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2024 DIGILAW 1460 (AP)

Indian Oil Corporation v. Sree Vijay Ganapathi Transport

2024-10-17

DHIRAJ SINGH THAKUR, R.RAGHUNANDAN RAO

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JUDGMENT : (per Hon’ble Sri Justice R.Raghunandan Rao) As both the writ appeals arise out of the same set of facts and between the same parties, they are being disposed of by way of this common judgment. 2. Heard Sri O. Manohar Reddy, learned Senior Counsel representing Sri S.V.S.S. Siva Ram, learned counsel appearing for the appellant in both writ appeals and Sri P. Kamalakar, learned counsel appearing for the 1st respondent in both writ appeals. 3. The appellant, which is an Oil Marketing Company, for the purpose of transport of its petroleum products, had issued a tender, dated 22.05.2023, calling for bids from tank truck owners, for road transportation of bulk petroleum products with effect from 01.08.2023, for a period of two years, with an option for extension up to one year. The tender was issued for employing 61 tank trucks. 4. The 1st respondent, which is registered under the Micro Small and Medium Enterprises Act, 2006, had offered six tank trucks in his bid. However, the 1st respondent received a letter of acceptance dated 08.09.2023 for only one tank truck and a work order was also issued on 05.10.2023. 5. Subsequently, the 1st respondent came to know that one of the successful bidders, who had been allotted one tank truck, could not produce the necessary tank truck and the letter of acceptance and work order given to the said bidder, were withdrawn. The 1st respondent had then made a representation, dated 26.10.2023, for supplying the tank truck, in the place of the said bidder whose letter of acceptance and work order had been withdrawn. As this representation was not being considered, the 1st respondent filed W.P.No.31150 of 2023 before this Court and an interim direction, dated 01.12.2023, was issued to the appellant to consider the representation of the 1st respondent as per the existing guidelines/tender conditions, within a period of two weeks. In pursuance of these directions, the appellant considered the representation, dated 26.10.2023, and rejected the same. Aggrieved by this rejection, the 1st respondent filed W.P.No.1268 of 2024, which came to be disposed of, by an order, dated 23.04.2024, by a learned Single Judge of this Court, setting aside the order of rejection dated 26.12.2023 with a direction to the appellant to reconsider the request of the 1st respondent within a period of four weeks from the date of receipt of the order. 6. 6. The appellant, after receipt of this order, had rejected the representation again, by way of an order, dated 22.05.2024. Aggrieved by the said rejection, the respondent again approached this Court by way of W.P.No.14748 of 2024. In this writ petition, a learned Single Judge of this Court, by way of an interlocutory order, dated 12.07.2024, had directed the appellant to award the contract of the tank trucks to the 1st respondent in view of the cancelled letter of acceptance by the appellant, pending disposal of the writ petition. 7. Aggrieved by the order, dated 23.04.2024, in W.P.No.1268 of 2024, the appellant moved W.A.No.681 of 2024 before this Court. Similarly, W.A.No.680 of 2024 was moved against the interlocutory order dated 12.07.2024 in W.P.No.14748 of 2024. 8. The case of the 1st respondent/writ petitioner before the learned Single Judge, in W.P.No.1268 of 2024, was that once a work order for a tank truck has been withdrawn, the appellant corporation has the power and authority to modify the tender and fill up the gap by calling upon the qualified bidders, who are ranked next in line to supply tank trucks. The 1st respondent also contended that such a course of action would not prejudice anybody and would only result in savings for the appellant corporation. 9. The appellant corporation contended that the shortfall created by the withdrawal of any of the tenderers, from a finalized contract, cannot be given to other tenderers in the said tender. It is also submitted that there is no provision in the tender for issuance of additional letter of acceptance as contended by the 1st respondent. 