COMMON ORDER
These Section 9 applications have been filed seeking for relief of an interim injunction restraining the respondents from terminating a contract, forfeiting the Earnest Money Deposit, Caution Deposit and also for a direction to grant LPG load for transportation to the Trucks indicating therein in accordance with the letter of acceptance.
2. These applications have been primarily contested by the respondents on the ground that only a show cause notice had been issued and the said applications are pre-mature with an intention to foreclose the right of the respondents in taking a decision on the show cause notice.
3. Heard Mr.Harishankar, learned counsel appearing for Mr.D.Vairamoorthy, learned counsel appearing for the applicants and Mr.Mohammed Fayaz Ali, learned counsel appearing for the respondents.
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4. The learned counsel appearing for the applicants would submit that the applicants have all been appointed pursuant to a two tier bid system where they had all been successful bidders. A show cause notice had been issued on the allegation that the applicants had failed to submit their registration certificate and PESO documents evidencing the change of ownership within four months from the date of issuance of LOA and calling upon the applicants as to why punitive action including forfeiture of EMD and Caution deposit and also termination of the contract, should not be initiated. He would submit that the applicants have already submitted the documents reflecting the change of ownership and there had only occurred a marginal delay which cannot at any stretch prejudice the respondents. No allegations of violation of the letters of acceptance particularly in carrying out the duties envisage under the contract had been complained. Having accepted the documents submitted, however with marginal delay, the respondents are estopped and acquiesced of the allegations made in the show cause notice. That apart, the services of the applicants have been engaged to meet the public demands and any termination would only cause severe hardship to the public in general. He would further submit that the issuance of the show cause notice itself is wholly arbitrary illegal which would have
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an effect of unjustly penalizing the applicants. In that context, he would draw attention of this Court to the judgment of the Hon'ble Apex Court in the case of K.S.Manjunath & Ors., vs. Moorasavirappa alias Muttanna Chennappa Batil & Ors., reported in (2025) SCC Online 2378, and contend that the Hon'ble Apex Court had approved the judgment of this Court wherein this Court had bifurcated the contracts into various spheres including contracts, which are terminable for the cause subject to the breach notice being issued and in this case, since a notice has been issued, which is the starting point of the dispute entitles the applicants to file an application under Section 9 for protection of their interest. He had also placed reliance upon the Division Bench judgment of the Madhya Pradesh High Court indicating maintainability of a Section 9 petition on issuance of a show cause notice. He would submit that by interim orders, protection had been granted by this Court and the same could also be extended till the appropriate arbitration proceedings are initiated in the manner known to law and disputes are resolved by the Arbitrator.
5. Countering his arguments, the learned counsel appearing for the respondents at the out set would submit that no dispute had arisen in none of the cases as only a show cause notice has been issued and only if the same is
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decided against the applicants, a dispute would arise between the parties. He would further submit that four months time period had only be granted for production of necessary Registration certificate and PESO licence in the name of the successful bidder from the date of the LOA and it is not the case that such documents have been submitted within the time period.
6. He would further draw attention of this Court to the General Conditions of the tender wherein the respondent was with a power to cancel the contract on failure to submit the said documents within the time period. He would further draw attention of this court to Section 14 of the Specific Relief Act to contend that no injunction could be granted when the contract is determinable and in that regard, he had also relied upon the judgment of the Delhi High Court in the case of Overnite Express Limited vs. Delhi Metro Rail Corporation reported in 2020 SCC Online Delhi 2093, and Rajasthan Breweries Limited vs. The Stroh Brewery Company reported in 2000 SCC Online 481. He would also vehemently contend that the present application at the present stage would not be maintainable and he would also submit that public interest would always be protected as the wait-listed bidders would be operated to meet the needs.
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7. I have considered the submissions made by the learned counsels appearing on either side and perused the materials placed on record.
8. The issue as to whether the show cause notice had been validly given or not, cannot be decided by this Court in the present stage, as it had been repeatedly held that while dealing with the Section 9 Application, the Court cannot conduct a mini trial to decide the rights of the parties. Section 9 had been envisaged only to grant interim measures pending initiation of the Arbitration proceedings and enforcement of the award. This Court when the applications came up for admission, had given a prima facie finding that the delay in carrying out the mutation in the registration certificate as well as the PESO licence was entirely within the jurisdiction of the authorities functioning under the Motor Vehicles Act and PESO Authorities.
9. Whether the delay had occurred at the instance of the applicant or the said authorities, can only be found out in the arbitration proceedings, the Court had also given a prima facie finding that if the agreements had terminated based upon the show cause notice not only the applicant would be
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put to irreparable loss and prejudice, but also a larger public interest would suffer.
10. The reason that had been attributed by the respondents that the public interest should not suffer as the persons in the wait-list could be operated, would only mean creation of a third party interest in the lis between the parties and in the event the applicants succeed in the arbitral proceedings, it would cause further proceedings. Even assuming that this Court upholds the right at the stage for the respondents to terminate the contract and in the event of the applicants succeeding before the Arbitrator, the respondents could be mulcted with liability of damages which would only flow from the money of the public exchequer. In that regard, this Court is of the view that the respondents can be permitted to proceed with and pass orders on the show cause notice issued based upon the reply submitted after giving an opportunity of personal hearing to the respective applicants, but however such order could be kept in abeyance granting reasonable time for the applicants to invoke the arbitral proceedings and implement the same subject to the result in arbitral proceedings. This would only be in the interest of justice as it involves the cost of public exchequer.
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11. For the aforesaid reasons, these applications are disposed of with the following directions:-
a) the interim order granted in the respective applications are made absolute;
b) the respondents are permitted to pass appropriate orders as indicated above, but shall not give effect to the same for a period of 90 days granting time for initiation of arbitral proceedings by the aggrieved persons.
c) However, there shall be no order as to costs.
01-09-2026
Index: Yes/No Speaking/Non-speaking order Neutral Citation: Yes/No pbn
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K.KUMARESH BABU J.
pbn Pre-delivery Order in
OA Nos. 479 of 2026 & etc., batch 01-09-2026
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