Reservation In PSU Contracts For SC/ST Contractors Does Not Violate Article 14 | Bombay High Court Upholds BPCL Tender Policy As Affirmative Action Under Article 46
Sanchayita Lahkar
The High Court of Judicature at Bombay Division Bench of Chief Justice Alok Aradhe and Justice Sandeep V. Marne held that the provision of reservation to Scheduled Caste (SC) and Scheduled Tribe (ST) categories in the tender process conducted by a public sector undertaking does not violate constitutional principles. The Court dismissed a petition challenging the tender conditions of Bharat Petroleum Corporation Limited (BPCL), which had made certain provisions for SC/ST and Micro and Small Enterprises (MSE) bidders. The Court recorded that the tender process had been carried out in accordance with the Government of India guidelines dated 18 August 1994, and that the guidelines were in line with Article 46 of the Constitution of India. The Court rejected the petitioners' contention that such reservations violated their fundamental rights under Article 14 and Article 19(1)(g), holding that the guidelines promoting affirmative action were constitutionally valid. Consequently, the Court refused to interfere with the tender process or the underlying government policy supporting such reservations.
The petition was filed by M/s. Patil Roadlines and others, engaged in the business of transporting petrol and petroleum products. The petitioners challenged specific conditions in a tender notice dated 9 August 2024 issued by BPCL for the road transportation of Bulk POL products by Top Loading Tank Lorries from the Manmad Installation in Maharashtra to various locations. The petitioners had previously been successful bidders in an earlier tender process dated 1 February 2018 and were providing transportation services under that contract, which had been extended until 31 March 2025.
The petitioners contended that the impugned tender conditions provided concession to SC/ST category bidders, including reduction in bank guarantee requirements, exemption from ownership requirements for lorries, and reservation of 15% and 7.5% of lorry quotas for SC and ST bidders respectively. They argued that these provisions were introduced pursuant to the Government of India guidelines dated 18 August 1994 and challenged both the tender and the guidelines.
The impugned conditions included:
- SC/ST bidders could participate in the tender with fewer Tank Lorries (2 TLs, of which 1 must be owned) compared to general category bidders (5 TLs, of which 3 must be owned).
- SC/ST bidders were allowed to participate with just a booking slip of chassis, whereas general bidders were required to have ownership and additional documentation.
- SC/ST bidders were required to furnish a reduced bank guarantee of Rs. 50,000, while general category bidders had to furnish Rs. 8,00,000.
Reservation of 15% and 7.5% of total lorry requirement for SC and ST bidders respectively, including a carry-forward of unfulfilled quotas from the previous tender period, which increased the effective reservation to approximately 22.96% and 13.62% respectively.
The petitioners submitted that such provisions were discriminatory and in violation of Article 14 and 19(1)(g) of the Constitution of India. They argued that the reservations were not backed by any statutory law and merely based on executive guidelines, thereby violating their fundamental rights to equal opportunity in business.
Mr. F.T. Mirza, Senior Advocate representing the petitioners, contended that the guidelines could not override fundamental rights and that Article 15 and 16 permitted reservations only in matters of education and public employment, not in the award of public contracts. It was also submitted that the cumulative effect of SC/ST and MSE reservations left less than 50% of lorry contracts open to unreserved category bidders.
BPCL, through Senior Advocate Mr. Girish Godbole, opposed the petition, submitting that the challenged provisions were in accordance with the guidelines issued by the Central Government and that these guidelines had been implemented for over 30 years. It was submitted that most petitioners had previously participated in tenders containing similar provisions and had not raised objections then. It was further argued that all petitioners except Petitioner No. 19 had been awarded contracts in the present tender, and hence were estopped from challenging the process.
The Union of India, represented by Mr. Vinit Jain, and intervenors who had been awarded work under the reserved category, also opposed the petition.
