Bombay High Court Hears Challenge to Tender Condition Preferring State-Registered Tank Trucks in LPG Transportation Contracts. Transporters Challenged Preference Given to State-Registered Tank Trucks as Arbitrary and Violative of Section 46 of Motor Vehicles Act, 1988.

Challenge to tender condition giving preference to state-registered tank trucks in Bulk LPG transportation contracts

Petitioners sought quashing of the impugned condition of the tender notice as arbitrary and violative of their fundamental right to carry on business and Section 46 of the Motor Vehicles Act.

The respondents floated state-wise e-tenders with a condition that preference would be given to bidders with tank trucks registered in the state for which the tender is floated, which petitioners alleged was discriminatory and would harm their business.

Whether the condition in the e-tender giving preference to state-registered Tank Trucks for Bulk LPG transportation is arbitrary, unreasonable, and violative of Article 226 of the Constitution of India and Section 46 of the Motor Vehicles Act, 1988.

Petitioners argued that the impugned condition is arbitrary, irrational, unreasonable and wholly irrelevant to the object sought to be achieved; it violates Section 46 of the Motor Vehicles Act which provides that a vehicle registered in any State is effective throughout India; the condition creates financial burden to re-register trucks and lacks nexus with the tender's objective; relied on principles laid down in Tata Cellular v. Union of India regarding scope of judicial review, particularly that decision must be free from arbitrariness. Respondents contended that the condition is reasonable and non-arbitrary; it generates local employment, promotes equitable development, prevents cartel formation, ensures operational efficiency, and provides fair opportunity to small and new entrepreneurs; the state-wise tenders address past complaints of route inequality and improve control over planning; the condition aligns with the social objectives of public sector undertakings and is tailored to business needs.

This Petition under Article 226 of the Constitution of India challenging the condition of the notices inviting ETenders for Bulk LPG Transportation contract by road for each of the State in the country by which “preference” has been provided to the bidders “who have registered their TTs in the State for which the tender is floated” over the TTs registered in other States. (Para 1) The Petitioners have expressed apprehension that such condition of granting preference to State registered TTs would throw several transporters out of business. (Para 2) The Respondents have filed reply and have justified the impugned condition by stating that the condition of preference to be given to TTs of a particular State will generate local employment and benefit local talent in transportation process. It will lead to overall equitable development of countries' resources and will remove developmental imbalance within different States of the country which is one of the avowed object of the instrumentality of the State. (Para 3) According to the Respondents, the new State wise tender would be beneficial to several small and new entrepreneurs and give them an opportunity to engage in business and participate in the growth of the country. It will generate employment opportunity to new and small entrepreneurs all across the country and it will not be restricted to any particular region as was the past experience of these Respondents with the previous tenders. (Para 4) The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasiadministrative sphere. However, the decision must not only be tested by the application of Wednesbury principle of reasonableness (including its other facts pointed out above) but must be free from arbitrariness not affected by bias or actuated by mala fides. (Para 7)

Writ petition filed by transporters challenging tender condition. Intervention applications were filed in support of respondents. Court heard arguments on 5th April 2018 and reserved judgment. Judgment pronounced on 9th April 2018.

• Constitution of India: Article 226
• Motor Vehicles Act, 1988: Section 46