Dismissed

Binu Prabhakar v. Indian Oil Corporation

Kerala HC6 Mar 2017WP(C)/2412/2017

Case brief

AI extract

What is this about?

The Kerala High Court dismissed a writ petition seeking to quash the cancellation of a tender invitation. The petitioner, a low-rate bidder, challenged the cancellation as arbitrary and motivated by malafides. The court found the cancellation was valid as the bid, though compliant with price bands, was not viable for the respondent. The petition was dismissed in principle but with an observation a

What did the court decide?

Writ petition dismissed. However, petitioner free to apply to carry out work at existing rates until re-tender.

Binu Prabhakar Vs Indian Oil Corporation — Contract and Commercial Disputes | Kerala HC (2017)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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MONDAY, THE 6TH DAY OF MARCH 2017/15TH PHALGUNA, 1938

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WP(C).No. 2412 of 2017 (B)

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PETITIONER:

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BINU PRABHAKAR, PROPRIETOR, B.T CYLINDERS PLOT NO 318/PART,UMAYANALLOOR INDUSTRIAL ESTATE, KOLLAM 691 589.

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BY ADVS.DR.K.P.SATHEESAN (SR.) SRI.P.MOHANDAS (ERNAKULAM) SRI.S.VIBHEESHANAN SRI.K.SUDHINKUMAR

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RESPONDENT(S):

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1. INDIAN OIL CORPORATION LTD, REPRESENTED BY ITS DIRECTOR(MARKETING) G9,ALI YAVAR JUNG MARG, BANDRA (EAST) MUMBAI 400 051.

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2. THE DEPUTY GENERAL MANAGER (CONTRACTS CELL), INDIAN OIL CORPORATION LTD, SOUTHERN REGIONAL OFFICE INDIAN OIL BHAVAN NO 139, NUNGAMBAKKAM HIGH ROAD, CHENNAI 600 034.

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3. THE DEPUTY GENERAL MANAGER (LPG), INDIAN OIL CORPORATION LTD KERALA STATE OFFICE, PANAMPILLY NAGAR, KOCHI 682 036.

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R1-R3 BY ADVS. SRI.M.GOPIKRISHNAN NAMBIAR SRI.P.GOPINATH SRI.K.JOHN MATHAI

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SRI.JOSON MANAVALAN SRI.KURYAN THOMAS

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 03-03-2017, THE COURT ON 06.03.2017 DELIVERED THE FOLLOWING:

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K.V.

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WP(C).No. 2412 of 2017 (B)

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APPENDIX

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PETITIONER(S)' EXHIBITS

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EXHIBIT P1 TRUE COPY OF THE LETTER GIVEN BY THE PETITIONER TO THE 3RD RESPONDENT DATED 14-03-2016 EXHIBIT P2 TRUE COPY OF THE LAST EXTENSION LETTER GIVEN BY THE 3RD RESPONDENT DATED 21-12-2016 EXHIBIT P3 TRUE COPY OF THE TENDER NOTIFICATION NO RCC/SR/PT/23/KESO/16-17 PUBLISHED BY THE 2ND RESPONDENT IN THE WEBSITE. EXHIBIT P4 TRUE COPY OF THE GENERAL INSTRUCTIONS PUBLISHED BY THE 2ND RESPONDENT IN THE WEBSITE EXHIBIT P5 TRUE COPY OF THE CIRCULAR NO 4/3/07 DATED 3-3-2007 ISSUED BY THE CHIEF VIGILANCE COMMISSION, GOVERNMENT OF INDIA EXHIBIT P6 TRUE COPY OF THE BID SUBMISSION CONFIRMATION OF TENDER ALONG WITH (PERCENTAGE BOQ) UPLOADED BY THE PETITIONER DATED 22-07-2016 EXHIBIT P7 TRUE COPY OF THE INFORMATION GIVEN BY THE 2ND RESPONDENT TO THE PETITIONER DATED 23-12-2016 EXHIBIT P8 TRUE COPY OF THE INTIMATION OF THE CANCELLATION OF THE TENDER REFERENCE NO RCC/SR/PT/23/KESO/16-17 DATED 4-12017 PUBLISHED BY THE 2ND RESPONDENT EXHIBIT P9 TRUE COPY OF THE INTIMATION PUBLISHED IN THE PORTAL OF THE RESPONDENTS EXHIBIT P10 TRUE COPY OF THE CIRCULAR DATED 21-03-2006 EXHIBIT P11 TRUE COPY OF THE OFFER MADE BY THE PETITIONER TO THE 3RD RESPONDENT DATED 15-01-2017 EXHIBIT P12 TRUE COPY OF THE REPLY GIVEN BY THE 3RD RESPONDENT DATED 16-01-2017 EXHIBITS P13 COPY OF THE TENDER NO KESO/LPG-O/PT/02/2014-15 DUE ON 21.11.2014. EXHIBIT P14 COPY OF THE WORK ORDER IN RESPECTR OF KOLLAM PLANT AS TENDER NO KESO/LPG-O/PT/01/2014-15 DUE ON 12.12.2013. EXHIBIT P15 COPY OF THE NOTIFICATION PUBLISHED BY THE 4RD RESPONDENT IN THE WEBSITE.

