Rajashthan State Warehousing … vs Star Agriwarehousing And … on 24 June, 2020


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Supreme Court of India

Rajashthan State Warehousing … vs Star Agriwarehousing And … on 24 June, 2020

Author: Hemant Gupta

Bench: Hemant Gupta, Aniruddha Bose

                                                         REPORTABLE

                IN THE SUPREME COURT OF INDIA

                  CIVIL APPELLATE JURISDICTION


          CIVIL APPEAL NOS. 2651-2656       OF 2020
     (ARISING OUT OF SLP (CIVIL) NOS. 7746-7751 OF 2020)


RAJASTHAN STATE WAREHOUSING
CORPORATION                                           .....APPELLANT(S)

                                   VERSUS

STAR AGRIWAREHOUSING AND COLLATERAL
MANAGEMENT LIMITED & ORS.                           .....RESPONDENT(S)

                               WITH

       CIVIL APPEAL NOS. 2657-2662            OF 2020
     (ARISING OUT OF SLP (CIVIL) NOS. 7834-7839 OF 2020)

                                AND

         CIVIL APPEAL NOS.    2663-2664      OF 2020
     (ARISING OUT OF SLP (CIVIL) NOS. 7935-7936 OF 2020)




                        JUDGMENT

HEMANT GUPTA, J.

Leave granted.

1. The present appeals are directed against the interim order passed

by the High Court of Judicature for Rajasthan on 29 th May, 2020

and 10th June, 2020 whereby in an intra-court appeal, the High

Court passed an order of status quo with a further direction that

other formalities may proceed but the contract shall not be signed

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with the leave of the Court.

2. The Rajasthan State Warehousing Corporation Ltd. is in appeal

aggrieved against the said interim order. It is argued by the

learned counsel for the appellant that the tender was given for

warehouses at 71 locations on 12th March, 2020 for operation and

management of the warehouses under Public Private Participation

(PPP) Model. Certain queries were raised by the writ petitioners

before the High Court (respondents herein) in respect of clause

5(5)(i) of the notice inviting bid. Such clause reads as under:

“The bidder (either directly or through its 100% owned
subsidiary) should have experience in preservation,
maintenance and storage of not less than 4.00 Lac MT
on an average basis for last 3 Financial years (i.e.: 2016-
17 to 2018-19) of MSP procured food grain, pulses, oil
seeds etc. of Central/state government agencies at par
with CWC/SWC/FCI/NAFED etc. in any state/union
territory across India.”

3. There was pre-bid conference and thereafter certain clarifications/

amendments were issued. The Clause 5(5)(i) was retained as such.

The writ petitions were filed challenging the tender conditions and

the clarification issued. Such writ petitions were dismissed by the

learned Single Bench of the High Court on 19 th May, 2020. It was

on 20th May, 2020, technical bids were opened and the appellants

in Civil Appeals arising out of Special Leave Petitions (Civil) Nos.

7834-7839 of 2020 and Special Leave Petitions (Civil) Nos. 7935-

7936 of 2020 were found to be successful bidders. A letter of

intent was issued on 21st May, 2020. In an intra-court appeal, the

High Court passed the following order:

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“D.B. Civil Special Appeal (W) No. 362/2020, D.B. Civil
Special Appeal (W) No. 364/2020 & D.B. Civil Special
Appeal (W) No. 372/2020:

Copies of the appeals be served on the Counsel for the
intervener through email. Reply affidavit, if any, be filed
on or before 05.06.2020 and be exchanged by the
parties.

List on 10.06.2020.

In the meantime, status-quo as on date shall be
maintained till the next date. Other formalities may
proceed, but the contract shall not be signed without
leave of this Court.”

4. The High Court maintained the above interim order on 10 th June,

2020. The order reads as under:

“Mr. Pankaj Gupta, learned Counsel for the appellant
submits that he has complied with the order dated
29.05.2020 and filed the amended cause titles in the
Registry last evening.

Registry to verify and act accordingly.

He also submits that he has served copies thereof
through E-Mail sent by the AOR.

Learned Counsel submits that the pleadings in the
matter are complete and seek urgent disposal of the
matter.

Accordingly, the matters stand adjourned to 06.07.2020
for final disposal. Interim order dated 29.05.2020 shall
continue till then.

In the meanwhile defect(s) as pointed out by the
Registry, be removed.”

