Arihant Bulk Carrier v. Indian Oil Corporation Ltd.

the total requirement of the first respondent which was 690 tank trucks was accepted being L-1 at the rate of 195 Paise/MT/RTKM for inter State and 200 Paise/MT/RTKM for within State. All the remaining 85 tenderers quoted identical rates of 316 Paise/MT/RTKM for inter State and 321 Paise/MT/RTKM for within State. 3

4. The aforesaid rates quoted by these remaining 85 tenderers were found to be on much higher side by the respondents. In the circumstances, to fulfill the balance requirement of 641 Tank Trucks it was decided by the respondents to hold negotiations with the aforesaid remaining 85 tenderers. The negotiations with the tenderers held from time to time failed as the tenderers declined to reduce the rates quoted by them. In the circumstances the respondents made a firm and final offer vide letter dated 22.03.2012 (Annexure P-4) asking the aforesaid 85 tenderers including the petitioner to submit their response / acceptance upto

30.03.2012. In the said communication the rates were offered at 230.25 Paise/MT/RTKM for inter State and 232.25 Paise/ MT/RTKM for within State (including HSD escalation).

5. In response to the said communication dated

22.03.2012 (Annexure P-4) only five tenderers accepted the counter offer dated 22.03.2012 in respect of 104 Tank Trucks, which was accepted by the respondents However the remaining eighty tenderers did not accept the counter offer dated 22.03.2012. Aggrieved by the non reduction of rates by the respondents, the said tenderers called a strike of bulk LPG transport in the Western region. On the intervention and at the instance of the Government of Maharashtra the joint meetings of tender consideration committee (for short, TCC) and all the 4 80 tenderers were held. In the meetings held on 2nd and 3rd April, 2012 the rates of 242 Paise/MT/RTKM for inter State and 240 Paise/MT/RTKM for within State category were agreed upon between the tenderers including the petitioner and the respondents.

6. When the matter stood thus, on 4.04.2012 the petitioner submitted a revised offer, quoting rates of 230 Paise/MT/RTKM for inter State and 238 Paise/MT/RTKM for within State category.

7. On the basis of the aforesaid agreement about the rates arrived at between the remaining eighty tenderers and the respondents in the joint meetings held on 2.04.2012 and

3.04.2012 a fresh offer was sent on 11.04.2012 (Annexure P-5) by the respondents to all the tenderers for conveying their acceptance to the rates as agreed to by them in the said meeting requiring them to submit their response upto

18.04.2012.

8. However instead of conveying his acceptance to the said offer made by the respondents, the petitioner in his reply dated 11.04.2012 (Annexure P-6) insisted for consideration of his revised offer dated 4.04.2012 (Annexure P-4A). The respondents having received positive response of 5 the letter dated 11.04.2012 (Annexure P-5) from 77 tenderers accepted the offer of 77 tenderers who had offered to provide 665 tank trucks as against the requirement of 537 tank trucks.

9. So far as the petitioner's revised offer dated

4.04.2012, the respondents sent a letter dated 17.04.2012 (Annexure P-7) to the petitioner informing him that his offer dated 4.04.2012 cannot be accepted as the same was submitted without being asked and is an unsolicited offer. It was also stated by the respondents that in the earlier counter offer dated 23.03.2012 the last date for submitting the offer was fixed upto 30.03.2012 and the petitioner having not responded to the said counter offer within due date and time, his offer dated 4.04.2012 cannot be accepted. Feeling aggrieved by the said communication dated 17.04.2012 (Annexure P-7) issued by the respondents, the petitioner submitted a representation dated 17.04.2012 (Annexure P-8) and has filed this petition.

