“Judicial Restraint Essential In Public Tender Disputes”: J&K High Court Quashes Injunction Against AAI's Debarment Order

Stressing the need for judicial restraint in matters involving public tenders and contractual integrity, the Jammu and Kashmir and Ladakh High Court has quashed an interim injunction that had stayed the Airports Authority of India's (AAI) debarment order against M/s Saptagiri Restaurant Pvt. Ltd. (SRPL).Justice Vinod Chatterji Koul ruled that courts must refrain from interfering with statutory bodies' regulatory decisions unless clear illegality or mala fide intent is established, warning that such interference risks undermining public contracts and policy enforcement.Citing Raunaq International Ltd. v. I.V.R. Contraction Ltd. and others (1999) 1 SCC 492 to explain the preconditions for a court to show indulgence in such matters the court observed, “.. before entertaining a 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 same considerations must weigh with the court when interim orders are passed in such petitions”The dispute arose when AAI issued a debarment order barring SRPL from participating in future tenders for three years due to its alleged involvement in collusive bidding and bid-rigging. The company challenged the order before the Additional District Judge (Fast Track), Budgam, securing an interim injunction that stalled AAI's action. The 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 undertaken within the framework of AAI's contractual and regulatory authority. He contended that courts must respect the autonomy of public bodies in managing tenders and contractual compliance. He further pointed out that SRPL had already approached the Madras and Punjab & Haryana High Courts for similar relief, both of which had dismissed its claims, making its civil suit an attempt at forum shopping.Per contra, Advocate Danish Majid, representing SRPL, defended the maintainability of the suit, arguing that AAI's debarment order was arbitrary and violated procedural fairness. He claimed that the Manual of Contract 2019, under which the debarment was issued, did not explicitly bar the jurisdiction of civil courts and that the injunction was necessary to prevent irreparable harm to SRPL's business.Justice Koul, in a detailed ruling, underscored that while courts have the power to review administrative decisions, they must do so cautiously, especially when statutory bodies act within their regulatory domain. He relied on the Raunaq International Judgment of SC where it held that public tenders and contractual decisions should not be routinely interfered with by courts unless they are patently illegal or arbitrary.Emphasising that AAI, as a statutory body, is entrusted with maintaining the integrity of the tender process the Court held that any interference with AAI's decisions should be minimal, especially when public interest is involved and cautioned against granting interim orders that could delay public projects and escalate costs.Pointing out the collusive bidding and conflict of Interest the Court noted that SRPL and Syona Spa had a long-standing relationship, with Karan Singh being an employee of SRPL until August 2022. The Court found that SRPL had extended a personal loan to Karan Singh, and both entities shared the same registered address, indicating a strong connection. The Court observed that this relationship allowed both entities to influence each other's bids, leading to collusive bidding practices.The Court referred to Clause 9(a)(vi) of the General Information and Guidelines of the e-Tender document, which prohibits conflict of interest. The Court held that SRPL's failure to disclose its relationship with Syona Spa violated this clause, justifying AAI's debarment order.Agreeing 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 the Court held that the cause of action did not arise in Srinagar, making the Trial Court's jurisdiction invalid.The Court criticized SRPL for pursuing multiple remedies simultaneously. 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.The Court reiterated the principles governing the grant of interim injunctions, emphasizing that a party seeking an injunction must establish a prima facie case, balance of convenience, and irreparable injury. The Court found that SRPL failed to prove a prima facie case, as the evidence pointed to collusive bidding...

“Judicial Restraint Essential In Public Tender Disputes”: J&K High Court Quashes Injunction Against AAI's Debarment Order

LIVELAW NEWS NETWORK

Tags