Bhanushali Dilip S/o. Bhanushali Govind v. Indian Oil Corporation Limited
2025-02-20
V.G.ARUN
body2025
DigiLaw.ai
JUDGMENT : Petitioner is the proprietor of Bharat Chemical, an enterprise engaged in the business of supplying bunkers (ship fuel) to vessels/ ships in both inner and outer anchorage of ports across India. The proprietary concern of the petitioner and the 3 rd respondent had participated in a tender/bid invited by the 1 st respondent for providing two barges for supply of Black Oil Bunkers to the coastal/foreign-run vessels berthed in the Cochin Port, Ernakulam-Berths and Outer Anchorages under Kerala State Office. After submission of the bid, petitioner received reliable information that one of the Barges, MV Shaun-I, offered by the 3 rd respondent is a foreign-flagged vessel registered with Tuvalu Ship Registry and flying the flag of Tuvalu. As a foreign-flagged barge cannot be offered as per the tender notification, the petitioner addressed Ext.P2 representation to the 1 st respondent, raising this issue. It was also pointed out that MV Shaun-I being a foreign vessel, does not possess the necessary licences to ply fuel/bunker in Indian waters. Some time later, petitioner received Ext.P5 e-mail dated 15.04.2024, informing that his representations were rejected, as there was no restriction against foreign-flagged vessels operating in India and being offered in the subject tender. It was also stated that, the successful bidder need only comply with the requirement by the time the work commenced. This, the 3 rd respondent had done by registering MV Shaun-I under the Indian Merchant Shipping Act, 1958 as a River Sea Vessel (RSV) Type Barge. Accordingly, the quotes were considered and 3 rd respondent being the lowest bidder (L1), the work was awarded to it. Aggrieved, this writ petition is filed seeking the following reliefs; “i. issue a writ of certiorari or any other appropriate writ or direction calling for the records resulting in Exhibit P5 proceedings and set aside the same; ii. issue a writ of certiorari or any other appropriate writ or direction calling for the records resulting in the selection as the impugned tender No. SRCC/PT/134/KES0/2023-24 (notified as per Exhibit P1) and declare that the 3rd respondent was ineligible for the tender.” 2. Heard, Adv.Philip T Varghese for the petitioner, Adv.Nithin George for respondents 1 and 2 and Adv.Sunil Shanker for the 3 rd respondent. 3.
Heard, Adv.Philip T Varghese for the petitioner, Adv.Nithin George for respondents 1 and 2 and Adv.Sunil Shanker for the 3 rd respondent. 3. Learned counsel for the petitioner submitted that as per Ext.P1, of the two barges offered, one should be of 1200 MT capacity or above, of RSV Type IV and necessarily IRS or equivalent certified and the other, of 1000 MT capacity or above and in IV Class. Referring to the pre-qualification criteria stipulated in the tender notification, more particularly, Clause 22.3 therein, it is submitted that the barge having capacity of 1200 KL and above should be registered as “Type-IV River Sea Vessel” and should be having a certificate of Class issued by the Indian Registry of Shipping or any classification society. Contrary to this, MV Shaun-I is an Oil Products Tanker (OPT) carrying a foreign-flagged with Tuvalu Country Registration, as evidenced by Ext.P4 Vessel Report. According to the learned counsel, since one of the barges offered by the 3 rd respondent did not satisfy the pre-qualification criteria, the 3 rd respondent's bid ought to have been rejected, and petitioner's proprietary concern being the only other qualified bidder, it should have been awarded the work. Instead, 3 rd respondent's bid was accepted and to justify the illegal action, 1 st respondent has taken the stand that the Director General of Shipping has not restricted the operation of any foreign-flagged vessel in Indian Ports and there was no restriction in offering foreign-flagged vessel(s). Drawing attention to the definition of “Indian ship” in Section 3 (18) of the Merchant Shipping Act, 1958 ('the Act' for short) and the procedure for registration stipulated in Sections 23 to 29 of the Act, it is submitted that the stand adopted by the 1 st respondent is contrary to the statutory provision. Moreover, as per the DG Shipping Order 18 of 2013, issued by the Directorate General of Shipping, it is mandatory to register River Sea Vessels under the Act. Hence, only an Indian ship/River Sea Vessel, registered in accordance with the procedure prescribed in the Act, can satisfy the qualification criteria prescribed in the notification. The 1 st respondent being a Public Sector Undertaking, cannot act in a grossly arbitrary and patently illegal manner in the award of public contracts. As such, the illegality needs to be corrected in exercise of this Court's extraordinary jurisdiction under Article 226 of the Constitution. 4.