The Court noted that the guidelines dated 18 August 1994 had been in existence for over three decades and that the petitioners had never previously challenged them despite participating in several tender processes. It stated: "Firstly, the impugned guidelines are issued on 18 August 1994 and Petitioners never bothered to challenge the same." The Court further recorded: "Since 1994, the reservation is provided for by BPCL in atleast 6/7 tender processes and many of the Petitioners have participated in the same without any demur."
On the issue of delay and acquiescence, the Court observed: "Despite being engaged in the transportation business and doing business with BPCL for a considerable period of time, Petitioners never thought of challenging the Guidelines dated 18 August 1994, which have been repeatedly implemented by Respondent No.1 - BPCL in various tender processes."
Regarding maintainability, the Court noted: "During pre-bid meeting Petitioners did not question prescription of reservation for SC/ST/MSE bidders." It was also recorded: "Except Petitioner No.19 all the Petitioners have been awarded work by the Respondent No.1-BPCL in the impugned tender process."
On judicial review in tender matters, the Court reiterated settled principles: "The court cannot sit in appeal over the wisdom of tendering authority in prescribing the tender conditions." Citing precedents, the Court stated: "Tendering authority is best judge in incorporating the tender conditions and the courts cannot substitute their opinion on interpretation of the tendering authority."
The Court discussed Article 46 of the Constitution of India, stating: "The State shall promote with special care the educational and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribes, and shall protect them from social injustice and all forms of exploitation."
It further held: "The impugned guidelines have been formulated by the Government of India in line with Article 46 of the Constitution of India."
Rejecting the argument that reservations could only be made under Article 15 or 16, the Court stated: "The argument, in our view, is canvassed in ignorance of provisions of Article 46 of the Constitution of India where the State is under obligation to take care of economic interest of SC/ST category persons."
It also noted: "The provision for reservation for select class of entrepreneurs for their social and economic upliftment towards fulfillment of constitutional objectives is an affirmative action taken by the State."
The Court recorded similar decisions supporting reservation in public contracts, including the Calcutta High Court judgment in Sanjay Kumar v. Union of India, which upheld reservations for SC/ST bidders in LPG transportation contracts.
The Court issued the following directives:
"We therefore do not find any reason to interfere either in the impugned guidelines dated 18 August 1994 or the impugned tender process providing reservation for SC/ST."
On the issue of rolling over unfilled quotas from earlier tenders, the Court held: "The issue appears to be well settled by judgment of Punjab and Haryana High Court in Sunil Kumar @ Sushil Kumar."
On the concessions regarding bank guarantee and ownership of tank lorries, the Court stated: "We are of the view that the tendering authority is the best judge to determine the eligibility conditions for different categories of bidders. The said concession is provided keeping in mind the broad objective of upliftment of weaker sections of society."
As to the overall relief sought, the Court concluded: "We do not find any valid ground to interfere in the impugned tender process. Except Petitioner No.19 all other Petitioners are already awarded contracts in the impugned tender process. It is reported that Petitioner No.19 has separately challenged the disqualification."
Finally, the Court held: "Petition must fail. It is accordingly dismissed. In view of dismissal of the Writ Petition, Interim Applications do not survive and hence stand disposed of."
Advocates Representing the Parties:
For the Petitioners: Mr. F.T. Mirza, Senior Advocate with Mr. Anand Deshpande and Ms. Amita Chaware
For the Respondents: Mr. Girish Godbole, Senior Advocate with Mr. Roop Basu and Mr. Ahmed Padela i/b. M/s. The Law Point (for Respondent No.1); Mr. Vinit Jain with Mr. A.R. Varma (for Respondent No.2 - Union of India); Mr. Akshay Lengare with Mr. Aniket Sangle, Mr. Sanket Garud, Mr. Anis Shaikh i/b. Mr. Ajinkya Gaikwad (for Applicants in IAL/21562/2025)
Case Title: M/s. Patil Roadlines and Ors. v. Bharat Petroleum Corporation Ltd. and Ors.
Neutral Citation: 2025: BHC-AS:28862-DB
Case Number: Writ Petition No.12106 of 2024
Bench: Chief Justice Alok Aradhe and Justice Sandeep V. Marne
