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PLD 2017 Lahore 111
Before Ayesha A. Malik, J
TEZ GAS (PRIVATE) LIMITED and others—Petitioners
versus
OIL AND GAS REGULATORY AUTHORITY and others—Respondents
Writ Petitions Nos. 33661/2015, 31817/2013, 6569/2014, 1461 of 2016 9214/2011, 9693 of 2011 and 262 of 2016, decided on 23rd November, 2016.
(a) Liquefied Petroleum Gas (Production and Distribution) Rules, 2001 — —R. 18—Liquefied Petroleum Gas (Production and Distribution) Policy, 2013, Cl. 3.4—Tender notices of Liquefied Petroleum Gas (“LPG”)—“Signature Bonus” charged by Oil and Gas Development Company Limited (“OGB awarding contract for lifting LPG from different gas fields—Nature and legality of ‘Signature Bonus’—Whether Oil and Gas Regulatory Authority (“OGRA”) could intervene to ensure that Signature Bonus was not Saudi Aramco Contract Price (“Aramco Price”) was relevant for the purposes of fixing base stock price of LPG— price of LPG was deregulated and determined by market forces terms of Liquefied Petroleum Gas (Production and Distribution) Policy, 2013—Neither the Government nor OGRA was required to fix the price of LPG— ‘Aramco Price ’ was no longer relevant for the purposes of fixing base stock price of LPG—‘Signature Bonus’ was not pegged or related to the price of LPG; it was a term and condition of the tender and did not increase the price of LPG—Licensees’/petitioners’ participation in the tender process was based on their own free will, thus, payment of ‘Signature Bonus’ was neither compulsory nor mandatory for the licensees/petitioners—Object of calling for bids on ‘Signature Bonus’ was to provide equal opportunity to all prospective bidders and to receive the highest bid—Charging of ‘Signature Bonus’ by OGDCL did not tantamount to unjust enrichment or abuse of dominant position in the market—Charging of ‘Signature Bonus’ was neither illegal nor did it infringe any fundamental right of the licensees/petitioners— Constitutional petition was dismissed accordingly.
Petitioners were in the business of marketing Liquefied Petroleum Gas (“LPG”) pursuant to licenses issued by the Oil and Gas Regulatory Authority (“OGRA”). Petitioners purchased LPG from LPG Producers, and sold it to consumers. Petitioners impugned Tender Notices for upliftment/sale of LPG from different gas fields on the basis that Oil and Gas Development Company Limited (“OGDCL”) was charging a “Signature Bonus” payable by the successful company prior to signing of the sale/purchase agreement. Petitioners contended that Signature Bonus raised the price of LPG such that it exceeded the Saudi Aramco Contract Price (“Aramco Price”) which was not permissible as per the Liquefied Petroleum Gas (Production and Distribution) Policy, 2013,' and that OGRA was not intervening for regulating the LPG price and ensuring that a premium over and above the price was not charged.
In terms of the clause 3.4 of the Liquefied Petroleum Gas (Production and Distribution) Policy, 2013, the price of LPG was determined by market forces. Said policy clarified that LPG price was deregulated and that neither the Government nor OGRA was required to fix the price of LPG. [p. 120] A & B
‘Aramco’ Price was not relevant for the purposes of fixing base stock price of LPG because the price was fixed by market forces, [p. 121] C
‘Signature Bonus’ was clearly a term of the tender. It was the price that the LPG licensees were required to pay for award of the contract and essentially qualified as a commercial deal between the parties. In order to participate in the bidding process for the uplifting of gas, the licensees had to tender their bid on the basis of ‘Signature Bonus’ and the highest bidder was to be awarded the contract accordingly. ‘Signature Bonus’ was a part of the terms and conditions of the tender process and the licensees’ participation was based on their own free will, thus, it was neither compulsory nor mandatory for the
licensees to pay the same. ‘Signature Bonus’, therefore, was not a component of the price but was the methodology adopted by OGDCL for the purposes of selection of the highest bidder and it was a one-time amount that had to be paid. [pp. 121, 122] D & E
Tata Cellular v. Union of India 1994 (6) SCC 651 ref.
