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IN THE HIGH COURT OF DELHI
Vipin Sanghi, Jasmeet Singh, JJ.
Underwater Services Company Limited - Appellant
Versus
Indian Oil Corporation Limited - Respondent
W.P.(C) 9575 of 2021 & CM Appls. 29637-29639 of 2021
Decided On : 09-12-2021
The acceptance of Right of First Refusal by a petitioner creates vested rights that cannot be unilaterally withdrawn by the respondent based on a misinterpretation of applicable guidelines.
Headnote:(A) Merchant Shipping Act, 1958 - Sections 406 and 407 - Right of First Refusal (RoFR) - Tender process for maintenance and operation of offshore terminals - The petitioner, a commercial diving company, challenged the withdrawal of RoFR after its acceptance based on the circulars - The court ruled that the petitioner, having offered Indian flag vessels, was entitled to the RoFR, which was incorrectly retracted by the respondent due to a misinterpretation of the applicable circulars. (Paras 23, 25, 30, 34)
(B) Legal principles regarding the nature of circulars issued by administrative authorities - The circulars lack statutory force but are binding as administrative orders, establishing rights and limitations in the licensing process. (Paras 28, 29)
(C) Issues of equitable estoppel in tender processes. (Paras 29, 31)
| Table of Content |
|---|
| 1. right of first refusal in tender process (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11) |
| 2. contentions regarding validity of rofr and circulars (Para 16 , 17 , 18 , 19 , 20 , 21 , 22) |
| 3. interpretation of guidelines and statutory authority (Para 23 , 24 , 25 , 26 , 27 , 28 , 29) |
| 4. binding nature of rofr and contract implications (Para 30 , 31 , 32) |
| 5. final order to quash communication and uphold rofr (Para 33 , 34) |
JUDGMENT
Vipin Sanghi, J. 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:
