15 July 2025 Civil Writ Petition >> Civil & Consumer Law  

The High Court of Judicature at Bombay recently dismissed a petition challenging the tender conditions issued by Bharat Petroleum Corporation Limited (BPCL) concerning the road transportation of bulk petroleum products. The petitioners, existing contractors with BPCL, contested the provision of reservations and concessions for Scheduled Castes (SC), Scheduled Tribes (ST), and Micro and Small Enterprises (MSE) categories, as well as the underlying Government of India guidelines from 1994 that mandate such reservations.

The Core of the Dispute:

BPCL, a public sector undertaking, issued a tender notice on August 9, 2024, for a five-year contract for road transportation of petroleum products from its Manmad Installation. The petitioners raised objections to several conditions, specifically:

• Concessions: Reduced security deposits and relaxed lorry ownership requirements for SC/ST bidders (e.g., Rs. 50,000 security deposit vs. Rs. 8 lakhs for general category; mere booking slip accepted instead of actual ownership).
• Reservations: A 15% reservation for SC bidders and 7.5% for ST bidders, with unfilled quotas from previous tenders carried forward. Petitioners argued that these reservations, along with those for MSEs (mandated by separate policy), significantly reduced the opportunities for general category bidders, leaving less than 50% of the lorries available to them.

The petitioners contended that these reservations violated their fundamental right to conduct business under Article 19(1)(g) of the Constitution, arguing that reservations could only be made in public employment (Articles 15 and 16) and not in awarding business contracts. They also claimed that mere government "guidelines" from 1994 could not curtail fundamental rights.

BPCL's Defense and Court's Examination:

BPCL, represented by Mr. Godbole, argued that the petition was not maintainable as the petitioners had participated in the tender process and were therefore estopped from challenging its conditions. Most petitioners had, in fact, been awarded work under the impugned tender. BPCL emphasized that the reservation policies were based on Government of India guidelines from 1994, which are binding on the PSU given the Central Government's majority shareholding. These provisions, according to BPCL, constituted legitimate "affirmative action" aimed at uplifting backward classes.

The High Court considered both the maintainability of the petition and the merits of the challenge:

Maintainability and Delay:

The Court first noted the significant delay in challenging the 1994 guidelines. The petitioners, having been in the transport business for "decades" and having participated in numerous BPCL tenders with similar reservation conditions since 1994 without objection, were found to have acquiesced to the policy. Their participation in the current tender, coupled with most of them being awarded contracts, further undermined their challenge.

Scope of Judicial Review:

Reiterating established legal principles, the Court affirmed that its scope of interference in tender conditions is narrow. Courts are not to sit in appeal over the tendering authority's wisdom but rather to ensure the decision-making process is just, fair, and transparent, free from irrationality, unreasonableness, bias, or procedural impropriety. The tendering authority is given broad latitude in setting conditions.

Constitutional Validity of Reservations:

Crucially, the Court upheld the constitutional validity of the reservation policy. It highlighted that BPCL, as a public sector undertaking under the Government of India, is subject to the State's directive under Article 46 of the Constitution, which mandates the promotion of "educational and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes."

The Court rejected the petitioners' argument that reservations are exclusive to public employment. It clarified that Article 46 empowers the State to take affirmative actions to promote the economic interests of SC/ST communities, and extending such measures to smaller contracts floated by PSUs is a legitimate step towards fulfilling constitutional objectives. The Court referenced a Calcutta High Court judgment (Sanjay Kumar) which similarly upheld such reservations as a reasonable classification consistent with the Constitution's vision of equality.

Regarding reservations for MSEs, the Court found them to be in line with the Public Procurement Policy for Micro and Small Enterprises Order, 2012, formulated under the Micro, Small and Medium Enterprises Development Act, 2006.

The Court also dismissed the petitioners' reliance on various Supreme Court judgments, deeming them "inapposite" as they pertained to different legal issues such as blacklisting, contract termination, or the creation of monopolies, not the validity of affirmative action through reservations in contracts.

Conclusion:

Finding no valid grounds to interfere, the High Court dismissed the petition. The judgment reaffirms the State's power to implement affirmative action policies through its undertakings to promote the economic upliftment of socially disadvantaged sections, even in the realm of commercial contracts, and reinforces the principle that participation in a tender process without initial objection can preclude subsequent challenges.