The Writ Jurisdiction cannot be exercised in public contracts - unless public interest is demonstrated in the matter; SC.

Supreme Court of India

CJ S. A. BOBDE, JUSTICE B.R. GAVAI & JUSTICE SURYA KANT

The SC on March 18, 2020 {The Bharat Coking Coal Ltd. & Ors. v. AMR Dev Prabha & Ors.} held that it is thus imperative that in addition to arbitrariness, illegality or discrimination under Article 14 or encroachment of freedom under Article 19(1)(g), public interest too is demonstrated before remedy is sought. Although the threshold for the latter need not be high, but it is nevertheless essential to prevent bypassing of civil courts and use of constitutional avenues for enforcement of contractual obligations.

It was held that such   conscious   restraint   is   also   necessary   because   judicial intervention   by   itself   has   effects   of   time   and   money, which   if unchecked would have problematic ramifications on the State’s ability to enter into contracts and trade with private entities. Further, it was held that it is not desirable or practicable for courts to review the thousands of contracts entered into by executive authorities every day. It was held that the Courts also must be cognizant that often­-a­times the private interest of a few can clash with public interest of the masses, and hence a requirement to demonstrate effect on ‘public interest’ has been evolved by the SC. 

It was held thus, it is clear that there was neither any public law right of the first respondent which was affected, nor was there any public interest sought to be furthered.

It was held that on merits also, the impugned order is incorrect in its conclusion that there were substantial procedural lapses on part of BCCL and C1­India which amount to arbitrariness, and ought to be remedied by way of judicial review.

Further held that even if there had been a minor deviation from explicit terms of the NIT, it would not be sufficient by itself in the absence of malafide for courts to set aside the tender at the behest of an unsuccessful bidder. It was held that this   is   because   notice   must   be   kept   of   the   impact   of overturning an executive decision and its impact on the larger public interest in the form of cost overruns or delays.

It was held that the High Court ought to have deferred to this understanding, unless   it   was   patently   perverse   or   mala   fide. It was also held that given   how   BCCL’s interpretation of these clauses was plausible and not absurd, solely differences in opinion of contractual interpretation ought not to have been   grounds   for   the   High   Court   to   come   to   a   finding   that   the appellant committed illegality.

Accordingly, the Division Bench judgment of the High Court dated 12.04.2018 was set ­aside and the writ petition filed by AMR­Dev Prabha was dismissed by the SC.

In present case, the appeals have been preferred by Bharat Coking Coal Ltd. (herein as, “BCCL”) being aggrieved by the order dated 12.04.2018 passed by a Division Bench of the High Court of Jharkhand at Ranchi, wherein a writ petition filed by AMR­Dev Prabha (Respondent No. 1) had been allowed and the auction process conducted by M/s C1 India Pvt Ltd (Respondent No. 4, hereinafter “C1­India”) was set aside and the   resultant   award   of   tender by   BCCL   to   M/s   RK   Transport   Co (Respondent No. 6) had also been quashed. The appeal was allowed by the SC - setting aside the judgment of DB of HC.