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Indian Oil Corporation Ltd. And Ors. v. Arti Devi Dangi And Anr. S
Factual and Procedural Background
The appellant, Indian Oil Corporation Ltd. (IOC), invited tenders for establishing retail outlets/Kisan Seva Kendras. The advertisement required that the proposed plot “should fulfil all the Rules and sub-rules of PWD and local legal necessities.” After receiving applications, IOC rejected the respondent–writ petitioners, Arti Devi Dangi and Mohan Singh Parmar, on the ground that their proposed sites were too close to road intersections/medians when measured against distance norms contained in the Indian Roads Congress (IRC) Guidelines, which had been adopted by the Madhya Pradesh Public Works Department (PWD).
The respondents challenged their disqualification by filing writ petitions in the High Court. A learned Single Judge and, in appeal, a Division Bench held in their favour, reasoning that the IRC Guidelines were not mandatory because the tender documents did not expressly mention them. IOC appealed to the Supreme Court, which granted leave to determine the legality of insisting on compliance with the IRC Guidelines.
Legal Issues Presented
- Whether IOC was entitled to treat compliance with the distance norms in the IRC Guidelines as a mandatory eligibility condition despite the tender documents making no specific reference to those Guidelines.
Arguments of the Parties
Appellant – Indian Oil Corporation Ltd.
- The advertisement obligated tenderers to satisfy “all the Rules and sub-rules of PWD”; because the Madhya Pradesh PWD has adopted the IRC Guidelines, those norms automatically formed part of the tender conditions.
- The Guidelines promote public safety and traffic flow; applying them uniformly to all applicants is neither arbitrary nor unreasonable.
Respondent – Writ Petitioners
- No tender document specifically mentioned the IRC Guidelines, so compliance with them could not be deemed an essential condition.
- The reference to “rules and sub-rules of PWD” should be confined to statutory rules, whereas the IRC Guidelines are non-statutory and hence not binding.
- (Specific to Mohan Singh Parmar) The proposed site lies in an urban area, reducing the required setback distance.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Supreme Court examined the wording of the advertisement together with undisputed evidence that the Madhya Pradesh PWD had adopted the IRC Guidelines. It reasoned that:
- When a tender condition obliges applicants to comply with “all the Rules and sub-rules of PWD,” it necessarily incorporates any norms formally adopted by the PWD, even if the tender notice does not name them expressly.
- The IRC distance norms serve public safety and facilitate smooth traffic movement; therefore, construing them as mandatory aligns with public interest.
- IOC applied the same standard to every applicant; hence its action cannot be termed arbitrary or unreasonable, and judicial review should have been exercised with circumspection.
- The High Court erred in holding that the IRC Guidelines are not mandatory; that view ignored the advertisement’s language, the public-safety objective of the norms, and their uniform application.
- Given this conclusion, it was unnecessary to discuss alternative arguments on permissible deviations or implied terms.
Holding and Implications
APPEALS ALLOWED; ORDERS OF THE HIGH COURT SET ASIDE.
The Supreme Court upheld IOC’s decision to disqualify the respondents for non-compliance with the IRC distance norms. The immediate consequence is restoration of IOC’s selection process that excluded the respondents. The judgment reinforces that tender conditions incorporating PWD requirements may implicitly include guidelines adopted by that department, even if non-statutory, when they serve public interest and are applied uniformly.
Order
1. Leave granted. The sole question in the two appeals under consideration is whether the insistence by the appellant Indian Oil Corpn. Ltd. on adherence to the Indian Roads Congress (IRC) Guidelines requiring maintenance of specific distance between the proposed retail outlet and the median of the road was correct in view of the fact that in the advertisement and the brochure there was no specific reference to the said guidelines and no specific mention was made that the same would have to be complied with by a tenderer. The respondent-writ petitioners in both the appeals have been held to be disqualified on the ground that they do not satisfy the requirement in question (i.e. distance) under the aforesaid guidelines.
