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...