Supreme Court: There Can Be Interference in the Interim Order If It Impinges Public Interest

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A division bench of the SC heard Rajasthan State Warehousing Corporation v. Star Agriwarehousing and Collateral Management Limited & Ors. on the 24th of June.

Brief Facts of the Case 

The case relates to a tender contract awarded to the Appellant. In the intra-court appeal, the High Court passed an interim order. By the said interim order, the Court ordered that there cannot be signing of a contract. The High Court passed the interim order in an intra-court appeal. The filing of appeal was against the dismissal of a writ petition filed by the Respondent. In the writ, the petitioners raised queries about the certain clause of the bid. The said clause required extensive experience to bid. The Appellant challenged the interim order passed by the High Court.

Arguments

The Appellant argued that it for them to decide the eligibility criteria. This is on the basis that they are the best judge of the requirements. A challenge thus cannot exist on conditions imposed in a tender. Moreover, if the tenderers are permitted to manage the warehouse, the Appellant would suffer a huge financial loss. The Respondent also argued that the Court cannot interfere in the interim order. 

Court’s View

The Court generally does not interfere with interim orders under Article 136 of the Constitution. However, in this case, the High Court ordered a stay without recording any reason. This has further affected the revenue of the State. In this regard, the public interest cannot be allowed to be suffered. The Court relied on Nitco Tiles Ltd. v. Gujarat Ceramic Floor Tiles Mfg. Assn. (2005) 12 SCC 454. In this case, the Apex Court interfered with an interim relief ‘having regard to singular lack of any acceptable reason’. 

The Court also raised questions of contractual matters. The Court made observations in Raunaq International Ltd. v. I.V.R. Construction Ltd. & Ors. (1999) 1 SCC 492. There was this observation that the Court could entertain petitions challenging interim orders if there is ‘overwhelming public interest’ involved.

The Court also has to account for the various other consequences ensuing from the challenge of such interim orders. Also, other considerations include the discharge of financial arrangements, an increase in cost from delay, or other damages. 

Additionally, the restraining successful bidders from executing the contract is not in the public interest. Especially when the tender is for storage of food articles in the warehouse.

Court’s Decision

The interim order impinges upon the public interest and is passed without recording of reasons. Hence, the interim order was set aside allowing the appeal. 


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