5. The argument of Mr. Kapil Sibal, learned Senior Advocate for

appellant – Rajasthan State Warehousing Corporation, is that what

should be eligibility criteria is to be determined by the Agency

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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. Kapil Sibal vehemently argued that for 38

locations, the appellant has granted short-term tender to the writ

petitioners for 4 months in the month of March, 2020 and 4

months’ time are going to expire on 3 rd July, 2020. The writ

petitioners are the successful short-term tenderers who have

offered 42% revenue to the State as against 71% of the revenue

offered by the successful bidders after the competitive bidding.

Therefore, the appellant will suffer huge financial loss if after the

completion of the tender process, the tenderers are not permitted

to manage and operate the warehouses.

6. Mr. Akhil Sibal, learned Senior Advocate for the successful bidders,

referred to Rule 70(8) of the Rajasthan Transparency in Public

Procurement Rules, 2013 that acceptance of an offer is complete as

soon as the letter of intent is posted and/or sent by e-mail.

Therefore, as far as the tenderer is concerned, the contract is

complete.

7. On the other hand, 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

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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.

8. We do not find any merit in the argument that the Special Leave

Petitions are directed against an interim order, therefore, this Court

should not interfere in the order passed. Though this Court does

not generally interfere in an interim order passed in an appeal

under Article 136 of the Constitution but when after the dismissal

of the writ petition, the Division Bench has passed an order of stay

without recording any reason affecting revenue of the State, this

Court cannot not permit the public interest to suffer. This Court in

Nitco Tiles Ltd. v. Gujarat Ceramic Floor Tiles Mfg.

Assn.1 held as under:-

“7. We are also aware of the well-established principle
that this Court normally does not interfere either with a
court’s decision not to relegate a writ petitioner to an
alternative remedy or with the grant of interim relief. It
is unnecessary to cite any authority in support of this as
the proposition cannot admit of any controversy.
However, having regard to the singular lack of any
acceptable reason in the impugned order we have no
hesitation in interfering with this particular exercise of
discretion by the High Court and set aside the same.”

9. The question of grant of interim stay in contractual matters was

examined by this Court in a judgment reported as Raunaq

1 (2005) 12 SCC 454

5
International Ltd. v. I.V.R. Construction Ltd. & Ors.2. The

Court held as under:

“13. Hence 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.

xx xx xx

18. The same considerations must weigh with the court
when interim orders are passed in such petitions. The
party at whose instance interim orders are obtained has
to be made accountable for the consequences of the
interim order. The interim order could delay the project,
jettison finely worked financial arrangements and
escalate costs. Hence the petitioner asking for interim
orders in appropriate cases should be asked to provide
security for any increase in cost as a result of such delay
or any damages suffered by the opposite party in
consequence of an interim order. Otherwise public
detriment may outweigh public benefit in granting such
interim orders. Stay order or injunction order, if issued,
must be moulded to provide for restitution.

xx xx xx

25. Therefore, when such a stay order is obtained at the
instance of a private party or even at the instance of a
body litigating in public interest, any interim order which
stops the project from proceeding further must provide
for the reimbursement of costs to the public in case
ultimately the litigation started by such an individual or

body fails. The public must be compensated both for the
delay in implementation of the project and the cost
escalation resulting from such delay. Unless an
adequate provision is made for this in the interim order,
the interim order may prove counterproductive.”

10. Since the matters are pending for final determination before the

High Court, we refrain from making any comment upon the merits
2 (1999) 1 SCC 492

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of the arguments raised by the parties. The fact remains that once

the bidding process is complete, the appellant is entitled to take

work from the successful bidders rather than taking work from the

short-term tenderers who were granted contract in exigency of the

situation. In the matters of contract, the grant of interim order to

restrain the successful bidders from executing the contract is not in

public interest, more so, when the tender is for storage of food

articles in the warehouses of the State Government undertaking.

11. Therefore, we find that the grant of interim order which impinges

upon the grant of contract by the appellant is not in public interest

that too without recording any reasons when the Writ Petition was

dismissed by the Learned Single Judge.

12. Consequently, we set aside the orders dated 29 th May, 2020 and

10th June, 2020 granting status quo while allowing the present

appeals.

13. However, the grant of contract shall be subject to the orders which

may be passed by the High Court in the intra-court appeals

pending before it.

………………………………………J.

(HEMANT GUPTA)

………………………………………J.

(ANIRUDDHA BOSE)

NEW DELHI;

JUNE 24, 2020.

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