Bench upholds single judge order against Muthoot

A division bench of the Madras High Court has refused to interfere with the orders of a single judge, which upheld the Tamil Nadu government blacklisting Muthoot Exim Private Limited in Mumbai from participating in government tenders and confiscating the earnest money deposit EMD of Rs 53 lakh pertaining to the Gold for Thali Mangalsutra scheme.

A division bench of the Madras High Court has refused to interfere with the orders of a single judge, which upheld the Tamil Nadu government blacklisting Muthoot Exim Private Limited in Mumbai from participating in government tenders and confiscating the earnest money deposit (EMD) of Rs 53 lakh pertaining to the Gold for Thali (Mangalsutra) scheme. The bench of Justices Pushpa Sathyanarayana and Krishnan Ramasway upheld the single judge order, while dismissing an appeal from Muthoot, recently.

The appeal sought to set aside the order of the single judge passed in February, 2020, declining to interfere with the impugned order of the state's Social Welfare department.

The dispute arose out of the tender issued in July 2018 for supply of 1.11 lakh eight gram gold coins of 22 carat, each. The tender was floated to distribute the gold coins to the beneficiaries under the TN government's prestigious 'Gold for Thali' scheme.

Muthoot had participated in the tender and offered to supply 20,000 gold coins, which was permissible as per the tender conditions. The selection letter was handed over to it on September 20, 2018, with a delay of 20 days from the date of opening of the tender, within which time, there was a steep rise in the price of gold due to extremely volatile market conditions.

As Muthoot was not in a position to absorb the steep rise in the price of the gold, it requested the government to consider the current rate per gram gold price as of September 24, 2018 or permit it to withdraw from the tender and return the EMD. However, the state government refused and by proceedings initiated under the TN Transparency in Tender Rules, blacklisted the firm and confiscated the EMD of Rs 53 lakh in December, 2018. Aggrieved, the firm moved the High Court and a single judge in February, 2020 rejected the plea. Hence, the present appeal.

The bench pointed out that the dispute brought-forth by Muthoot was based on a contract. The scope of judicial review in such contractual matters was very limited. Power of judicial review would not be invoked to protect private interest at the cost of public interest or to decide contractual disputes.

When Muthoot was clear on the facts and the dispute and the authorities concerned had acted only as per the tender conditions, by filing a writ petition under Article 226, it could not persuade the court to interfere in the matter, the judges said, adding that the appellant was blacklisted for its delinquent act, which was well within the power of the State to take any action.

In view of the settled position, Muthoot could not invoke Article 226 of the Constitution, when it got the common law remedy, as the dispute had arisen out of breach of contract. When an alternative remedy was available, unless it was established that there was a breach of its fundamental rights or violation of principles of natural justice or an excess of jurisdiction, which were exceptional cases, the company could not invoke Article 226 of the Constitution, the bench said and held that the order of the single judge did not suffer from any infirmity for interference.

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