10. The petitioner's case is that having offered the rates lower than the rates offered by the respondents in the offer letter dated 11.04.2012 it was not justified on the part of the respondents to reject his offer dated 4.04.2012. According to the petitioner, his offer dated 4.04.2012 was not an unsolicited offer but was made on the basis of negotiations which were held on 2.04.2012 and 3.04.2012. 6

11. The case of the respondents is that in response to the firm and final offer dated 22.03.2012 (Annexure P-4) the petitioner could have submitted his response / acceptance only upto 30.03.2012. Having failed to do so he could not have submitted a revised offer on 4.04.2012. The respondents further case is that the petitioner after participating in the negotiations held between all the tenderers and the respondents on 2.04.2012 and on 3.04.2012 and having agreed for the rate of 242 Paise/MT/RTKM for inter State and 240 Paise/MT/RTKM for within State category as would be clear from the minutes of the meeting (Annexure R-1) he could not have made an offer on 4.04.2012 contrary to what was agreed between all the tenderers and could not have backed out from the agreement so as to frustrate the tender process and the agreement arrived at in the said joint meeting.

12. It is also the case of the respondents that initially the petitioner joined with the 85 tenderers who had quoted identical rates of 316 Paise/MT/RTKM for inter State and 320 Paise/MT/RTKM for within State category. Thereafter he alongwith all the other remaining tenderers agreed to for the rates of 242 Paise/MT/RTKM for inter State and 240 Paise/ 7 MT/RTKM for within State category in the joint meeting held between the tenderers and the respondents. Thereafter realising that the number of offers of tank trucks is more than the required remaining number of tank trucks and the fact his tank trucks are of inferior models and as such he would not be able to secure contract in view of Clause 4 of the NIT providing that if everything would be equal preference would be given in the order of Model etc. he made an unsolicited revised offer dated 4.04.2012 quoting lower rates than what was agreed between all the tenderers and the respondents. Thus, according to the respondents, since the petitioner's offer, action and conduct was not bonafide, his offer dated

4.04.2012 was rightly rejected.

13. Heard learned counsel for the parties and perused the annexures.

14. Before dealing with the submissions made by the learned Senior Counsel for the parties, we feel it necessary to refer the judgments on which reliance has been placed by both the parties. In the case of Jagdish Mandal vs. State of Orissa and others 2007 (14) SCC 517 the Supreme Court while reiterating its earlier view taken in the case of Tata Cellular vs. Union of India AIR 1996 SC 11 has observed as under :- 8 quasi-administrative “The Government must have freedom of contract. In other words, a fairplay in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere 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. 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.” In this case, the Supreme Court has further observed :- “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 9 interest involved 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 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 by deciding 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."

15. In the case of Air India Limited vs. Cochin International Airport Limited (2002) 2 SCC 617 the Supreme Court has observed 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 decision considerations which are paramount are commercial considerations. The a commercial 10 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, 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. 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 unreasonableness fides, arbitrariness. 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 The State, 11 to a conclusion that overwhelming public interest requires interference, the court should intervene."

16. The Supreme Court in the case referred to above Jagdish Mandal vs. State of Orissa and others in paragraph 22 observed thus :- review “Judicial administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, 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 12 tenderers in a civil court. Attempts by unsuccessful imaginary grievances, wounded pride and business rivalry, to make mountains out of molehills of some violation or technical/procedural 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.

17. Undisputedly, in pursuance to the firm and final offer letter dated 22.03.2012 (Annexure P-4) made by the respondents no response / acceptance was submitted by the 13 petitioner upto the last date of 30.03.2012 but he submitted a revised offer only on 4.04.2012. It is also not in dispute that the petitioner participated in the joint meeting held between all the tenderers and the respondents at Mumbai on 2.04.2012 and on 3.04.2012 in which the agreed rates were fixed as would be clear from the minutes of the meeting (Annexure R-1) filed by the respondents. The relevant extract of the minutes of meeting reads thus :- “16. Accordingly, strike was called off by the tenderers on 30.03.2012 and negotiation meeting with the tenderers was fixed on 02.04.2012 between tenderers and TCC of OMCs.

17. Acceptance to our counter offer letter dated 22.03.2012 was received on 30.03.2012, the details are as under : IOC : 104 TRUCKS, 5 TENDERERS against our requirement of 690 trucks BPC : 59 TRUCKS, 4 TENDERERS against our requirement of 1157 trucks 42 HPC : 4 TENDERERS against our requirement of 1200 trucks TRUCKS, Industry total shortfall after above induction is 2880 no. of trucks.

