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Bombay High Court
Agrawal Roadlines Pvt. Ltd. vs Indian Oil Corporation Ltd. And … on 1 October, 2002
Equivalent citations: 2003 (1) ARBLR 600 Bom, III (2003) BC 234, 2003 (1) BomCR 495, 2003 (1) MhLj 610
Author: R Lodha
Bench: R Lodha, D Bhosale


JUDGMENT

R.M. Lodha, J.

1. This group of four writ petitions relates to identical issues and is, therefore, heard and disposed of together.

2. Rule in all the four writ petitions. Returnable forthwith. Service is waived by the concerned respondents. Looking to the controversy involved, we dispose of rule finally at this stage.

3. The Indian Oil Corporation Ltd. (IOC), Hindustan Petroleum Corporation Ltd. (HPCL) and Bharat Petroleum Corporation Ltd, (BPCL), invited tenders for award of separate contracts regionwise for transportation of bulk LPG by road in tank trucks. Advertisement to that effect was published in newspapers whereby sealed tenders were invited under a two bid system, viz. Credential Bid and Price Bid from the eligible tenderers. The petitioners herein, viz. M/s Agrawal Roadlines Pvt Ltd., M/s Agrawal Automobile, M/s Agrawal Transport Company were issued tender documents on payment of requisite amount of Rs. 1000/- for each tender. The closing date for credential bid was 11th July 2002 which was extended to 22nd July 2002. M/s Agrawal Roadlines Pvt. Ltd. (petitioner in Writ Petition No. 2525/02 as well as No. 2527/02) submitted one tender to IOC and the other to BPCL. Along with the tender form submitted to the IOC, a demand draft of Rs. 12000/- purchased in the name of HPCL was annexed while with the other tender form tendered to BPCL, a demand draft of Rs. 12000/- purchased in the name of IOC was submitted. M/s Agrawal Automobiles (petitioner in Writ Petition No. 2528/02) submitted tender to HPCL but along with the said tender, a demand draft of Rs. 12000/- drawn in favour of IOC was annexed. Insofar as M/s Agrawal Transport Company (petitioner in Writ Petition No. 2526/02) is concerned, tender form was submitted to the IOC but along therewith, a demand draft of Rs. 12000/- issued in favour of BPCL was annexed. Since the demand drafts annexed by the petitioners with the tender forms were not found to be in the name of the Corporation to which tender was submitted, the petitioners’ credential bids were rejected, giving rise to present writ petitions.

4. The facts, which are reflected from the pleadings and the documents available before us, leave no manner of doubt that the demand drafts were, in fact, purchased by the petitioners for the concerned Corporations in the sum of

Rs. 12,000/- each for the purposes of credential bid but seems to have got interchanged. Such interchange could, at best, be a mix up or inadvertence or mistake. The question before us is whether on this ground the respondents, viz. IOC, HPCL and BPCL were justified in rejecting the petitioners’ credential bids.

5. As already noted by us, the sealed tenders were invited from the bidders under a two bid system. Viz. Credential Bid and Price Bid. Tenderers were required to submit earnest money deposit of Rs. 12000/- per tender along with the credential bid. The petitioners did purchase demand drafts in the sum of Rs. 12000/- per tender for submission for the purposes of the credential bid but because of inadvertence or mistake or clerical slip, the demand drafts got mixed up and interchanged. In our considered view, the respondents, viz. The Indian Oil Corporation Ltd., Hindustan Petroleum Corporation Ltd. and Bharat Petroleum Corporation Ltd. were not justified in rejecting the petitioners’ bids by adopting a very hypertenchnical stance. The mistake committed by the petitioners by annexing the demand drafts issued in the name of other Corporation deserved to be condoned and waived as it was only a technical irregularity of little or no significance. Before us, Mr. Chirag Balsara, the learned counsel appearing for IOC was fair in leaving the matter to the Court but Mr. Siodia and Ms Sheeja John appearing for HPCL and BPCL argued that if the bid was not strictly in accord with the terms and conditions, thereof, such bid was liable to be rejected and in such administrative decision, no interference is called for. Mr. Siodia cited the judgments of the Apex Court in R. D. Shetty v. International Airport Authority, and G. J. Ferenandez v. State of Karnataka, .