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-2-

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WPC 2412 OF 2017:

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-2-

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RESPONDENT(S)' ANNEXURES

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R1(A) COPY OF THE PAGES OF THJE TENDER NO RCC/SR/PT/23/KESO/16-17 CONTAINING CLAUSES 13.4 AND

14 OF THE GCC.

/TRUE COPY/

P.A.TO JUDGE

K.V.

SHAJI P. CHALY, J.

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W.P.(C). NO. 2412 OF 2017

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Dated this the 6^th day of March, 2017

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JUDGMENT

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This writ petition is filed by the petitioner seeking to quash Ext. P8 intimation published by the second respondent cancelling tender No. RCC/SR/PT/23/KESO/1617 dated 04.01.2017 and for other related reliefs. Material facts for disposal of the writ petition are as follows:-

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Second respondent invited tenders for statutory testing and painting of cylinder work at LPG Bottling Plant, Parippally, Kollam as per Ext. P3 tender notification. As per Ext. P4 general instruction the tenderers are at liberty to quote '+/-' 10% of the estimated cost. The estimated cost is determined on the basis of the rate prevailing in 2015. However, the petitioner quoted the rate +9.8% of the estimated cost and the petitioner was the lowest tenderer. Thereafter, the second respondent negotiated with the petitioner and the petitioner still lowered the rate to +8%. Thus, the rate quoted by the petitioner is within the limit

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W.P.(C). NO. 2412 OF 2017 2

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prescribed by the second respondent and the petitioner was under the bonafide belief that the contract will be awarded in his favour. That apart, it is stated that petitioner was carrying on very same work from 2008 onwards without any complaint from any corner. However, quite surprisingly second respondent cancelled the tender stating that the rate quoted by the petitioner is high and the said reasoning is legally unsustainable as it is within the limits prescribed by the second respondent. Therefore, the cancellation is vitiated with malafides and ill motives and it is thus seeking to quash Ext. P8 and other related reliefs this writ petition is filed.

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Respondents have filed a statement refuting the allegations, claims and demands raised by the petitioner. Apart from other contentions, it is submitted that the writ petition is not maintainable as Ext. P8 has not violated any of the fundamental right of the petitioner and there is no public law element involved in the subject issue raised by the petitioner in the writ petition. The matter is purely

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W.P.(C). NO. 2412 OF 2017 3

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commercial in nature and the petitioner's attempt is only to protect his commercial interests by wrongly invoking the writ jurisdiction. Petitioner who has participated in the tender without demur or protest, cannot turn around and challenge the terms and conditions of the tender or contend contrary to the express and unambiguous terms of the tender. That apart is stated that it is settled law that judicial review cannot be exercised to examine terms and conditions of tender in cases except, where terms and conditions are made to suit one particular person and eliminate others. That apart it is stated that the submission of a bid/tender in response to a notice inviting tenders, is only an offer, which is not under any obligation, to be accepted. All that the participating bidders are entitled to is a fair, equal and nondiscriminatory treatment in evaluation of their bids/tenders. Therefore, petitioner has no right to insist that his bid/tender should be accepted merely because he is the L1 tenderer. That apart it is contended that Clause 15 of the General Instructions to Bidders indicates only the price

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W.P.(C). NO. 2412 OF 2017

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band within which the bidder has to bid and that if a bidder bids beyond that price band such bid will be summarily rejected without any consideration. The said clause does not by any means suggest that the tendering authorities are obliged to, or has no option but to accept within that band. Other terms and conditions of the invitation to bid are also pressed into service so as to justify the action of the respondents.

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A reply affidavit is filed by the petitioner reiterating the stand adopted in the writ petition and also contending that at present the cylinders are being transported from Kollam to Kochi and the maintenance works of the cylinders are carried out at Kochi. That apart it is stated that consequent to the cancellation of the petitioner's continuance after the tender period the cylinders are not tested properly thereby causing innumerable concern to the public at large. Therefore, petitioner seeks to grant the relief sought for by the petitioner in the writ petition.

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W.P.(C). NO. 2412 OF 2017 5

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Heard learned Senior Counsel for the petitioner and learned Standing Counsel appearing for the respondents and perused the documents on record and the pleadings put forth by the respective parties.

