Dismissed

Fasttrack Logistics, v. Indian Oil Corporation Limited

Kerala HC13 Oct 2021WA/1144/2021

Case brief

AI extract

What is this about?

The High Court of Kerala dismissed writ appeals seeking to quash the Indian Oil Corporation's decision to invite a gate tender for bulk petroleum transport. The Court held that the tender process was completed per the notice, vacancies were filled per the 2015 policy, and writ courts cannot interfere in commercial contracts absent blatant illegality or violation of public policy.

What did the court decide?

The writ appeals were dismissed with directions that the petitioners confirm the result.

Fasttrack Logistics, Vs Indian Oil… — Contract and Commercial Disputes | Kerala HC (2021)

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W. A. Nos. 1084 of 2021 and connected cases -1-

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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WEDNESDAY, THE 13^TH DAY OF OCTOBER 2021 / 21ST ASWINA, 1943

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WA NO. 1084 OF 2021

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AGAINST THE JUDGMENT IN WP(C) 13265/2021 OF HIGH COURT OF

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KERALA, ERNAKULAM

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APPELLANT/S:

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1 CONCORD TRANSPORTS REP.BY ITS MANAGING PARTNER, JOHNY C.D., AGE 65, S/O.DEVASSY, KALAMPARAMBIL BUILDING, PERUMBAVOOR ROAD, KALADY P.O, 683 574

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2 FASTTRACK LOGISTICS REP.BY ITS MANAGING PARTNER, SHAIJAN, AGED 50 YEARS, S/O.VELAYUDHAN, NEDUVELI HOUSE, THURAVUR P.O., ANGAMALY 683 574 BY ADVS. SAIBY JOSE KIDANGOOR BENNY ANTONY PAREL S.SIBHA PARVATHY VIJAYAN SAJUNA GOPINATH

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RESPONDENT/S:

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1 INDIAN OIL CORPORATION LIMITED REP.BY ITS CHAIRMAN, HAVING ITS HEADQUARTERS AT 079/3, SADIQ NAGAR, J B TITO MARG, NEW DELHI 110 049

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2 INDIAN OIL CORPORATION LIMITED REP.BY ITS GM, OPERATIONS, KERALA STATE OFFICE, PANAMPILLY NAGAR, KOCHI 682 036

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3 INDIAN OIL CORPORATION LIMITED REP.BY ITS GENERAL MANAGER, CONTRACT CELL, CHENNAI 600 018 BY ADVS. M.GOPIKRISHNAN NAMBIAR, E.K.NANDAKUMAR (SR.),K.JOHN MATHAI, JOSON MANAVALAN, KURYAN THOMAS, PAULOSE C. ABRAHAM, RAJA KANNAN, RAMOLA NAYAMBILLIL

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 13.10.2021, ALONG WITH WA.1144/2021, 1276/2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W. A. Nos. 1084 of 2021 and connected cases -2-

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY

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WEDNESDAY, THE 13^TH DAY OF OCTOBER 2021 / 21ST ASWINA, 1943 WA NO. 1144 OF 2021

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AGAINST THE JUDGMENT IN WP(C) 12449/2021 OF HIGH COURT OF

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KERALA, ERNAKULAM

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APPELLANT/S:

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FASTTRACK LOGISTICS, REPRESENTED BY ITS MANAGING PARTNER, SHAIJAN, AGED 50 YEARS, S/O.VELAYUDHAN, NEDUVELI HOUSE, THURAVUR P.O., ANGAMALY-683 572.

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BY ADVS. SAIBY JOSE KIDANGOOR BENNY ANTONY PAREL S.SIBHA PARVATHY VIJAYAN SAJUNA GOPINATH

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RESPONDENT/S:

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1 INDIAN OIL CORPORATION LIMITED, REPRESENTED BY ITS CHAIRMAN, HAVING ITS HEADQUARTERS AT 079/3, SADIQ NAGAR, JB TITO MARG, NEW DELHI-110 049.

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2 INDIAN OIL CORPORATION LIMITED, REPRESENTED BY ITS GM, OPERATIONS, KERALA STATE OFFICE, PANAMPILLY NAGAR, KOCHI-682 036.

