NOOTY RAMAMOHANA RAO

1. This writ petition has been instituted by a company, which was manufacturing explosives to be used essentially by the mining industry. The writ petitioner company was supplying explosives and accessories to Singareni Collieries Limited for over two decades. The respondent – Singareni Collieries floated a tender enquiry on 14.12.2006 for supply of SMS explosives and accessories to its MNC Open Cast – II project for a period of one year. The writ petitioner submitted its bid on 28.2.2007. The respondent – Singareni Collieries has called for negotiations on 26.3.2007 with the petitioner company with regard to procurement explosives and accessories against the tender enquiry dated 14.12.2006. The Minutes of the said meeting have been reduced to writing. The conditions, subject to which the explosive have to be supplied, have also been spelt out in detail therein. Thereafter, a Letter Of Intent was released in favour of the petitioner company on 9.4.2007 followed by a detailed purchase order on 20.4.2007. The petitioner company started making the supplies from 2.5.2007 pursuant to the Letter of Intent and the purchase order. However, on 6.7.2007, it has submitted a representation setting out that the price of Ammonium Nitrate Melt has increased from Rs.10,100/- to Rs.12,000/- per Metric Tonne, between March, 2007 to 1st May, 2007 and that the offer earlier made by the petitioner company was based upon the calculations worked out taking the price of Ammonium Nitrate at Rs.10,100/- and hence it has sought for revision of rate for supply of the explosives from Rs.7.59 to Rs.8.255 per Cub Mt. They have enclosed to this representation a detailed work sheet in support of the above claim. After considering this representation, the respondent through its Chief General Manager (Purchase) has replied that the offer made is on firm basis and hence it is not possible to extend any price variation for the supply orders. Upon receipt of this communication dated 3.8.2007, the petitioner company has immediately responded requesting the respondent to short close the contract and to make alternative arrangements for supply of explosives. However, considering the long association and good business relationship between the parties, the petitioner offered to supply the explosives up to 31.8.2007. Accepting this offer, by an order passed on 9.8.2007, the respondent – Singareni Collieries informed the petitioner that the unwillingness of the petitioner to continue to make supplies as per the rate finalized has necessitated the respondent to float afresh a tender enquiry and hence requested the petitioner to continue the supplies as per the terms of the conditions of the purchase order till the alternative arrangement at full scale is made. It will be appropriate at this stage to notice that on 7.8.2007 a fresh tender enquiry has been floated by the respondent and the same was also opened on 14.9.2007. The writ petitioner has once again participated and found to be the second lowest offeror. Therefore, it is represented again to the respondent seeking payment at the rate of L-1 for the supplies that are being made pending finalisation of the latest tender enquiry. On 26.11.2007, the petitioner has suggested that the alternative arrangements may be made for securing supply of the explosives, as the writ petitioner would not be able to supply the material beyond December 2007. The said representation was followed up by yet another representation on 26.12.2007 seeking for reconsideration of the price in view of the steep escalation in the cost of Ammonium Nitrate Melt, the basic raw material for the explosives. However, through communication dated 10.1.2008, the respondent – Singareni Collieries passed orders pointing out that pursuant to the retenders floated afresh orders have been placed on M/s. IDEAL Industrial Explosives Ltd., for supply of SMS/SME explosives and accessories and that the said firm is rea