02 April 2024 Business Laws >> Business & Commercial Law   |   Medical, Pharma & Healthcare >> Miscellaneous  

A recent writ petition has raised concerns about safety protocols in the supply of liquid chlorine gas. The petitioner is challenging a corrigendum issued by a government entity (Respondent No. 2) that modified a tender condition requiring bidders to possess a valid PESO (Petroleum and Explosives Safety Organisation) license and certificate.

The Dispute:

The crux of the issue lies in the interpretation of the tender terms and the Gas Cylinder Rules, 2016. The petitioner argues that the tender involves the sale of filled gas cylinders, making a PESO license mandatory for suppliers to ensure safe handling and storage of this hazardous material.

Respondent No. 4, a potential supplier, disagrees. They claim that their role is merely transporting the cylinders between licensed entities (manufacturer and Respondent No. 2) and, as such, are exempt from the PESO license requirement under a specific rule (44(a)) within the Gas Cylinder Rules. Additionally, they argue that the petitioner's storage capacity is insufficient to meet the daily demand, potentially disrupting the supply chain.

Key Questions for the Court:

1. Separate Activities? Does the tender differentiate between the supply and transportation of liquid chlorine gas? Or are these considered a single commercial activity?

2. PESO License Requirement: Do the tender terms explicitly require the supplier to possess a PESO license, even if the activity involves transportation to a licensed entity?

Court's Decision:

The court sided with the petitioner, emphasizing several key points:

• The tender clearly distinguished between supplying and transporting the cylinders, placing responsibilities on suppliers beyond mere transportation.
• The tender demanded uninterrupted supply even during emergencies, implying a storage requirement for the supplier.
• The very nature of the business involved supplying chlorine gas cylinders, strengthening the need for a PESO license for safe handling.

The court deemed the modification unreasonable as it:

• Downplayed Public Safety: It prioritized potentially increasing competition over public safety concerns related to handling hazardous materials.
• Lacked Justification: No compelling reason explained the relaxation of the original, safety-focused tender condition.

Court's Order:

• The court quashed the modification, reinstating the original tender condition that mandated a PESO license for suppliers.
• This decision prioritized public safety over commercial considerations.

Limited Stay Granted:

A temporary stay order was granted for four weeks. This allows uninterrupted chlorine gas supply while Respondent No. 6 (presumably the entity managing the tender) implements necessary safety measures.

Key Takeaway:

This case highlights the importance of stringent safety regulations when dealing with hazardous materials. It also underscores the court's role in upholding legal requirements and prioritizing public safety in government tenders.

  Gas Cylinders Rules, 1981