Parumala Transport and Others v. Indian Oil Corporation Ltd.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** ## **THE HONOURABLE MR.JUSTICE S.SIRI JAGAN** ## **THURSDAY, THE 23RD DAY OF FEBRUARY 2012/4TH PHALGUNA 1933** ## **WP(C).No. 2266 of 2012 (G)** ## **---------------------------------** ## **PETITIONER(S):** - **-------------------** **1. PARUMALA TRANSPORT REPRESENTED BY ITS PARTNER BINOY ALEX V. CHIYYARAM PO, THRISSUR 680 026.** **2. AMMU TRANSPORT CORPORATION REPRESENTED BY ITS MANAGING PARTNER MANESH P. KUMAR PULIMOOTIL BUILDINGS VANNAPPURAM PO THODUPUZHA 685 607.** **3. PANANGOTE TRANSPORTS REPRESENTED BY ITS PROP. ANAND OOMMEN PANANGOTE BUNGALOW, ALUMMOODU PO MUKATHALA KOLLAM-691577.** ## **4. KEERTHI TRAVELS** - **REPRESENTED BY MANAGING PARTNER V.KRISHNAN MANJALIKULAM ROAD OPP. KSRTC BUS STAND PALAKKAD-14.** **5. LPG TRANSPORTERS ASSOCIATION ROOM NO.1, ANJALY BUILDING UDAYAMPEROOR NADAKKAVU PO ERNAKULAM.** **BY ADVS.SRI.G.SHRIKUMAR (SR.) SRI.SREEJITH S.NAIR SRI.K.G.JITHU JAGANNATH** **RESPONDENT(S):** ## **--------------------** **1 INDIAN OIL CORPORATION LTD., MARKETING DIVISION KERALA STATE OFFICE PANAMPILLY AVENUE PANAMPILLY NAGAR, COCHIN 682 036 REPRESENTED BY THE CHIEF LPG MANAGER.** **svs** **...............2/-....** **..2..** ## **WPC. NO.2266/2012** - **ADDL. R2 TO F8 IMPLEADED** **2. VENUGOPAL.A.T. DISTRIBUTOR, SUPER GAS AGENCY, PONEVUZHY ROAD EDAPPALLY.P.O., ERNAKULAM.** **3. JAYAPRAKASH.K.,DISTRIBUTOR, POOJA GAS, UNNICHIRA, KOCHI-21.** **4. GEORGE MATHEW DISTRIBUTOR, MATHSONS GAS SERVICES KOTHAMANGALAM- 686691.** **5. T.B.MOHAN DISTRIBUTOR, ARANI INDANE SERVICES KOOTHATTUKULAM.P.O., KOCHI-686662.** **6. CYRIAC KURIAKOSE DISTRIBUTOR, RASMI GAS, THRIPPUNITHURA.P.O.** - **KOCHI- 682301.** **7. MINI GEORGE** - **DISTRIBUTOR, AMAR JYOTHI INDANE SERVICES KOTHAMANGALAM, KOCHI-686691.** **8. BABU VARGHESE** - **DISTRIBUTOR,BABU GAS SERVICES, A.M. ROAD PERUMBAVOOR.ADDL.** - **R2 TO R8 ARE IMPLEADED AS PER ORDER DATED 06/02/2012 IN IA. 1882/2011.** - **** ADDL. R9 IS IMPLEADED** **9. T.NIRMALANANDAN** - **NIRMAL INDANE, NP IX, 811 F MARKET JUNCTION, VENJARAMOODU THIRUVANANTHAPURAM- 695607.** - **** ADDL. R9 IS IMPLEADED AS PER ORDER DATED 13/02/2012 IN IA. 1896/12.** - ***** ADDL. R10 TO R25 ARE IMPLEADED** **10. INDANE DISTRIBUTORS FORUM REPRESENTED BY ITS GENERAL SECRETARY, BABU VARGHESE BABU GAS SERVICES, A.M. ROAD, PERUMBAVOOR ERNAKULAM.** **.............3/-....** **svs** **...3...** ## **WPC. NO.2266/2012** - **# ADDL.R10 IS IMPLEADED AS PER ORDER DATED 16/02/2012 IN IA. 1883/2012.** **11. ALL INDIA LPG DISTRIBUTORS FEDERATION (KERALA CIRCLE) REPRESENTED BY ITS GENERAL SECRETARY M.SANGEETH KUMAR.** **12. SANAL KUMAR G. K.R.AGENCIES, KAIMANAM, THIRUVANANTHAPURAM- 695 040.** **13. MADHU. R. SANDHYA FLAMES, ARANMULA PO, PATHANAMTHITTA.** - **# ADDL. R11 TO R13 ARE IMPLEADED AS PER ORDER DATED 16/02/2012 IN IA. 1907/2012.** **14. NATIONAL TRANSPORTS KODIKUTHIPARAMBU, ANDIYOORKUNNU P.O.** - **MALAPPURAM-673 637. REPRESENTED BY ITS MANAGING PARTNER - P.V. ASIF.** **15. SREE VINAYAKA LOGISTICS 4/573, BEHIND VILLAGE OFFICE, NORTH NADA KODUNGALLUR, TRICHUR - 680 664.** - **# ADDL. R14 AND R15 ARE IMPLEADED AS PER ORDER DATED 16/02/2012 IN IA 1931/2012.** **16. SURESH BABU DEVAMATHA TRANSPORT, DEVAMATHA HOUSE NEDUMGOLAM P.O.,SOUTH PARAVOOR, KOLLAM.** **17. V.SATHYASEELAN SREENILAYAM TRANSPORT, SREENILAYAM, ATTINKUZHI KAZHAKOOTTAM PO, THIRUVANANTHAPURAM.** **18. JYANI T.K. KANNAN TRANSPORTS, BHAVANA, NEDUMGOLAM PO. SOUTH PARAVOOR, KOLLAM.** **19. USHA JOHNSON MARUTHAYATHU TRANSPORT, MARUTHAYATH BUILDING PALLIMUKKU, KUNDARA.PO., KOLLAM.** **20. GAISHU SUNIL ADWAIDAM, PAMPURAM, KALLUVATHUKKAL PO KOLLAM.** **svs** **...............4/-....** **...4...** ## **WPC. NO.2266/2012** **21. PRIYA UPASANA TRANSPORTS, PRIYA LAND, AYROOR PO VARKALA.