18. On 02.04.2012, the meeting between tenderers and TCC members 14 started at 11:00 Hrs. Tenderers asked for the details of the acceptance received in response to the offer of OMC dated 22.03.2012. OMC shared the details as mentioned in point nos. 17 above. OMC also requested the Tenderers to accept the offered rate of 232.25 & 230.25 paise/MT/RTKM (inclusive of HSD escalation) for within state and inter state category. Tenderers did not agree for the same. TCC further revised their offer upward by 02 (two) paise in both the categories but tenderers did not agree for the same. Tenderers were demanding rate of 260 paise/MT/RTKM. TCC offered another rate of 236.25 and 234.25 Paise/ HSD MT/RTKM escalation) for within state and inter state category by giving further hike of 02 (two) paise but tenderer did not accept the same. Tenderers also revised their demand downward from 260 to 256 Paise/MT/RTKM. TCC clarified that same can not be accepted. Some of the tenderers were agitated at the rates being offered by TCC and started expressing their frustration by hinting precepetative actions and withdrawal of trucks. (inclusive of

19. After detailed deliberations on various issues, ultimately a rate of 242 paise/MT/RTKM (within State) and 240 paise/MT/RTKM (Inter State) was agreed upon between tenderers and TCC. The above rate is inclusive of effect of escalation of HSD (6.25 paise) for within State and inter State categories. It was also decided that individual Oil Marketing Companies shall finalise the 15 special sector rates with the tenderers in consultation with the Regional representative of OMCs on 03.04.2012. After finalizing the same, a firm and final counter offer shall be sent to all the tenderers by individual Oil Marketing Companies for their acceptance.” (emphasis supplied)

18. The aforesaid minutes of meeting clearly indicates that rate of 242 Paise/MT/RTKM for inter State and 240 Paise/MT/RTKM for within State category were fixed on the basis of agreement arrived at between all the tenderers and the respondents TCC after detailed deliberation on various issues between the tenderers and the TCC. In the said meeting it was decided that after finalisation of the rates for special sector a firm and final counter offer shall be sent to all the tenderers by the respondents. Thus, when after a prolonged discussion and with a view to ease the tension and to call off the strike, the rates were finalized as above and a firm and final offer was sent by the respondents on 11.04.2012. In the circumstances for what reason the petitioner has backed out from the said decision taken in the joint meeting and submitted a revised offer with lower rates, could not been explained by the petitioner. Having regard to this, we find ourselves in agreement with the stand of the respondents that the petitioner having realised that the offers of tank trucks of identical rates as fixed in the said joint meeting would be for 16 the more than the required number of tank trucks and in that situation he would not be awarded the contract as per conditions of the tender requiring that the preference is to be given to the tenderer having higher model tank truck if other conditions are equal, he backed out from the agreement.

19. Thus keeping in view the aforesaid facts, in our considered view, the action of the respondents in not accepting the petitioner's revised offer dated 4.04.2012, cannot be said to be arbitrary or illegal, warranting interference in this petition under Article 226 of the Constitution of India.

20. Having regard to the aforesaid in the absence of any malafides or arbitrariness in rejecting the petitioner's revised offer no case for interference is made out even if the petitioner had offered for lower rates after the expiry of the date fixed for making such offer. Thus, keeping in view of the law laid down by the Supreme Court, in our considered view the decision taken by the respondent being bonafide, no case for judicial review is made out. We are of the firm view that the respondents have not acted in any way arbitrarily in proceeding further on the basis of the agreement entered into between all the remaining tenderers including the petitioner and TCC of the respondents. The petitioner was bound by the 17 commitment which he made in the said meeting and he has rightly been not allowed to frustrate and spoil the entire tender process on the basis of his revised belated offer which was not bonafidely made.

21. Thus, no case for interference is made out. The petition fails and is hereby dismissed with no orders as to the costs. (Shantanu Kemkar) Judge