RAJASTHAN STATE WAREHOUSING CORPORATION versus STAR AGRIWAREHOUSING AND COLLATERAL MANAGEMENT LIMITED & ORS. on 24 June 2020

1. The present appeals are directed against the interim orderpassed by the High Court of Judicature for Rajasthan on 29th May, 2020Gand 10th June, 2020 whereby in an intra-court appeal, the High Courtpassed an order of status quo with a further direction that other formalitiesmay proceed but the contract shall not be signedwithout the leave of theCourt.

H

RAJASTHAN STATE WAREHOUSING CORP. v. STAR AGRIWAREHOUSING& COLLATERAL MANAGEMENT [HEMANT GUPTA, J.]

2. The Rajasthan State Warehousing Corporation Ltd. is in appealaggrieved against the said interim order. It is argued by the learnedcounsel for the appellant that the tender was given for warehouses at 71locations on 12th March, 2020 for operation and management of thewarehouses under Public Private Participation (PPP) Model. Certainqueries were raised by the writ petitioners before the High Court(respondents herein) in respect of clause 5(5)(i) of the notice invitingbid. Such clause reads as under:

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

3. There was pre-bid conference and thereafter certainclarifications/ amendments were issued. The Clause 5(5)(i) was retainedas such. The writ petitions were filed challenging the tender conditionsand the clarification issued. Such writ petitions were dismissed by thelearned Single Bench of the High Court on 19th May, 2020. It was on20th May, 2020, technical bids were opened and the appellants in CivilAppeals arising out of Special Leave Petitions (Civil) Nos. 7834-7839 of2020 and Special Leave Petitions (Civil) Nos. 7935-7936 of 2020 werefound to be successful bidders. A letter of intent was issued on 21stMay, 2020. In an intra-court appeal, the High Court passed the followingorder:

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

Copies of the appeals be served on the Counsel for the intervenerthrough email. Reply affidavit, if any, be filed on or before05.06.2020 and be exchanged by the parties.

List on 10.06.2020.

In the meantime, status-quo as on date shall be maintained till thenext date. Other formalities may proceed, but the contract shallnot be signed without leave of this Court.”

A

B

C

D

E

F

G

H

A4. The High Court maintained the above interim order on 10thJune, 2020. The order reads as under:

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

B

Registry to verify and act accordingly.

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

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

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

In the meanwhile defect(s) as pointed out by the Registry, beremoved.”D

5. The argument of Mr. Kapil Sibal, learned Senior Advocate forappellant – Rajasthan State Warehousing Corporation, is that what shouldbe eligibility criteria is to be determined by the Agencyinviting bids as itis the best judge of its requirement and expectations from the tenderer.Such condition cannot be challenged on the ground that in the earlierEyear such was not the condition or similar condition is not the condition

of tender in the other States. Mr. Kapil Sibal vehemently argued that for38 locations, the appellant has granted short-term tender to the writpetitioners for 4 months in the month of March, 2020 and 4 months’ timeare going to expire on 3rd July, 2020. The writ petitioners are thesuccessful short-term tenderers who have offered 42% revenue to theFState as against 71% of the revenue offered by the successful biddersafter the competitive bidding. Therefore, the appellant will suffer hugefinancial loss if after the completion of the tender process, the tenderersare not permitted to manage and operate the warehouses.

6. Mr. Akhil Sibal, learned Senior Advocate for the successfulGbidders, referred to Rule 70(8) of the Rajasthan Transparency in PublicProcurement Rules, 2013 that acceptance of an offer is complete assoon as the letter of intent is posted and/or sent by e-mail. Therefore, asfar as the tenderer is concerned, the contract is complete.

7. On the other hand, Mr. R.K. Mathur, Mr. Gourab Banerji andHMr. Shyam Divan, learned Senior Advocates appearing for the writ petitioners argued that the Special Leave Petitions are directed againstan interim order, therefore, this Court should not interfere in the interimorder, so passed. The liberty has been granted to the appellant to seekleave from the High Court for execution of the contract but instead ofavailing such remedy, the appellant has approached this Court underArticle 136 of the Constitution of India.