10. The learned Single Judge, after noticing various clauses in the tender, had held that the appellant corporation has power and authority to continue to process the hiring of tank trucks till the entire requirement of the appellant corporation, set out in the tender document, is met. The learned Single Judge, while holding that there was no clause or provision for issuance of letter of acceptance in lieu of cancelled letter of acceptance, had held that the clauses also stipulate that tank trucks should be allocated to successful tenderers till the full requirement of the tank trucks is met, and the process has to be continued till such requirement is met. The learned Single Judge held that in such circumstances, rejecting the representation of the 1st respondent would amount to an unreasonable exercise of discretionary power, in the light of the judgment of the Hon’ble Supreme Court in Shanti Vijay & Co., vs. Princess Fatima Fouzia, (1979) 4 SCC 602 , and set aside the proceedings dated 26.12.2023 with a direction to the appellant to reconsider the request of the 1st respondent. 11. Sri O. Manohar Reddy, learned Senior Counsel representing Sri S.V.S.S. Sri Ram, learned counsel appearing for the appellant corporation, would contend that the learned Single Judge ought not to have entertained the writ petition, as the issue relates to interpretation of tenders, on contractual terms; the judgment of the Hon’ble Supreme Court in the case cited above, would not be applicable to the facts of the present case, in as much as the observations of the Hon’ble Supreme Court arose in a case where exercise of discretionary power by the trustees, in the absence of a contract, has come up for consideration while there is a contract with specific terms and conditions in the present case; the 1st respondent does not have any vested right for being given letter of acceptance for one more tank truck, especially, when all other tenderers would also be entitled to participate, and contend, for giving the tank truck, on hire, to the appellant corporation; the learned Single Judge ought to have noticed that the requirement of 61 tank trucks given in the tender was qualified by Clause-I of the tender, which stated that the estimated requirement is indicative and subject to change; the appellant was at liberty to increase or reduce the number of tank trucks, and in the present case, the requirement of the appellant was met by hiring 56 tank trucks, after which the tender had been closed; and the clause relating to acceptance of tank trucks at L.2 rates after all L1 bidders had been exhausted, does not mean that tank trucks offered at L.2 rate have to be hired irrespective of whether the appellant corporation requires the said tank trucks or not. 12. Sri P. Kamalakar, learned counsel appearing for the 1st respondent would contend that there is no error in the order of the learned Single Judge, which requires to be looked into by this Court. 12. Sri P. Kamalakar, learned counsel appearing for the 1st respondent would contend that there is no error in the order of the learned Single Judge, which requires to be looked into by this Court. He would further submit that as far as W.A.No.680 of 2024 is concerned, the same is against the interlocutory order, and as such, the writ appeal is not maintainable. 13. The learned Single Judge, after noticing Clause-3 of Chapter “Opening of Tender”, Clause 4 of “Tender terms” and Clauses 6, 8 and 9 of Chapter “Evaluation of Tenders” had come to the conclusion that tank trucks would have to be allocated to the successful tenderers till full requirement of the tank trucks is met. On the basis of this finding, the learned Single Judge had come to the conclusion that the appellant corporation would have to be offered the tank trucks, which could not be suffered by other successful tenderers and to the eligible tenderers in the tender. 14. The learned Single Judge had arrived at this conclusion on the basis of Clause 6, 8 and 9 which read as follows: “Clause–6: In case, Tank Trucks offered by L-1 tenderers is not meeting full requirement then the L-1 rate/revised rate accepted by L-1 tenderers would be offered to all the remaining successful tenderers, Tank Trucks shall be allocated at above rates till full requirement of Tank Trucks is met. Clause–8: In case requirement is not met by the Tank Trucks offered by the tenderers accepted L-1 rate/revised rate accepted by L-1 tenderers, negotiations/counter offer exercise shall be carried out with the tenderers who are at highest ranking amongst remaining tenderers who have not accepted above rates and the Tank Trucks offered by these tenders accepted L-2 rate shall be allocated up to the requirement. Clause–9: In case, Tank Trucks offered by the tenderers accepted L-2 rate is not meeting full requirement then the L-2 rate would be offered to all the remaining successful tenderers who have not accepted L-1 rate/revised rate accepted by L-1 tenderers and based on their ranking and acceptance by the tenderers, Tank Trucks shall be allocated at above rates till full requirement of Tank Trucks is met. In case the requirement is still not met, IOC shall have the option to continue the above process. 