Parties in commercial litigation should avoid filing mindless appeals, says SC

The Supreme Court on Friday observed that parties engaged in commercial litigation must weigh the commercial interests and avoid filing mindless appeals.

A bench of Justices Sanjay Kishan Kaul and Hrishikesh Roy said: “In carrying on commercial litigation, parties must weigh the commercial interests, which would include the consequences of the matter not receiving favourable consideration by the courts. Mindless appeals should not be the rule.”

The bench noted that tender jurisdiction was created for scrutiny of commercial matters and, thus, where continuously parties seek to challenge award of tenders.

“We are of the view that the succeeding party must get costs and the party which loses must pay costs. This was really a battle between two commercial entities on one side seeking to get set aside an award of a tender to two other entities. What else would be commercial interest!” it said, while allowing an appeal by company, UFLEX Ltd, against the order passed by the Madras High Court allowing two other companies which were unsuccessful at a government bidding, to draw a “share of the pie”.

“We are thus unequivocally of the view that the impugned order cannot be sustained for all the aforesaid reasons and must be set aside and the appeals are accordingly allowed,” said the bench, directing the respondent companies to pay a sum of Rs 23 lakh to the petitioner and Rs 7.5 lakh to the state government for litigation expenses.

The bench noted there is often a hesitancy in the judicial system to impose costs, presuming as if it is a reflection on counsel. “In a tussle for enforcement of rights against state, different principle apply but in commercial matters, costs must follow the cause,” it added in the 48-page judgment.

The case in connected with the Tami Nadu government’s attempt to contain the sale of spurious liquor by deciding to paste stickers on every liquor bottle and invite tenders for this.

Many companies submitted their bids. Two companies challenged the process before Madras High Court without participating in the bidding, claiming that the tender was designed in a way, which allowed few companies to participate.

The division bench of the high court in April this year gave the Tamil Nadu government four months’ time to float a fresh tender, while permitting the existing successful tenderers to continue to provide the supplies under the same terms and conditions. The successful bidder, UFLEX Ltd, moved the top court challenging this order.