Courts can exercise judicial review in contract cases only if dishonesty/arbitrariness is demonstrated: Telangana High Court

The Telangana High Court has recently observed that the judicial review exercised by the Court in contractual matters is very limited and that unless bad faith and arbitrariness are demonstrated, the Court cannot intervene in the administrative action.

The sighting came from Judge G. Radha Rani in a written petition contesting the action of the 2nd defendant in not allowing the petitioner to participate in the notice inviting e-Tender based on the reservation receipt of the respective category of trucks obtained from the authorized dealer.

“The scope of the jurisdictional control exercised by the Court in contractual matters is very limited and except to demonstrate dishonesty and arbitrariness, the Court could not interfere in the administrative action. Considering that distributors and general carriers are not not on the same footing and allowing the petitioner to participate in the public tender on the basis of the booking receipt would give him an unfair advantage over other potential bidders who had already invested in trucks and would subject them to serious loss and the modification of the conditions of the invitation to tender after the launch of the offer would amount to modifying the rules of the game after the start of the game and would cause prejudice to the other bidders and unnecessary difficulties for them, it is judged appropriate to deny the request for an order;” Court held.

Respondent 2/Company was the manufacturer of Indane LPG gas cylinders. The Claimant argued that Respondent 2 issued a tender for the award of a contract to transport Indane LPG cylinders in an upright position on the basis of a unit rate, the Kondapally Bottling Plant to sites within and outside the states of Telangana and Andhra Pradesh for a period of 3 hours. years.

The distributors of the said bottles attached to the Kondapally bottling plant had the choice of using their own trucks to transport the bottles from the bottling plant to the warehouse or using the trucks provided by the respondent No. 2/Corporation. Respondent No. 2/Company had launched a call for expressions of interest from existing distributors attached to the Kondapalli bottling plant for the transport of their own load on the basis of a unit rate and the call Instant bidding is launched for the awarding of the transport contract to the regular distributors.

The basis of the unit rate in the context of the expression of interest was to be fixed on the basis of the L-1 rates obtained in this invitation to tender. The two invitations to tender had the same object and were linked. The petitioner was prepared to procure a truck and was prepared to provide a booking slip to prove his good faith. The contract period under clause 10 of the electronic tender notice did not specify the start date of the contract period.

The Claimant argued that the above clause would show that the start date of the contract was either from the date of placement of the LOI or as stated by the state office of Indane Oil Corporation ( IOC). If the petitioner purchased the truck, it would remain idle from the date the bid was submitted until the date the letter of intent was filed or the date indicated by the state office of the IOC. Since that lorry could only be used for transporting bottles, it could not be used for any other purpose by the applicant. The same would result in severe financial loss for the petitioner would not be financially viable, it was argued.

The 2nd defendant filed a counter-attestation declaring that the e-Tender for the transport of packaged LPG was a call for tenders open to the general public. Bidders who were interested and agreed with the terms and conditions of the tender would participate and they were evaluated strictly against the terms and conditions of the tender, while the EOI flouted in July 2021 was not open to the general public and was aimed only for specified Indane distributors who were attached to IOC Kondapally, LPG Plant, to help interested distributors induct their trucks to enable them to raise their own load requirements subject to meeting the required eligibility criteria mentioned therein.

Considering the lead time needed for distributors to finally place the truck for their own needs in the new contract, the possibility of offering trucks with booking slip has been extended to voluntary distributors upon payment of Rs.50,000/ -. No EMD had to be paid by common carriers/bidders under this offer. The guidelines and bidding conditions of EOI and transport were not the same, as shown in the EMD clause. The petitioner sought to modify the general conditions of the tender according to his personal interest. As this was an online public tender, those who met the pre-qualification criteria could only bid their trucks through the tender. The company’s policy on EOI for Distributors and Public Tender for General Carriers has been prepared based on different criteria for all over India and is not comparable.

The Court reviewed the pre-qualification criteria referred to in the solicitation document at clause (1) and noted that the solicitation provides criteria for the evaluation of bids under which there is a classification criterion in which the classification is based on the age of the truck, which will be determined by the month and the year of manufacture which will be found on the sales invoice and/or the registration certificate and/or on the certificate temporary registration. The said condition is prescribed in the pre-qualification criteria under 1 (2) age of trucks.

The court relied on the judgment rendered by the supreme court, namely Michigan Rubber (India) Limited, in which the court had clarified the nature and scope of judicial review in relation to tender conditions, and decided that consideration of the request would cause unnecessary difficulties for the bidders. .

In view of the foregoing, the motion in writ was dismissed.

“Therefore, the motion in writ is dismissed. In view of the dismissal of the motion in writ, it is not deemed necessary to allow the motion to impeach. No order as to costs.”

Case Title: Prakash Singh v Union of India

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