Point of Law: Tender Process - Extension of period of Contract - Placed on successful bidders may be extended/repeated at sole discretion of Corporation for a further period of up to 12 months including increasing contract quantity calculated on prorate basis on repeat order basis at same terms and conditions.

JUDGMENT :

M.S. KARNIK, J.

Rule. Rule is made returnable forthwith. Heard finally with the consent of the parties.

2. This Petition under Article 226 of the Constitution of India takes exception to the tender conditions in the Notice inviting tender dated November 8, 2019. Petitioner - Company has prayed for further consequential reliefs.

3. Petitioner No.1 - Company is engaged in the business of manufacturing of different types of Liquid Processed Gas (LPG) Cylinders. Respondent No.2 - Hindustan Petroleum Corporation Limited (‘HPCL’ for short) is a Government of India Enterprise engaged in refining and marketing of petroleum products throughout the country.

4. Respondent No.2, on November 8, 2019, floated a tender (hereafter referred to as ‘NIT’ for short) bearing No.1900789-HD-10157 inviting bids for procurement of 89.87 lacs of 14.2 kg LPG cylinders fitted with Self Closing Type LPG Cylinder Valves to various LPG Bottling Plants. The bid of Petitioner No.1 was rejected on the ground that Petitioner No.1 did not comply with the essential terms and conditions of the tender as it did not submit bid for ten States. The Petitioner decided to accept the decision of Respondent No.2 rejecting the Petitioner’s bid.

5. The letter of intent in favour of the successful bidder was issued on January 10, 2020 and the tender was awarded in favour of the successful bidder. It is the Petitioner’s case that upon expiry of the period of 12 months in terms of Clause 3 of the NIT, HPCL is now considering extension of the period of contract in favour of successful bidder for a further period of 12 months. By a letter dated February 10, 2021, the Petitioner requested HPCL to consider empaneling Petitioner No.1 with supply of 14.2 kg LPG Cylinders to HPCL on pan-India basis. However, HPCL failed to respond to the same.

6. The Petitioner is aggrieved by the decision of HPCL in extending the period of contract for further period of 12 months in favour of the successful bidder without floating a fresh tender. It is the submission of learned Counsel for the Petitioners that though pursuant to NIT, the Petitioner participated in the tender process and duly submitted its bid, however, due to inadvertence and/or oversight and/or clerical mistake, Petitioner No.1 submitted a bid restricting the same for nine States. Learned Counsel invited our attention to Clause 47.A.vii.b of the ‘NIT’ which stated thus :

“Bidders quoting for any of the States, i.e. Punjab, Himachal Pradesh, Uttarakhand, Uttar Pradesh have to necessarily quote for J&K”

It is submitted by learned Counsel that the Petitioner No.1 had no other option but to abide by the decision of HPCL rejecting its bid.

7. It is the submission of learned Counsel that it is not rejection of the bid of Petitioner No.1 by HPCL which is impugned in the present Petition but the decision of HPCL to extend the period of contract under the tender for a further period of 12 months in favour of the successful bidder. Learned Counsel submitted that the decision on the part of HPCL extending the period of contract for a further period of 12 months tantamounts to giving unfettered power to HPCL to take a decision with regard to the extension of the contract and without offering prospective bidders to have their bids considered, in gross violation of the principles of equality, fairness and non-arbitrariness. It is contended by learned Counsel that though the Petitioners accepted the decision of HPCL rejecting their bid, however, the decision to grant an extension of one year is nothing but providing an unfettered discretion and unrestricted power on HPCL in contractual matters which according to him is capricious and unreasonable. In the submission of learned Counsel, the absolute discretion that the Respondent authority reserved for itself in extending a contract of a vendor who emerged successful in the tender process of November 2019, is both unreasonable and contrary to public interest and such discretion curtails the right