Arbitrariness - The Legal Chamber

Supreme Court Balances Fairness & Flexibility in Govt. Contracts, Upholds Cancellation of LoI in Himachal Case

10Feb

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Supreme Court

Supreme Court Balances Fairness & Flexibility in Govt. Contracts, Upholds Cancellation of LoI in Himachal Case

This Supreme Court judgment clarifies that a Letter of Intent is a conditional, non-binding precursor to a contract, creating no vested rights until stipulated prerequisites are fulfilled. The Court held that the State's cancellation of such an LoI is valid if based on genuine grounds of non-compliance and public interest, and is not arbitrary per se. Facts Of The Case: The State of Himachal Pradesh initiated a tender process to upgrade its Public Distribution System with biometric and IRIS-enabled ePOS devices. After four rounds of tendering, M/s OASYS Cybermatics Pvt. Ltd. emerged as the sole technically qualified bidder and was issued a Letter of Intent (LoI) in September 2022. The LoI was conditional, requiring successful compatibility testing, live demonstrations, an...

Supreme Court Sets Aside Mining Tender: “Previous Year” Means Year Before Bid

The Supreme Court emphasized that judicial review in tender matters ensures fairness and non-arbitrariness under Article 14. It held that misinterpretation of a tender condition, which wrongly excludes the highest bidder and deprives the state of revenue, vitiates the decision-making process. The court underscored the state's duty to maximize public value in natural resource auctions. Facts Of The Case: The case involved a public auction for a five-year sand quarry lease in Odisha. The appellant, M/s Shanti Construction Pvt. Ltd., was the highest bidder but its bid was rejected by the Tender Committee for allegedly failing to comply with Rule 27(4)(iv) of the Odisha Minor Mineral Concession Rules, 2016. The rule required submission of an Income Tax Return for the "previous Financial Year...

Coal India’s 20% Price Hike for Select Industries Upheld by Supreme Court

The Supreme Court upheld the constitutional validity of Coal India's Interim Pricing Policy, ruling that the 20% price increase for the non-core sector was a valid economic policy decision. The Court affirmed that such price fixation, based on reasonable classification and to subserve the common good, does not violate Article 14, and set aside the refund directed by the High Court. Facts Of The Case: Following the Supreme Court's 2006 decision in Ashoka Smokeless that struck down the e-auction system for coal sales, Coal India Limited (CIL) introduced an Interim Coal Policy on December 15, 2006. This policy increased the price of coal by 20% over the pre-e-auction notified price specifically for linked consumers in the non-core sector, such as manufacturers of smokeless fuel. An associat...