6. We shall first deal with the judgment of the Apex Court in Poddar Steel Corporation v. Ganesh Engineering Works and Ors., cited by Mr. Chagla, the learned Senior Counsel. In that case, in response to a notice inviting tenders by the Diesel Locomotive Works, Indian Railways, in connection with disposal of one lot of Ferrous Scrap, number of tenders were submitted inter alia by Poddar Steel Corporation, Ganesh Engineering Works and other intending purchasers. The tenders of Ganesh Engineering Works and some other bidders were rejected as defective and Poddar Steel Corporation’s bid was accepted being the highest. Ganesh Engineering Works challenged the decision of the Diesel Locomotive Works, Indian Railways, before Allahabad High Court, contending that the tender submitted by them was not defective and that Poddar Steel Corporation did not satisfy condition 6 of tender notice as earnest money was offered by Banker’s cheque other than State Bank of India as mentioned in that clause. The writ petition filed by Ganesh Engineering Works was resisted on the grounds that the said Ganesh Engineering Works having not deposited the earnest money at all, were not entitled to a consideration of its tender and that Poddar Steel Corporation had substantially complied with the requirement by sending along with tender a Banker’s cheque, marked and certified by the Union Bank of India which good for payment. The High Court held that the tender of Ganesh Engineering Works was rightly rejected for failure to deposit the earnest money, but still the Writ Petition of Ganesh Engineering Works was allowed on the finding that Poddar Steel Corporation did not satisfy the condition No. 6 of the

tender notice as the earnest money was offered by the Banker’s Cheque of a bank other than the State Bank of India mentioned in the said clause. Poddar Steel Corporation challenged the order of the High Court before the Apex Court and in para 6 of the report, the Apex Court observed, thus :

“6. It is true that in submitting its tender accompanied by a cheque of the Union Bank of India and not of the State Bank clause No. 6 of the tender notice was not obeyed literally, but the question is as to whether the said non-compliance deprived the Diesel Locomotive Works of the authority to accept the bid. As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect to every term mentioned in the notice in meticulous detail, and is not entitled to waive even a technical irregularity of little or no significance. The requirements in a tender notice can be classified into two categories – those which lay down the essential conditions of eligibility and the others which are merely ancillary or subsidiary with the main object to be achieved by the condition. In the first case the authority issuing the tender may be required to enforce them rigidly. In the other cases it must be open to the authority to deviate from and not to insist upon the strict literal compliance of the condition in appropriate cases. This aspect was examined by this Court in G. J. Fernandez v. State of Karnataka, , a case dealing with tenders. Although not in an entirely identical situation as the present one, the observations in the judgment support our view. The High Court has, in the impugned decision, relied upon Ramana Dayaram Shetty v. International Airport Authority of India, , but has failed to appreciate that the reported case belonged to the first category where the strict compliance of the condition could be insisted upon. The authority in that case, by not insisting upon the requirement in the tender notice which was an essential condition of eligibility, bestowed a favour on one of the bidders, which amounted to illegal discrimination. The judgment indicates that the Court closely examined the nature of the condition which had been relaxed and its impact before answering the question whether it could have validly condoned the shortcoming in the tender in question. This part of the judgment demonstrates the difference between the two categories of the conditions discussed above. However it remains to be seen as to which of the two clauses the present case belongs.”

Again in para 8 of the report it was held by the Supreme Court thus : “8. In the present case, the certified cheque of the Union Bank of India drawn on its own branch must be treated as sufficient for the purpose of achieving the object of the condition and the Tender Committee took the abundant caution by a further verification from the bank. In this situation it is not correct to hold that the Diesel Locomotive Works had no authority to waive the technical literal compliance of Clause 6, specially when it was in its interest not to reject the said bid which was the highest. We, therefore, set aside the impugned judgment and dismiss the writ

petition of the respondent no. 1 filed before the High Court. The appeal. is accordingly allowed with costs throughout.”

