Prashanth Projects Limited vs Indian Oil Corporation Ltd.

Swatanter Kumar, C.J.—Rule, returnable forthwith. By consent, Rule called out and heard.

In this Writ Petition under Article 226 of the Constitution of India, the Petitioners pray for issuance of an appropriate writ, order or direction to quash and set aside the tender awarded to the successful bidder by the Respondents in furtherance to the Tender No. LPG/ENG/PT236/09 and Tender No. LPG/ENG/PT239/09 both dated 20th April 2009and also quashing the decision of the Respondents rejecting the bid of the Petitioners on the ground that the Petitioners have been black listed and the Respondents be directed to consider the bid in accordance with the terms and conditions inviting tender.

The Petitioners is a Company incorporated under the provisions of the Companies Act, 1956 and is engaged in the business of large engineering projects as well as construction of large LPG containers and Mounded Storage Vessels (MSV) for the last 20 years. Hindustan Petroleum Corporation Limited (hereinafter for short referred to as ''HPCL''), had invited tender for setting up MSV Project at Ajmer, Rajasthan. The Petitioners had submitted their bid dated 20th December2007. However, certain disputes arose on the aspect of taxation between the said parties. According to the Petitioners, without issuing any show cause notice and in violation of the principles of natural justice, the Petitioners were allegedly black listed by HPCL and put on holiday list/blacklisted upto 20th February 2010 vide its letter dated 9th March2009. This was challenged by the Petitioners by filing a Writ Petition in this Court being Writ Petition No. 998 of 2009 impugning the said decision of the HPCL. After notice, when the Writ Petition came up for hearing and in view of the stand taken by the Respondents vide order dated 20th July2009 the said Writ Petition was disposed of. The Order of the Court reads as under:

Not on board. Upon mentioning taken on board.

Counsel appearing for the Petitioners submits that the Respondents issued show cause notice to the Petitioners, to which they will submit reply. Counsel also submits that Writ Petition be disposed of with liberty to challenge the order, in case the same is adverse to the Petitioners. Writ Petition is disposed of with liberty, as prayed.

HPCL is stated to have issued notice to the Petitioners to show cause as to why the Petitioners should not be blacklisted, for post decisional hearing and the matter has still not been finally disposed of. In the meanwhile, the Respondents in the present Writ Petition had floated a tender for setting up of LPG Storage Plant at Trichy (Tamilnadu) vide tender dated 20th April 2009. One of the terms and conditions of the tender was that the bidder should not be under any blacklist declared by the Owner or any Department of the State or Central Government or any other Public Sector Organization. The Petitioners had submitted their tender but the Respondents asked for the copy of the letter issued by the HPC revoking the holiday listing/blacklisting. The Petitioners vide their letter dated 30th July 2009 informed the Respondents that the affidavit filed by the HPCL showed that according to HPCL the Petitioners were not blacklisted and the holiday period could not be treated as blacklisting. Somewhere on 4th August 2009 the Petitioners were informed that their bid was not considered in view of the letter of HPCL. Thereafter, the Petitioners claim to have served a notice upon the Respondents, through their Counsel, on 4th August 2009 and having failed to get any relief at the hands of the Respondents, they have filed the present Writ Petition.

The principal ground raised on behalf of the Petitioners before us is that the Petitioners are not the blacklisted contractor and, therefore, the terms and conditions of the tender do not prohibit participation of the Petitioners in the above noticed tender. It is, however, denied on behalf of the Respondents who claimed that the HPCL letter clearly shows that the Petitioners were blacklisted and the said order continues to be in force and the Respondents have not committed any irregularity or illegality by not considering the Petitioners� bid for the work tender in question. It is noticeable that when the Petitioners filed Writ Petition No. 998 of 2009 which was disposed of on 20th July 2009, it was understood and argued that the letter issued by the HPCL was an order of blacklisting which was passed in violation of the principles of natural justice and without even serving any notice upon the Petitioners. It is not in dispute that HPCL had issued a letter issued on 9th March 2009 which reads as under:

Hindustan Petroleum Corporation Limited Regd.A/D

March 9th, 2009 Ref. LPG/MKNG/KCSR/JBK

To

M/s Prashant Project Limited 406408, Hermos Atrium Plot No. 57, Sector 11, CBD BELAPUR Navi Mumbai 400614 (Maharashtra India).

Dear Sirs,

Sub.: Fabrication of MSV at Ajmer, P.O. No. 800034-0Q-12001 dated 17.04.2008

This has reference to our above Purchase Order placed on you for Fabrication of Mounded Storage Vessels at Ajmer LPG Plant and your letter (e mail) dated 3112.2008 advising that you would not accept the Purchase Order placed on you unless Excise Duty/VAT will not include in basic rates.

In view of your failure to accept our Purchase order, you are hereby advised that:

1) The Purchase Order placed on you is treated as cancelled.

2) Your firm is put on holiday upto 28.2.2010 and no tender will be issued to you during this period.

3) The Corporation also reserves the right to take further action as it deems fit in line with the Terms & Conditions of the Purchase Order.

Thanking you,

Very truly your�s

Sd/- K C S Rao

Sr. Manager - EP&P (LPG)

A bare reading of the above letter shows that the HPCL had cancelled the order placed upon the Petitioners and they were put on holiday upto 20th February 2010 clearly stating that no tender will be issued to the Petitioners during that period. The use of the expression ''holiday'' would not per se make it clear that the HPCL had taken a decision not to deal with the Petitioners and even not to issue tender document to them for the period ending 20th February 2010. Strictly construing the expression ''blacklisting'' might not have been used, but the effect of the expression ''holiday'' at least temporarily was same as that of black listing. The Division Bench dealing with the Writ Petition filed by the Petitioners earlier had not quashed the letter dated 9th March 2009 of the HPCL. While the order remained in force, the Petitioners had stated that they would submit their reply to the show cause notice issued by the Corporation and the matter would be disposed of and in the event the order so passed was adverse to the Petitioners, the Petitioners had the liberty to challenge the same. The Writ Petition was primarily disposed of on the basis of the statement made by the Petitioners. There is nothing on record before us to show that the letter dated 9thMarch 2009 was quashed by the Court or withdrawn/kept in abeyance by HPCL. Once that letter is operative, we are unable to find any error in the approach of the Respondents in the present Writ Petition in not entertaining the tender submitted by the Petitioners. Furthermore, we must notice that this tender was invited by the Respondents on 20th April 2009and, as stated by the Respondents during the course of hearing, the tender has also been awarded to the successful bidder. As such, nothing survives in this Writ Petition. Furthermore, as per the letter written by the Petitioners to the Respondents, it is obvious that the Petitioners knew that their tender had not been considered because the letter of HPC which was being treated as blacklisting of the Petitioners by the Corporation. There is hardly any justification on the part of the Petitioners to wait till 10th August2009 when the present Writ Petition was lodged. In the meanwhile, the tender has also been awarded to the successful bidder. It was also stated on behalf of the Respondents that if the Hindustan Petroleum Corporation Limited withdraws the letter dated 9th March 2009, they would permit the Petitioners to participate in the tender in future.

In view of the above facts, we are unable to hold that the action of the Respondents suffers from any infirmity or is arbitrary. Writ Petition is dismissed. Rule discharged. No order as to costs.