The distinction between essential and ancillary conditions in tender notices and the requirement for reasonableness and non-arbitrariness in tender processes.

SANJEEV SACHDEVA, J

1. The Petitioner filed W.P.(C) No.12331/2015 seeking quashing/waiving off the arbitrary and discriminatory conditions encapsulated in clauses B.2.6(v) and B.2.7(v) and B.2.6(v) of the tender Nos.1, 2 & 3 respectively. W.P(C) No.791/2016 has been filed seeking a mandamus to the Respondent No. 1 to consider the bid of the Petitioner against the five subject tenders.

2. The Petitioner is a Public Limited Company engaged in the business of oil and gas drilling, providing drilling services to E& P Operators in India and overseas. It is stated to have over ten years of drilling experience across the industry and claims to be India’s leading and fastest growing drilling company.

3. The Petitioner is a wholly owned subsidiary of SREI Infrastructure Finance Limited, which owns 99.90% of the shares. The share-holding pattern of the Petitioner, as on the date of the filing of the petition, was as under:-       

4. It is contended that SREI is in full and complete control of the Petitioner Company and has full control on the operations and affairs of the Company of the Petitioner.

5. It is contended that the Respondent No.1/Oil and Natural Gas Corporation Limited (ONGC Ltd.) floated the subject tenders for deployment of drilling rigs and carrying out of 3-D seismic survey. The Petitioner is aggrieved by the financial criteria of the subject tenders, whereby the subsidiary Company is required to be a 100% subsidiary of the parent/ultimate parent/holding Company. It is contended that since the holding Company owns 99.90% shares of the Petitioner Company, it virtually amounts to 100% shareholding and the holding Company exercises complete control in the management and the decision making of the Petitioner. It is contended that such a condition is discriminatory and aimed at excluding prospective bidders and preventing healthy competition. It is contended that the said condition of owning 100% shareholding in the subsidiary is not relevant to ensure successful execution of the work and the said condition is unreasonable, discriminatory, opposed to public policy, arbitrary and irrational. It is contended that the said condition is not an essential condition of eligibility and is merely ancillary or subsidiary with the main object to be achieved by the condition. It is contended that even the Respondent No.1/ONGC has applied the same liberally. The Respondent No.1, in its counter-affidavit filed to C.M. No. 2081/2016, has conceded that it has awarded a tender to a consortium of M/s Bumi Armada Offshore Contractor Limited (BAOCL), Marshall Island and M/s Afcons Infrastructure Limited, Mumbai wherein the BAOCL has 99% stake in its subsidiary company M/s Bumi Armada Caspian LLC (BACLLC), Russia. BAOCL has 99% of shareholding in BACLLC and the rest 1 % is with M/s Bumi Armada Russia Holdings Limited, Marshall Islands (BARHL).

6. M/s Bumi Armada Russia Holdings Limited (BARHL), Marshall Islands and M/s Afcons Infrastructure Limited, Mumbai, wherein BARHL has 90% stake in its subsidiary Company.

7. It is contended in the counter affidavit, that the same has been done because as per Russian Law, holding Company cannot hold 100% share of its subsidiary Company and, as such, 10% share was allotted to anoth