IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 09.08.2011 CORAM: THE HONOURABLE MR. JUSTICE K.N.BASHA W.P.No.15676/2011 & MP.No.2/2011 & 1/2010 Sri Ganapathy Transports represented by its Proprietor T.L.Ram Rajan, No.25/11, Main Raod, Metha Nagar Chennai 600 029. .. Petitioner Versus 1.The Senior Manager Chennai Petroleum Corporation Ltd., [A Group Company of Indian Oil Corporation Ltd.] Manali, Chennai 600 068. 2.Namagiri Lakshmi Transport Opp.to NMR Plaza Salem Road, Namakkal 637 001. Tamil Nadu. 3.Vasantham Trasnports Swamy Nagar, Salem Raod, Namakkal 637 001, Tamil Nadu. .. Respondents Writ petition filed under Article 226 of the Constitution of India praying for a writ of certiorarified mandamus calling for the records of the 1st respondent in the Letters of Intent dated 24.06.2011 issued in favour of the respondents 2 and 3 and quash the same and consequently direct the 1st respondent to award the Tender bearing No.CC009610 dated 22.12.2010 to the petitioner for 28 Tank Trucks. For Petitioner : Mr.P.S.Raman For R1 : Mr. R.Senthil Kumar For RR2 &3 : Mr.T.R.Rajagopalan, SC for Mr.S.K.Chandrakumar ORDER The petitioner has come forward with the above writ petition seeking for the relief of quashing the order of the 1st respondent dated 24.06.2011 issued in favour of the respondents 2 and 3 and consequently direct the 1st respondent to award the Tender bearing No.CC009610 dated 22.12.2010 to the petitioner for 28 Tank Trucks. https://hcservices.ecourts.gov.in/hcservices/ 2.1.The case of the petitioner is that the petitioner is engaged in the business of private services for transport of bulk and packed bitumen for the last more than 19 years. The petitioner has been awarded tenders by HPCL, IOCL, BPCL etc., for transport of Bulk Bitumen. The tenders for the transport of packed bitumen have been awarded to the petitioner by the District Rural Development Agencies of the Tamil Nadu State Government. 2.2.The 1st respondent is dealing in the products of Motor Spirit, LPG, Superior Kerosene, Aviation Turbine Fuel, High Speed Diesel, Bitumen, Fuel Oil etc. The respondents 2 and 3 are the other transport companies inter-alia, engaged in the similar business as that of the petitioner. 2.3.The 1st respondent issued a Notice inviting tender bearing Tender No.CC009610 dated 22.12.2010 for the work of Raod Transport Services for movement of Reduced Crude Oil [RCO] from its Cauvery Basin Refinery, Nagapattinam, to its Refinery at Manali. The bids were to be in two parts, Part A being the Techno Commercial Bid and Part B being the Price Bid. Sealed item rate tenders were invited while fixing the due date for the submission of the bids as 20.04.2011. A pre-bid meeting was provided for and scheduled on 07.01.2011. EMD was fixed at Rs.6,000/- for each tank truck and the contract period was for 24 months. 2.4.Three corrigenda were later issued by the 1st respondent dated 21.01.2011, 04.02.2011 and 11.02.2011 respectively. On 15.02.2011, the petitioner submitted its bid as required under the tender and the corrigenda, as required by the 1st respondent. Totally 24 bids were made which included the petitioner and the respondents 2 and 3. 2.5.On 16.02.2011, the Part A techno commercial bids were opened and evaluated over a period of around three and a half months. Finally, 20 of the bidders were found eligible at this stage. 2.6.On 13.06.2011, the price bids were opened in front of all the 20 aforesaid bidders which included the petitioner and the 2nd and 3rd respondents respectively. The petitioner as well as the respondents 2 and 3 had bid for the minimum of Rs.1.92 and as a result, as far as the Lowest permissible rate is concerned, there were only18 bidders who had all bid the same of Rs.1.92. The petitioner had offered 28 tank trucks, all of which are owned absolutely by the sole proprietor, viz., the petitioner herein. The number of trucks offered by the petitioner was the maximum among the 18 short listed tenderers. The respondents 2 and 3 have offered one truck less than the petitioner as they have offered only 27 tank trucks each. As per clause 2.8.5, viz., the Evaluation Methodology caluse of the Tender Document, priority is to be given to those who offer and own the maximum number of Tank Trucks and the petitioner ought to have been ranked first as it was owning 28 Tank Trucks and consequently, the tender should have been awarded to the petitioner. https://hcservices.ecourts.gov.in/hcservices/ 2.7.After opening and reading out of the price bids, the 1st respondent informed the 18 shortlisted bidders that it would contact them soon. The petitioner was confident of being awarded the tender as it had offered the maximum number of tank trucks and would become automatically successful going by the aforesaid clause 2.8.5. As no tenderer had individually offered the required number of tank trucks, viz., 42, the 1st respondent was expected to award the tender to more than one bidder. Bids were to be awarded to the reserved category of SC/ST as per the clause. 