Interference of courts in commercial transactions must be minimal

Punjab and Haryana High Court: The High Court recently denied interfering in the contractual matter of two parties holding that contract being a commercial transaction does not seek court’s indulgence under Article 226 of the Constitution. The petitioner being a small time timber and firewood dealer takes small lots from government or government agencies for cutting the trees and in public auction.

The petitioners prayed before the Court to seek the writ of certiorari for setting aside the order passed by respondent-corporation by allotting the tender arbitrarily without calling public tender and giving due opportunity to other tenderers, causing huge loss to the State exchequer when the State of Punjab was widening various roads in the State and for that purpose, tenders were being allotted to different companies and firms for different strips of roads.

When the trees are auctioned, the petitioner and similarly situated persons who deal in timber trade participate in such auctions and take tender for cutting the trees. The petitioner asserted before the Court that respondents in connivance with each other opened the bid of all the other persons involved in bidding and held one of the respondents to be the highest bidder and thereby allotted work to them. The petitioner contended that the value in all the strips mentioned in the order had been shown less than one crore which had been done just to deny the right of participation to the petitioner and other similarly situated persons.

The Court on hearing the arguments of the petitioners observed that no material had been produced on record by the petitioner to substantiate its claim. Also, no proof of arbitrary action by the official respondents had been presented. To come to a conclusion, the Court referred to the judgment of the Supreme Court in BSN Joshi v. Nair Coal Services Limited, (2006) 11 SCC 548, wherein it was held that the employer is the best judge to award contract and the court’s interference in such matters should be minimal specifying that the Court should normally exercise judicial restraint unless illegality or arbitrariness on the part of the employer is apparent.

Again, the Court referred to Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517 wherein it was held that the contract is a commercial transaction and the court’s indulgence under Article 226 of the Constitution of India in such matter should be minimal. The Court went on to say that the principles of equity and natural justice stay at a distance and the power of judicial review will not be permitted to be invoked to protect private interest at the cost of public interest or to decide contractual disputes. Finally, the Court held that there is no merit in the petition and the appeal was dismissed. [Abdul Rashid v. State of Punjab, 2017 SCC OnLine P&H 1735, decided on 03.07.2017]

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