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3 INDIAN OIL CORPORATION LIMITED, REPRESENTED BY ITS GENERAL MANAGER, CONTRACT CELL, CHENNAI-600 018. BY ADVS. E.K.NANDAKUMAR (SR.) M.GOPIKRISHNAN NAMBIAR K.JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS PAULOSE C. ABRAHAM RAJA KANNAN

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 13.10.2021, ALONG WITH WA.1084/2021 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W. A. Nos. 1084 of 2021 and connected cases -3-

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE THE CHIEF JUSTICE MR.S.MANIKUMAR

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THE HONOURABLE MR. JUSTICE SHAJI P.CHALY WEDNESDAY, THE 13^TH DAY OF OCTOBER 2021 / 21ST ASWINA, 1943

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WA NO. 1276 OF 2021

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AGAINST THE JUDGMENT IN WP(C) 11874/2021 OF HIGH COURT OF KERALA, ERNAKULAM

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APPELLANT/S:

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V.K.LALITHAKUMARI AGED 70 YEARS W/O.K.V.RAMAKRISHNAN, LAGI NIVAS, KUTTEMPEROOR P.O., MANNAR, ALAPPUZHA-689 623 BY ADVS. K.JAJU BABU (SR.) M.U.VIJAYALAKSHMI BRIJESH MOHAN

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RESPONDENT/S:

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1 INDIAN OIL CORPORATION LTD REGIONAL CONTRACT CELL, MARKETING DIVISION, REGIONAL CONTRACT CELL, SOUTHER REGIONAL OFFICE , INDIAN OIL BHAVAN, UTHAMAR GANDHI SALAI, NUNGAMBAKKA, CHENNAI600 034, REPRESENTED BY THE GENERAL MANAGER

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2 THE GENERAL MANAGER (CONTRACT CELL), INDIAN OIL CORPORATION LTD., MARKETING DIVISION, REGIONAL CONTRACT CELL, INDIAN OIL BHAVAN, UTHAMAR GANDHI SALAI, NUNGAMBAKKA, CHENNAI-600 034

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3 THE CHIEF GENERAL MANAGER, INDIAN OIL CORPORATION, KERALA STATE OFFICE, PANAMPILLY AVENUE, PANAMPILLY NAGAR, COCHIN-682 036 BY ADVS. E.K.NANDAKUMAR (SR.) M.GOPIKRISHNAN NAMBIAR K.JOHN MATHAI JOSON MANAVALAN KURYAN THOMAS PAULOSE C. ABRAHAM RAJA KANNAN RAMOLA NAYANPALLY

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THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 13.10.2021, ALONG WITH WA.1084/2021 AND CONNECTED CASES, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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W. A. Nos. 1084 of 2021 and connected cases -4-

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J U D G M E N T

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Shaji P. Chaly, J.

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Writ petitioners have filed the captioned appeals, challenging the common judgment of the learned Single Judge in W. P. (C) Nos. 13265 of 2021, 12449 of 2021 and 11874 of 2021 dated 13.08.2021, whereby the writ petitions were dismissed.

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In fact, in the writ petitions, a typical relief to quash notice inviting gate tender issued by the Indian Oil Corporation Ltd, for bulk transportation of petroleum products was sought for, apart from other consequential reliefs.

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The basic facts for the disposal of the writ appeals are as follows:-

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M/s. Indian Oil Corporation Ltd., the 1^st respondent herein, invited tenders for road transportation of bulk petroleum products by top loading tank trucks as per tender bearing No. SRCC/PT/064/KESO/2020-21-'TENDER FOR TRANSPORTATION