** **22. SUKUMARI** - **GOWRI TRANSPORTS, SS BHAVAN, MANVILA COLONY ROAD PANGAPARA PO, THIRUVANANTHAPURAM.** **23. LEELA SURESH** - **MATHA ENGINEERING WORKS, DEVAMATHA HOUSE NEDUMGOLAMA PO, SOUTH PARAVOOR, KOLLAM.** **24. MOHANDAS** - **SIVA TRANSPORTS, MAYYANAD, KARIKUZHI.PO KOLLAM.** **25. LPG TRANSPORTERS ASSOCIATION** - **KOLLAM, REPRESENTED BY ITS SECRETARY, JAGAL MOHAN BHAVANA, NEDUMGOLAMA PO., SOUTH PARAVOOR KOLLAM.** **# ADDL.R16 TO R25 ARE IMPLEADED AS PER ORDER DATED 16/02/2012 IN IA 2272/2012.** **R2-R10 BY ADVS. DR.S.GOPAKUMARAN NAIR (SR.) SRI.M.CHANDRA BOSE SRI.A.RAJASIMHAN RADDL.R6 BY SRI.GEORGE POONTHOTTAM R11 TO R13 BY ADV. SRI.B.UNNIKRISHNA KAIMAL R14 & 15 BY ADV. SRI.V.V.ASOKAN R16 TO R25 BY ADVS. SRI.S.SANTHOSH KUMAR SMT.P.LISSY JOSE. RADDL.R.8 & 9 BY SMT.RUKHIYABI MOHD KUNHI BY SRI.M.GOPIKRISHNAN NAMBIAR BY SRI.P.GOPINATH BY SRI.P.BENNY THOMAS BY SRI.K.JOHN MATHAI** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16-02-2012, THE COURT ON 23-02-2012 DELIVERED THE FOLLOWING:** **svs** ## **W.P.(C). NO. 2266/2012** ## **APPENDIX** ## **PETITIONER'S EXHIBITS:** ## **P1: COPY OF THE TENDER NOTIFICATION NO.KeSO/LPG-O/PT-06/2011-12.** - **P2: COPY OF THE TENDER NOTIFICATION ISSUED BY THE RESPONDENT FOR TRANSPORTATION OF LPG CYLINDERS DURING THE YEAR 2009.** ## **P3: COPY OF THE REPRESENTATION DATED 20.1.2012 SUBMITTED BY THE 5TH PETITIONER.** ## **RESPONDENT'S EXHIBITS:** ## **R1: COPY OF THE REGISTRATION CERTIFICATE.** - **R2(a):COPY OF REGISTRATION CERTIFICATE ISSUED BY THE REGISTRAR TO THE 1ST PETITIONER/2ND RESPONDENT.** - **R2(a):COPY OF THE NEWS PAPER REPORT DATED 04/03/2009 IN MALAYALAMANORAMA.** - **R2(b):COPY OF THE NEWS PAPER REPORT DATED 19/02/2009 IN MALAYALAMANORAMA.** - **R2(c):COPY OF THE NEWS PAPER REPORT DATED 23/04/2009 IN INDIAN EXPRESS.** - **R2(d):COPY OF THE NEWS PAPER REPORT DATED 13/10/2009 IN MALAYALAMANORAMA.** - **R2(e):COPY OF THE NEWS PAPER REPORT DATED 04/03/2010 IN JANAYUGAM** - **R2(f):COPY OF THE NEWS PAPER REPORT DATED 29/08/2009 IN MALAYALAMANORAMA.** - **R2(g):COPY OF THE NEWS PAPER REPORT DATED 06/11/2010 IN MALAYALAMANORAMA.** ## **R2(h):COPY OF THE NEWS PAPER REPORT DATED 04/03/2009 IN MALAYALAMANORAMA.** **svs** **...............2/-....** **...2...** ## **WPC. NO.2266/2012** **R2(i):COPY OF THE NEWS PAPER REPORT DATED 13/11/2010 IN MALAYALAMANORAMA.** **R2(j):COPY OF THE NEWS PAPER REPORT DATED 03/06/2011 IN INDIAN EXPRESS.** **R2(k):COPY OF THE NEWS PAPER REPORT DATED 09/06/2009 IN DESABHIMANI.** **R2(l):COPY OF THE NEWS PAPER REPORT DATED 03/06/2009 IN INDIAN EXPRESS.** **R2(m):COPY OF THE NEWS PAPER REPORT DATED 04/08/2009 IN INDIAN EXPRESS.** **R2(n):COPY OF THE LETTER DATED 10/11/2010.** **R2(o):COPY OF THE LETTER DATED 23/03/2009.** **R2(p): COPY OF THE LETTER DATED 01/11/2010.** **R2(q): COPY OF THE LETTER DATED 26/08/2009.** **R2(r): COPY OF THE LETTER DATED 24/08/2009.** **R2(s):COPY OF THE REPRESENTATION DATED 31/06/2006.** **R2(t): COPY OF THE REPRESENTATION DATED 27/03/2009.** **R2(u): COPY OF THE REPRESENTATION DATED 27/02/2009.** **R2(v):COPY OF THE JUDGMENT IN WPC. NO.34392/2010 DATED 19/11/10. R2(w):COPY OF THE TENDER NO.KESO/LPG/PT.06/2011 - 2012. R2(x):COPY OF THE UNDERTAKING** **/TRUE COPY/** **P.A. TO JUDGE.** **svs** ## **S. SIRI JAGAN, J.** ------------------------------------------- W.P.