to continue with the present arrangement which they have been continuing since 2014 and the order for extension amounts to interference in the process of invitation to tender in the tendering process which is not permissible in view of the law laid down in Para 94(6) of the Tata Cellular Vs. Union of India, (1994) 6 SCC 651 . “94. The principles deducible from the above are : ……………….. (6) Quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure.” 5. The trial Court relying on Para 23 of the judgment of Hon’ble the Supreme Court in ‘M/s Michigan Rubber (India) Ltd. V. State of Karnataka & ors., (2012) 8 SCC 216 , wherein the following principles were restated 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.
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.” 6. The finding of the trial court was as under: “……..After all said and done above it seems that applicants have two grievance one harsh conditions of EOI in question and paucity of time in fulfilling conditions of EOI preparing documents/undertakings. As far as former question is concerned the Hon’ble Superior Courts have once for all settled the issue hence need not to be addressed, but so far as later question with regard to paucity of time is concerned, in applicants shall definitely suffer an irreparable loss.
As far as former question is concerned the Hon’ble Superior Courts have once for all settled the issue hence need not to be addressed, but so far as later question with regard to paucity of time is concerned, in applicants shall definitely suffer an irreparable loss. Therefore, arguments advanced by 1d counsel for the applicants seems to be, just, proper and appealing to the extent of extension of time, hence application to that extent is allowed hence interim order dated 20-05-2020 is modified to the extent that non applicants are directed to extend three months more time to the applicants for fulfilling the condition of E01 in question from the date of this order keeping into account peculiar and unhealthy circumstances of the South Kashmir. This is order shall dispose of application for interim relief and also application for vacation of order dated 20-05- 2020 moved by Ld counsel for the non applicants. Application is accordingly disposed of be consigned to records after due compilation.” 7. Therefore, if decree as prayed for cannot be passed, whether the learned Trial Court could interfere in the time fixed by the petitioners’ in EOI for submitting tender. The Legal position was accepted by the trial Court but still it travelled beyond its jurisdiction by holding that keeping into account peculiar and unhealthy circumstances of South Kashmir, it is necessary to extend three months more time for fulfilling the condition of EOI from 04.07.2020. 8. The question that arises is whether by extending the time vide impugned order, the trial court has interfered with the terms of the invitation of tender which is not open to judicial review in view of the para 23 of the Michigan Rubber Ltd. (Supra) and then specifically in Tata Cellular V. Union of India, (Supra), ignored Sub-para 94(6) of the said judgment. 9. The trial Court has, thus, acted without jurisdiction by directing extension of time by three months with effect from the date of the order of Court dated 04.07.2020. In Jagdish Mandal vs. State of Orissa and others, (2007) 14 SCC 517 , their lordships held as under :- “22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. Its purpose is to check whether choice or decision is made ‘lawfully’ and not to check whether choice or decision is ‘sound’.
In Jagdish Mandal vs. State of Orissa and others, (2007) 14 SCC 517 , their lordships held as under :- “22. Judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. 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. Evaluating 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”. 10. The next question is whether the petition under Article 227 is maintainable when the order impugned is appealable. 11. The Supreme Court in Koyilerian Janki & ors. vs. Rent Controller, 2000 (9) SCC 406 has been pleased to hold that “the power under Article-227 is exercisable where it is found by the High Court that due to certain grave error, an injustice has been caused to party. For this reason also, the judgment of the High Court deserves to be set aside.” 12.
vs. Rent Controller, 2000 (9) SCC 406 has been pleased to hold that “the power under Article-227 is exercisable where it is found by the High Court that due to certain grave error, an injustice has been caused to party. For this reason also, the judgment of the High Court deserves to be set aside.” 12. The learned Sub-Judge, Pulwama having acted contrary to the law laid down by the Supreme Court by interfering in the administrative decision, his action is without jurisdiction, although the order can be challenged in appeal, however, this is a fit case in which this Court should exercise jurisdiction under Article 227 as held in ‘Waryam Singh and another v. Amarnath and another’ AIR 1954 SC 215 . 13. In view of the above discussions and since the order impugned is without jurisdiction being against the law as laid down by their lordships of Hon’ble the Supreme Court, this petition is, accordingly, allowed and impugned order dated 04.07.2020 passed by the learned Sub-Judge/CJM Pulwama is quashed.