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OF BULK PETROLEUM PRODUCTS – MS/HSD/Branded Fuels (TOP LOADING)' which is evident from Annexure R1(a) produced by the Oil Corporation along with its statement before the writ court. The total requirement of tank trucks as modified by Ext.P1 corrigendum was 151 Nos. having a capacity of 12-16 KL capacity and 114 Nos. having a capacity of 18-40 KL. As per clause 1.4 (7) of the notice inviting tender, tenderers will have to offer tank trucks in the ratio of number of tank trucks required capacity-wise, as specified above and in the tender notice. In accordance with the requirements of the tender, the ratio of the tank trucks offered shall be 1:1 and the tank trucks which are falling in the ratio specified above, i.e. 1:1 capacitywise alone, shall be considered as LOT-1. However the tenderer is free to offer tank trucks other than the above combination, i.e. not exactly in the desired ratio of 1:1. In case a tenderer has offered tank trucks not in the desired ratio, then such tank trucks shall be considered in LOT-2. All the offers of tank trucks with only chassis and not readily built tank trucks shall be placed in LOT-3.

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As per the evaluation criteria contained under clause 1.11 of

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the notice inviting tender, while allocation of tank trucks with L-1 rate is finalized, the offers from LOT-1 will be allocated first. If the

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W. A. Nos. 1084 of 2021 and connected cases -6-

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location's requirement is still not met from the L1 tenderers in LOT-1, then allocation will be made from L1 tenderers in LOT-2 and after exhausting all offers of LOT-1 and LOT-2, still if the location's requirement is not met, then offers under LOT-3 shall be considered. As per the specifications in the tender, the tenderers are ranked in the order of preference and allotment made to the highest ranked tenderers.

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In the case at hand, the entire requirement of tank trucks in the general category, under which the petitioners had applied, was met by the L1 tenderers in LOT-1, above the ranking of the petitioners, and therefore, there was no need to accept tank trucks offered by the petitioners. The Letters of Award (LOA) have been issued to the tenderers as early as on 09.03.2021.

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As per the terms of Annexure R1(a) tender, upon completion of the Award of Contract, the Earnest Money Deposit (EMD) submitted by unsuccessful tenderers such as the petitioners are refunded and the tender stands closed. In other words, once the Letters of Acceptance are awarded to the successful tenderers, the tender stands closed.

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W. A. Nos. 1084 of 2021

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and connected cases -7-

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Therefore, after the tender proceedings were complete, which is the rule of the game, if any vacancy arises from the non-placement of tank trucks by the successful tenderers, the said issue is governed by the policy of the Oil Corporation dated 20.11.2015, produced as Annexure R1(b) (circular).

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The case advanced by the petitioners in the writ petitions were that the company is liable to carry forward the unfilled quota under the SC/ST category to the next tenderer, and if it is not filled, even then, the remaining unfilled quota under SC/ST will be dereserved and allotted to the general category. Thereafter the respondent corporation is to allow those who are included in SC/ST category and general category to submit tank trucks for loading as contemplated under the conditions in the notification.

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According to the petitioners, the persons who have applied under the SC/ST category, even though majority of them are benamis of third parties and who are not eligible to be included under SC/ST category, could not submit the tank trucks within the time period as stipulated in the notification.

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It is also the case of the petitioners that the same issue

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W. A. Nos. 1084 of 2021 and connected cases -8-

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happened in some of the cases under the general category also. Therefore when there were sufficient number of vacancies to include the tank trucks offered by the petitioners and who have sufficient number of tank trucks and all the qualifications as prescribed under the notification, even after the lapse of time period as prescribed in the notification, the oil corporation is duty bound to accommodate the tank trucks offered by the petitioners and other eligible persons.

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In order to ventilate the said grievance, one of the petitioners has preferred a detailed representation and urged the oil corporation and its officials to take necessary action to allot work orders to the petitioners, who are otherwise eligible as per the notification.

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Anyhow, since no action was taken on the basis of the representation, writ petitions were filed before this Court, basically seeking appropriate directions on the basis of Ext. R1(a) tender notification.

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While the writ petitions were pending adjudication before the writ court, the oil corporation issued Ext. P4 notice inviting gate tender for transportation of bulk POL products from Cochin terminal in sealed cover from existing general transporting contractors

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operating at Cochin terminal, who were awarded work order / contract in Ext. R1(a) tender. It was thus challenging Ext. P4 notice inviting gate tender, the writ petitions were filed. According to the petitioners, Ext. P4 notice inviting gate tender is against the stipulations contained in the original notice inviting tenders based on which the same is issued and therefore illegal and arbitrary.

