The Andhra Pradesh High Court dismissed a Public Interest Litigation (PIL) filed challenging the allotment of a contract in favour of Technical and Construction Company (respondent No.6) for undertaking some works allotted to it by the Indian Oil Corporation Limited (respondent No.2).
The counsel for the petitioner submitted that no contract could have been allotted to said respondent No.6 in view of the prohibition prescribed in that regard by the Bank.
The Court attention has been drawn to a circular dated 16.10.2019, which suggests that the bank had undertaken a review of the bank’s approach in handling trade transactions involving some of the countries for example Russia, Iran, Syria, Sudan, Myanmar, Venezuela, etc.,. Since Iran also figures in the said circular, learned counsel for the petitioner would submit that if the State Bank of India was not encouraging any transactions involving Iranian persons or entities or institutions, then the contract in question could never had been allotted to the said respondent No.6 by the Indian Oil Corporation Limited.
The Division Bench of Chief Justice Dhiraj Singh Thakur and Justice Rao Raghunandan Rao fail to understand as to how a circular issued by a banking company like a Bank would bind the Indian Oil Corporation Limited which is a separate legal entity from entering into contracts with foreign entities.
“The petitioner’s case, therefore, appears to be totally misplaced in this regard. The petitioner would then submit that after the allotment of the contract, the respondent No.6 had allotted a sub-contract to certain entities which could not have been so allotted in terms of the prohibition prescribed in the tender document and the Agreement executed in connection therewith.”
The Court opined that if at all there was any violation of any of the terms and conditions of the Agreement executed between the two companies, it would be open to the principal company to take appropriate action or even condone the said action if the business interest so demand.