28 Jun 2121

Terms of the invitation to tender cannot be open to judicial scrutiny as the invitation to tender is in the realm of contract - Bombay High Court

Case : Perfect Alloys and Steel Limited and Anr. v. Union of India and Ors. Writ Petition (L) No. 5516 of 2021

Court : Bombay High Court

Bench : Justice M. S. Karnik and Justice S. C. Gupte

Decided on : 28 Jun 2121

Relevant Statues

Articles 226 of the Constitution of India, 1950

Brief Facts & Procedure History

1. The relevant seminal facts are that Petitioner No.1 is a Company engaged in the business of manufacturing different types of Liquid Processed Gas Cylinders. Respondent No.2, Hindustan Petroleum Corporation Limited is a Government of India Enterprise engaged in refining and marketing petroleum products throughout the country.

2. Respondent No.2 on 8.11.2019 floated a Notice Inviting Tender bearing No.1900789-HD-10157 inviting bids for procurement of 89.87 lakhs of 14.2 kg Liquid Processed Gas cylinders fitted with Self Closing Type Liquid Processed Gas Cylinder Valves to various Liquid Processed Gas Bottling Plants. The bid of Petitioner No.1 was rejected on the ground that Petitioner No.1 did not comply with the essential terms and conditions of the tender as it did not submit a bid for ten States. The Petitioner decided to accept the decision of Respondent No.2 rejecting the Petitioner’s bid.

3. The letter of intent in favour of the successful bidder was issued on 10.1.2020 and the tender was awarded in favour of the successful bidder. It is the Petitioner’s case that upon expiry of the period of 12 months in terms of Clause 3 of the Notice Inviting Tender, Hindustan Petroleum Corporation Limited is now considering an extension of the period of the contract in favour of the successful bidder for a further period of 12 months. By a letter dated 10.2.2021, the Petitioner requested Hindustan Petroleum Corporation Limited to consider empanelling Petitioner No.1 with the supply of 14.2 kg Liquid Processed Gas Cylinders to Hindustan Petroleum Corporation Limited on a pan-India basis. However, Hindustan Petroleum Corporation Limited failed to respond to the same.

4. Being aggrieved by the decision of Hindustan Petroleum Corporation Limited, the Petitioner instituted this Writ Petition under Article 226 of the Constitution of India, 1950 taking exception to the tender conditions in the Notice Inviting Tender dated 8.11.2019.

The Issue(s) of the Case

Whether the Petitioner is entitled to make an exception to the tender conditions mentioned in Clause 3 of the Notice Inviting Tender dated 8.11.2019?

The Observations of the Court

The Honourable Bombay High Court observed the following:

1. Perused the Petition, the Exhibits, the affidavit-in-reply filed by Respondent Nos. 2 and 3, the affidavit-in-rejoinder and also heard the learned Counsels for the Petitioners and Respondents respectively.

2. Critically analyzed the relevant portion of Clause 3 of the Notice Inviting Tender and observed that the said tender document contains a specific provision for extension of the contract by a further period of up to 12 months at the sole discretion of the Corporation.

3. Opined that the Petitioner participated in the tender process with full knowledge that the tender document did provide for a clause for extension of the contract in favour of the successful bidder for a further period of up to 12 months. Furthermore, the Petitioners did not raise any objection regarding Clause 3 of the Notice Inviting Tender while submitting the bid or even thereafter when the Petitioners’ bid was declared unsuccessful.

4. Contemplated the Petitioner’s decision to abide by the decision of Hindustan Petroleum Corporation Limited rejecting his bid due to which the Court opined that the challenge to tender condition regarding extension cannot be entertained at this belated stage at the instance of the Petitioner who participated in the tender process and was the unsuccessful bidder.

5. Took cognizance of the fact that the decision in the present case to extend the contract has been taken based on the terms and conditions of the tender document and therefore, Respondent No. 2 did not unilaterally at its discretion granted extension sans any clause in terms of the notice inviting tenders.

6. Opined that the Court cannot interfere with the tender conditions as it is a matter purely within the domain of Hindustan Petroleum Corporation Limited in the realm of contract, provided as long as the decision is bonafide and not actuated with any malafides.

7. Reliance was placed upon precedents such as Tata Cellular v. Union of India, (1994) 6 SCC 651 and Sterling Computers Limited v. M/s. M & N Publications Limited and Ors.

The Decision held by the Court

The Honourable Bombay High Court dismissed the Writ Petition (L) No. 5516 of 2021.

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