In a recent decision, the Jammu and Kashmir and Ladakh High Court underscored the necessity for judicial restraint in matters concerning public tenders and contractual integrity. The court annulled an interim injunction that had previously halted the Airports Authority of India's (AAI) debarment order against M/s Saptagiri Restaurant Pvt. Ltd. (SRPL).
Justice Vinod Chatterji Koul emphasized that courts should avoid interfering with regulatory decisions made by statutory bodies unless there is clear evidence of illegality or malicious intent. He cautioned that unwarranted judicial intervention could undermine public contracts and the enforcement of policies. The judge referenced the Supreme Court's ruling in Raunaq International Ltd. v. I.V.R. Constructions Ltd. (1999), which advises courts to carefully weigh conflicting public interests before intervening in such matters.
The case arose when AAI issued a debarment order against SRPL, barring the company from participating in future tenders for three years due to alleged collusive bidding and bid-rigging. SRPL challenged this order in the Additional District Judge (Fast Track) court in Budgam, securing an interim injunction that temporarily halted AAI's action. This injunction was later made absolute on April 8, 2024, prompting AAI to appeal to the High Court.
Senior Advocate Rajiv Shakdher, representing AAI, argued that the debarment was a statutory action within AAI's contractual and regulatory authority. He asserted that public bodies should have autonomy in managing tenders and ensuring contractual compliance. Shakdher also highlighted that SRPL had approached the Madras and Punjab & Haryana High Courts for similar relief, both of which had dismissed its claims, suggesting that SRPL's civil suit constituted forum shopping.
On the other hand, Advocate Danish Majid, representing SRPL, contended that AAI's debarment order was arbitrary and lacked procedural fairness. He argued that the Manual of Contract 2019, under which the debarment was issued, did not explicitly preclude the jurisdiction of civil courts. Majid maintained that the injunction was necessary to prevent irreparable harm to SRPL's business.
Justice Koul, in his ruling, noted that while courts have the authority to review administrative decisions, they must exercise caution, particularly when statutory bodies act within their regulatory domain. He emphasized that AAI, as a statutory body, is responsible for maintaining the integrity of the tender process, and any interference with its decisions should be minimal, especially when public interest is at stake. The judge warned against granting interim orders that could delay public projects and increase costs.
The court also pointed out the close relationship between SRPL and Syona Spa, another bidder, indicating potential collusive bidding practices. Evidence showed that Karan Singh, an employee of SRPL until August 2022, had received a personal loan from SRPL, and both entities shared the same registered address. This relationship suggested a conflict of interest, violating Clause 9(a)(vi) of the General Information and Guidelines of the e-Tender document, which prohibits such conflicts.
Furthermore, the court agreed with AAI's contention that the Trial Court lacked territorial jurisdiction, as the debarment order was issued from AAI's headquarters in New Delhi, and SRPL's registered office was also in Delhi. Therefore, the cause of action did not arise in Srinagar, rendering the Trial Court's jurisdiction invalid.
The court criticized SRPL for pursuing multiple remedies simultaneously, noting that SRPL had filed writ petitions in the Madras High Court and the Punjab & Haryana High Court, challenging similar debarment orders. The court held that once SRPL chose to approach the Dispute Resolution Committee (DRC) in Amritsar, it could not simultaneously pursue a civil suit in Srinagar.
In conclusion, the High Court quashed the injunction granted by the Trial Court and upheld AAI's debarment order, maintaining that SRPL remains barred from participating in tenders for the stipulated three-year period. This ruling reinforces the principle that judicial intervention in public tender disputes should be exercised with caution to preserve the integrity of contractual processes and public interest.
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