Sri N Guruswamy Reddy vs. Indian Oil Corporation Limited

Facts

The petitioners, who are truck owners engaged in transporting LPG cylinders for Indian Oil Corporation Limited (IOC), challenged several conditions in a tender notification dated May 4, 2023. These conditions included a 10% ceiling on the number of trucks awarded to a single bidder, a clause requiring bidders to bear all operational costs except GST and toll charges, a strict 'one bid per person' rule with expansive definitions of 'person' and 'multiple bids,' a stipulation for transportation charges based on the shortest route, and a clause imposing a Rs. 4 charge on transporters for security caps on new self-closing valves. The petitioners argued these conditions were unjust, arbitrary, unconscionable, impracticable, and harsh. They also noted that their prior representation to IOC remained unanswered.

Held

The Court declined to grant indulgence and dismissed the writ petition. Regarding the 10% ceiling on truck awards (Clause V(C)), the Court noted that while it initially appeared restrictive, the respondent clarified that this limit could be exceeded if the plant requirements were not met by the offered trucks, thus relaxing the ceiling to benefit participants. On Clause 4(17), the Court accepted the respondent's submission that a subsequent tender (Annexure-R1) had addressed the anomaly highlighted by the petitioners concerning previous rulings. The Court found Clause 4(29) regarding multiple bids to be a valid measure to prevent monopolies and uphold Directive Principles (Article 39(b) & (c)). For Clause 10.9 (shortest route), the Court relied on Clause 73 of the tender, which vests discretion in IOC authorities to grant redressal for genuine grievances supported by evidence, and expressed no reason to assume such redressal would be denied. Finally, concerning Clause 19 (security cap charge), the Court held that it was not arbitrary but a reasonable measure to recover losses caused by culpable acts of contractors, providing a yardstick to prevent arbitrary levies and deter delinquents, thus protecting public interest. The Court also noted that such clauses are common and protective of public property, and bidders participate voluntarily with full knowledge of the risks.

Key Issues

1. Whether Clause V(C) of the tender conditions, limiting the award of trucks to a maximum of 10% of the total requirement per bidder, is unjust and arbitrary. The petitioners argued this restriction is unfair. The respondent contended that such stipulations are within the discretion of the authorities and based on their experience. 2. Whether Clause 4(17) of the General Instructions to Bidders, which requires bidders to include all operational costs except GST and toll charges, runs counter to a previous decision of a Coordinate Bench in W.P.No.29585/2019. The petitioners argued this clause is inconsistent with prior rulings. The respondent pointed out that this anomaly has been addressed in a subsequent tender. 3. Whether Clause 4(29) of the Tender Notification, which defines 'multiple bids' expansively and mandates rejection of such bids, is unconscionable. The petitioners argued this clause is overly restrictive. The respondent contended that this clause prevents monopolies and aligns with Directive Principles of State Policy. 4. Whether Clause 10.9, prescribing the 'shortest route' for transportation, is impracticable due to road conditions. The petitioners argued this stipulation disadvantages bidders. The respondent highlighted Clause 73, which allows for redressal of genuine grievances. 5. Whether Clause 19, imposing a Rs. 4 charge for security caps, is a penal clause that is manifestly arbitrary and harsh. The petitioners argued this clause is unfair. The respondent contended that this clause is a reasonable measure to recover losses and prevent arbitrary levies, providing a yardstick for authorities.