7. The aforesaid law laid down by the Apex Court in Poddar Steel Corporation is squarely and fully applicable to the facts and circumstances of the present case. The only mistake committed by the petitioners was that they annexed the demand draft issued in favour of other Corporation. That was only a technical irregularity and did not in the facts of the case could be said to violate the essential conditions of the tender notice. It was only because of inadvertence that the demand drafts purchased by the petitioners got interchanged. Under the terms and conditions of the tender notice, inter alia, for the satisfaction of financial credibility of the bidder, the condition is that earnest money of Rs. 12000/- by way of crossed demand draft/pay order from the scheduled bank in favour of concerned corporation is deposited with the bid. The Corporations, viz. IOC, HPCL and BPCL ought not to have given strict construction to Clause 7 of the tender which provided that the earnest money deposit as provided in Clauses 5 and 6 by crossed Demand Draft/Pay Order drawn on any Scheduled Bank, be in favour of concerned Corporation like Indian Oil Corporation Ltd. (MD), Bharat Petroleum Corporation Ltd. (MD) and Hindustan Petroleum Corporation (MD). The essential clause concerning an interest free earnest money deposit of Rs. 12000/- finds place in Clause 6 which, of course, was required to be construed strictly, but Clause 7 could not have been given effect in meticulous detail as has been sought to be given when the petitioners did purchase demand draft in favour of concerned corporation in the required sum from scheduled bank – the only mistake, these drafts got interchanged at the time of submission of tenders and this mistake reflected at all necessarily places in the tender form. The contention of Mr. Siodia that this Court should not interfere in administrative decision when admittedly there was some mistake by the petitioners in the facts of the present case does not deserve to be accepted. If an administrative decision is based on hypertcchnical approach by treating a non-essential condition of the tender notice as essential condition, such administrative decision shall be ceased to be fair and lack reasonableness warranting interference in suitable and deserving cases under Article 226.

8. The judgments of the Apex Court in Ramana Dayaram Shetty v. International Airport Authority of India, and G. J. Fernandez v. State of Karnataka, relied upon by the learned counsel Mr. Siodia, need not detain us as in Poddar Steel Corporation (supra) the Apex Court considered the aforesaid judgments and observed in para 6 which we have noted above.

9. Consequently, we allow all the four writ petitions by following order :

(i) The respondents, viz. The Indian Oil Corporation Ltd. Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. are directed to reconsider the petitioners credential bids immediately treating the earnest money deposited by the petitioners in accordance with tender terms and if credential bids submitted by the petitioners are otherwise found to be in order, consider the tenders (price bids) submitted by the petitioners accordingly.

(ii) We direct the petitioners to collect the demand drafts from the respective Corporation for resubmission of the said demand drafts to the concerned Corporation immediately and in that connection we also direct the respondents to hand over the demand drafts received by them with the tender forms to the petitioners for their resubmission to the concerned Corporation.

10. We clarify that reconsideration of the petitioners credential bids by the respondents shall not be dependent on resubmission of demand drafts immediately is it may take some time since the petitioners shall have to first get the demand drafts collected from the respective Corporation and then resubmit to the concerned Corporation. However, the petitioners shall positively resubmit the demand drafts to the concerned Corporation by 4 p.m. on 3rd October 2002.

11. Since the tender price bids are to be reopened on 3rd October 2002 and very little time is left, 2nd October 2002 being holiday, we have orally directed Mr. Siodia, Ms. Sheeja John and Mr. Chirag Balsara, learned counsel for Hindustan Petroleum Corporation, Bharat Petroleum Corporation and the Indian Oil Corporation Ltd. respectively for communication of this order to concerned authorities for compliance of the order.

12. Parties may be provided ordinary copy of this order duly authenticated by Court Associate on payment of usual copying charges.


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