{"id":147473,"date":"2003-01-31T00:00:00","date_gmt":"2003-01-30T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/ms-sanghvi-movers-limited-vs-ms-oil-and-natural-gas-on-31-january-2003"},"modified":"2015-08-26T11:28:53","modified_gmt":"2015-08-26T05:58:53","slug":"ms-sanghvi-movers-limited-vs-ms-oil-and-natural-gas-on-31-january-2003","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/ms-sanghvi-movers-limited-vs-ms-oil-and-natural-gas-on-31-january-2003","title":{"rendered":"M\/S. Sanghvi Movers Limited vs M\/S. Oil And Natural Gas on 31 January, 2003"},"content":{"rendered":"<div class=\"docsource_main\">Madras High Court<\/div>\n<div class=\"doc_title\">M\/S. Sanghvi Movers Limited vs M\/S. Oil And Natural Gas on 31 January, 2003<\/div>\n<pre>       \n\n  \n\n  \n\n \n \n IN THE HIGH COURT OF JUDICATURE AT MADRAS\n\nDated: 31\/01\/2003\n\nCoram\n\nThe Hon'ble Mr. Justice P. SATHASIVAM\n\nWrit Petition No. 41170 of 2002\nand\nWPMP No. 60937 of 2002 and WVMP No. 1771 of 2002\n\nM\/s. Sanghvi Movers Limited,\nhaving its Regional Office at\nNo.121, Chennai-Bangalore Road,\nChembarambakkam-602 103,\nrepresented by its AGM (Operations)\nMr. R.K. Ozarkar.                    .. Petitioner.\n\n-Vs-\n\nM\/s. Oil and Natural Gas\nCorporation Limited,\nRegional Office: Southern Region,\nCMDA Building, 8th floor (East Wing),\n8, Gandhi Irwin Road, Egmore,\nChennai-8.                          .. Respondent.\n\nPetition under Article 226 of the Constitution of India,  for  issuance  of  a\nWrit of Mandamus, as stated therein.\n\nFor petitioner:- Mr.  T.K.  Bhaskar.\n\nFor respondent:- Mr.  G.  Masilamani, Senior\n                  Counsel for M\/s.  Sarvabhauman Associates.\n\n:ORDER\n<\/pre>\n<p>Messers.   Sanghvi Movers Limited, Chembarambakkam, have approached this Court<br \/>\nto issue a writ of mandamus to direct the respondent to  renew  the  contracts<br \/>\nentered into with the petitioner in respect of one Crane with Registration No.<br \/>\nof  the Cranes NL-02\/D 0691 for the full extension period of one year pursuant<br \/>\nto the tender No.  MAS\/TPT\/HYD.  CRANES\/TYPE III\/KG-CAU\/2000-2002<\/p>\n<p>2.  The case of the petitioner is briefly stated hereunder:<br \/>\nAccording to the petitioner, they engaged in the business of hiring Cranes for<br \/>\nthe last 14 years.  The petitioner company has been performing  satisfactorily<br \/>\nin  respect  of  their  contracts  right  from the time of supplying cranes to<br \/>\nrespondent company.    The  cranes  supplied  by  the  petitioner  have   been<br \/>\nfunctioning  in  respect  of  KrishnaGodavari and Cauvery Projects since 1990.<br \/>\nThe petitioner company has  bid  in  various  tenders  and  has  been  awarded<br \/>\ncontracts  for  the said cranes on hire from time to time and on each occasion<br \/>\nthe contract period in the tender has been stipulated as  2  +1  years.    The<br \/>\ncontract  period  is  granted  for  a  period  of  at  least 3 years to enable<br \/>\nsuccessful tenders to offer their services  efficiently  and  to  realize  the<br \/>\nvalue of   their  investments  which  is  substantial.    Pursuant  to  tender<br \/>\nnotification No.  MAS\/TPT\/HYD.CRANES\/TYPE III\/HG CAU\/2000-2002, the respondent<br \/>\ncompany has invited tenders for  hiring  of  diesel  hydraulic  truck  mounted<br \/>\ncranes  with  capacity  of lifting a minimum load of 20 MTS at 3 metres and 12<br \/>\nMTS at 6 Metres operating radius with 11 Metres left from  the  ground  level.<br \/>\nThe tender specifications mentioned in the document and the tender was invited<br \/>\nfor a total quantity of 14 Nos.  cranes for a period of 2 years with extension<br \/>\nof further  period  of one year at the sole discretion of the respondent.  