2.8.Thereafter, the 1st respondent, to the shock and surprise of the petitioner, had issued four Letters of Intent dated 24.06.2011 to respondents 2 and 3 and Sri Murugan and Thangamani, without issuing copies to the petitioner. Sri Murugan and Thangamani have been awarded under the SC/ST category which are ranked separately under clause 2.8.8. On the very same day, the 2nd and the 3rd respondents have issued their acceptance to the said letters of intent. The 2nd respondent has been awarded for 27 tank trucks, the 3rd respondent has been awarded for 10, Sri Murugan for 4 and Thangamani for 1, totalling to 42. Thereafter, the petitioner wrote a letter to the Deputy General Manager as well as to the Senior manager of the 1st respondent requesting the reasons for not being awarded the tender by specifically stating that the petitioner had offered 28 of its own tank trucks. There has been no reply for the same. Under the above said circumstances, the petitioner has been constrained to approach this court with the present petition with the above said prayer. 3.Mr.P.R.Raman, the learned counsel for the petitioner contended that admittedly, the petitioner as well as the respondents 2 and 3 offered the same bid amount of Rs.1.92. It is submitted that as far as the petitioner is concerned, he had offered 28 tank trucks and whereas, the respondents 2 and 3 have offered 27 tank trucks each and as such, the 1st respondent ought to have awarded the tender in favour of the petitioner herein as the petitioner had satisfied the requirement of clause 2.8.5 of the Tender Document regarding the evaluation methodology. It is contended that only the petitioner has offered the maximum number of owned tank trucks. Learned counsel further contended that the petitioner has not been furnished with the Impugned Letters of Intent dated 24.06.2011 and the counter filed by the 1st respondent disclosed that the petitioner has been deprived of his opportunity on the ground that the petitioner is not having valid permits for all the 28 tank trucks and out of the said trucks, the petitioner was having valid permits only for 14 trucks. It is pointed out that even in respect of the remaining 14 trucks, the permits have been issued for the transport of bitumen which is also a petroleum product and as such, there is no impediment for considering the tender in favour of the petitioner. It is further contended that in the tender document, one of the conditions stipulated is to the effect of possession of valid permits for tank trucks for the transport of Reduced Crude Oil and as far as the 2nd respondent and 3rd respondent including the petitioner are concerned, they are not https://hcservices.ecourts.gov.in/hcservices/ possessing the permit exclusively for the transport of the Reduced Crude Oil. Therefore, it is contended that the petitioner had offered 28 tank trucks more than the offer made by the respondents 2 and 3 to the effect that each of them have offered only 27 tank trucks each and there is no justification for rejecting the tender of the petitioner herein. Therefore, it is submitted that the award of tender in favour of the respondents 2 and 3 is unsustainable in law and the same is liable to be set aside. 4.Per contra, Mr.R.Senthil Kumar, learned counsel appearing for the first respondent would submit that there is no illegality of infirmity in awarding the tender to the 2nd and 3rd respondents. It is pointed out that the petitioner as well as the respondents 2 and 3 have offered the same bid amount to the tune of Rs.1.92 and the only difference is that each of the respondents 2 and 3 are possessing valid permits for all the 27 tank trucks owned by each of them. It is contended that out of the 28 tank trucks offered by the petitioner, except 14, the remaining tank trucks are with the permits for the exclusive transport of bitumen only. Therefore, it is contended that the offer of 27 tank trucks made by the respondents 2 and 3 cannot be equated with the 28 tank trucks offered by the petitioner as out of 28 trucks, only 14 trucks