The 1 st respondent being a Public Sector Undertaking, cannot act in a grossly arbitrary and patently illegal manner in the award of public contracts. As such, the illegality needs to be corrected in exercise of this Court's extraordinary jurisdiction under Article 226 of the Constitution. 4. Refuting the allegations, learned Standing Counsel for the 1 st respondent made the following submissions; The contention that, only barges flying Indian Flag can be offered in the tender is unsustainable. As per Clause 22 sub- clause (3) of the pre-qualification criteria, the flag of the barge is not considered at the technical evaluation stage and such requirements are to be met only after issuance of the letter of acceptance. The allegation that MV Shaun-I is not registered under the Indian Merchant Shipping Act is also without substance. As evident from Ext.R1(a), MV Shaun-I has been issued with an Indian Register of Shipping Certificate of Class. The subject tender is a two bid system and the petitioner as well as the 3 rd respondent were technically qualified for price bid opening. Among the two bidders, the 3 rd respondent's quote was the lowest. Being so, there is no illegality in awarding the contract to the 3 rd respondent. 5. Learned counsel for the 3 rd respondent submitted that as per the scope of the work mentioned in Ext.P1, the offered vessels should be of IV Class or RSV Type-4 with the certificate of class being issued either by the Indian Register of Shipping or any other classification societies. If the vessels met the primary criteria at the time of submitting the bids, the bidders could comply with the secondary tender conditions subsequently. Therefore, flying of the flag of Tuvalu by MV Shaun-I was not a disqualification at the stage of submission of the bid, as the barge met the primary requirements of the tender. As discernible from Ext.R3(c), Inspection Report dated 24.05.2024 of MV Shaun-I, the vessel was built in the year 2016 and classified by the IRS. Thereafter, the vessel was flying the Indian Flag as an RSV Type IV Tanker Vessel and continued bunkering operations as an Indian vessel until 2019. Thereafter MV Shaun-I was mobilised under the Tuvalu flag for sailing and carrying out bunkering operations in and around the United Arab Emirates.
Thereafter, the vessel was flying the Indian Flag as an RSV Type IV Tanker Vessel and continued bunkering operations as an Indian vessel until 2019. Thereafter MV Shaun-I was mobilised under the Tuvalu flag for sailing and carrying out bunkering operations in and around the United Arab Emirates. At the time of submission of the subject bid, the vessel was under a time charter for carrying out bunkering operations in the Gulf upto 13.05.2024. The 3 rd respondent had proposed MV Shaun-I, confident of bringing her back to India and complying with the secondary requirements under the tender. Accordingly, MV Shaun-I was demobilised from UAE by providing an alternate vessel to carry out the time-chartered activity. On 01.05.2024, 3 rd respondent applied for deletion of MV Shaun-I from the Tuvalu Flag Registry. Thereafter, the vessel was brought to India and after essential repair and maintenance works, application was submitted for conversion of the vessel's flag to Indian flag. Thereupon, the ship was surveyed and issued with Ext.R3(e), the Certificate of Indian Registry dated 09.05.2024. This was followed by Ext.R3(f) registration dated 10.05.2024 of the Mercantile Marine Department, Government of India under Section 406 of the Act. The certificates would show that MV Shaun-I satisfies the requirements of registration and classification as RSV Type IV under the Act. Thus, by the time the work order was issued, MV Shaun-I satisfied all requirements stipulated in the notification. Admittedly, 3 rd respondent's bid was the lowest and after negotiation with the 1 st respondent, final contract price was fixed at INR 19,39,66,951/- including GST @5% for a period of 30 months as compared to the original tender estimate of INR 28,93,93,125/-. As such, public interest also favours award of the work to the 3 rd respondent. 6. There cannot be any dispute to the fact that MV Shaun- I was flying the flag of Tuvalu at the pre-qualification stage and got registered as an Indian ship before placement of the work order. While petitioner contends that, as per the pre- qualification criteria, the barge of capacity 1200MT or above, should be of RSV Type 4 classification and IRS or equivalent certified at the pre-qualification stage itself, 1 st respondent is definite in its stand that the criteria need be achieved only before placement of work order. To resolve this issue, the relevant clauses in the tender notification have to be read and understood.
