Point of Law : Guidelines contained in two Circulars do not have statutory force, though they may be binding as administrative orders, as they seek to incorporate the terms and conditions in the licenses issued to Indian and foreign vessels.

JUDGMENT :

VIPIN SANGHI, J.

1. The petitioner has preferred the present writ petition to seek quashing of the communication dated 31.08.2021 issued by the respondent. The petitioner also seeks a direction to the respondent to restore the letter dated 17.08.2021 and allow the petitioner to use its option of Right of First Refusal (RoFR).

2. The case of the petitioner is that the petitioner was the first commercial diving company in India. It has expanded into various ancillary businesses, including SPM Maintenance, offshore diving including saturation and mixed gas, plus salvage and wreck removal. The petitioner is the incumbent contractor at the Paradip Port providing maintenance and operation of offshore terminals and other facilities, and similar services at other ports in India, including at IOCL Vadinar, Bharat Oman Refinery at Singach, BPCL at Kochi, HMEL at Mundra, Reliance at Hazira and Sikka Port and Terminal Limited - Reliance Group Company.

3. The respondent No.1/Indian Oil Corporation Limited (IOCL) invited a tender for “Maintenance and Operation of Offshore Terminals & Facilities at Paradip, Orissa” for a period of three years from eligible bidders. The “Type of tender” was described as “Open (Global), Tender Cum Reverse Auction”.

4. The commencement date of the work under the tender, by the selected contractor was fixed as 14.11.2021 or any other date as notified by the Engineer-in-charge in that behalf.

5. The petitioner participated in the tender. The terms & conditions laid down in the tender provided for preferential treatment to the domestic shipping industry by providing the domestic players (i.e. those offering Indian Flag Vessel) the RoFR by matching the most competitive bid if the L-1 bidder was the one offering a Foreign Flag Vessel. Relevant clauses in this regard were incorporated in Clause 23.9.0 and 23.10.0 of the tender document which were premised on the Circular No.2/2002 issued by the Director General of Shipping, Mumbai under Sections 406 & 407 of the Merchant Shipping Act, 1958. Clause 23 of the tender document prescribed the mechanism of Price Evaluation and Comparison of Bids”. Clause 23.9.0 and Clause 23.10.0 are relevant, and read as follows:

“23.9.0 Due consideration will be given to Vessels/Boats with Indian Flag as per the S.D. Circular-2/2002 dated 08.11.02 issued from the Office of the Director General of Shipping, Mumbai and any amendments issued subsequently thereof.

23.10.0 The detailed S.D. Circular-2/2002 can be seen on internet at web site www.dgshipping.com/http://www.dgshipping.com/dgship/final/notices/sdcir2_02.htm) the official site of the Office of the Director General of Shipping, Mumbai. Some of the relevant clauses under ‘Chartering of Vessels done through Tender Process for all types of Requirements’ are reproduced here:

• Unless the Indian vessel becomes successful in the evaluation of the technical bid, it will not of course be eligible for any consideration and support under the provisions of Section 407 of the M.S. Act, 1958.

• Whenever charter of vessel is undertaken through a tender process, open, closed or global tender, or any other process of tender, the provisions of these guidelines are required to be incorporated. Whether the guidelines have been incorporated in any tender or not, the said guidelines would be deemed to have been incorporated as a part of the tender documents.

• Every tender process would provide scope for Indian Citizens/Companies/Cooperative Societies having Indian flag vessels to participate in the said tender. Where the said Indian Citizens/Companies/Co-operative Societies have failed either to participate or obtain the order, they cannot be allowed to obtain the same or part of the same work at any cost merely through the provisions found in Section 407 and Section 406 of the M.S. Act, 1958. In the said tender process, the right of first refusal will remain with the Indian vessel owner on his showing readiness to take up the job at the lowest price