Case Note & Summary
The petitioners, Perfect Alloys and Steel Limited and another, challenged the tender conditions in a Notice Inviting Tender (NIT) dated November 8, 2019, issued by Hindustan Petroleum Corporation Limited (HPCL) for procurement of LPG cylinders. The petitioner's bid was rejected for non-compliance with essential conditions, which the petitioner accepted. Subsequently, HPCL extended the contract with the successful bidder for an additional 12 months without inviting fresh tenders. The petitioner sought to quash the extension and direct HPCL to consider its empanelment. The court examined whether the extension was arbitrary and violative of Article 14. It held that the tender conditions permitted extension, and the decision was a commercial one within HPCL's discretion. No mala fides were alleged, and the extension was in public interest to ensure continuous supply. The court dismissed the petition, finding no grounds for interference under Article 226.
Headnote
A) Constitutional Law - Judicial Review of Contractual Matters - Article 226 of Constitution of India - Scope of Interference - The court examined whether the extension of a contract without re-tendering was arbitrary. Held that the court's interference in contractual matters is limited to cases of arbitrariness, mala fides, or violation of statutory provisions. The decision to extend was a commercial decision within HPCL's discretion, and no mala fides were alleged. (Paras 7-10) B) Tender Law - Extension of Contract - Legitimate Expectation - The petitioner argued that HPCL should have invited fresh tenders upon expiry of the contract period. The court held that the tender conditions permitted extension, and the petitioner had no legitimate expectation to be considered for the extended contract as its bid was already rejected. (Paras 11-13) C) Public Interest - Extension of Contract - The court noted that the extension was in public interest to ensure uninterrupted supply of LPG cylinders. The decision was taken after due consideration and was not arbitrary. (Paras 14-15)
Issue of Consideration
Whether HPCL's decision to extend the contract with the successful bidder without inviting fresh tenders is arbitrary, unreasonable, or violative of Article 14 of the Constitution of India.
Final Decision
The petition is dismissed. Rule discharged. No order as to costs.
Law Points
- Tender conditions
- extension of contract without re-tendering
- judicial review of contractual matters
- Article 226 of Constitution of India
- legitimate expectation
- public interest