The<br \/>\nperiod of contract mentioned in Clause 2 of the  agreements  executed  between<br \/>\nthe petitioner and the respondent for an initial period of two years which may<br \/>\nbe  extended  by one year in 2 instalments of 6 months each at sole discretion<br \/>\nof ONGC on the same rates,  terms  and  conditions,  subject  to  satisfactory<br \/>\nperformance, of Cranes and execution of the contract.  The petitioner has been<br \/>\nsatisfactorily performing  in  respect of each of the contracts.  The contract<br \/>\nperiod for the NL 02 D 0691 expired on 2-11-200 2.   The  respondent  extended<br \/>\nthe  contract for a temporary period of 3 months which period is terminable at<br \/>\nthe discretion of the respondent at a lower rate.  The respondent has  floated<br \/>\na  fresh  tender  for 17 numbers cranes in respect of the Krishna Godavary and<br \/>\nCauvery projects even before the contracts with the petitioner  have  expired.<br \/>\nThe  respondent  has not considered the fact that the petitioner has performed<br \/>\nsatisfactorily under the contract and extended the contract for  the  extended<br \/>\nperiod of  one  year.    No  opportunity  has  been given to the petitioner to<br \/>\nestablish a case for extension of the contract and the  respondent  has  acted<br \/>\nunilaterally and  in  violation  of  the  principles  of natural justice.  The<br \/>\nexercise of discretion by the respondent is arbitrary, unfair and unjust.  The<br \/>\npetitioner by their letter dated 7-11-2 002 arbitrarily extended the time  for<br \/>\n3 months instead of 6 months.  The petitioner has invested substantial sums in<br \/>\nrespect of the cranes put on hire with the respondent and was quite legitimate<br \/>\nexpectation  that  the  contracts  could  be  renewed for the extension period<br \/>\nmentioned in clause 2 of the agreements  entered  into  with  the  respondent.<br \/>\nHowever, the  respondent  has  failed  to  extend  the  same.  Having no other<br \/>\neffective remedy, filed the present writ petition  challenging  the  arbitrary<br \/>\nand mala fide action of the respondent.\n<\/p>\n<p>3.   On  15-11-2002  while  admitting  the above writ petition, in W.P.M.P.No.<br \/>\n60937\/2002, this Court granted interim order to the  limited  extent,  namely,<br \/>\nthe  respondent  shall  not finalise the awarding of the contract to any third<br \/>\nparty until further orders.  Now the respondent has filed W.V.M.P.No.  1771 of<br \/>\n2002 to vacate the said interim order.  In the counter affidavit, it is stated<br \/>\nthat since the petitioner does not have a legal  right  of  extension  of  the<br \/>\ncontract period,  he  cannot seek for the issue of Writ of a Mandamus.  As per<br \/>\nclause 2 of the contract between the parties, the duration of  contract  is  2<br \/>\nyears initially, the extension for a period of one year in 2 instalments is at<br \/>\nthe sole  discretion  of  the ONGC.  It is the exercise of this administrative<br \/>\ndecisions that is subject matter of challenge in this writ petition  and  this<br \/>\nCourt  may  not  sit  in  appeal  over an administrative decision taken by the<br \/>\nrespondent Corporation.  The crane bearing  No.    NL-02D-0691  which  is  the<br \/>\nsubject  matter  of  the  present  writ  petition  was taken on lease from the<br \/>\npetitioner&#8217;s associate company M\/ s.  Sanghvi Projects Limited on 7-9-2000 for<br \/>\na period of 3 years starting from  11-9-2000.    The  petitioner&#8217;s  period  of<br \/>\ncontract  with the respondent with regard to the deployment of the above crane<br \/>\ndrew to an end on 1-11-2002.  Based on  the  request  and  the  rate  offered,<br \/>\ninitially the  same  was  extended  for a period of 3 months.  Thereafter, the<br \/>\nrespondent with a team of qualified officers decision not to extend  and  flow<br \/>\ntenders inviting  offers  from  qualified persons.  The injunction restraining<br \/>\nthe respondent from awarding the contract with respect to the new tenders  for<br \/>\nthe period  2002-2004 against the petitioner crane no.  NL-02D-0691 is clearly<br \/>\nbeyond the scope of the main writ petition.  Since the  tender  for  2002-2004<br \/>\nhas  been  finalised  with respect to 3 brand new cranes at Rs.6,989\/- and the<br \/>\nletter of intent has been issued in favour of one Sanjib Kakatia on  8-4-2002,<br \/>\nthe interim  injunction  prayed  for  has  become  infructuous.   Similar writ<br \/>\npetition in W.   P.No.    39763\/2002  filed  by  the  sister  concern  of  the<br \/>\npetitioner  M\/s  Sanghvi  Projects  Limited  was  dismissed  by  this court on<br \/>\n10-12-2002.\n<\/p>\n<p>4.  In the light of the above pleadings, I have heard  Mr.    T.K.    Bhaskar,<br \/>\nlearned counsel for  the  petitioner  and  Mr.  G.  Masilamani, learned senior<br \/>\ncounsel for the respondent.\n<\/p>\n<p>5.  The only point for consideration  in  this  writ  petition  is  whether  a<br \/>\nMandamus can be issued, directing the respondent to renew the contract entered<br \/>\ninto with the petitioner in respect of one Crane for the full extension period<br \/>\nof one year, pursuant to the tender for 2000-2002?\n<\/p>\n<p>6.  Mr.   T.K.    Bhaskar, learned counsel for the petitioner, after taking me<br \/>\nthrough the terms and conditions of the tender and the agreement  between  the<br \/>\nparties,  would contend that the action of the respondent in not extending the<br \/>\ncontracts in  respect  of  Crane  No.    NL-02D-091  for  one  year  with  two<br \/>\ninstalments is  arbitrary,  unjust  and unfair.  He further contended that the<br \/>\naction of the respondent in not exercising its discretion against the contract<br \/>\namounts to abuse of discretion and bad  in  law.    The  respondent  has  also<br \/>\ndeviated  from  the  longstanding  policy  in  extending  the contract for the<br \/>\nextended period upon the satisfactory performance by the petitioner.  He  also<br \/>\ncontended  that  the  petitioner was under the legitimate expectation that the<br \/>\ncontract in respect of cranes hired by the respondent could be renewed for the<br \/>\nfull extension  period  upon  the  expiry  of  the  primary  contract  period.<br \/>\nAccording to him, in view of the satisfactory performance of the petitioner in<br \/>\nrespect  of  contract,  the  action  of the respondent ignoring their claim is<br \/>\ncontrary to public interest and violative of Articles  14,  19and  21  of  the<br \/>\nConstitution of India.\n<\/p>\n<p>On the other  hand,  Mr.    G.    Masilamani,  learned  senior counsel for the<br \/>\nrespondent, would contend that in the absence of any legal right of  extension<br \/>\nof contract,  a  Writ  of  Mandamus  cannot be issued.  He also contended that<br \/>\nsince the respondent Corporation received lower offers during the bid for  new<br \/>\ntender   floated   for   2002-2004,  the  tender  committee  after  series  of<br \/>\ndeliberations, decided to use imported cranes to tender which is  one  of  the<br \/>\nessential requirement of fresh tender 2002-2004 and to get the best out of the<br \/>\nmarket; hence  their action cannot be faulted with.  He further contended that<br \/>\nthis Court exercising jurisdiction under Article 226 of the Constitution,  may<br \/>\nnot  sit  in  appeal  over  an administrative decision taken by the Government<br \/>\nBody, more particularly the contract  in  question  is  non-statutory  falling<br \/>\npurely in the realm of private contract.