2. To answer the question arising, it will be necessary to note herein the relevant part of the advertisement issued dealing with the above question.
“(a) For establishment of Kendra, the compulsory measurement of the plot should be 35 m × 35 m (apart from the PWD land) the proposed plot of land for KVK should not be on the National Highway/State Highway and should fulfil all the Rules and sub-rules of PWD and local legal necessities.”
3. The materials on record would go to show that the IRC Guidelines have been adopted by the State PWD of Madhya Pradesh. In view of the aforesaid fact, it is urged on behalf of the appellant that the respondents ought to have verified all such requirements that the rules and sub-rules of PWD stipulate including the requirements spelt out under the IRC Guidelines.
4. On behalf of the respondent-writ petitioners it is urged that there being no specific reference to the guidelines in question the requirement of compliance therewith was not an essential condition of the tender. It is also urged that the rules and sub-rules of PWD referred to in the extract of the advertisement as above would naturally mean statutory rules and the IRC Guidelines do not partake the character of statutory rules.
5. From the proceedings of the selection which shows the manner in which the cases of the respondent-writ petitioners were considered, which proceedings are on the record of the case, it is clear and evident that even at the very initial stage of consideration of the cases of the respondents, it is the requirements spelt out under the IRC Guidelines that were taken into account to hold that the respondents do not fulfil the eligibility criteria prescribed by the tender conditions. The respondent-writ petitioner Arti Devi Dangi was found not to have satisfied the particular eligibility criteria as the land offered by her was situated at a distance of 26 m away from the intersection on the road whereas in the case of Mohan Singh Parmar the distance was found to be about 600 m. The IRC Guidelines stipulated that in urban areas where the station is to be located along the State/National Highways the distance should be 1000 m and in case of rural areas the distance should be 300 m.
6. Though an argument has been sought to be made on behalf of the respondent Mohan Singh Parmar that the location of the station for which he had tendered is in an urban area and a certificate in support of the said claim has been relied upon, we do not find the aforesaid stand to be substantiated by the certificate [issued by the Municipal Council, Pankhedi (Kalapipal) District Shajapur] which has been placed on record of the present appeal inasmuch as the same only indicates that the volume of traffic on the road (about 300 vehicles).
7. If the clauses in the advertisement required a tenderer to fulfil all requirements under the rules and sub-rules of PWD and if what was suggested/recommended by IRC has been adopted by the State PWD and the said norms are in the interest of public safety and would facilitate smooth movement of traffic, it will be difficult to hold that the rules and sub-rules of PWD contemplated in the advertisement do not embrace the IRC Guidelines either because there was no specific mention thereof in the tender documents or the same do not have a statutory flavour. We, therefore, hold that the fulfilment of the requirements spelt out by the IRC Guidelines relevant to the present cases to be a mandatory requirement of the tender conditions. Coupled with the above what we find is that the action of the appellant Corporation cannot be said to be either arbitrary or unreasonable inasmuch as a uniform standard has been applied to all the applicants and in the present two appeals in question no candidate has been found to be eligible upon application of the said uniform standard i.e. the IRC norms. The action of the appellant Corporation, therefore, not being in any manner arbitrary or unreasonable the power of judicial review vested in the High Court ought to have been exercised with due circumspection.
8. A perusal of the orders of the High Court indicates that the only basis on which the decision of the appellant Corporation has been faulted with is that the IRC Guidelines are not mandatory. We fail to see how such a view can be sustained keeping in mind the provisions of the advertisement quoted above; the purport and object of the said norms; the uniform application of the same to all the tenderers by the appellant Corporation and above all the requirements of public interest.
9. In view of the above conclusion reached, it is not necessary for us to consider the arguments advanced on the question of permissibility of deviations from the tender conditions on the touchstone of public interest or the issue of understanding the requirement of the IRC Guidelines as implied terms of the tender document.
10. For the aforesaid reasons, the orders of the learned Single Judge as well as the Division Bench of the High Court cannot be sustained. We, therefore, set aside the same and allow the appeals.
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