To resolve this issue, the relevant clauses in the tender notification have to be read and understood. Hence, sub-clause (3) of Clause 22 detailing the pre-qualification criteria is extracted hereunder; “The bidder shall quote for both the barges required in tender which are One number of barge of capacity 1000 MT capacity or above and to be IV Class AND One number of barge of capacity 1200 MT or above or RSV IV and necessarily IRS or equivalent certified. Proof of confirmation of capacity of barge : Approved stability booklet (issued by Flag/classification society) or Calibration certificate (issued by any dock) or Tonnage certificate. Barges having Capacity of 1200 KL and above shall be registered as Type-IV River sea vessel '(Proof of Class of the Barge RSV Type IV: Certificate of Class issued by Indian Registry of Shipping or any classification society) Barges having Capacity of 1000 KL and above shall be registered as Inland Vessel CLASS or RSV Type I/II/III/IV (Proof of Class of the Barge: For inland vessel: Certificate issue by State Maritime Board of any state. For RSV Type I/II/III/IV: Certificate of class issued by Indian Registry of Shipping or any classification society) Out of requirement of above Two number of barges for the tender, the bidder shall own at least one number of barge on his name (Own) and the other barge can be attached or all owned.” The above extracted clause require the bidder to quote for two barges; one of 1000MT capacity or above and in IV Class and the other, of capacity 1200MT or above of RSV IV and necessarily IRS or equivalent certified. Being contextually relevant, details of barge requirements and licences mentioned in the notification are also extracted below; “ BARGE REQUIREMENTS AND LICENCES (To be ensured by Bidders for quoting and Original documents shall be presented by Bidders for verification at IOCL Ernakulam Terminal/Wellingdon Island Terminal, after placement of LOA and before placement of Work Order): We require 1 no of barge in each category. 1. Category 1 One number of barge of capacity 1200MT or above of RSV IV and necessarily IRS or equivalent certified 2. Category 2 One number of barge of capacity 1000 MT capacity or above and to be IV Class. Proof of confirmation of capacity of barge: Approved stability booklet (issued by Flag/classification society) or Calibration certificate (issued by any dock) or Tonnage certificate.
Category 2 One number of barge of capacity 1000 MT capacity or above and to be IV Class. Proof of confirmation of capacity of barge: Approved stability booklet (issued by Flag/classification society) or Calibration certificate (issued by any dock) or Tonnage certificate. The Tender should have valid licenses for the barge offered for operation in Cochin PORT, Ernakulam Berths and Outer anchorages during entire period of contract. Physical verification of Barge and all the licenses will be carried out by authorised officials of Ernakulam Terminal /Wellingdon Island Terminal or approved Master Mariner after placement of LOA. Barge should be classified by IRS or its equivalent agency acceptable by DG shipping as applicable for each category Barges having Capacity of 1200 KL and above shall be registered as Type-IV 'River sea vessel (Proof of Class of the Barge RSV Type IV: Certificate of Class issued by Indian Registry of Shipping or any classification society) Barges having Capacity of 1000 KL and above shall be registered as Inland Vessel CLASS or Type I/II/III/IV (Proof of Class of the Barge: For inland vessel: Certificate issue by State Maritime Board of any state. For RSV Type I/II/III/IV: Certificate of class issued by Indian Registry of Shipping or any classification society)”. Going by the above requirements, responsibility of the bidders is to ensure that barges with requisite specifications are offered and original documents of those vessels submitted for verification, after issuance of letter of acceptance and before placement of work order by the 1 st respondent. In the case at hand, Ext.R3(b) letter of acceptance was issued on 06.05.2024 and MV Shaun-I was issued with Ext.R3(d) interim certificate of class, with description RSV Tanker Type 4, by the IRS on 31.05.2024. As such, MV Shaun-I satisfied the notified requirements before placement of the work order. The definite stand of the 1 st respondent is that the pre- qualification criteria only mentions the requirement of class and capacity of barge, while the requirement of licences, are mentioned under the head 'Barge Requirement and Licences'. The former requirement should be met with while submitting the bid whereas the latter need to be satisfied before placement of work order. Going by the expressions used in the tender notification, the above stand appears to be reasonable.
The former requirement should be met with while submitting the bid whereas the latter need to be satisfied before placement of work order. Going by the expressions used in the tender notification, the above stand appears to be reasonable. As held by the Apex Court in Agmatel India Private Limited v. Resoursys Telecom and Others [ (2022) 5 SCC 362 ] and series of other cases, the author of the document is the best person to understand and appreciate its requirements; and if the interpretation of the author is manifestly in consonance with the language of the tender document or subserves the purpose for which tenders are invited, courts should keep restraint. The subject contract is intended to acquire the best available vessels under the stipulated category at reasonably low prices. The author of the tender document having made it clear that the vessel offered by the 3 rd respondent meets its requirements and its licences and documents were produced within the time stipulated, it is not for this Court to hold otherwise. The contention that as per DG Shipping Order 18 of 2013, River Sea Vessels are required to be registered under the Merchant Shipping Act cannot also be countenanced in the light of Ext.R3(d) certificate of registration issued by the IRS and Ext.R3(e) certificate issued under Section 34 of the Merchant Shipping Act. For the aforementioned reasons, this writ petition is dismissed.