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2017 Supreme(Del) 1357
IN THE HIGH COURT OF DELHI AT NEW DELHI
S. RAVINDRA BHAT, YOGESH KHANNA, JJ.
QUIPPO OIL AND GAS INFRASTRUCTURE LTD - Petitioner
Versus
OIL AND NATURAL GAS CORPORATION LIMITED AND ANR - Respondents
W.P.(C) No.2604 of 2017 & CM No.11275 of 2017
Decided on : 08-05-2017
For the Petitioner:Ms.Kartika Sharma, Advocate.
For the Respondent:Mr.Sunil K Jain, Mr.Pawanshree Agrawal, Ms.Reeta Chaudhary & Mr.Punya Garg, Advocates.
The court emphasized that legitimate expectation should be reasonable, logical, and valid, and that public interest or change in policy may be sufficient to negate the concept of legitimate expectation.
Headnote:
ONGC - Tender Bid Rejection - Circular No.07/2017, Clause 6.0 - The court discussed the bid evaluation criteria in the tender document, the petitioner's reliance on the doctrine of legitimate expectation, and ONGC's position contrary to the petitioner's legitimate expectations. The court found that ONGC was justified in rejecting the bid of the petitioner as it failed to meet the eligibility criteria.
Fact of the Case:
The petitioner sought a direction to ONGC to consider its bid for a tender and restrain ONGC from awarding the letter of intent to another company. The petitioner argued that ONGC had always considered its bid based on the positive net worth of its parent company in past tenders.
Finding of the Court:
The court found that ONGC was justified in rejecting the petitioner's bid as it failed to meet the eligibility criteria. The court also dismissed the petitioner's reliance on the doctrine of legitimate expectation.
Issues: The issues revolved around the petitioner's bid rejection, reliance on legitimate expectation, and ONGC's position on the bid evaluation criteria.
Ratio Decidendi: The court held that ONGC's rejection of the petitioner's bid was justified, and the reliance on the doctrine of legitimate expectation was misplaced.
Final Decision: The writ petition and miscellaneous application were dismissed by the court.
1. The first respondent – Oil and Natural Gas Corporation Limited (ONGC) is a public sector undertaking of the Government of India and is under the administrative control of the Ministry of Petroleum and Natural Gas. It issued various tenders for charter hire of the drilling rigs of 2D seismic data amongst others.
2. The petitioner, a public limited company, engaged in providing oil and gas rigs on rent with related services, claim that a direction should be issued to ONGC to consider its bid for a tender bearing No.P26AC16006 dated 05.12.2016 and also seeks a direction restraining ONGC from awarding the letter of intent to M/s Globe Ecologistic Private Limited for the said tender. The second Respondent herein owns 100% share holding in the petitioner company and is its ultimate holding company for all practical purposes, including the financial criteria mentioned in the tender. It is urged that no other corporate entity holds any share in the petitioner company other than the second respondent.
3. ONGC had issued a tender for hire of services for 2D seismic data acquisition in unappraised “on land” areas of Sedminetary Basins of India for sector 3, 4, 6 & 10. The offer contained the following bid evaluation criteria in the tender document for the prospective bidder viz, (i) the technical eligibility criteria and (ii) the financial eligibility criteria. The tender demanded the following financial criteria to be fulfilled by the bidder for financial qualification viz, (a) turnover of the bidders : 30% of annualised bid value or more; (b) net worth of bidder : positive (as per latest audited annual accounts.)
4. It is alleged by the petitioner that ONGC had made a provision in all its tenders stating inter alia that in the event any of the criteria (a) or (b) above is not met with by the bidder, it can submit its bid on the basis of the qualification of its 100% subsidiary or 100% parent holding company. It is alleged that the petitioner did not have positive net worth as on 31.03.2016, but it had always submitted its bid to the tenders floated by ONGC by relying upon the positive net worth of its parent holding company i.e. second respondent and that ONGC on past occasions had always considered the petitioner’s bid by relying upon positive net worth of the holding company for example, in (a) tender No.ZNSVC15004/14.04.2015 (Rig); (b) tender No.BN6PC15007 /17.04.2015 (Rig); and (c) tender No.L26BC16030 /12.08.2016 (Seismic).
5. Further, it is urged that ONGC had issued tender Nos.P26AC15002 (Sectors 01-06) and No.P26AC15003 (Sector 07-11) for the same service and sectors; containing identical provisions and that the petitioner duly participated and submitted its bid. The bid of the petitioner was opened, but since it was not declared L1, the contract was awarded to some other companies. However, L1 could not furnish the performance bank guarantee for certain sectors. Therefore, ONGC re tendered it.
6. The petitioner argues that ONGC had also issued a circular No.10/2017 dated 01.03.2017 where it confirmed that the net worth of the supporting company shall be considered in case the bidder relies on the financial strength of such supporting company. It is alleged that the ONGC in the said circular dated 01.03.2017 categorically stated that if the bidder does not meet the financial criteria by itself and relies upon the financial capacity of its parent company, then in such event, the financial parameters viz turnover, net worth, working capital, debt/equity ratio of the supporting company will be considered for evaluation and the financial accountability of the bidder entity will not be considered for evaluation.
7. The petitioner urges, and Ms.Kartika Sharma, its counsel argues, that since it was allowed to bid in the other tenders floated by ONGC, on the basis of the positive net worth of its parent company, it could not now have denied such opportunity for tender No.P26AC16006 dated 05.12.2016 for hiring of 2D seismi
