Calcutta High Court: In a case involving a dispute between an association of LPG distributors, and the Indian Oil Corporation Ltd. (respondent) regarding the nature and validity of an Expression of Interest issued by respondent for the transportation of Indane LPG cylinders, a single-judge bench comprising of Bibek Chaudhuri,* J., determined that the Expression of Interest was an offer and not an invitation to offer and since the distributors were unable to propose counteroffers or negotiate terms, making the Expression of Interest a unilateral offer. However, the Court could not grant relief to the appellant due to their failure to comply with the statutory representation requirement under the West Bengal Societies Registration Act, 1961. According to the West Bengal Societies Registration Act, 1961 the writ petitions should be represented by the President, Secretary, or authorized office-bearer of the associations.
Factual Matrix
The petitioners, an association of distributors of Indane LPG cylinders in West Bengal, filed three similar writ petitions regarding the respondents’ actions related to the Expression of Interest for transporting LPG cylinders.
The respondent issued an Expression of Interest to ascertain the interest of distributors in engaging their own packed trucks for transporting LPG cylinders vertically from the bottling plants to their respective places of business/godowns. This Expression of Interest was linked to a proposed packed transportation tender for the years 2023-2028.
The main grievance of the petitioners is that the Expression of Interest did not specify a base rate for transportation, leaving distributors dependent on respondent’s discretion when fixing transportation rates through the tender process. The petitioners particularly contested Clauses 9, 10, and 11 of the Expression of Interest.
The petitioners argued that the Expression of Interest lacked transparency, failing to outline the factors used to determine the per-unit transportation rate, such as labor costs, fuel costs, and geographical considerations. They alleged that this violated Articles 14, 19(1)(g), and 21 of the Constitution.
Reliefs Sought
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Cancellation of the Expression of Interest for transportation of LPG cylinders.
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Direction to respondents to proceed with the tender process without cancelling the existing Expression of Interest.
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Quashing of certain terms and conditions of the Expression of Interest.
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Stay on the tender process involving the Expression of Interest until the disposal of the writ petition.
Moot Point
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Whether the failure to disclose a base rate in the Expression of Interest violates the distributors’ rights and is in violation of Articles 14, 19(1)(g), and 21 of the Constitution of India?
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Whether the petitioners’ associations have the locus standi to maintain the writ petitions?
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Whether the Expression of Interest’s Clauses 9, 10, and 11 are arbitrary and violate Article 14 of the Constitution of India?
Respondents’ Contentions
The respondents contended that the Expression of Interest was necessary to determine the number of trucks available through distributor participation, which, in turn, influenced the floor rate for the tender. It was argued that past Expression of Interest had been issued without specifying floor rates, and the distributors’ participation was voluntary.
The respondents contended that the petitioners had no locus standi to maintain the writ petitions, as the associations represented only a fraction of the LPG distributors.
Legal Principles
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The right to refuse the lowest or any tender is available to the government, but it must be exercised in line with Article 14 of the Constitution of India.
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The doctrine of “level playing field” requires that the terms and conditions of Expression of Interest must indicate norms and benchmarks with legal certainty.
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While judicial review is generally limited to contractual matters, it may be invoked in cases with a public law element.
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Associations may maintain writ petitions if they represent a large body of persons with a common grievance.
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The Court distinguished between an offer and an invitation to offer, emphasizing the importance of the promisor’s ability to propose terms.
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An agreement without consideration is void ab initio and unenforceable by law.
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Compliance with statutory requirements for representation is crucial when filing cases on behalf of associations registered under specific acts.
Court’s Assessment
The Court first addressed the issue of locus standi raised by the respondents. The Court cited Supreme Court and High Court decisions that allowed associations to represent a large body of individuals with a common grievance, rejecting the narrow concept of locus standi.
The Court considered whether the Expression of Interest violated Article 14 of the Constitution of India. The Court observed that while the government had the right to refuse tenders, this right was subject to Article 14, which required that government policies and actions be reasonable and non-arbitrary. The Court emphasized that Expression of Interest should provide clear norms and benchmarks to ensure fairness and non-discrimination.
The Court opined that the Expression of Interest’s failure to specify a base rate for transportation and its lack of transparency regarding factors used to determine the per-unit rate made it arbitrary and unreasonable. The Court held that the Expression of Interest was in violation of Article 14 of the Constitution of India.
The Court held that the Expression of Interest issued by the respondent was, in fact, an offer and not an invitation to offer. The Court concluded that the Expression of Interest was invalid because it required distributors to accept it without specifying any consideration, making it void ab initio.
The Court emphasized the importance of complying with statutory requirements for maintaining legal proceedings, highlighting that registered societies must be represented by authorized office-bearers in accordance with the relevant law. The Court found that the petitioners’ associations did not have the legal standing to file the writ petitions as they were not represented by the President, Secretary, or authorized office-bearer of the associations, as required by the West Bengal Societies Registration Act, 1961.
Court’s Decision
The Court held that the writ petitions filed by the petitioner were not maintainable under the West Bengal Societies Registration Act, 1961, as the representation by petitioners did not comply with the statutory requirements of the West Bengal Societies Registration Act, 1961.
As a result, the Court dismissed the writ petitions, ruling them as not maintainable in their present form.
[Indane LPG Distributors Assn. v. Indian Oil Corpn. Ltd., 2023 SCC OnLine Cal 3167, order dated 29-09-2023]
*Judgment by Justice Bibek Chaudhuri
Advocates who appeared in this case :
Mr. Kalyan Bandopadhyay, Sr. Adv., Mr. Niladri Bhattacharjee, Mr. Sirsanya Bandopadhyay, Mr. Soham Bandopadhyay, Ms. Deblina Chattaraj, Mr. Aditya Chaturvedi, Ms. Angana Dutta, Counsel for the Petitioner
Mr. Joydip Kar, Sr. Adv., Mr. Amit Kumar Nag, Ms. Sudeshna Majumder, Mr. Partha Banerjee, Counsel for the Respondent/IOCL
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