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In the writ petition, Oil Corporation has filed a detailed statement and has produced relevant documents to support the contentions. According to the oil corporation, as per the terms of Annexure R1(a) tender, upon completion of the award of contract, the earnest money submitted by unsuccessful tenderers such as the petitioners, are refunded, and the said tenders stand closed. Thereafter the oil corporation is entitled to fill up the vacancies arising from the non-placement of tank trucks by the successful tenderers, in accordance with Annexure R1(b) policy of the oil corporation dated 20.11.2015. It is specifically pointed out that as per para 4(i) of Annexure R1(b) circular, after closure of a tender, additional requirements as per original notice inviting tender can only be inducted from existing transporters. It was in line with the said policy, vacancies arising from the non-placement of trucks by successful

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W. A. Nos. 1084 of 2021 and connected cases -10-

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tenderers of Annexure R1(a) tender were sought to be filled from the existing transporters by way of Ext. P4 notice inviting gate tender.

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The sum and substance of the contention put forth by the oil corporation is that the invitation of Ext. P4 gate tender was strictly in terms of the policy contained in the circular dated 20.11.2015 for ensuring efficient, smooth and speedy management of transportation of bulk petroleum products. It was after evaluating the rival submissions so made, learned Single Judge, taking note of the imperative terms and conditions contained in the notice inviting tender, the writ petitions were dismissed holding that Annexure R1(b) circular, which is the policy of the oil corporation, has not been challenged, and that apart, insofar as the contract in respect of the entire fleet of tank trucks covered by the tender notice, have been awarded after a due process of selection, the policy covered by Ext. R1(b) circular would come into play, permitting award of contracts for the vacancy arose, consequent to the non-placement of tank trucks by the successful bidders, and instead of taking up the burden of undertaking a fresh selection process, issued the notice inviting gate tender, which can never be said to be an arbitrary and illegal selection process. It is thus challenging the legality and correctness of the

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judgment of the learned Single Judge, the writ appeals are filed.

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We have heard learned counsel for the appellants Sri. Saiby Jose Kidangoor, Smt. M. U. Vijayalakshmi, and Sri. Brijesh Mohan, and Sri. Gopikrishnan Nabiar and Smt. Ramola Nayambillil for the respondents and perused the pleadings and material on record.

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The paramount contentions advanced by the appellants are that the action of the oil corporation inviting Ext. P4 notice inviting gate tender is arbitrary and violative of the fundamental rights guaranteed under Articles 14, 19 and 21 of the Constitution of India; that the Single Judge failed to appreciate that as per the tender conditions, in case tenderers do not place the tank trucks for loading within 15 days from the date of work order, or 45 days from the date of letter of acceptance for ready guilty tank trucks, and within three months from the date of letter of acceptance for tank trucks offered under purchase invoice / booking slip, the tank trucks offered by the successful tenderers shall be kept on holiday listing, apart from forfeiture of Earnest Money Deposit etc.

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It is also the case of the appellants that in case of the successful tenderers failing to position the entire fleet for loading as

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W. A. Nos. 1084 of 2021 and connected cases -12-

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per LOA, the whole contract shall be terminated and the successful tenderers shall be placed on holiday listing, apart from forfeiture of the Earnest Money Deposit.

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In sum and substance, the contention of the appellants is that the tenderers who have failed to place the tank trucks within the time period prescribed above, are not eligible to be continued in the list of tenderers who are issued with work orders, in accordance with the terms and conditions of the notice inviting tender.

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Therefore, according to the appellants, since the successful tenderers have failed to position the tank trucks, irrespective of the time period and the time fixed for termination of the tender, the tenderers who have participated in the tender are liable to be considered. It is also pointed out that gate tender for road transportation of bulk petroleum products as per Ext. P4 notice inviting gate tender can be made only in case of replacement of an old top loading location to a new top loading location, and therefore the action of the oil corporation cannot be sustained.

