Interim Orders In Writ Petitions Involving Contractual Matters Should Be Passed Only After Carefully Weighing Public Interest: SC [Read Judgment]

The Supreme Court has reiterated that passing any interim orders in writ petitions involving contractual matters, the courts must carefully weigh conflicting public interests.

In a writ petition filed in a matter relating to tender of warehouses, the Rajasthan 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 single bench had dismissed the writ petition and the above interim order was passed by the Division Bench in intra court Appeal. Assailing this interim order, the state warehousing corporation approached the Apex Court.

The bench comprising Justices Hemant Gupta and Aniruddha Bose took note of the following observations made in Raunaq International Ltd. v. I.V.R. Construction Ltd. & Ors (2005) 12 SCC 454 :

• 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 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.
• 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.

The bench observed that the grant of interim order impinges upon the grant of contract by the state and is not in public interest that too without recording any reasons. While allowing the appeal, the bench said:

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.  

Case no.: CIVIL APPEAL NOS. 2651-2656 OF 2020
Case name: RAJASTHAN STATE WAREHOUSING CORPORATION vs. STAR AGRIWAREHOUSING AND COLLATERAL MANAGEMENT LIMITED
Coram: Justices Hemant Gupta and Aniruddha Bose
Counsel: Senior Advocates Kapil Sibal,Akhil Sibal,R.K. Mathur, Mr. Gourab Banerji and Shyam Divan, 

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