(C) No.2266 of 2012 ---------------------------------------------Dated this the 23[rd] day of February, 2012 ## **JUDGMENT** The issue involved in this writ petition is the validity of a clause in Ext. P1 notification inviting tenders issued by the 1[st] respondent company for transportation of LPG cylinders from the various bottling plants of the respondents to various destinations for distribution to the ultimate customers of LPG. As per clause 1.9 of Ext. P1, a general tenderer must own at least five trucks in their name, but IOC distributor/IOC reseller/SC &ST tenderers need own only one truck in their name. Under clause 1.28.3, a group of distributors who are taking supplies from the same plant can form a partnership firm duly registered and quote in the tender for their own supplies, in which case the firm which is formed with only distributors will be evaluated as a distributor for the purpose of the requirement regarding number of trucks in clause 1.9. Clause 1.28.3 is challenged by the petitioners as arbitrary and discriminatory and violative of the fundamental 2 W.P.(C)No.2266/12 rights of the petitioners under Articles 14, 16 and 19(g) of the Constitution of India. The petitioners 1 to 4 are tenderers in the general category and the 5[th] petitioner is an association of transporters of LPG. 2. The petitioners challenge the said clause on two grounds. The first is that the relaxation in qualification prescribed under clause 1.9 is applicable to distributors only and once the distributors join themselves into a partnership firm, they lose their identity as distributors and therefore the new entity is not entitled to the same relaxation as applicable to a distributor. They particularly refer to a partnership firm under the Limited Liability Partnership Act, 2008, as per Section 3 of which such a partnership is a body corporate and legal entity separate from its partners. The second is that such a benefit available to individual distributors, if granted to a cartel formed by the distributors, will result in a monopoly of the contract in distributors. The petitioners seek the following reliefs: “i) Issue a writ in the nature of mandamus or any other appropriate writ, order or direction, directing the respondent to delete clause 1.28.3 in Ext.P1 tender notification and in similar notifications in respect of Calicut and Quilon Bottling Plants to prevent formation of partnership W.P.(C)No.2266/12 3 firms among the distributors and their evaluation as distributors. ii) Issue a writ in the nature of mandamus or any other appropriate writ order or direction, directing the respondents to define the projected quantum of work exclusively meant for the transporters so as to enable the petitioners to quote competitive rates. iii) Issue a writ in the nature of mandamus or any other appropriate writ order or direction, directing the respondents to ensure equitable utilization of all trucks inducted after finalization of the contracts irrespective of category.” ## 3. Various individual distributors and associations of distributors have got themselves impleaded in this writ petition to oppose the prayers in the writ petition. All the respondents have filed counter affidavits opposing the contentions in the writ petition. They would contend that a partnership firm is not a legal entity like a company and it is a group of individual partners not distinct from the partners and is only a compendium description of individuals who compose the firm. Therefore they would contend that a firm comprised of the distributors would continue to possess the same character as distributors and consequently there is nothing arbitrary or illegal in conferring the benefit under clause 1.9 applicable to individual distributors to a firm of distributors as well. According to them clause 1.28.3 will not result in any monopoly in distributors insofar as only those distributors who W.P.