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Rajasthan State Warehousing Corporation v. Star Agriwarehousing and Collateral Management Limited & Ors.

Civil Appeal · 2020 INSC 444Decided 24 Jun 2020
Civil Appeal Nos. 2651-2656 of 2020
Justice Hemant Gupta · Justice Aniruddha Bose

Background

Rajasthan State Warehousing Corporation invited tenders for operating 71 warehouses under a public-private partnership. Unsuccessful bidders (the existing short-term operators) challenged the tender's eligibility conditions in the Rajasthan High Court; a Single Judge dismissed their writ petitions and the new successful bidders were issued a letter of intent. However, in intra-court appeals, a Division Bench granted a "status quo" order restraining the Corporation from signing the contract with the successful bidders, pending further hearing, without recording any reasons.

Decision Breakdown

The Supreme Court held that while it ordinarily does not interfere with a High Court's interim orders, it would make an exception here because the status quo order gave no reasons, came after the underlying writ petition had already been dismissed, and risked harming public interest and state revenue (the successful bidders had offered a far higher revenue share than the existing short-term operators). Relying on precedent cautioning courts against casually staying public contracts and project execution, the Court set aside the High Court's status quo orders and allowed the appeals, permitting the contract to proceed, while leaving the underlying merits of the tender challenge to be decided by the High Court in the still-pending intra-court appeals.

Lesson Learnt

Courts should be cautious about halting public contracts and tenders through interim stays, particularly without giving reasons, since such delays can cause real harm to public revenue and project execution even while the main legal dispute is still being decided.

Official source (sci.gov.in)View Judgment (PDF)

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