Supreme Court: The Division Bench of M.R. Shah* and A.S. Bopanna, JJ., quashed the judgment of Gujarat High Court wherein it had directed ONGC to accept modified bid of the writ applicant. The Bench held that the when High Court had permitted the writ applicant to modify its offer, the opportunity ought to have been given to the other applicants as well. The Bench remarked,

“The procedure adopted by the High Court while disposing of the writ petition by permitting/allowing the original writ applicant to modify its offer and that too in exercise of powers under Article 226 of the Constitution of India, as observed herein above, is unsustainable and unknown to law.”

Facts of the Case

By the impugned judgment, the High Court had directed the respondent-ONGC to finalize the contract with the writ applicant on the condition that the writ applicant shall lift the gas within 65 days from the date of allotment instead of 75 days as offered by it earlier. Noticeably, the respondent-ONGC had invited “Expressions of Interest” (EOI) on 22-07-2020 for demand assessment for natural gas produced from the two fields. As per the EOI, the demand assessment for the natural gas in the area was to be undertaken by ONGC and the ultimate approval for allocation was to come from Ministry of Petroleum and Natural Gas, Government of India. If allotted, the gas supply was to operate for a period of five years from the date of award.

Only three applicants were interested in sourcing the natural gas from two fields advertised by ONGC viz., (1) original writ applicant – Nobel Cera Coat, (2) Vaibhavi Enterprise (3) Tanish Cerachem Pvt. Ltd. Thereafter, ONGC sought approval of Ministry for gas allocation. When the matter was pending consideration before the Union Government, one of the applicant-Tanish Cerachem Pvt. Ltd. revised its response and offered to commence off take of gas within 65 days of allotment.

Evidently, the writ applicant had offered to lift gas from the field/block within a period of 75 days. However, considering the revised offer from Tanish Cerachem Pvt. Ltd., the ONGC had re-invited bids from all the three shortlisted applicants and accordingly it had asked them to place fresh bids.

The appellant contended that, it had submitted to the fresh tendering process and submitted its bid. However, the writ applicant did not submit any fresh bid and filed a writ petition before the High Court challenging the ONGC’s decision to re-invite the bid so far as it called for “expected period of readiness to off take gas from ONGC’s offer letter”, wherein the High Court had permitted the writ applicant to reduce the days for lifting gas from 75 days to 65 days, and had directed the ONGC to finalize the contract with the writ applicant.

Analysis and Findings

“It is required to be noted that before the High Court it was brought on record that there are two other applicants who submitted their EOI and even one of the applicants was ready and willing to lift the gas within 65 days.

Observing that the writ applicant had revised its offer only during the pendency of the petition, and unfortunately High Court had permitted the same that too in exercise of powers under Article 226 of the Constitution, the Bench remarked,

“We have our own doubt whether in exercise of powers under Article 226 of the Constitution of India, the High Court could have permitted one of the bidder to revise / modify its offer. Even in the facts and circumstances of the case, the High Court felt that instead of inviting fresh bids, the same could be allowed, in that case also, similar opportunity ought to have been given to the other applicants also.”

In the light of the above, the impugned decision was set aside and the matter was remitted to the High Court for its fresh decision in accordance with law and after giving fullest opportunities to all the respondents including ONGC, Union of India and the appellants.

[Vaibhavi Enterprise v. Nobel Cera Coat, 2021 SCC OnLine SC 954, decided on 21-10-2021]

Kamini Sharma, Editorial Assistant has put this report together 

Appearance by:

For the appellant: Santosh Krishnan,

For the Writ Applicant: Saurav Agrawal,

For ONGC: Vikramjit Banerjee, ASG

*Judgment by: Justice M.R. Shah

Know Thy Judge | Justice M. R. Shah


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