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It is also the contention of the appellants that the original notice inviting tender was under two bid system from tank truck

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W. A. Nos. 1084 of 2021 and connected cases -13-

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owners for award of contracts for road transportation of bulk petroleum products with effect from 01.11.2020 or a date to be decided at the discretion of the company for a period of three years, with an option for extension up to further two years at the sole discretion of the company.

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Relying upon the said condition contained under the notice inviting tender, it is the contention of the appellants that the original notification is active for a minimum period of five years from 01.11.2020 or at the date decided at the discretion of the company. Therefore in the case of the successful tenderers not positioning the tank trucks within 15 days from the date of work order or 45 days from the date of letter of acceptance and within three months from the date of LOA for different kinds of tank trucks respectively, the tank trucks offered by the tenderers shall be overlooked and the other participants in the tender shall be awarded the contract.

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It is also the case of the appellants that the learned Single Judge has failed to take note of the said vital aspects in the terms and conditions of the notice inviting tender and therefore the judgment of the learned Single Judge requires interference.

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W. A. Nos. 1084 of 2021 and connected cases -14-

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On the other hand, learned counsel appearing for the respondents submitted that the entire action in the matter of award of the contract was undertaken by the oil corporation absolutely on the basis of the terms and conditions contained under Ext. R1(a) notice inviting tender which conditions are binding on all the participants in the bid process. It was also submitted that after participating in the bid fully knowing the terms and conditions of the contract, the appellants are not entitled to make arguments in violation of the terms and conditions of the contract.

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We have evaluated the rival submissions made across the Bar, and the sole question to be considered is whether any manner of interference is warranted to the judgment of the learned Single Judge on the basis of the contentions advanced by the appellants.

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On going through the judgment of the learned Single Judge, we find that the learned Single Judge, after taking into account the nature of the tender proceedings and the imperative conditions contained thereunder, has found that as per clause 1.11 of the notice inviting tender, the manner in which the price bid ranking was to be made is clearly spelt out, and it was on the basis of the same, the ranking procedure was adopted by the oil corporation.

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W. A. Nos. 1084 of 2021 and connected cases -15-

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Therefore it was found that on the basis of clause 1.11, the company was entitled to pursue the tender process until it is able to procure the tank requirements in terms of the notice inviting tender.

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Learned Single Judge has also found that the attempt made by the appellants could only be seen as one to interpret the clauses contained under 1.11 of the tender notice to contend that even the deficit tank truck requirement of the company arising on account of the failure on the part of the tenderers who have been awarded the contracts to provide tank trucks are to be procured in terms of the notice inviting tender. It was on the basis of the said findings and reasons, learned Single Judge has found that in a dispute of the instant nature, the Court is bound to accept the stand of the company depending on the policy in place right from the year 2015 for dealing with such a contingency. Other important provisions of the notice inviting tender were also taken into account by the learned Single Judge.

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Assimilating the fact situation, we are of the clear and considered opinion that the tender proceedings were completed by the oil corporation in accordance with the terms and conditions of the notice inviting tender which are straight and understandable to the

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and connected cases -16-

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participants of the bid. As we have pointed out above, the selection of the bidders is clearly specified and the manner in which the selection is to be made is delineated very plainly so as to avoid any confusion to the bidders.

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It is also clear from the terms and conditions of the notice inviting tender that on closure of the bid, the EMD to the unsuccessful bidders would be released. The appellants have no case that the termination has not taken place in accordance with the conditions of the bid, especially due to the fact that the EMD was returned to the unsuccessful bidders, including the appellants. when the company has a specific policy with respect to the manner in which the situation emerging from non-position of tank trucks by the successful tenderers within the time period prescribed in the tender notification and the contract executed by and between the parties, has to be tackled, the company is entitled to take steps in accordance with the same.

¶109

The contention of the appellants that since the tender is for a period of three years plus an option for extending the period by two years, the tender process is a continuing one, irrespective of the return of EMD and therefore the tender submitted by the appellants were entitled to be considered by the oil corporation on the failure of the

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and connected cases -17-

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successful bidders to produce the tank trucks, cannot have any force of law, or even any basis and foundation since there is no such term or condition in the notice inviting tender, which is the rule of the game for completion of the tender proceedings.

