Courts Can Exercise Judicial Review In Contractual Matters Only If Malafide/ Arbitrariness Is Shown: Telangana High Court

The observation came from Justice G. Radha Rani in a writ petition challenging the action of the 2nd respondent in not permitting the petitioner to participate in the Notice inviting e-Tender on the basis of the booking receipt of the respective category of trucks obtained from the authorized dealer.

"The scope of the judicial review by the Court in contractual matters is very limited and unless malafides and arbitrariness was shown, the Court could not interfere with the administrative action. Considering that the distributors and general transporters are not standing on the same footing and allowing the petitioner to participate in the public tender basing on the booking receipt would give him an unfair advantage over the other prospective bidders who had already invested in trucks and would put them to grave loss and altering the terms of tender conditions after initiation of the bid would amount to change in the rules of the game after the game started and would cause prejudice to other bidders and unnecessary hardship to them, it is considered fit to dismiss the Writ Petition," Court held.

The respondent No.2/Corporation was the manufacturer of Indane LPG gas cylinders. The Petitioner submitted that the respondent No.2 invited tenders for award of contract for transportation of Indane LPG cylinders in vertical position on unit rate basis, from Kondapally bottling plant to locations within and outside the States of Telangana and Andhra Pradesh for a period of 3 years.

The distributors of the said cylinders attached to Kondapally Bottling Plant had an option to either opt to use their own trucks for the transport of the cylinders from the bottling plant to the warehouse or use the trucks provided by respondent No.2/Corporation. The respondent No.2/Corporation had invited for Expression of Interest from the existing distributors attached to Kondapalli Bottling Plant for own load transportation on unit rate basis and the instant tender is floated for the award of contract for transportation to regular distributors.

The unit rate basis under the expression of interest was to be fixed on the basis of L-1 rates arrived at in the instant tender. The purpose of both the tenders were the same and they were intertwined. The petitioner was willing to procure a truck of his own and was ready to provide a booking slip to prove his bonafides. The period of contract under clause 10 of the Notice inviting e-Tender did not specify the commencement date of the period of contract.

The petitioner submitted that the above clause would show that the date of commencement of the contract was either from the date of placement of the LOI or as advised by the State Office of Indane Oil Corporation (IOC). If the petitioner purchased the truck, the same would be lying idle from the date of submission of the bid till the date of placement of LOI or the date advised by the State office of the IOC. Since the said truck could only be used for the transportation of cylinders, the same could not be used for any other purpose by the petitioner. The same would cause severe financial loss to the petitioner would not be financially viable, it was argued.

The 2nd respondent filed a counter affidavit stating that e-Tender for packed LPG transportation was an open tender to all public. The bidders who were interested and who were agreeable to the tender terms and conditions only would participate and they were assessed strictly in terms of the tender terms and conditions, whereas the EOI flouted during July, 2021 was not open to general public and was meant only for specified Indane Distributors who were attached to IOC Kondapally, LPG plant, to facilitate interested distributors to induct their trucks to enable them to uplift their own load requirements subject to meeting the requisite eligibility criteria mentioned therein.

Taking into account the lead time involved in Distributors ultimately placing the truck for their own requirement in the new contract, facility of offering trucks with booking slip was extended to the willing distributors with payment of Rs.50,000/-. No EMD was required to be paid by the general transporters/bidders against the present tender. Both EOI and transportation tender guidelines and conditions were not the same, as could be seen from EMD clause. The petitioner was seeking change of tender terms and conditions to suit his personal benefit. As it was open public e-tender, those who would fulfil the pre-qualification criteria could only offer their trucks against the tender. The Corporation policy of EOI for distributors and public tender for general transporters was prepared based on different yardsticks on all India basis and not comparable.

Court perused the pre-qualification criteria mentioned in the tender document at clause (1) and noted that the tender provides for a tender evaluation criteria under which there is a ranking criteria wherein the ranking is based on the age of the truck, which will be determined by the month and year of manufacturing which will be found in the sales invoice and /or the registration certificate and/ or in the temporary registration certificate. The said condition is prescribed in the pre-qualification criteria under 1 (2) age of trucks.

Court relied on the judgement passed by the Apex Court namely Michigan Rubber (India) Limited wherein the court had elaborated on the nature and scope of judicial review in matters relating to tender conditions, and decided that considering the petition will result in unnecessary hardship to bidders.

In view of the above, the writ petition was dismissed.

"Hence, the Writ Petition is dismissed. In view of the dismissal of the writ petition, it is considered not necessary to allow the implead petition. No order as to costs."