Prime object of calling for bids on ‘Signature Bonus’ was to provide equal opportunity to all prospective bidders and to receive the highest bid. The settlement of the terms and conditions was the discretion of the LPG producers in awarding the contract for uplifting of gas from different gas fields. The fact that OGDCL charged ‘Signature Bonus’ did not tantamount to unjust enrichment or abuse of its dominant position in the market. It is a commercial deal between the parties and there was no restriction on OGDCL in putting forward terms and conditions that in its opinion represented the best commercial deal. [p. 123] I
Licensees did not have any fundamental right or vested right to insist that the Government must offer a particular tender on more favourable terms and conditions or that it should adopt a particular method for selection and not follow the given method. Licensees must either accept or reject the terms offered but could not require it to be changed through the present constitutional petitions. Charging of Signature Bonus was therefore neither illegal nor did it infringe any fundamental right of the licensees. Constitutional petition was dismissed accordingly, [p. 123] H
(b) Tender — —Acceptance of tender and award of contract—Scope—Terms and conditions of tender set by the Government—Judicial scrutiny— Scope—High Court did not sit as a court of appeal in relation to the terms and conditions of tender but merely reviewed the manner in which the decision was made—Terms of the invitation to tender could not be open to judicial scrutiny because the invitation to tender was in the realm of a contract—Normally, decision to accept the tender or award the contract was reached through a process of negotiation and deliberations through several tiers—More often than not, such decisions were made qualitatively by experts and the government was free to settle the terms of the contract with the parties—In such cases, if the terms and conditions of the contract were not suited to a party, they need not participate in the tender process or accept the contract— State could fix its own terms of invitation to tender and those terms ;/ were generally not open to judicial scrutiny—Court could examine the decision making process and interfere if it was found tainted with mala fides or was arbitrary, [pp. 122, 123] F & J
Tata Cellular v. Union of India 1994 (6) SCC 651 ref.
(c) Tender—
—Preconditions or qualifications—Permissibility—For tenders certain preconditions or qualifications could be laid down to ensure that the contractor had the capacity and the resources to successfully execute the works—Fair and transparent process was necessary to ensure that the contract was awarded to a credible party. [p. 122] G
Association of Registration Plates v. Union of India and others 2005 (1) SCC 679 ref.
Kh. A. Tariq Rahim and Muhammad Azhar Siddique for Petitioners.
Feisal Hussain Naqvi for Petitioners (in W.P.No.31817 of
2013) .
Muhammad Ahmad Pansota for Petitioner (in W.P. 6569 of
2014) .
M.N. Beg and Tariq Farooqi for Petitioner (in W.P.No. 1461 of
2016).
Dr. A. Basit for Petitioner (in W.P.No.262 of 2016).
Salman Akram Raja for Petitioners (in W.Ps.Nos.9214/2011 and 9693/2011).
Mirza Nasar Ahmad, Muzammil Akhtar Shabbir and Muhammad Zikria Sheikh, DAGs.
Mustafa Ramday and Jehanzaib Inam for Respondent PPL (in W.P. No.33661/2015).
Ali Sibtain Fazli for Respondent PARCO (in W.P. No.33661/2015).
Tahir Ali Zahi and Asad Javed for Respondent PARCO (in W.P. No.33661/2015).
Haroon Dugal for Respondent OGRA.
Mehmood Azam Awan, Sardar Qasim Farooq and Muhammad Umar Qureshi for Respondent OGDCL along with Sajid Mehmood, Corporate Law Officer, OGPCL. x
Asim Iqbal for Respondent SSGCL.
Kh. Saeed uz Zafar for Respondent Ministry of Petroleum, Islamabad.
Khaliq uz .Zaman for Respondents Nos. 1-3 (in W.P-No.6569/2014).
Date of hearing: 21st October, 2016.
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