are having valid permits for the transport of petroleum products. It is contended that though in the tender, a condition was stipulated that the tank trucks are required for transport of Reduced Crude Oil , the said oil comes under the category of Petroleum products and as such, the respondents 2 and 3 are owning 27 trucks each with valid permits for transporting petroleum products and there is no restriction for their trucks for the transport of a particular item or commodity. It is further contended that the 1st respondent has already issued the Facts Acceptance and the same would amount to issuing the work order and soon after the issuance of the Facts Acceptance, the respondents 2 and 3 are entitled to commence their work. Therefore, it is contended that there is no illegality or any arbitrary exercise of considering the tender offered by the petitioner. 5.Mr.T.R.Rajagopalan, learned senior counsel appearing for the respondents 2 and 3 would submit that there is absolutely no illegality or irregularity in respect of confirming the tenders offered by the respondents 2 and 3. It is reiterated by the learned senior counsel that both the respondents 2 and 3 have offered 27 trucks each with valid permits for transporting the petroleum products. It is contended that though the petitioner had offered 28 tank trucks, among the said 28 trucks, admittedly, only 14 trucks are having valid permits to transport the petroleum products and the remaining trucks are having valid permits for the exclusive transport of bitumen. Therefore, it cannot be stated that the 1st respondent has confirmed the tenders offered by the respondents 2 and 3 in a mechanical or arbitrary manner or adopted any unfair procedure. https://hcservices.ecourts.gov.in/hcservices/ 6.I have given my careful and anxious consideration to the rival contentions put forward by either side and also perused the entire materials available on record including the affidavit filed by the petitioner; counter affidavits filed by the respondents 1 to 3 and the impugned Letters of Intent dated 24.06.2011, which is called as "Facts Acceptance" as per the document produced by the 1st respondent herein. 7.At the outset, it is to be stated that the petitioner as well as the respondents 2 and 3 have offered the same price bid amount to the tune of Rs.1.92. A perusal of the tender document discloses that the tenderers should also satisfy the condition of offering the maximum number of owned tank trucks as per clause 2.8.5 of the tender document, which reads as here under:- "2.8.5:- If tank trucks offered are more than the requirement then the tenderers in that particular ranking shall be further ranked based on the following order of priority and allocations shall be made only till such time the full requirement of the Tank Trucks is met and the tenderers who are ranked lower in that particular ranking may not get any allocation:- a.Maximum number of owned TTs offered by the tenderer; b.Maximum number of TTs offered." 8.A reading of the above said clause makes it crystal clear that the tenderer who offers the maximum number of tank trucks would be given priority. As far as the case on hand is concerned, it is seen that the petitioner had offered 28 Tank Trucks and the respondents 2 and 3 have offered 27 tank trucks each. But, as far as the petitioner is concerned, it is pointed out by the learned counsel for the first respondent that out of the said 28 trucks, only 14 trucks are having valid permits to transport the petroleum products and the remaining tank trucks are having valid permits for the exclusive transport of bitumen. The said factor is not disputed by the learned counsel for the petitioner. However, the learned counsel for the petitioner took enormous pain to contend that the bitumen is also one of the petroleum products and as such, the permits available with the petitioner for the transport of bitumen is enough for transporting any other petroleum products. I am unable to countenance such contention for the simple reason that the said permits are issued only for the exclusive transport of bitumen and the petitioner cannot violate the said permit by transporting any other petroleum products. Therefore, by no stretch of imagination, the possession of permits for the exclusive transport of bitumen could be equated with the possession of valid permits by the respondents 2 and 3 for each of their 27 trucks for transporting the petroleum products. Of course, it is mentioned in the tender document that the tank trucks are required for the transportation of Reduced Crude Oil. But the fact remains that the said Reduced crude oil is also one of the petroleum products. https://hcservices.ecourts.gov.in/hcservices/ Therefore, it goes without saying that the respondents 2 and 3 have offered more number of tank trucks than that of the petitioner. It is needless to state that the 1st respondent has exercised its power in a reasonable manner and the same cannot be construed to be an arbitrary exercise of power in confirming the tenders offered by the respondents 2 and 3. 