\n<\/p>\n<p>7.  I have carefully considered the rival submissions.\n<\/p>\n<p>8.   In order to appreciate the contentions raised by both sides, it is useful<br \/>\nto refer Clause (2) of the Agreement dated 6-12-2 000 between the ONGC and the<br \/>\npetitioner which reads as under:\n<\/p>\n<p>&#8220;2.  DURATION OF CONTRACT (2 years +1 year)<br \/>\n2.1 The period of contract is from 02\/11\/2000 to  01\/11\/2002  for  an  initial<br \/>\nperiod of TWO years.\n<\/p>\n<p>2.2  The  period of contract may be extended by one year in 2 instalments of 6<br \/>\nmonths each  at  sole  discretion  of  ONGC  on  the  same  rates,  terms  and<br \/>\nconditions,  subject  to  satisfactory performance, of Cranes and execution of<br \/>\nthe contract.&#8221;\n<\/p>\n<p>It is clear that the period of contract is initially for 2 years and the  same<br \/>\nmay be extended for one year in two instalments of six months each at the sole<br \/>\ndiscretion of  the  ONGC.  It is also clear that the said extension is subject<br \/>\nto sole discretion of  the  ONGC  subject  to  various  other  factors  namely<br \/>\nsatisfactory performance,  of  Cranes  and  execution of the contract.  In the<br \/>\nlight of the terms of agreement, as rightly contended by  the  learned  senior<br \/>\ncounsel  for  the  respondent,  the  extension  of  one  year  period  in  two<br \/>\ninstalments of 6 months each rests on the sole discretion of  the  respondent.<br \/>\nNo  doubt,  the  discretion has to be exercised fairly, justly and reasonably.<br \/>\nIt is the admitted case of the petitioner that after the expiry of the  period<br \/>\nof two years, the contract was extended only for a period of 3 months which is<br \/>\npermissible at  the  discretion  of  the  respondent at a lower rate.  Learned<br \/>\ncounsel for the petitioner would contend that having spent huge investment, on<br \/>\nthe legitimate expectation that he would be allowed to continue for  the  full<br \/>\nextended  period  of one year, the respondent is not justified in limiting the<br \/>\nextended period only for 3 months.  In support of his contention that exercise<br \/>\nmust be governed by a rule of law, he relied on three decisions in  (i)  <a href=\"\/doc\/121952\/\">UNION<br \/>\nOF INDIA  v.    DINESH  ENGINEERING  CORPORATION<\/a> ((2001) 8 Supreme Court Cases\n<\/p>\n<p>491); ( ii) <a href=\"\/doc\/349643\/\">PUNJAB COMMUNICATIONS LTD.  v.  UNION OF INDIA AND OTHERS<\/a>  ((1999)<br \/>\n4 Supreme  Court  Cases  727;  and  (iii)  <a href=\"\/doc\/1238017\/\">MAHABIR  AUTO STORES v.  INDIAN OIL<br \/>\nCORPORATION (AIR<\/a> 1990  Supreme  Court  1031).    In  the  light  of  the  said<br \/>\ncontention,  I  have carefully perused the facts in those cases and the dictum<br \/>\nlaid down therein.  Absolutely there is no doubt about the proposition of  law<br \/>\nenunciated therein.    In  our  case, I have already extracted the duration of<br \/>\ncontract namely initial period of 2 years and  extended  period  of  one  year<br \/>\nsubject  to  sole  discretion of ONGC on the same rates, terms and conditions,<br \/>\nsatisfactory performance of Cranes and execution of contract, etc.  It is  the<br \/>\ndefinite  case  of  the  respondent  that  the discretion of not extending the<br \/>\ncontract period has been exercised by the ONGC  after  much  deliberation  and<br \/>\nafter  taking  into  consideration  the highly competitive and improved market<br \/>\ncondition where crane operators have  offered  new\/imported  cranes  at  lower<br \/>\nrates.    It   is   also  stated  that  after  series  of  deliberations,  the<br \/>\nqualifications of the participants was re-cast in order to broaden the  vendor<br \/>\nbase and to increase  the  competition.    