8. We do not find any merit in the argument that the Special LeavePetitions are directed against an interim order, therefore, this Court shouldnot interfere in the order passed. Though this Court does not generallyinterfere in an interim order passed in an appeal under Article 136 of theConstitution but when after the dismissal of the writ petition, the DivisionBench has passed an order of stay without recording any reason affectingrevenue of the State, this Court cannot not permit the public interest tosuffer. This Court in Nitco Tiles Ltd. v. Gujarat Ceramic FloorTiles Mfg. Assn.[1]heldas under:- “7. We are also aware of the well-established principlethat thisCourt normally does not interfere either with a court’s decisionnot to relegate a writ petitioner to an alternative remedy or withthe grant of interim relief. It is unnecessary to cite any authorityin support of this as the proposition cannot admit of any controversy.However, having regard to the singular lack of any acceptablereason in the impugned order we have no hesitation in interferingwith this particular exercise of discretion by the High Court andset aside the same.”

9. The question of grant of interim stay in contractual matterswas examined by this Court in a judgment reported as RaunaqInternational Ltd. v. I.V.R. Construction Ltd. & Ors.[2].TheCourtheld as under:

“13. Hence before entertaining a writ petition andpassing anyinterim orders in such petitions, the court must carefully weighconflicting public interests. Only when it comes to a conclusionthat there is an overwhelming public interest in entertaining thepetition, the court should intervene.

xx

xxxx

1 (2005) 12 SCC 454

2 (1999) 1 SCC 492

A

B

C

D

E

F

G

A

18. The same considerations must weigh with the court wheninterim orders are passed in such petitions. The party at whoseinstance interim orders are obtained has to be made accountablefor the consequences of the interim order. The interim order coulddelay the project, jettison finely worked financial arrangementsand escalate costs. Hence the petitioner asking for interim ordersin appropriate cases should be asked to provide security for anyincrease in cost as a result of such delay or any damages sufferedby the opposite party in consequence of an interim order.Otherwise public detriment may outweigh public benefit in grantingsuch interim orders. Stay order or injunction order, if issued, mustbe moulded to provide for restitution.

B

C

xx

xx

xx

25. Therefore, when such a stay order is obtained at the instanceof a private party or even at the instance of a body litigating inpublic interest, any interim order which stops the project fromDproceeding further must provide for the reimbursement of coststo the public in case ultimately the litigation started by such anindividual or body fails. The public must be compensated both forthe delay in implementation of the project and the cost escalationresulting from such delay. Unless an adequate provision is madeEfor this in the interim order, the interim order may provecounterproductive.”

D

10. Since the matters are pending for final determination beforethe High Court, we refrain from making any comment upon the meritsof the arguments raised by the parties. The fact remains that once theFbidding process is complete, the appellant is entitled to take work fromthe successful bidders rather than taking work from the short-termtenderers who were granted contract in exigency of the situation. In thematters of contract, the grant of interim order to restrain the successfulbidders from executing the contract is not in public interest, more so,when the tender is for storage of food articles in the warehouses of theGState Government undertaking.

11. Therefore, we find that the grant of interim order whichimpinges upon the grant of contract by the appellant is not in publicinterest that too without recording any reasons when the Writ Petitionwas dismissed by the Learned Single Judge.

H

RAJASTHAN STATE WAREHOUSING CORP. v. STAR AGRIWAREHOUSINGAND COLLATERAL MANAGEMENT [HEMANT GUPTA, J.]

12. Consequently, we set aside the orders dated 29th May, 2020and 10th June, 2020 granting status quo while allowing the present appeals.

13. However, the grant of contract shall be subject to the orderswhich may be passed by the High Court in the intra-court appeals pendingbefore it.

Ankit Gyan

Appeals allowed.

A

B

C

D

E

F

G

H