9.At this juncture, it is relevant to refer the decision of the Hon'ble Apex Court in STERLING COMPUTERS LIMITED V. M&N PUBLICATION LIMITED reported in AIR 1996 SC 51, wherein the Apex Court has held as here under:- "Under some circumstances, a discretion has to be conceded to the authorities who have to enter into contract giving them liberty to assess the overall situation for purpose of taking a decision as to whom the contract be awarded and at what terms. If the decisions have been taken in bonafide manner although not strictly following the norms laid down by the Courts, such decisions are upheld on the principle laid down by Justice Holmes, that Courts while judging the constitutional validity of executive decisions must grant certain measure of freedom of 'play in the joints' to the executive." 10.It is further relevant to refer to the yet another decision of the Hon'ble Apex Court in KANHAIYA LAL AGRAWAL VS. UNION OF INDIA reported in AIR 2002 SC 2766, wherein the Apex Court has held as here under:- "6.It is settled law that when an essential condition of tender is not complied with, it is open to the person inviting tender to reject the same. Whether a condition is essential or collateral could be ascertained by reference to consequence of non-compliance thereto. If non- fulfillment of the requirement results in rejection of the tender, then it would be essential part of the tender otherwise it is only a collateral term. This legal position has been well explained in G.J.FERNANDEZ VS. STATE OF KARNATAKA AND OTHERS [1998 [2] SCC 488]". 11.The said decisions rendered by the Hon'ble Apex Court cited supra are also followed by a Division Bench of this court in M.VASUDEVAN V. C.EO., CHENNAI METROPOLITAN DEVELOPMENT AUTHORITY reported in AIR 2006 MADRAS 45, wherein the Division Bench has held as here under:- "5................. An order rejecting tender is not a quasi-judicial order nor is it even an administrative order which affects rights and liabilities. Hence, neither reasons have to be given in the said order nor opportunity of hearing has to be given before passing the said order." https://hcservices.ecourts.gov.in/hcservices/ 12.The principles laid down by the Hon'ble Apex court and by the Division Bench of this court in the decisions cited supra are squarely applicable to the facts of the instant case as in this case also the tender offered by the petitioner was rejected for the non-compliance of the tender condition as contemplated under clause 2.8.5 of the Tender Document. 13.It is also relevant to refer the yet another decision of the Hon'ble Apex Court regarding the scope of judicial review in awarding the tender in TATA CELLULAR V. UNION OF INDIA reported in 1994 [6] SCC 651. The Hon'ble Apex Court acknowledged that the principles of judicial review can apply to the exercise of contractual powers only with a view to prevent arbitrariness or favouritism. The Apex Court in the same decision has held that there are inherent limitations in the exercise of that power of judicial review. The Hon'ble Apex Court by upholding that the right to choose cannot be considered as an arbitrary power set out the following principles:- "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 on contract. 5]The Government must have freedom of contract." 14.In view of the principle laid down by the Hon'ble Apex Court in the decision cited supra and in view of the aforesaid reasons, this court is constrained to dismiss the writ petition as devoid of merits. No costs. Consequently, connected miscellaneous petitions are also dismissed. Sd/- Asst.Registrar /True Copy/ Sub.Asst.Registrar ap https://hcservices.ecourts.gov.in/hcservices/ To 1.The Senior Manager Chennai Petroleum Corporation Ltd., [A Group Company of Indian Oil Corporation Ltd.] Manali, Chennai 600 068. + 1 cc to Mr.P.R. Raman, Sr.49097 + 1 cc to Mr.R. Senthilkumar, Sr.12147 + 1 cc to Mr.S.K. Chandrakumar, Sr.48929 WP.No.15676/2011 GV(CO) Eu 18.8.11 https://hcservices.ecourts.gov.in/hcservices/