Court reserves order on cases challenging TNCSC’s demand for palm olein at old prices

Contractors say they cannot comply with tender conditions since palm olein prices had skyrocketed due to Russia-Ukraine crisis

The Madras High Court on Friday reserved orders on a batch of cases filed by government contractors expressing their inability to supply additional quantity of palm olein at old prices to the Tamil Nadu State Civil Supplies Corporation (TNCSC) due to the steep rise in prices of the commodity following the Russia-Ukraine crisis.

Justice G. R. Swaminathan deferred the verdict on the batch after hearing Advocate General R. Shunmugasundaram for TNCSC and senior counsel A. L. Somayaji and A. R. L. Sundaresan for various contractors who feared that the corporation might blacklist them if they do not supply the additional quantity at old prices.

In his affidavit, Suresh Gattreddi, partner of Starshine Logistics based in Chennai, said the firm was in the business of providing logistics and trading in food products such as pulses, edible oils and sugar. It had also obtained importer-exporter code for the purpose of importing and exporting the food products.

On December 20, the TNCSC invited bids for supply of 400 lakh pouches (one litre each) of palm olein and the petitioner bagged the tender in January for supplying 65 lakh pouches at a negotiated rate of ₹120.25 each. The first tranche of 32.50 lakh pouches was supplied before February 21 and the second was supplied before March 28.

Since clause 17(d) of the tender notification empowers the TNCSC to vary the final quantity by 25% either way of the requirement, the corporation sent an e-mail to the petitioner on March 2 instructing it to supply an additional quantity of 16.25 lakh pouches on or before May 3 at the agreed price of ₹120.25 for each pouch.

However, the petitioner firm expressed its inability to make such additional supply because the international price of palm olein had risen from $1,575 per tonne on February 22 to $2,000 on March 3. The rise was attributed to heavy demand for palm olein due to stoppage of export of sunflower oil from Russia and Ukraine.

Facing the threat of getting blacklisted and not allowed to participate in future tenders if it does not comply with the tender condition of supplying 25% of additional quantity at the agreed price, the petitioner firm urged the court to quash TNCSC’s e-mail order for supplying 16.25 lakh pouches of palm olein.