RAJASTHAN STATE WAREHOUSING CORPORATION versus STAR AGRIWAREHOUSING AND COLLATERAL MANAGEMENT LIMITED & ORS.
[2020] 5 S.C.R. 391, Supreme Court of India, 2020
Outcome: Appeal(s) allowed (Granted)
Segment: Arguments
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RAJASTHAN STATE WAREHOUSING CORPORATION
v.
STAR AGRIWAREHOUSING AND COLLATERAL
MANAGEMENT LIMITED & ORS.
(Civil Appeal Nos. 2651-2656 of 2020)
JUNE 24, 2020
[HEMANT GUPTA AND ANIRUDDHA BOSE, JJ.]
Tender – A tender was given for warehouses at 71 locations
on 12.03.2020 for operation and management of warehouses under
Public Private Participation (PPP) Model – Writ petitions were filed
challenging the tender conditions and the same were dismissed by
the Single Judge of the High Court – Thereafter, the technical bids
were opened and the appellants in the connected civil appeals were
found to be successful and the letter of intent was issued – In an
intra- Court appeal, the High Court passed an order of status quo
with a further direction that the other formalities may proceed but
the contract shall not be signed without leave of the Court – Before
the Supreme Court, the appellant- Rajasthan State Warehousing
Corporation contended that writ petitioners are successful short-
term tenderers who have offered 42% revenue to the State as against
the 71% of the revenue offered by the successful bidders after
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
– Held: Since the matters are pending for final determination before
the High Court, the Supreme Court will refrain from making any
comment upon the merits 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 successful bidders rather
than taking the work from the short-term tenderers who were granted
contract in exigency of the situation – In 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 – Therefore, the grant of interim order
which impinges upon the grant of contract by the appellant is not
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SUPREME COURT REPORTS
[2020] 5 S.C.R.
in public interest that too without recording any reasons when the
writ petition was dismissed by the Single Judge of the High Court –
Consequently, the orders granting status quo set aside.
Nitco Tiles Ltd. v. Gujarat Ceramic Floor Tiles Mfg.
Assn. (2005) 12 SCC 545; Raunaq International Ltd.
v. I.V.R. Construction Ltd. & Ors. (1999) 1 SCC 492 :
[1998] 3 Suppl. SCR 421 – relied on.
Case Law Reference
(2005) 12 SCC 545
relied on
Para 8
[1998] 3 Suppl. SCR 421
relied on
Para 9
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2651-
2656 of 2020.
From the Judgment and Order dated 29.05.2020 and 10.06.2020
of the High Court of Judicature for Rajasthan, Jaipur Bench in D.B.
Special Appeal (Writ) No. 362 of 2020, D.B. Special Appeal (Writ) No.
364 of 2020 and D.B. Special Appeal (Writ) No. 372 of 2020.
With
Civil Appeal Nos.2657-2662 and 2663-2664 of 2020
Kapil Sibal, Shyam Divan, Akhil Sibal, Gaurab Banerjee,
R.K.Mathur, Sr.Advs., Harsh Sahu, Amish Tandon, Ayush Beotra, Akshay
Joshi, Ms. B. Vijayalakshmi Menon, Vikas Mishra, Suhail Sehgal, Vikas
Singh Jangra, K.S. Bhati, Aditya Vikram Singh, Ajay Chaudhary, Sameer
Abhyankar, Dhaval Mehrotra, Advs. for the appearing parties.
The Judgment of the Court was delivered by
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 29th 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 without the leave of the
Court.
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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 19th 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:
“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.”
RAJASTHAN STATE WAREHOUSING CORP. v. STAR AGRIWAREHOUSING
& COLLATERAL MANAGEMENT [HEMANT GUPTA, J.]
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4. The High Court maintained the above interim order on 10th
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 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 3rd 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
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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.
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
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.
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1 (2005) 12 SCC 454
2 (1999) 1 SCC 492
RAJASTHAN STATE WAREHOUSING CORP. v. STAR AGRIWAREHOUSING
AND COLLATERAL MANAGEMENT [HEMANT GUPTA, J.]
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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.
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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
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.

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12. Consequently, we set aside the orders dated 29th 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.
Ankit Gyan
Appeals allowed.
RAJASTHAN STATE WAREHOUSING CORP. v. STAR AGRIWAREHOUSING
AND COLLATERAL MANAGEMENT [HEMANT GUPTA, J.]