Mr.  G.  Masilamani, learned senior<br \/>\ncounsel for the respondent, by relying on a decision of the Supreme  Court  in<br \/>\n<a href=\"\/doc\/928900\/\">STATE OF WEST  BENGAL  v.    NIRANJAN SINGHA,<\/a> reported in (2 001) 2 M.L.J.  24<br \/>\n(S.C), would contend that the action of the  respondent  inviting  fresh  bids<br \/>\ncannot  be  said to be arbitrary and there is no question of applying doctrine<br \/>\nof legitimate expectation.  In  the  said  decision,  the  respondent  therein<br \/>\nrequested  the  Executive Engineer concerned for extension of the agency for a<br \/>\nperiod of another one year in terms  of  Clause  5  of  the  agreement  having<br \/>\ncomplied with the conditions stated therein.  The appellant therein instead of<br \/>\nextending  the  period  of  agency  in favour of the respondent, invited fresh<br \/>\nbids; hence a writ petition was filed by the  respondent  in  the  High  Court<br \/>\nseeking for  quashing  of  notification  calling  for fresh bids.  The learned<br \/>\nsingle  Judge  directed  for  consideration  of  the  representation  of   the<br \/>\nrespondent and ultimately the writ petition was allowed by upholding the claim<br \/>\nof the respondent for renewal of the agreement for another period of one year.<br \/>\nThe matter  was  carried  in  appeal  to the Division Bench.  On behalf of the<br \/>\nrespondent the contention put forth before the Court was that Clause 5 of  the<br \/>\nagreement  entered  into between the appellant and the respondent, involved an<br \/>\nelement of &#8216;legitimate expectation&#8217; and non-consideration of  the  same  would<br \/>\namount  to  arbitrary  exercise of the power and, therefore, he learned single<br \/>\nJudge was justified in issuing the writ.  The Division Bench upheld the  order<br \/>\nmade  by  the  learned  Single  Judge,  hence  appeal  to  the  Supreme Court.<br \/>\nDisapproving the view expressed by the High Court, the Supreme Court has held,<br \/>\n(para 4)<\/p>\n<p>&#8220;4.  We may notice that the distinction sought to be made by  the  High  Court<br \/>\nthat this is not a case involving grant of a fresh agency but extension of the<br \/>\nexisting one  does  not  make  much  sense.    An extension of an agreement or<br \/>\nrenewal is granted on the expiry of the  period  of  the  existing  agreement.<br \/>\nEither  the  extension  or the renewal of the existing agreement may be on the<br \/>\nsame terms or on different terms.  If  it  is  a  case  of  extension  of  the<br \/>\nexisting  agreement  on  the  same terms and conditions and such consideration<br \/>\ngives rise to a question  of  legitimate  expectation  being  a  part  of  the<br \/>\nconcerned agreement, economic consideration of getting higher bid for the same<br \/>\nperiod would be a relevant consideration.  If the Governmental authorities had<br \/>\nfound that it would be feasible to have the agency, as in the present case, on<br \/>\nfresh  terms  by enhancing the amount payable to the Government, it would be a<br \/>\nrelevant factor and in such a case it  cannot  be  said  that  the  legitimate<br \/>\nexpectation  of  the  respondent had been affected because the public interest<br \/>\nwould out-weight the extension of the period of the agreement.   The  doctrine<br \/>\nof &#8220;Legitimate expectation&#8221; is only an aspect of Art.14 of the Constitution in<br \/>\ndealing  with the citizens in a non-arbitrary manner and thus, by itself, does<br \/>\nnot give rise to an enforceable right but in testing the action taken  by  the<br \/>\nGovernment  authority  whether  arbitrary  or otherwise, it would be relevant.