(C)No.2266/12 4 are taking supplies from the same plant is given that benefit and they can quote only for their own supplies. The 1[st] respondent would point out that the benefit is only in the matter of qualification regarding ownership of trucks and such firms of distributors have to compete with all others in the matter of rates for the contract and irrespective of whether the tenderer is distributor, firm of distributors or general tenderer, only those who quote the lowest rate would be awarded contracts pursuant to the tender. Therefore there is no chance of any monopoly of contract in the distributors as contended by the petitioners is their contention. They would further contend that it is their experience over the past years that distribution of LPG cylinders are disrupted often because of strike by workers of truck owners, which can be contained to a great extent if the distributors, who themselves have special interest to see that the transportation from the bottling plants to their go-downs are not disrupted since they are the persons on whom the responsibility to see that the gas cylinders reach the ultimate consumers without disruption in supplies lies. Whether their aim in practice fructifies or not, which is yet to be seen from experience, they have taken this decision in all W.P.(C)No.2266/12 5 good faith, in public interest and this court is not justified in interfering with such good intentions is their argument. 4. In reply, the petitioners would contend that the clause does not distinguish between firms under the Partnership Act, 1932 and firms under the Limited Liability Partnership Act, 2008 and therefore the contentions of the respondents have no merit. They point out that as is clear from the paper reports they have produced the strikes the 1[st] respondent seeks to prevent, are of the loading and unloading workers and not by the transporters themselves, which is equally applicable to distributors trucks as well, as that of trucks of other tenderers. Therefore there is no nexus between the clause and the object they seek to achieve by the same is the contention of the petitioners. ## 5. I have considered the rival contentions in detail. Clause 1.9 of Ext. P1 tender conditions reads thus: “Tenderer must own at least **FIVE** (in case of IOC distributor/IOC reseller/SC & ST tenderers minimum **ONE** ) trucks in their name. If the tenderer does not have minimum trucks as stated above in owned category, then the bid of such tenderer will not be considered. Additional trucks offered by any tenderer may be owned or attached. In case the tenderer is offering attached trucks along with the owned trucks as mentioned above, then the maximum number of such attached trucks that can be offered should be in the W.P.(C)No.2266/12 6 ratio of 1:2 only i.e. for every 1 owned truck 2 attached trucks. For award of contract, preference will be given to **OWNED** trucks. Trucks Owned by tenderers and offered in response to this tender should be registered in the case of: - a. Proprietorship firms/Individuals - in the name of the tenderer. - b. Partnership Firms - In the name of the firm or in the name of any of the partners. - c. Company - In the name of the Company d. Co-operative Society - In the name of the Co-Operative Society.” ## Clause 1.28 reads thus: “Corporation dealers/distributors should participate in this tender for award of transport contract. Petroleum product being essential commodity and having potential to create law and order situation in case of supply chain break down, the Corporation reserves the right to give preference to award transport contract to its distributors/dealers for transportation subject to the acceptance of rates offered by the Corporation. 1.28.1 Distributors may offer trucks as per requirement for their own supplies only and all trucks should be owned by the distributor. 1.28.2 Distributors shall earmark the owned trucks as per their requirement for their own supplies and these trucks shall not be used for other transportation work. In case the distributor not earmarking trucks for their own supplies, the supplies to their distributorship shall be made at the discretion of IOCL. The distributors not earmarking trucks for own supplies shall be evaluated as general tenderer. 