Threshold Of 'Public Interest' Must To Prevent Bypassing Of Civil Courts For Enforcement Of Contractual Obligations: Bombay High Court

The Bombay High Court has reiterated that a writ court should not ordinarily exercise its powers under Article 226 of the Constitution in contractual matters, unless the same is expedient in public interest.The bench of Justices A.S. Chandurkar and G.A. Sanap took note of the Supreme Court's observations in Bharat Coking Coal Limited and others vs. AMR Dev Prabha and others, that the power of judicial review should not be permitted to be invoked in contractual disputes to protect private interest at the cost of public interest or to decide contractual disputes.It observed,"although the threshold for the public interest to exist need not be high nevertheless it is essential to prevent bypassing of civil Courts and use of constitutional avenues for enforcement of contractual obligations."The observation was made while adjudicating upon a challenge raised in a writ petition to the issuance of work order by the Executive Engineer, Lower Wardha Project, Division Wardha (second respondent) in favour of the third respondent. The court deliberated whether the challenge was within the scope of writ jurisdiction. FactsThe petitioner had invited attention to various tender conditions and especially Clause 2.22.0. According to him, as per sub-clause (ix) thereof the lowest bidder was required to submit the additional performance security in the form of Demand Draft/Bank Guarantee or Fixed Deposit Receipt within two working days of opening of the financial bid. This period of two working days was not liable to be relaxed under any circumstances and therefore since the third respondent furnished such additional performance security beyond the period of two working days, it was contended that the second respondent was not justified in issuing the work order to the third respondent. It was submitted that the financial bid was opened on 12.03.2021. 13.03.2021 was a Saturday and 14.03.2021 was a Sunday. The next two working days were 15.03.2021 and 16.03.2021. The third respondent submitted the additional performance security in the form of a Fixed Deposit Receipt on 17.03.2021 which was beyond the period of two working days. The petitioner's counsel submitted that with regard to other works that were the subject matter of the same tender notice wherein the bids were to be submitted as per similar schedule, the bidders for other two works had furnished additional performance security within a period of two working days. Inviting attention to the Government Resolution dated 23.06.2020 which was also referred to in Clause 2.22.0 it was submitted that reading of paragraph 18 thereof indicated that the mandatory period of two days was not liable to be extended for any reason whatsoever.Referring to the provisions of Section 25 of the Negotiable Instruments Act, 1881 (Act of 1881), it was submitted that only a "public holiday" was liable to be excluded while construing Clause 2.22.0. As 15.03.2021 and 16.03.2021 were not declared as public holidays, those days could not be excluded from consideration.If the bid of the third respondent was liable to be rejected for this reason the petitioner would be entitled to seek the work order since his bid was the next lowest bid. The third respondent had sought to rely upon a communication dated 11.05.2021 that was issued by the Branch Manager of the Bank of Maharashtra that on 15.03.2021 and 16.03.2021 there was a strike of bank employees due to which there were no banking transactions. Since the third respondent had approached the bank on 17.03.2021, the Fixed Deposit Receipt was issued on that date. The second respondent had come up with the stand that on account of strike of the bank on 15.03.2021 and 16.03.2021, the request for extension of time to submit the additional performance security came to be accepted.First and second respondent- Tender Issuing Authority submitted that the work order was issued to the third respondent in accordance with the tender notice itself. Referring to paragraph 2 of the additional affidavit filed on behalf of the first and second respondent, it was submitted that the third respondent on 15.03.2021 had informed the second respondent that on account of strike of the bank, it would not be possible to furnish the additional performance security. That request was accepted and the Fixed Deposit Receipt in that regard was accepted on 17.03.2021.It was further contended there were no mala fides on the part of the first and second respondent in granting the work order to the third respondent. In absence of any arbitrariness or a plea of mala fides there was no reason to interfere with the decision of the second respondent of granting time to the third respondent to furnish the additional performance security.Findings The bench observed that the principal challenge raised by the petitioner to the acceptance of the financial bid of the third respondent is that the additional performance security that...

Threshold Of 'Public Interest' Must To Prevent Bypassing Of Civil Courts For Enforcement Of Contractual Obligations: Bombay High Court

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Threshold Of 'Public Interest' Must To Prevent Bypassing Of Civil Courts For Enforcement Of Contractual Obligations: Bombay High Court

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