<br \/>\nThe decision in <a href=\"\/doc\/298443\/\">FOOD CORPORAITODN OF INDIA v.   M\/S.    KAMDHENU  CATTLE  FEED<br \/>\nINDUSTRIES,<\/a> (1993) 1 S.C.C.  71 does not lay down any principle which detracts<br \/>\nfrom what  we  gave  stated  now.    In a case where the agency is granted for<br \/>\ncollection of toll or taxes, as in the present case, it can  easily  discerned<br \/>\nthat  the  claim  of  the respondent for extension of the period of the agency<br \/>\nwould not come in the way  of  the  Government  if  it  is  economically  more<br \/>\nbeneficial to have a fresh agreement by enhancing the consideration payable to<br \/>\nthe Government.    In  such an event, it cannot be said that the action of the<br \/>\nGovernment inviting fresh bids is arbitrary.   Moreover,  the  respondent  can<br \/>\nalso participate  in the tender process and get his bid considered.  Hence, we<br \/>\ndo not think that the view taken by the High Court can be justified.&#8221;\n<\/p>\n<p>Here, in our case in the counter affidavit the respondent has pointed out  new<br \/>\ndeveloped  Cranes  and  reduction  in  rate  by inviting competitive bid, etc.<br \/>\nApart from these details, I have already referred to the duration of  contract<br \/>\nwhich  clearly  shows  that  the  period  of contract is for two years and the<br \/>\nextension in a period of one year in 2 instalments of 6 months each is at  the<br \/>\nsole discretion  of  ONGC  subject  to  fulfilling  certain terms.  Though the<br \/>\npetitioner was granted extension for a period of 3  months,  in  view  of  the<br \/>\ncompetitive  offers,  availability of new model Cranes, the respondent decided<br \/>\nto go for a fresh tender.  In such a circumstance, as observed by the  Supreme<br \/>\nCourt in (2001) 2 M.L.J.  24 (S.C) (cites supra), the proposed fresh tender is<br \/>\neconomically more  beneficial.  In such a circumstance, it cannot be said that<br \/>\nthe action of the ONGC inviting fresh bids is arbitrary.  As  rightly  pointed<br \/>\nout, the petitioner can also participate in the tender process and get his bid<br \/>\nconsidered.   Hence,  I  do  not  find  any  valid ground to issue Mandamus as<br \/>\nclaimed by the petitioner.  It is also brought to my notice that in respect of<br \/>\nsimilar claim made by  the  sister  concern  namely  M\/s.    Sanghvi  Projects<br \/>\nLimited, R.    Balasubramanian,  J.,  after  considering  similar contentions,<br \/>\ndismissed W.P.No.  397 63\/2002 on 10-12-2002.\n<\/p>\n<p>9.  In the result, I do not find any merit in the  claim  of  the  petitioner;<br \/>\nconsequently the  Writ  Petition  fails  and the same is dismissed.  No costs.<br \/>\nConsequently, connected W.P.M.P., and W.  V.M.P., are closed.<br \/>\n31-01-2003<\/p>\n<p>Internet :  Yes<br \/>\nR.B.\n<\/p>\n<p>To:-\n<\/p>\n<p>M\/s.  Oil and Natural Gas<br \/>\nCorporation Limited,<br \/>\nRegional Office:  Southern Region,<br \/>\nCMDA Building, 8th floor (East Wing),<br \/>\n8, Gandhi Irwin Road, Egmore,<br \/>\nChennai-8.\n<\/p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Madras High Court M\/S. Sanghvi Movers Limited vs M\/S. Oil And Natural Gas on 31 January, 2003 IN THE HIGH COURT OF JUDICATURE AT MADRAS Dated: 31\/01\/2003 Coram The Hon&#8217;ble Mr. Justice P. SATHASIVAM Writ Petition No. 41170 of 2002 and WPMP No. 60937 of 2002 and WVMP No. 1771 of 2002 M\/s. Sanghvi Movers [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,13],"tags":[],"class_list":["post-147473","post","type-post","status-publish","format-standard","hentry","category-high-court","category-madras-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>M\/S. Sanghvi Movers Limited vs M\/S. 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