SC set aside the interim stay granted by High Court in contractual matter

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Rajasthan State Warehousing Corporation v. State Agriwarehousing and Collateral Management Limited & ors.

CIVIL APPEAL NOS. 2651-2656 OF 2020

 [Arising out of SLP (Civil.) NOS.7746-7751 OF 2020]

https://main.sci.gov.in/supremecourt/2020/12781/12781_2020_33_6_22685_Judgement_24-Jun-2020.pdf

Bench: Hemant Gupta, Aniruddha Bose JJ. 

Facts:

A tender was given for warehouses operation and management of the warehouses under Public Private Participation (PPP) Model. The writ petitions were filed challenging the tender conditions . The High Court passed an interim order of status quo with a further direction that other formalities may proceed but the contract shall not be signed with the leave of the Court. The appellant in the present case approached the Supreme Court under Article 136 of the Constitution of India.

Question of Law:

The court primarily dealt with the following questions:

a)      Whether the grant of interim order to restrain the successful bidder from signing the contract without assigning any reason is in public interest?

Arguments

Appellant

Respondent

 

Mr. Kapil Sibal, learned Senior Advocate for appellant argued that what should be eligibility criteria is to be determined by the Agency  inviting bids as it is the best judge of its requirement and expectations from the tenderer. Such condition cannot be challenged on the ground that in the earlier year such was not the condition or similar condition is not the condition of tender in the other States.

 

 

 

Mr. R.K. Mathur, Mr. Gourab Banerji and Mr. Shyam Divan, learned Senior Advocates appearing for the writ petitioners argued that the Special Leave Petitions are directed against an interim order, therefore, this Court should not interfere in the interim order, so passed. The liberty has been granted to the appellant to seek leave from the High Court for execution of the contract but instead of availing such remedy, the appellant has approached this Court under Article 136 of the Constitution of India.

 

 

 

Held

The Court granted leave to the appellant and setting aside the order of High Court held that the order issued by High Court is not in public interest and most importantly, the order was issued without recording any reason. The court found no merit in the argument of respondent that the SLP is directed against interim order and the court can’t interfere in an appeal filed under Article 136 of the Constituion of India.

The court referred to the case of Nitco Tiles Ltd. v. Gujarat Ceramic Floor Tiles Mfg. Assn and held that if the division bench passed any order without recording any reason which will affect the revenue of the state, the court can interfere to protect the public interest.

The court examined the judgement of Raunaq International Ltd. v. I.V.R. Construction Ltd. & in light of grant of interim stay in contractual matters and observed that, “Before entertaining a writ petition and passing any interim orders in such petitions, the court must carefully weigh conflicting public interests. Only when it comes to a conclusion that there is an overwhelming public interest in entertaining the petition, the court should intervene.”

The court said that since the matter is pending before the High Court, the court shall not make any remark on the merit of the case.

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