¶113

Even though the appellants have also a contention that on failure of the the successful tenderers to position the tank trucks within the time period prescribed under the notice inviting tender, the tender proceedings would have to be terminated and a fresh tender is to be invited, it is unacceptable for the basic reason that the terms and conditions of the tender proceedings are clearly specified in the notice inviting tender and there is no provision in the notice inviting tender that on failure on the part of the successful tenderers to position the tank trucks the tender would be terminated. It is clear from Annexure R1(b) that it is to deal with such situations and in order to avoid any delay to supply the petroleum products, which is an essential service, the company has come out with a policy on 20.11.2015.

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Clause 4.1 thereto deals with closure of tender and it specifies that after closure of tender, additional tank trucks requirement, either with the original NIT number or the revised NIT number, can be inducted as under:-

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and connected cases -18-

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i) from existing dealer / dealer – transporter / general

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transporters as per the provisions of DOA at established L1 rates;

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ii) in case demand is not fulfilled by action taken at 4(i) above, the Public Expression of Interest (EOI) is to be floated seeking an offer at established L1 rates for the balance period of the contract.

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Clause 5 thereto clearly specifies that the above process of tank trucks induction has to be as per the terms and conditions of the original tender with equal opportunity to all transporters.

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Appreciation of the facts and circumstances, make it clear that the appellants knew fully well that the selection procedure is on the basis of the notice inviting tender and they are bound by it, and therefore the appellants are not at liberty to later turn around and contend that the action of the oil corporation is arbitrary, illegal and violative of the principles of natural justice.

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Moreover, since the subject issues raised are in regard to contract, unless and until the conditions prescribed in the notice inviting tender were found to be void for the reason of violation of the public policy or the fundamental rights guaranteed under the Constitution of India, the appellants are not entitled to succeed in the

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challenge which thus means appellants have failed to establish before the writ court or this Court that the consideration and objects of the conditions in the notice inviting tender are unlawful and forbidden by law or is of such a nature that if permitted it would defeat the provisions of any law or is fraudulent or involves or implies injury to the person or property of another or any enabling circumstances were brought forth for the court to regard it as immoral or opposed to public policy, which is the guiding factor contained under Section 23 of the Indian Contract Act, 1872, to interfere with any contract invited by any public body referable to Article 12 of the Constitution of India.

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This we say because the contract invited by the oil corporation is not a statutory contract guided by Article 299 of the Constitution of India made in exercise of the executive power of the Union or of a State and consequently, the notice inviting tender and the consequential proceedings can only be termed as commercial in nature, and unless and until it is specifically established that there is blatant arbitrariness and illegality on the part of the tendering authority, there can be no interference made with such commercial tenders, by a writ court exercising the power of discretion conferred under Article 226 of the Constitution of India.

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It is significant to note that even though Annexure R1(b) circular, which is termed to be a policy of the oil corporation was produced along with a statement, the said circular was never challenged before the writ court, which was also a factor weighed with the learned Single Judge to dismiss the writ petitions.

¶128

Taking into account all the factual and legal situations, we are of the considered opinion that the appellants have not made out any case for interference with the judgment of the learned Single Judge, there being no jurisdictional error or other legal infirmities liable to be interfered with in an intra court appeal filed under Section 5 of the Kerala High Court Act, 1958.

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Needless to say, writ appeals fail. Accordingly they are dismissed.

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S. MANIKUMAR CHIEF JUSTICE

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Sd/SHAJI P. CHALY JUDGE

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///TRUE COPY/// P. A. TO JUDGE

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W. A. Nos. 1084 of 2021 and connected cases -21-

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APPENDIX OF WA 1144/2021

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PETITIONER ANNEXURE Annexure A1 TRUE COPY OF THE NOTICE INVITING GATE TENDER FOR POL CONTRACT AT COCHIN TERMINAL DATED NIL OF THE INDIAN OIL CORPORATION.

Fasttrack Logistics, v. Indian Oil Corporation Limited

Case brief

What is this about?

What did the court decide?

Fasttrack Logistics, v. Indian Oil Corporation Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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Statutes considered

Parties & counsel

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Case details

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