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The discussions made above will clearly explain the circumstances under which the petitioner has approached this Court. There is no concluded contract by and between the petitioner and the respondents. The offer made by the petitioner based on the tender invited by the respondents are all admitted. However, the respondents were not satisfied with the amounts offered by the petitioner and consequent to which petitioner was invited for negotiation and therefore petitioner has lowered his bid from +9.8% to +8%, still the respondents were not satisfied. The paramount contention advanced by the learned Senior Counsel for the petitioner is that the bid was submitted by the petitioner within the stipulations put forth by respondents, as per the invitation of the tender and therefore the cancellation made as per Ext. P8 of the tender

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W.P.(C). NO. 2412 OF 2017 6

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itself cannot be sustained. The issue first to be considered

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is whether petitioner has any legal right to approach this Court and seek a direction to accept the bid of the petitioner, after quashing Ext. P8 order passed by the authority cancelling the tender itself. As pointed by the learned counsel for the respondents there is no concluded contract. The tender submitted by the petitioner is only an offer, which offer is not accepted by the respondents. Even according to the petitioner as per the terms and conditions of the invitation to bid, evident from Ext. P3 the respondents are entitled to reject the bid without assigning any reason.

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Therefore, it cannot be said that the respondents have committed any illegality or arbitrariness in violation of the conditions contained under Exts. P3 and P4. Clause 15 of Ext. P4 deals only with the band under which the bidders are entitled to quote. It can be '+ or -' 10% of the estimate rate that does not mean that a bid submitted within the said band is to be accepted by the respondents. Even though

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W.P.(C). NO. 2412 OF 2017 7

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respondents negotiated with the petitioner, petitioner did not lower the bid as expected by the respondents. It was thereupon that Ext.P8 communication is issued cancelling the bid since the bid was not viable for the respondents, to carry out the activities notified under the tender. Ultimately, it is for the master to decide how the tender is to be evaluated in accordance with the terms of the invitation of bid, and the general instructions to bidders (GITB). Petitioner has no case that the respondents have in any manner exceeded their authority conferred under such documents, to act upon the bid submitted by the petitioner. Petitioner also cannot insist that, he being the lowest tenderer, his tender is to be accepted, consequent to the stipulation contained under Clause 13.4 of the General Conditions of Contract. Moreover, petitioner has not made out a case of malafides or other legal infirmities to sustain a challenge in a discretionary jurisdiction. So also none of the provisions contained under the invitation to bid, general conditions of contract, and general instructions to the

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W.P.(C). NO. 2412 OF 2017

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bidders enabling the respondents to cancel the tender without assigning any reasons etc., etc., except Clause 18 of Ext. P4, which are the rules of the game, are not under challenge. That apart petitioner has participated in the tender knowing fully well the stipulations and parameters for participating in the tender, and therefore, petitioner is not at liberty to challenge any stipulation thereunder, after participation, is a well recognised proposition of law.

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At any stretch of imagination, I do not find any illegality, arbitrariness, unfairness or any other legal infirmity warranting interference of this Court, to Ext. P8, invoking the power conferred under Article 226 of the Constitution of India. However, during the course of the arguments, learned Senior Counsel for the petitioner submitted that, in the interregnum the cylinders are taken from Kollam to Kochi to carry out the activities notified in the tender, which is causing heavy loss to the respondent Corporation.

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However, learned Standing Counsel appearing for

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W.P.(C). NO. 2412 OF 2017 9

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the respondents submitted that infact respondents have offered to the petitioner, the activity till the tender proceedings are finalised but the petitioner thereupon insisted for the rates provided to such contractors at Kochi, which was not acceptable to the respondents.

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Even though I am not inclined to grant any relief as sought for by the petitioner in the writ petition, there being no grounds sustainable to entertain the writ petition, if the petitioner is prepared to carry out the work, at the rates at which he was doing the work, till finalisation of the tender proceedings, the same shall be considered by the respondents. The petitioner will be free to submit a suitable application for the said purpose before the third respondent, who, or the competent among the respondents will be at liberty to consider the request, till such time the tenders are finalised as per the re-tender notification, which according to the petitioner and the respondents is to take place after the last date of receiving the bids on 06.03.2017.

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W.P.(C). NO. 2412 OF 2017

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Writ petition is dismissed however subject to the above

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observation.

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SHAJI P. CHALY JUDGE

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DCS

Binu Prabhakar v. Indian Oil Corporation

Case brief

What is this about?

What did the court decide?

Binu Prabhakar v. Indian Oil Corporation

Case brief

What is this about?

What did the court decide?

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