15. In case the requirement is still not met, IOC shall have the option to continue the above process. 15. Clause–9 of the tender terms and conditions stipulates that the estimated number of tank trucks shown in the tender notice is indicative and is subject to change. IOC reserves the right to contract additional tank trucks. In view of this clause, no finding can be arrived at, that there is a firm offer of hiring 61 tank trucks, and that the process of hiring will continue till 61 tank trucks, at the very least, are hired. 16. The aforesaid Clauses 6, 8 & 9 in the Evaluation of Tenders are in relation to the hire rate at which the tank trucks would be taken by the appellant corporation. 17. A conjoint reading of the aforesaid Clauses would clarify that the appellant corporation would hire only tank trucks, which are offered at the lowest price. If the trucks offered at the lowest price are not sufficient to meet the requirement of the appellant-corporation, all the tenderers would be given an opportunity to match the lowest rate and tank trucks offered by any bidder at the lowest rate would also be taken. Even if these trucks are not sufficient, the trucks offered at the second lowest rate would be accepted. Thereafter, the tenderers would again be given an option to match the second lowest rate and their trucks would be taken and so on and so forth, till the requirement of the appellant corporation is met. This, again does not mean that the appellant corporation is bound to carry on this process till all the tank trucks are hired. A practical reason why such an interpretation cannot be placed on the tender conditions is the fact that the corporation would always have the option of rejecting all or any of the bids if the appellant corporation finds that the rate offered by the bidders is not commercially viable. Similarly, the appellant corporation may find the lowest rate commercially viable while the second lowest rate may not be commercially viable or acceptable to the appellant corporation. In such circumstances, there cannot be a direction that the corporation has to hire all the tank trucks which are offered, irrespective of the fact whether the rate offered for such tank trucks is acceptable to the appellant corporation or not. 18. In such circumstances, there cannot be a direction that the corporation has to hire all the tank trucks which are offered, irrespective of the fact whether the rate offered for such tank trucks is acceptable to the appellant corporation or not. 18. The initial order of rejection, dated 26.12.2023, was passed on the ground that there was no tender clause or provision for issuance of additional letter of acceptance in lieu of a cancelled letter of acceptance in the tender document and the shortfall cannot be filled for a finalized contract. This contention is in relation to the interpretation of the contract by the appellant corporation. 19. It can be argued that interpretation of these clauses, placed by the 1st respondent, are also equally tenable. Even if such a situation was to be accepted, the Hon’ble Supreme Court in the case of Slippi Constructions Contractors vs. Union of India, (2020) 16 SCC 489 and in Agmatel India Pvt. Ltd., vs. REsoursys Telecom & Ors., (2022) 5 SCC 362 , had held that the author of the tender document would be the best person to understand and appreciate the requirements of the tender and the interpretation placed by the author of the tender should be accepted even if there could be an alternative interpretation of the tender conditions. 20. In that view of the matter, the judgment of the learned Single Judge, dated 23.04.2024 in W.P.No.1268 of 2024 is set aside. As W.P.No.14748 of 2024 is consequential to the directions of the learned Single Judge in W.P.No.1268 of 2024, nothing further would survive in the said writ petition. Consequently, the interim direction given in W.P.No.14748 of 2024 would also have to be set aside. 21. Accordingly, both the writ appeals are allowed setting aside the orders of the learned Single Judge in W.P.No.14748 of 2024 and W.P.No.1268 of 2024. There shall be no order as to costs. As a sequel, pending miscellaneous petitions, if any, shall stand closed.