1.28.3 A group of distributors who are taking supplies from same Plant can form a partnership firm duly registered and quote in the tender for their own supplies. A firm which is formed with only distributors will be evaluated as distributor. 1.28.4 Distributors will be considered as distributor category only at the plant from where they are drawing their regular supplies. At other Plants they will be evaluated as transporter only.” (underlining supplied) W.P.(C)No.2266/12 7 6. Various decisions have been relied upon by both sides regarding the jurisdiction of this court to interfere with tender conditions. The law being settled by various decisions of the Supreme Court, I do not think that it is necessary to consider those decisions in detail. It is settled law that it is the prerogative of the awarder of a contract to set the terms and conditions of a tender, which can be interfered with by courts only where the tender conditions are arbitrary, discriminatory, irrational or irrelevant. Therefore this court can test the tender conditions only in the anvil of Articles 14 and 16 of the constitution of India. See the decisions of the Supreme Court in _**Tata Cellular**_ v. _**union of India**_ [(1994) 6 Supreme Court Cases 651], _**New Horizons Limited and another**_ v. _**Union of India and others,**_ [ _(1995) 1 Supreme Court Cases 478]_ , _**Directorate of Education and others**_ v. _**EducompDatamatics Ltd. and others,**_ [(2004) 4 Supreme Court Cases 19], and _**Association of Registration Plates**_ v. _**Union of Inida and others**_ [(2005) 1 Supreme Court Cases 679]. Therefore what I have to consider is whether clause 1.28.3 violates the fundamental rights of the petitioners and whether it is in any way arbitrary or discriminatory. W.P.(C)No.2266/12 8 7. At the outset it must be noted that the petitioners do not challenge the relaxation in qualification granted to individual distributors by clause 1.9, which condition has all along been part of the tender conditions in tenders floated by the 1[st] respondent for the particular purpose, for the past few years. Their only grievance is against extending the same benefit to a firm comprised of individual distributors. They would contend that when one distributor having one truck and several others having none, join together, then, by virtue of the impugned clause an unqualified tenderer is also enabled to participate in the tender process. I do not find any merit in that contention, since the same is applicable to the petitioners also in the matter of their qualification of ownership of five trucks, since as per clause 1.9 partnership firms can also participate in the tender process as general tenderers. If one general tenderer owning 5 trucks forms a partnership firm with persons having no trucks, the situation is the same. Moreover in _**New Horizons case**_ (supra), the Supreme Court has held that a qualification of one of the constituents of a consortium can be accepted as the qualification of the consortium, which would be equally applicable to partnership firms as well. W.P.(C)No.2266/12 9 8. Just because distributors form partnerships under the Partnership Act, 1932, the partnership does not lose the characteristics of distributors, since as is clear from the decisions of the Supreme Court in _**Munshi Ram and others**_ v. _**Municipal Committee, Chheharta,**_ [(1979) 3 Supreme Court Cases 83] and _**Comptroller and Auditor General**_ v. _**KamalsehVadilala Mehta,**_ [ _(2003) 2 Supreme Court Cases 349],_ a partnership concern formed under that Act is not a separate legal entity like a company, separate and distinct from its partners and is only a compendious description of individuals who compose the partnership. That being so when the petitioners do not have any complaint against the individual distributors being given the relaxation in qualification regarding ownership of trucks, they cannot have any grievance against a group of individual distributors in that regard. But there is some merit in the contention of the petitioner in respect of a partnership firm of distributors under the Limited Liability Partnership Act, 2008, as per Section 3 of which, such a partnership is a body corporate and legal entity separate from its partners. Such a benefit can be granted only if the firm of distributors retains the identity as distributors, W.P.