Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(Tel) 13620

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Aparesh Kumar Singh, CJ, G.M.Mohiuddin, J
Readers Store – Appellant
Versus
Telangana State Trade Promotion Corporation Limited – Respondent
WRIT APPEAL No.262 of 2026

Advocates:
For the Appellants/Petitioners: N.Naveen Kumar
For the Respondents: Tera Rajinikanth Reddy

A Letter of Award (LOA) in public procurement does not create a binding contract where the tender conditions mandate a formal agreement as a pre-condition, parties continue to negotiate material terms, or essential security requirements like a Performance Bank Guarantee are not maintained.

Headnote:(A) Constitution of India - Article 226 - Tender process - Cancellation of tender - Contractual autonomy - Power of authority to annul bidding process reserved under RFP - Whether Letter of Award (LOA) constitutes a concluded contract where definitive agreement remains unexecuted - Held, LOA is an intermediate step; failure to meet pre-conditions (like PBG renewal) and repeated attempts by bidder to modify material terms indicate lack of consensus ad idem - Exercise of power to cancel tender under specific RFP clause for valid administrative/operational requirements upheld - Courts will not interfere with commercial wisdom/administrative autonomy of tender authority unless decision is patently arbitrary, mala fide, or perverse. (Paras 19, 21, 24, 25, 27)

Facts of the case:
The appellants challenged the cancellation of a tender process for the Operations & Maintenance of a Container Freight Station (CFS) facility. While the appellants were issued a Letter of Award (LOA), they failed to execute the formal contract, sought multiple modifications, and failed to maintain the required Performance Bank Guarantee. The respondent corporation cancelled the process citing organizational requirements for business expansion and storage needs under an express ‘right to annul’ clause in the RFP.

Findings of Court:
The High Court held that no concluded contract had come into existence as the tender contemplated a two-stage process (LOA followed by an O&M contract). The appellants' conduct indicated that material terms were still under negotiation, and their inability to maintain security documents rendered their claim unsustainable.

Issues: Whether the Letter of Award resulted in a binding contract; whether the cancellation of the tender process was legally valid and whether the court should interfere with the administrative decision-making process under Article 226.

Ratio Decidendi: An authority cannot be compelled to enter into a contract when the bidding conditions (RFP) expressly reserve the right to annul the tender. A Letter of Award does not crystallize into a binding contract where pre-conditions (such as contract signing and performance guarantees) remain unfulfilled and parties are still negotiating material terms.

Result: Writ Appeal dismissed.

Table of Content
1. factual background: tender process for o&m contract cancellation. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12)
2. appellants' argument: legitimate expectation and concluded contract claim. (Para 13 , 14)
3. respondents' argument: lack of consensus and right to annul. (Para 15)
4. contract status: loa as intermediate step; no concluded contract. (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25)
5. administrative discretion: bona fide tender cancellation is not subject to judicial interference. (Para 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33)

JUDGMENT

Heard Sri N.Naveen Kumar, learned counsel for the appellants and Sri Tera Rajinikanth Reddy, learned Additional Advocate General appearing for respondent No.1-Corporation and respondent No.2-General Manager of the Corporation and perused the record.

2. This writ appeal is preferred, under Clause 15 of the Letters Patent , aggrieved by the order dated 09.01.2026 passed by the learned Single Judge in W.P.No.33804 of 2024. By the said order, the learned Single Judge dismissed the underlying writ petition filed by the appellants, wherein they sought a writ of mandamus against the respondent authorities to compel the execution of an Operation & Management (O&M) Contract in their favour pursuant to a Letter of Award (LOA) dated 08.05.2023.

Factual matrix (in brief)

3. Respondent No.1, Telangana State Trade Promotion Corporation Limited (TGTPC), a State instrumentality, issued a Request for Proposal (RFP) dated 13.09.2022 inviting bids for selection of an Operations & Maintenance (O&M) Operator for the Container Freight Station (CFS) situated at Mamidipally, near Rajiv Gandhi International Airport (RGIA), Hyderabad. Pursuant thereto, appellant No.1 participated in the tender process, qualified in the technical bid, submitted its financial bid and upon negotiations, furnished a revised financial bid. Upon evaluation, the appellants emerged as the successful bidders.

4. Consequent upon approval by the Board of respondent No.1, a LOA, dated 08.05.2023 was issued in favour of the appellants awarding the O&M rights of the subject CFS facility. The said LOA specifically stipulated that the award was subject to fulfilment of certain conditions precedent, such as incorporation of a Special Purpose Vehicle (SPV), furnishing of a Performance Bank Guarantee (PBG), and execution of a formal O&M Contract within the stipulated period. The LOA also contained operational conditions, including restriction of use of the premises for CFS-related activities.

5. The appellants, by communication dated 24.05.2023, accepted the LOA. Simultaneously, appellants sought certain modifications/clarifications contending that the LOA conditions ought to be aligned with the broader uses contemplated under the RFP, including use as an Air Freight Station/Logistics Facility/Bonded Warehouse, which were according to the appellants, only to bring the LOA in conformity with the tender conditions and not by way of repudiation or renegotiation.

6. In compliance with the post-award requirements, the appellants incorporated the requisite SPV on 25.06.2023 and subsequently furnished a PGB for Rs.19,50,000/- on 20.09.2023. However, the said Bank Guarantee was valid only till 19.09.2024 and was admittedly not renewed thereafter.

7. Further, representations were made by the appellants on 14.07.2023, 21.08.2023, 19.09.2023 and 24.11.2023, particularly with respect to (i) use of the facility for multiple purposes, (ii) moratorium period, and (iii) handing over of the 17,000 Sq. Ft. exim warehouse, which was stated to be under use by respondent No.1 for its paper products division. Certain requests were considered and partly accommodated in the 34th Board Meeting dated 11.08.2023, and again deliberated upon in the 36th Board Meeting dated 30.12.2023.

8. Despite exchange of communications, compliance with certain conditions by the appellants and deliberations at Board level, the contemplated formal O&M Contract

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2026 Supreme(Online)(Tel) 13620

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABADAparesh Kumar Singh, CJ, G.M.Mohiuddin, JReaders Store – AppellantVersusTelangana State Trade Promotion Corporation Limited – RespondentWRIT APPEAL No.262 of 2026

A Letter of Award (LOA) in public procurement does not create a binding contract where the tender conditions mandate a formal agreement as a pre-condition, parties continue to negotiate material terms, or essential security requirements like a Performance Bank Guarantee are not maintained.

Cases Referred (3)

IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Aparesh Kumar Singh, CJ, G.M.Mohiuddin, J
Readers Store – Appellant
Versus
Telangana State Trade Promotion Corporation Limited – Respondent
WRIT APPEAL No.262 of 2026