(C)No.2266/12 10 which a firm under the Limited Liability Partnership Act, 2008 will not have by virtue of the provisions of the said Act. But that can easily be remedied if it is clarified that the firm of distributors shall be a firm other than one constituted under the Limited Liability Partnership Act, 2008. Therefore I hold that the benefit under clause 1.28.3 is applicable to firms of distributors formed under the partnership Act, 1932 and not to firms formed under the Limited Liability Partnership Act. As such tenders from firms of distributors formed under the Limited Liability Partnership Act, 2008 shall be considered only as tenders from a general tenderer, without the benefit of relaxation in qualification provided by clause 1.9. 9. I am unable to countenance the contention of the petitioners that the impugned clause will result in conferring a monopoly in distributors for the contract also. First of all, that clause confers only a relaxation in qualification regarding ownership of trucks and not in the matter of rates for the contract. In the tender process the firm of distributors have to compete not only with other individual distributors and other firms of distributors, but also against the petitioners and other general tenderers like the petitioners. Only those tenderers W.P.(C)No.2266/12 11 who quote the lowest rates would ultimately get the contract. As such there is no danger of a cartel of distributors monopolising the field. Perhaps because of the same, the 1[st] respondent may even get more competitive rates also. Secondly, such distributors cannot quote for all areas of distribution, as they like. Only distributors who are taking supplies from the same plant can form the partnership to quote rates in the tender process, that too only for their own supplies and not for supply to third parties. In such circumstances, I do not find any reasonable chance of such firms of distributors forming a cartel to monopolise the contract. 10. I also find considerable merit in the justification put forth by the 1[st] respondent for incorporating the impugned clause. As rightly pointed out by the counsel for the 1[st] respondent, whether their object fructifies or not, at this point of time, they bona fide expects that such a measure, to some extent, may be an answer to the disruption in supplies on account of strikes, since, distributors have a special interest in seeing that supplies are not disrupted since as a distributor, they have a responsibility to satisfy the ultimate consumer in 12 W.P.(C)No.2266/12 time. As laid down by the Supreme Court in _**EducompDatamatics’s case**_ (supra), clauses in tenders are not open to interference merely because this court feels that some other terms would have been more preferable. 11. Therefore I do not find any merit in the contentions of the petitioners, except the one based on the Limited Liability Partnership Act, 2008 and hence, I hold that except to the extent clarified in paragraph 7 above, the impugned clauses do not suffer from any of the infirmities pointed out by the petitioners. Accordingly subject to that clarification, this writ petition is dismissed, but without any order as to costs. ## **S. SIRI JAGAN, JUDGE** acd W.P.(C)No.2266/12 13 W.P.(C)No.2266/12 14